[Federal Register Volume 80, Number 162 (Friday, August 21, 2015)]
[Notices]
[Pages 50887-50896]
[FR Doc No: 2015-20660]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31764; File No. 812-14424]

Amplify Investments LLC and Amplify ETF Trust; Notice of
Application

August 17, 2015.
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 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) for an exemption from sections 12(d)(1)(A) and
12(d)(1)(B) of the Act.

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    Summary of Application: Applicants request an order that would
permit (a) series of certain 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 rather than at net asset value
(``NAV''); (c) certain series to pay redemption proceeds, under certain
circumstances, more than seven days after 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 Underlying
Funds (defined below) to acquire shares of the Underlying Funds.
    Applicants: Amplify ETF Trust (the ``Trust'') and Amplify
Investments LLC (the ``Initial Adviser'').
    Filing Dates: The application was filed on February 20, 2015, and
amended on June 30, 2015.
    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. on September 11, 2015, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the
Commission's Secretary.

ADDRESSES:  Secretary, Securities and Exchange Commission, 100 F Street
NE., Washington, DC 20549-1090; Applicants, 3250 Lacey Road, Suite 130,
Downers Grove, IL 60515, Attn: Christian Magoon.

FOR FURTHER INFORMATION CONTACT:  Christine Y. Greenlees, Senior
Counsel at<PHONE_NUMBER>, or David P. Bartels, Branch Chief, at (202)
551-6821 (Division of Investment Management, Chief Counsel's Office).

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 for an
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling<PHONE_NUMBER>.

Applicants' Representations

    1. The Trust is a business trust organized under the laws of the
Commonwealth of Massachusetts and is, or will be prior to the
commencement of operation of the Initial Fund (defined below),
registered under the Act as an open-end management investment company
with multiple series.
    2. The Initial Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940 (the ``Advisers Act'') and will be
the investment adviser to the Funds (defined below). Any other Adviser
(defined below) will also be registered as an investment adviser under
the Advisers Act. The Adviser may enter into sub-advisory agreements
with one or more investment advisers to act as sub-advisers to
particular Funds (each, a ``Sub-Adviser''). Any Sub-Adviser will either
be registered under the Advisers Act or will not be required to
register thereunder.
    3. The Trust will enter into a distribution agreement with one or
more distributors (each, a ``Distributor''). Each Distributor will be a
broker-dealer (``Broker'') registered under the

Securities Exchange Act of 1934 (the ``Exchange Act'') and will act as
distributor and principal underwriter of one or more of the Funds. The
Distributor of any Fund may be an affiliated person, as defined in
section 2(a)(3) of the Act (``Affiliated Person''), or an affiliated
person of an Affiliated Person (``Second-Tier Affiliate''), of that
Fund's Adviser and/or Sub-Advisers. No Distributor will be affiliated
with any Exchange (defined below).
    4. Applicants request that the order apply to the initial series of
the Trust described in the application (``Initial Fund''), as well as
any additional series of the Trust and other open-end management
investment companies, or series thereof, that may be created in the
future (``Future Funds''), each of which will operate as an exchanged-
traded fund (``ETF'') and will track a specified index comprised solely
of domestic or foreign equity and/or fixed income securities (each, an
``Underlying Index''). Any Future Fund will (a) be advised by the
Initial Adviser or an entity controlling, controlled by, or under
common control with the Initial Adviser (each, an ``Adviser'') and (b)
comply with the terms and conditions of the application. The Initial
Fund and Future Funds, together, are the ``Funds.'' \1\
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    \1\ All 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 order. A Fund of Funds (as defined
below) may rely on the order only to invest in Funds and not in any
other registered investment company.
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    5. Each Fund will hold certain securities, currencies, other assets
and other investment positions (``Portfolio Holdings'') selected to
correspond generally to the performance of its Underlying Index.
Certain Funds will be based on Underlying Indexes that will be
comprised of equity and/or fixed income securities issued by one or
more of the following categories of issuers: (i) Domestic issuers; and
(ii) non-domestic issuers meeting the requirements for trading in U.S.
markets. Other Funds will be based on Underlying Indexes that will be
comprised of foreign and domestic or solely foreign equity and/or fixed
income securities (``Foreign Funds'').
    6. Applicants represent that each Fund will invest at least 80% of
its assets (excluding securities lending collateral) in the component
securities of its respective Underlying Index (``Component
Securities'') and TBA Transactions,\2\ and in the case of Foreign
Funds, Component Securities and Depositary Receipts \3\ representing
Component Securities. Each Fund may also invest up to 20% of its assets
in certain index futures, options, options on index futures, swap
contracts or other derivatives, as related to its respective Underlying
Index and its Component Securities, cash and cash equivalents, other
investment companies, as well as in securities and other instruments
not included in its Underlying Index but which the Adviser or Sub-
Adviser believes will help the Fund track its Underlying Index. A Fund
may also engage in short sales in accordance with its investment
objective.
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    \2\ A ``to-be-announced transaction'' or ``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 settlement date.
    \3\ Depositary receipts representing foreign securities
(``Depositary Receipts'') include American Depositary Receipts and
Global Depositary Receipts. The Funds may invest in Depositary
Receipts representing foreign securities in which they seek to
invest. Depositary Receipts are typically issued by a financial
institution (a ``depositary bank'') and evidence ownership interests
in a security or a pool of securities that have been deposited with
the depositary bank. A Fund will not invest in any Depositary
Receipts that the Adviser or any Sub-Adviser deems to be illiquid or
for which pricing information is not readily available. No
affiliated person of a Fund, the Adviser or any Sub-Adviser will
serve as the depositary bank for any Depositary Receipts held by a
Fund.
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    7. The Trust may offer Funds that seek to track Underlying Indexes
constructed using 130/30 investment strategies (``130/30 Funds'') or
other long/short investment strategies (``Long/Short Funds''). Each
Long/Short Fund will establish (i) exposures equal to approximately
100% of the long positions specified by the Long/Short Index \4\ and
(ii) exposures equal to approximately 100% of the short positions
specified by the Long/Short Index. Each 130/30 Fund will include
strategies that: (i) Establish long positions in securities so that
total long exposure represents approximately 130% of a Fund's net
assets; and (ii) simultaneously establish short positions in other
securities so that total short exposure represents approximately 30% of
such Fund's net assets. Each Business Day (defined below), for each
Long/Short Fund and 130/30 Fund, the Adviser will provide full
portfolio transparency on the Fund's publicly available Web site (``Web
site'') by making available the Fund's Portfolio Holdings before the
commencement of trading of Shares on the Listing Exchange (defined
below).\5\ The information provided on the Web site will be formatted
to be reader-friendly.
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    \4\ Underlying Indexes that include both long and short
positions in securities are referred to as ``Long/Short Indexes.''
    \5\ Under accounting procedures followed by each Fund, 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.
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    8. A Fund will utilize either a replication or representative
sampling strategy to track its Underlying Index. A Fund using a
replication strategy will invest in the Component Securities of its
Underlying Index in the same approximate proportions as in such
Underlying Index. A Fund using a representative sampling strategy will
hold some, but not necessarily all of the Component Securities of its
Underlying Index. Applicants state that a Fund using a representative
sampling strategy will not be expected to track the performance of its
Underlying Index with the same degree of accuracy as would an
investment vehicle that invested in every Component Security of the
Underlying Index with the same weighting as the Underlying Index.
Applicants expect that each Fund will have an annual tracking error
relative to the performance of its Underlying Index of less than 5%.
    9. Each Fund will be entitled to use its Underlying Index pursuant
to either a licensing agreement with the entity that compiles, creates,
sponsors or maintains the Underlying Index (each, an ``Index
Provider'') or a sub-licensing arrangement with the Adviser, which will
have a licensing agreement with such Index Provider.\6\ A ``Self-
Indexing Fund'' is a Fund for which an Affiliated Person, or a Second-
Tier Affiliate, of the Trust or a Fund, of the Adviser, of any Sub-
Adviser to or promoter of a Fund, or of the Distributor (each, an
``Affiliated Index Provider'') \7\ will serve as the Index Provider. In
the case of Self-Indexing Funds, an Affiliated Index Provider will
create a proprietary, rules-based methodology to create Underlying
Indexes (each an ``Affiliated Index'').\8\

Except with respect to the Self-Indexing Funds, no Index Provider is or
will be an Affiliated Person, or a Second-Tier Affiliate, of the Trust
or a Fund, of the Adviser, of any Sub-Adviser to or promoter of a Fund,
or of the Distributor.
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    \6\ The licenses for the Self-Indexing Funds will specifically
state that the Affiliated Index Provider (or in case of a sub-
licensing agreement, the Adviser) must provide the use of the
Underlying Indexes and related intellectual property at no cost to
the Trust and the Self-Indexing Funds.
    \7\ In the event that an Adviser or Sub-Adviser serves as the
Affiliated Index Provider for a Self-Indexing Fund, the terms
``Affiliated Index Provider'' or ``Index Provider,'' with respect to
that Self-Indexing Fund, will refer to the employees of the
applicable Adviser or Sub-Adviser that are responsible for creating,
compiling and maintaining the relevant Underlying Index.
    \8\ The Affiliated Indexes may be made available to registered
investment companies, as well as separately managed accounts of
institutional investors and privately offered funds that are not
deemed to be ``investment companies'' in reliance on section 3(c)(1)
or 3(c)(7) of the Act for which the Adviser acts as adviser or sub-
adviser (``Affiliated Accounts'') as well as other such registered
investment companies, separately managed accounts and privately
offered funds for which it does not act either as adviser or sub-
adviser (``Unaffiliated Accounts''). The Affiliated Accounts and the
Unaffiliated Accounts, like the Funds, would seek to track the
performance of one or more Underlying Index(es) by investing in the
constituents of such Underlying Indexes or a representative sample
of such constituents of the Underlying Index. Consistent with the
relief requested from section 17(a), the Affiliated Accounts will
not engage in Creation Unit transactions with a Fund.
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    10. Applicants recognize that Self-Indexing Funds could raise
concerns regarding the ability of the Affiliated Index Provider to
manipulate the Underlying Index to the benefit or detriment of the
Self-Indexing Fund. Applicants further recognize the potential for
conflicts that may arise with respect to the personal trading activity
of personnel of the Affiliated Index Provider who have knowledge of
changes to an Underlying Index prior to the time that information is
publicly disseminated.
    11. Applicants propose that each day that a Fund, the NYSE and the
national securities exchange (as defined in section 2(a)(26) of the
Act) (an ``Exchange'') on which the Fund's Shares are primarily listed
(``Listing Exchange'') are open for business, including any day that a
Fund is required to be open under section 22(e) of the Act (a
``Business Day''), each Self-Indexing Fund will post on its Web site,
before commencement of trading of Shares on the Listing Exchange, the
identities and quantities of the Portfolio Holdings held by the Fund
that will form the basis for the Fund's calculation of its NAV at the
end of the Business Day. Applicants believe that requiring Self-
Indexing Funds to maintain full portfolio transparency will provide an
effective additional mechanism for addressing any such potential
conflicts of interest.
    12. In addition, applicants do not believe the potential for
conflicts of interest raised by the Adviser's use of the Underlying
Indexes in connection with the management of the Self Indexing Funds
and the Affiliated Accounts will be substantially different from the
potential conflicts presented by an adviser managing two or more
registered funds. Both the Act and the Advisers Act contain various
protections to address conflicts of interest where an adviser is
managing two or more registered funds and these protections will also
help address these conflicts with respect to the Self-Indexing
Funds.\9\
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    \9\ See, e.g., rule 17j-1 under the Act and section 204A under
the Advisers Act and rules 204A-1 and 206(4)-7 under the Advisers
Act.
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    13. The Adviser and any Sub-Adviser have adopted or will adopt,
pursuant to rule 206(4)-7 under the Advisers Act, written policies and
procedures designed to prevent violations of the Advisers Act and the
rules thereunder. These include policies and procedures designed to
minimize potential conflicts of interest among the Self-Indexing Funds
and the Affiliated Accounts, such as cross trading policies, as well as
those designed to ensure the equitable allocation of portfolio
transactions and brokerage commissions. In addition, the Adviser has
adopted or will adopt policies and procedures as required under section
204A of the Advisers Act, which are reasonably designed in light of the
nature of its business to prevent the misuse, in violation of the
Advisers Act or the Exchange Act or the rules thereunder, of material
non-public information by the Adviser or an associated person (``Inside
Information Policy''). Any Sub-Adviser will be required to adopt and
maintain a similar Inside Information Policy. In accordance with the
Code of Ethics \10\ and Inside Information Policy of the Adviser and
Sub-Advisers, personnel of those entities with knowledge about the
composition of the Portfolio Deposit \11\ will be prohibited from
disclosing such information to any other person, except as authorized
in the course of their employment, until such information is made
public. In addition, an Index Provider will not provide any information
relating to changes to an Underlying Index's methodology for the
inclusion of component securities, the inclusion or exclusion of
specific component securities, or methodology for the calculation of
the return of component securities, in advance of a public announcement
of such changes by the Index Provider. The Adviser will also include
under Item 10.C. of Part 2 of its Form ADV a discussion of its
relationship to any Affiliated Index Provider and any material
conflicts of interest resulting therefrom, regardless of whether the
Affiliated Index Provider is a type of affiliate specified in Item 10.
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    \10\ The Adviser has also adopted or will adopt a code of ethics
pursuant to rule 17j-1 under the Act and rule 204A-1 under the
Advisers Act, which contains provisions reasonably necessary to
prevent Access Persons (as defined in rule 17j-1) from engaging in
any conduct prohibited in rule 17j-1 (``Code of Ethics'').
    \11\ The instruments and cash that the purchaser is required to
deliver in exchange for the Creation Units it is purchasing is
referred to as the ``Portfolio Deposit.''
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    14. To the extent the Self-Indexing Funds transact with an
Affiliated Person of the Adviser or Sub-Adviser, such transactions will
comply with the Act, the rules thereunder and the terms and conditions
of the requested order. In this regard, each Self-Indexing Fund's board
of directors or trustees (``Board'') will periodically review the Self-
Indexing Fund's use of an Affiliated Index Provider. Subject to the
approval of the Self-Indexing Fund's Board, the Adviser, Affiliated
Persons of the Adviser (``Adviser Affiliates'') and Affiliated Persons
of any Sub-Adviser (``Sub-Adviser Affiliates'') may be authorized to
provide custody, fund accounting and administration and transfer agency
services to the Self-Indexing Funds. Any services provided by the
Adviser, Adviser Affiliates, Sub-Adviser and Sub-Adviser Affiliates
will be performed in accordance with the provisions of the Act, the
rules under the Act and any relevant guidelines from the staff of the
Commission.
    15. The Shares of each Fund will be purchased and redeemed in
Creation Units and generally on an in-kind basis. Except where the
purchase or redemption will include cash under the limited
circumstances specified below, purchasers will be required to purchase
Creation Units by making an in-kind deposit of specified instruments
(``Deposit Instruments''), and shareholders redeeming their Shares will
receive an in-kind transfer of specified instruments (``Redemption
Instruments'').\12\ On any given Business Day, the names and quantities
of the instruments that constitute the Deposit Instruments and the
names and quantities of the instruments that constitute the Redemption
Instruments will be identical, unless the Fund is Rebalancing (as
defined below). In addition, the Deposit Instruments and the Redemption
Instruments will each correspond pro rata to the positions in the
Fund's portfolio (including cash

positions) \13\ except: (a) In the case of bonds, for minor differences
when it is impossible to break up bonds beyond certain minimum sizes
needed for transfer and settlement; (b) for minor differences when
rounding is necessary to eliminate fractional shares or lots that are
not tradeable round lots; \14\ (c) TBA Transactions, short positions,
derivatives and other positions that cannot be transferred in kind \15\
will be excluded from the Deposit Instruments and the Redemption
Instruments; \16\ (d) to the extent the Fund determines, on a given
Business Day, to use a representative sampling of the Fund's portfolio;
\17\ or (e) for temporary periods, to effect changes in the Fund's
portfolio as a result of the rebalancing of its Underlying Index (any
such change, a ``Rebalancing''). If there is a difference between the
NAV attributable to a Creation Unit and the aggregate market value of
the Deposit Instruments or Redemption Instruments exchanged for the
Creation Unit, the party conveying instruments with the lower value
will also pay to the other an amount in cash equal to that difference
(the ``Cash Amount'').
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    \12\ The Funds must comply with the federal securities laws in
accepting Deposit Instruments and satisfying redemptions with
Redemption Instruments, including that the Deposit Instruments and
Redemption Instruments are sold in transactions that would be exempt
from registration under the Securities Act of 1933 (``Securities
Act''). In accepting Deposit Instruments and satisfying redemptions
with Redemption Instruments that are restricted securities eligible
for resale pursuant to rule 144A under the Securities Act, the Funds
will comply with the conditions of rule 144A.
    \13\ The portfolio used for this purpose will be the same
portfolio used to calculate the Fund's NAV for the Business Day.
    \14\ A tradeable round lot for a security will be the standard
unit of trading in that particular type of security in its primary
market.
    \15\ This includes instruments that can be transferred in kind
only with the consent of the original counterparty to the extent the
Fund does not intend to seek such consents.
    \16\ Because these instruments will be excluded from the Deposit
Instruments and the Redemption Instruments, their value will be
reflected in the determination of the Cash Amount (as defined
below).
    \17\ A Fund may only use sampling for this purpose if the
sample: (i) Is designed to generate performance that is highly
correlated to the performance of the Fund's portfolio; (ii) consists
entirely of instruments that are already included in the Fund's
portfolio; and (iii) is the same for all Authorized Participants
(defined below) on a given Business Day.
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    16. Purchases and redemptions of Creation Units may be made in
whole or in part on a cash basis, rather than in kind, solely under the
following circumstances: (a) To the extent there is a Cash Amount; (b)
if, on a given Business Day, the Fund announces before the open of
trading that all purchases, all redemptions or all purchases and
redemptions on that day will be made entirely in cash; (c) if, upon
receiving a purchase or redemption order from an Authorized
Participant, the Fund determines to require the purchase or redemption,
as applicable, to be made entirely in cash;\18\ (d) if, on a given
Business Day, the Fund requires all Authorized Participants purchasing
or redeeming Shares on that day to deposit or receive (as applicable)
cash in lieu of some or all of the Deposit Instruments or Redemption
Instruments, respectively, solely because: (i) Such instruments are not
eligible for transfer through either the NSCC or DTC (defined below);
or (ii) in the case of Foreign Funds holding non-U.S. investments, such
instruments are not eligible for trading due to local trading
restrictions, local restrictions on securities transfers or other
similar circumstances; or (e) if the Fund permits an Authorized
Participant to deposit or receive (as applicable) cash in lieu of some
or all of the Deposit Instruments or Redemption Instruments,
respectively, solely because: (i) Such instruments are, in the case of
the purchase of a Creation Unit, not available in sufficient quantity;
(ii) such instruments are not eligible for trading by an Authorized
Participant or the investor on whose behalf the Authorized Participant
is acting; or (iii) a holder of Shares of a Foreign Fund holding non-
U.S. investments would be subject to unfavorable income tax treatment
if the holder receives redemption proceeds in kind.\19\
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    \18\ In determining whether a particular Fund will sell or
redeem Creation Units entirely on a cash or in-kind basis (whether
for a given day or a given order), the key consideration will be the
benefit that would accrue to the Fund and its investors. For
instance, in bond transactions, the Adviser may be able to obtain
better execution than Share purchasers because of the Adviser's
size, experience and potentially stronger relationships in the fixed
income markets. Purchases of Creation Units either on an all cash
basis or in-kind are expected to be neutral to the Funds from a tax
perspective. In contrast, cash redemptions typically require selling
portfolio holdings, which may result in adverse tax consequences for
the remaining Fund shareholders that would not occur with an in-kind
redemption. As a result, tax consideration may warrant in-kind
redemptions.
    \19\ A ``custom order'' is any purchase or redemption of Shares
made in whole or in part on a cash basis in reliance on clause
(e)(i) or (e)(ii).
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    17. Creation Units will consist of specified large aggregations of
Shares, e.g., at least 25,000 Shares, and it is expected that the
initial price of a Creation Unit will range from $500,000 to $25
million. All orders to purchase Creation Units must be placed with the
Distributor by or through an ``Authorized Participant'' which is either
(1) a ``Participating Party,'' i.e., a broker-dealer or other
participant in the Continuous Net Settlement System of the NSCC, a
clearing agency registered with the Commission, or (2) a participant in
The Depository Trust Company (``DTC'') (``DTC Participant''), which, in
either case, has signed a participant agreement with the Distributor.
The Distributor will be responsible for transmitting the orders to the
Funds and will furnish to those placing such orders confirmation that
the orders have been accepted, but applicants state that the
Distributor may reject any order which is not submitted in proper form.
    18. Each Business Day, before the open of trading on the Listing
Exchange, each Fund will cause to be published through the NSCC the
names and quantities of the instruments comprising the Deposit
Instruments and the Redemption Instruments, as well as the estimated
Cash Amount (if any), for that day. The list of Deposit Instruments and
Redemption Instruments will apply until a new list is announced on the
following Business Day, and there will be no intra-day changes to the
list except to correct errors in the published list. Each Listing
Exchange will disseminate, every 15 seconds during regular Exchange
trading hours, through the facilities of the Consolidated Tape
Association, an amount for each Fund stated on a per individual Share
basis representing the sum of (i) the estimated Cash Amount and (ii)
the current value of the Deposit Instruments.
    19. Transaction expenses, including operational processing and
brokerage costs, will be incurred by a Fund when investors purchase or
redeem Creation Units in-kind and such costs have the potential to
dilute the interests of the Fund's existing shareholders. Each Fund
will impose purchase or redemption transaction fees (``Transaction
Fees'') in connection with effecting such purchases or redemptions of
Creation Units. In all cases, such Transaction Fees will be limited in
accordance with requirements of the Commission applicable to management
investment companies offering redeemable securities. Since the
Transaction Fees are intended to defray the transaction expenses as
well as to prevent possible shareholder dilution resulting from the
purchase or redemption of Creation Units, the Transaction Fees will be
borne only by such purchasers or redeemers.\20\ The Distributor will be
responsible for delivering the Fund's prospectus to those persons
acquiring Shares in Creation Units and for maintaining records of both
the orders placed with it and the confirmations of acceptance furnished
by it. In addition, the Distributor will maintain a record of the
instructions given to the applicable

Fund to implement the delivery of its Shares.
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    \20\ Where a Fund permits an in-kind purchaser to substitute
cash-in-lieu of depositing one or more of the requisite Deposit
Instruments, the purchaser may be assessed a higher Transaction Fee
to cover the cost of purchasing such Deposit Instruments.
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    20. Shares of each Fund will be listed and traded individually on
an Exchange. It is expected that one or more member firms of an
Exchange will be designated to act as a market maker (each, a ``Market
Maker'') and maintain a market for Shares trading on the Exchange.
Prices of Shares trading on an Exchange will be based on the current
bid/offer market. Transactions involving the sale of Shares on an
Exchange will be subject to customary brokerage commissions and
charges.
    21. Applicants expect that purchasers of Creation Units will
include institutional investors and arbitrageurs. Market Makers, acting
in their roles to provide a fair and orderly secondary market for the
Shares, may from time to time find it appropriate to purchase or redeem
Creation Units. Applicants expect that secondary market purchasers of
Shares will include both institutional and retail investors.\21\ The
price at which Shares trade will be disciplined by arbitrage
opportunities created by the option continually to purchase or redeem
Shares in Creation Units, which should help prevent Shares from trading
at a material discount or premium in relation to their NAV.
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    \21\ Shares 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 the DTC Participants.
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    22. Shares will not be individually redeemable, and owners of
Shares may acquire those Shares from the Fund, or tender such Shares
for redemption to the Fund, in Creation Units only. To redeem, an
investor must accumulate enough Shares to constitute a Creation Unit.
Redemption requests must be placed through an Authorized Participant. A
redeeming investor may pay a Transaction Fee, calculated in the same
manner as a Transaction Fee payable in connection with purchases of
Creation Units.
    23. Neither the Trust nor any Fund will be advertised or marketed
or otherwise held out as a traditional open-end investment company or a
``mutual fund.'' Instead, each such Fund will be marketed as an
``ETF.'' All marketing materials that describe the features or method
of obtaining, buying or selling Creation Units, or Shares traded on an
Exchange, or refer to redeemability, will prominently disclose that
Shares are not individually redeemable and will disclose that the
owners of Shares may acquire those Shares from the Fund or tender such
Shares for redemption to the Fund in Creation Units only. The Funds
will provide copies of their annual and semi-annual shareholder reports
to DTC Participants for distribution to beneficial owners of Shares.

Applicants' Legal Analysis

    1. Applicants request an order under section 6(c) of the Act for an
exemption from sections 2(a)(32), 5(a)(1), 22(d), 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 17(a)(2) of the Act.
    2. Section 6(c) of the Act provides that the Commission may exempt
any person, security or transaction, or any class of persons,
securities or transactions, from any provision of the Act, if and to
the extent that such exemption is necessary or appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
Section 17(b) of the Act authorizes the Commission to exempt a proposed
transaction from section 17(a) of the Act if evidence establishes that
the terms of the transaction, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned, and the proposed transaction is
consistent with the policies of the registered investment company and
the general provisions of the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may exempt any person, security, or
transaction, or any class or classes of persons, securities or
transactions, from any provisions of section 12(d)(1) if the exemption
is consistent with the public interest and the protection of investors.

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

    3. Section 5(a)(1) of the Act defines an ``open-end company'' as a
management investment company that is offering for sale or has
outstanding any redeemable security of which it is the issuer. Section
2(a)(32) of the Act defines a redeemable security as any security,
other than short-term paper, under the terms of which the owner, upon
its presentation to the issuer, is entitled to receive approximately 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 Funds to register as
open-end management investment companies and issue Shares that are
redeemable in Creation Units only. Applicants state that investors may
purchase Shares in Creation Units and redeem Creation Units from each
Fund. Applicants further state that because Creation Units may always
be purchased and redeemed at NAV, the price of Shares on the secondary
market should not vary materially from 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 a
Fund's prospectus, and not at a price based on NAV. Thus, purchases and
sales of Shares in the secondary market will not comply with section
22(d) of the Act and rule 22c-1 under the Act. Applicants request an
exemption under section 6(c) from these provisions.
    5. Applicants assert that the concerns sought to be addressed by
section 22(d) of the Act and rule 22c-1 under the Act with respect to
pricing are equally satisfied by the proposed method of pricing Shares.
Applicants maintain that while there is little legislative history
regarding section 22(d), its provisions, as well as those of rule 22c-
1, appear to have been designed to (a) prevent dilution caused by
certain riskless-trading schemes by principal underwriters and contract
dealers, (b) prevent unjust discrimination or preferential treatment
among buyers, and (c) ensure an orderly distribution of investment
company shares by eliminating price competition from dealers offering
shares at less than the published sales price and repurchasing shares
at more than the published redemption price.
    6. Applicants believe that none of these purposes will be thwarted
by permitting Shares to trade in the secondary market at negotiated
prices. Applicants state that (a) secondary market trading in Shares
does not involve a Fund as a party and will not result in dilution of
an investment in Shares, and (b) to the extent different prices exist
during a given trading day, or from day to day, such variances occur as
a result of third-party market forces, such as supply and demand.
Therefore, applicants assert that secondary market transactions in
Shares will not lead to

discrimination or preferential treatment among purchasers. Finally,
applicants contend that the price at which Shares trade will be
disciplined by arbitrage opportunities created by the option
continually to purchase or redeem Shares in Creation Units, which
should help prevent Shares from trading at a material discount or
premium in relation to their NAV.

Section 22(e)

    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 only on the settlement cycle of the United States
market, but also on current delivery cycles in local markets for
underlying foreign securities held by a Foreign Fund. Applicants state
that the delivery cycles currently practicable for transferring
Redemption Instruments to redeeming investors, coupled with local
market holiday schedules, may require a delivery process of up to
fifteen (15) calendar days.\22\ Accordingly, with respect to Foreign
Funds only, applicants hereby request relief under section 6(c) from
the requirement imposed by section 22(e) to allow Foreign Funds to pay
redemption proceeds within fifteen (15) calendar days following the
tender of Creation Units for redemption.\23\
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    \22\ Applicants state that certain countries in which a Fund may
invest have historically had settlement periods of up to fifteen
(15) calendar days.
    \23\ Applicants acknowledge that no relief obtained from the
requirements of section 22(e) will affect any obligations applicants
may otherwise have under rule 15c6-1 under the Exchange Act
requiring that most securities transactions be settled within three
business days of the trade date.
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    8. Applicants believe that Congress adopted section 22(e) to
prevent unreasonable, undisclosed or unforeseen delays in the actual
payment of redemption proceeds. Applicants propose that allowing
redemption payments for Creation Units of a Foreign Fund to be made
within fifteen calendar days would not be inconsistent with the spirit
and intent of section 22(e). Applicants suggest that a redemption
payment occurring within fifteen calendar days following a redemption
request would adequately afford investor protection.
    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)

    10. Section 12(d)(1)(A) of the Act prohibits a registered
investment company from acquiring securities of an investment company
if such securities represent more than 3% of the total outstanding
voting stock of the acquired company, more than 5% of the total assets
of the acquiring company, or, together with the securities of any other
investment companies, more than 10% of the total assets of the
acquiring company. Section 12(d)(1)(B) of the Act prohibits a
registered open-end investment company, its principal underwriter and
any other broker-dealer from knowingly 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.
    11. Applicants request an exemption to permit registered management
investment companies and unit investment trusts (``UITs'') that are not
advised or sponsored by the Adviser, and not part of the same ``group
of investment companies,'' as defined in section 12(d)(1)(G)(ii) of the
Act as the Underlying Funds (such management investment companies are
referred to as ``Investing Management Companies,'' such UITs are
referred to as ``Investing Trusts,'' and Investing Management Companies
and Investing Trusts are collectively referred to as ``Funds of
Funds''),\24\ to acquire Underlying Fund Shares beyond the limits of
section 12(d)(1)(A) of the Act; and the Underlying Funds, and any
principal underwriter for the Underlying Funds, and/or any Broker
registered under the Exchange Act, to sell Underlying Fund Shares to
Funds of Funds beyond the limits of section 12(d)(1)(B) of the Act. The
``Underlying Funds'' are (a) the Funds and (b) any registered open-end
management investment company or any series thereof that is advised by
an Adviser and that, pursuant to a separate order of the Commission, in
general terms, operates as an ETF that utilizes active management
investment strategies. Shares of an Underlying Fund are referred to as
``Underlying Fund Shares.''
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    \24\ Funds of Funds do not include the Underlying Funds.
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    12. Each Investing Management Company will be advised by an
investment adviser within the meaning of section 2(a)(20)(A) of the Act
(the ``Fund of Funds Adviser'') and may be sub-advised by investment
advisers within the meaning of section 2(a)(20)(B) of the Act (each a
``Fund of Funds Sub-Adviser''). Any investment adviser to an Investing
Management Company will be registered under the Advisers Act. Each
Investing Trust will be sponsored by a sponsor (``Sponsor'').
    13. Applicants submit that the proposed conditions to the requested
relief adequately address the concerns underlying the limits in
sections 12(d)(1)(A) and (B), which include concerns about undue
influence by a fund of funds over underlying funds, excessive layering
of fees and overly complex fund structures. Applicants believe that the
requested exemption is consistent with the public interest and the
protection of investors.
    14. Applicants believe that neither a Fund of Funds nor a Fund of
Funds Affiliate would be able to exert undue influence over an
Underlying Fund.\25\ To limit the control that a Fund of Funds may have
over an Underlying Fund, applicants propose a condition prohibiting a
Fund of Funds Adviser or Sponsor, any person controlling, controlled
by, or under common control with a Fund of Funds Adviser or Sponsor,
and any investment company and any issuer that would be an investment
company but for sections 3(c)(1) or 3(c)(7) of the Act that is advised
or sponsored by a Fund of Funds Adviser or Sponsor, or any person
controlling, controlled by, or under common control with a Fund of
Funds Adviser or Sponsor (``Fund of Funds Advisory Group'') from
controlling (individually or in the aggregate) an Underlying Fund
within the meaning of section 2(a)(9) of the Act. The same prohibition
would apply to any Fund of Funds Sub-Adviser, any person controlling,
controlled by or under common control with the Fund of Funds 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 Fund of Funds Sub-Adviser or any person controlling, controlled by
or under common control with the Fund of Funds Sub-Adviser (``Fund of
Funds Sub-Advisory Group'').
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    \25\ A ``Fund of Funds Affiliate'' is a Fund of Funds Adviser,
Fund of Funds Sub-Adviser, Sponsor, promoter, and principal
underwriter of a Fund of Funds, and any person controlling,
controlled by, or under common control with any of those entities.
An ``Underlying Fund Affiliate'' is an investment adviser, promoter,
or principal underwriter of an Underlying Fund and any person
controlling, controlled by or under common control with any of these
entities.
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    15. Applicants propose other conditions to limit the potential for

undue influence over the Underlying Funds, including that no Fund of
Funds or Fund of Funds Affiliate (except to the extent it is acting in
its capacity as an investment adviser to an Underlying Fund) will cause
an Underlying 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, director, member of an advisory board, Fund of Funds Adviser,
Fund of Funds Sub-Adviser, employee or Sponsor of the Fund of Funds, or
a person of which any such officer, director, member of an advisory
board, Fund of Funds Adviser or Fund of Funds Sub-Adviser, employee or
Sponsor is an affiliated person (except that any person whose
relationship to the Underlying Fund is covered by section 10(f) of the
Act is not an Underwriting Affiliate).
    16. 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 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 Underlying Fund in which the Investing Management
Company may invest. In addition, under condition B.5., a Fund of Funds
Adviser, or a Fund of Funds' trustee or Sponsor, as applicable, will
waive fees otherwise payable to it by the Fund of Funds 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 an Underlying Fund by the Fund of Funds Adviser, trustee or
Sponsor or an affiliated person of the Fund of Funds Adviser, trustee
or Sponsor, other than any advisory fees paid to the Fund of Funds
Adviser, trustee or Sponsor or its affiliated person by an Underlying
Fund, in connection with the investment by the Fund of Funds in the
Underlying Fund. Applicants state that any sales charges and/or service
fees charged with respect to shares of a Fund of Funds will not exceed
the limits applicable to a fund of funds as set forth in NASD Conduct
Rule 2830.\26\
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    \26\ Any references to NASD Conduct Rule 2830 include any
successor or replacement FINRA rule to NASD Conduct Rule 2830.
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    17. Applicants submit that the proposed arrangement will not create
an overly complex fund structure. Applicants note that no Underlying
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 the
Underlying Fund to purchase shares of other investment companies for
short-term cash management purposes. To ensure a Fund of Funds is aware
of the terms and conditions of the requested order, the Fund of Funds
will enter into an agreement with the Underlying Fund (``FOF
Participation Agreement''). The FOF Participation Agreement will
include an acknowledgement from the Fund of Funds that it may rely on
the order only to invest in the Underlying Funds and not in any other
investment company.
    18. Applicants also note that an Underlying Fund may choose to
reject a direct purchase of Underlying Fund Shares in Creation Units by
a Fund of Funds. To the extent that a Fund of Funds purchases
Underlying Fund Shares in the secondary market, an Underlying Fund
would still retain its ability to reject any initial investment by a
Fund of Funds in excess of the limits of section 12(d)(1)(A) by
declining to enter into a FOF Participation Agreement with the Fund of
Funds.

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

    19. Sections 17(a)(1) and (2) of the Act generally prohibit an
affiliated person of a registered investment company, or an affiliated
person of such a person, from selling any security to or purchasing any
security from the company. Section 2(a)(3) of the Act defines
``affiliated person'' of another 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 defines ``control'' as the
power to exercise a controlling influence over the management or
policies of a company, and provides that a control relationship will be
presumed where one person owns more than 25% of a company'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 an Adviser
or an entity controlling, controlled by or under common control with an
Adviser (an ``Affiliated Fund''). Any investor, including Market
Makers, owning 5% or holding in excess of 25% of the Trust or such
Funds, may be deemed affiliated persons of the Trust or such Funds. In
addition, an investor could own 5% or more, or in excess of 25% of the
outstanding shares of one or more Affiliated Funds making that investor
a Second-Tier Affiliate of the Funds.
    20. Applicants request an exemption from sections 17(a)(1) and
17(a)(2) of the Act pursuant to sections 6(c) and 17(b) of the Act to
permit persons that are Affiliated Persons of the Funds, or Second-Tier
Affiliates of the Funds, solely by virtue of one or more of the
following: (a) Holding 5% or more, or in excess of 25%, of the
outstanding Shares of one or more Funds; (b) 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, to effectuate purchases and redemptions ``in-kind.''
    21. Applicants assert that no useful purpose would be served by
prohibiting such affiliated persons from making ``in-kind'' purchases
or ``in-kind'' redemptions of Shares of a Fund in Creation Units. Both
the deposit procedures for ``in-kind'' purchases of Creation Units and
the redemption procedures for ``in-kind'' redemptions of Creation Units
will be effected in exactly the same manner for all purchases and
redemptions, regardless of size or number. There will be no
discrimination between purchasers or redeemers. Deposit Instruments and
Redemption Instruments for each Fund will be valued in the identical
manner as those Portfolio Holdings currently held by such Fund and the
valuation of the Deposit Instruments and Redemption Instruments will be
made in an identical manner regardless of the identity of the purchaser
or redeemer. Applicants do not believe that ``in-kind'' purchases and
redemptions will result in abusive self-dealing or overreaching, but
rather assert that such procedures will be implemented consistently
with

each Fund's objectives and with the general purposes of the Act.
Applicants believe that ``in-kind'' purchases and redemptions will be
made on terms reasonable to applicants and any affiliated persons
because they will be valued pursuant to verifiable objective standards.
The method of valuing Portfolio Holdings held by a Fund is identical to
that used for calculating ``in-kind'' purchase or redemption values and
therefore creates no opportunity for affiliated persons or Second-Tier
Affiliates of applicants to effect a transaction detrimental to the
other holders of Shares of that Fund. Similarly, applicants submit
that, by using the same standards for valuing Portfolio Holdings held
by a Fund as are used for calculating ``in-kind'' redemptions or
purchases, the Fund will ensure that its NAV will not be adversely
affected by such securities transactions. Applicants also note that the
ability to take deposits and make redemptions ``in-kind'' will help
each Fund to track closely its Underlying Index and therefore aid in
achieving the Fund's objectives.
    22. Applicants also seek relief under sections 6(c) and 17(b) from
section 17(a) to permit an Underlying Fund that is an affiliated
person, or an affiliated person of an affiliated person, of a Fund of
Funds to sell its Underlying Fund Shares to and redeem its Underlying
Fund Shares from a Fund of Funds, and to engage in the accompanying in-
kind transactions with the Fund of Funds.\27\ Applicants state that the
terms of the transactions are fair and reasonable and do not involve
overreaching. Applicants note that any consideration paid by a Fund of
Funds for the purchase or redemption of Underlying Fund Shares directly
from an Underlying Fund will be based on the NAV of the Underlying
Fund.\28\ Applicants believe that any proposed transactions directly
between the Underlying Funds and Funds of Funds will be consistent with
the policies of each Fund of Funds. The purchase of Creation Units by a
Fund of Funds directly from an Underlying Fund will be accomplished in
accordance with the investment restrictions of any such Fund of Funds
and will be consistent with the investment policies set forth in the
Fund of Funds' registration statement. Applicants also state that the
proposed transactions are consistent with the general purposes of the
Act and are appropriate in the public interest.
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    \27\ Although applicants believe that most Funds of Funds will
purchase Underlying Fund Shares in the secondary market and will not
purchase Creation Units directly from an Underlying Fund, a Fund of
Funds might seek to transact in Creation Units directly with an
Underlying Fund that is an affiliated person of a Fund of Funds. To
the extent that purchases and sales of Underlying Fund Shares occur
in the secondary market and not through principal transactions
directly between a Fund of Funds and an Underlying Fund, relief from
section 17(a) would not be necessary. However, the requested relief
would apply to direct sales of Underlying Fund Shares in Creation
Units by an Underlying Fund to a Fund of Funds and redemptions of
those Underlying Fund Shares. Applicants are not seeking relief from
section 17(a) for, and the requested relief will not apply to,
transactions where an Underlying Fund could be deemed an affiliated
person, or an affiliated person of an affiliated person of a Fund of
Funds because an Adviser or an entity controlling, controlled by or
under common control with an Adviser provides investment advisory
services to that Fund of Funds.
    \28\ Applicants acknowledge that the receipt of compensation by
(a) an affiliated person of a Fund of Funds, or an affiliated person
of such person, for the purchase by the Fund of Funds of Underlying
Fund Shares of an Underlying Fund or (b) an affiliated person of an
Underlying Fund, or an affiliated person of such person, for the
sale by the Underlying Fund of its Underlying Fund Shares to a Fund
of Funds, may be prohibited by section 17(e)(1) of the Act. The FOF
Participation Agreement also will include this acknowledgment.
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Applicants' Conditions

    Applicants agree that any order of the Commission granting the
requested relief will be subject to the following conditions:

A. ETF Relief

    1. 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 ETFs.
    2. As long as a Fund operates in reliance on the requested order,
Shares of such Fund will be listed on an Exchange.
    3. Neither the Trust nor any Fund will be advertised or marketed as
an open-end investment company or a mutual fund. Any advertising
material that describes the purchase or sale of Creation Units or
refers to redeemability will prominently disclose that Shares are not
individually redeemable and that owners of Shares may acquire those
Shares from the Fund and tender those Shares for redemption to a Fund
in Creation Units only.
    4. The Web site, which is and will be publicly accessible at no
charge, will contain, on a per Share basis for each Fund, the prior
Business Day's NAV and the market closing price or the midpoint of the
bid/ask spread at the time of the calculation of such NAV (``Bid/Ask
Price''), and a calculation of the premium or discount of the market
closing price or Bid/Ask Price against such NAV.
    5. Each Self-Indexing Fund, Long/Short Fund and 130/30 Fund will
post on the Web site on each Business Day, before commencement of
trading of Shares on the Exchange, the Fund's Portfolio Holdings.
    6. No Adviser or any Sub-Adviser to a Self-Indexing Fund, directly
or indirectly, will cause any Authorized Participant (or any investor
on whose behalf an Authorized Participant may transact with the Self-
Indexing Fund) to acquire any Deposit Instrument for a Self-Indexing
Fund through a transaction in which the Self-Indexing Fund could not
engage directly.

B. Section 12(d)(1) Relief

    1. The members of a Fund of Funds' Advisory Group will not control
(individually or in the aggregate) an Underlying Fund within the
meaning of section 2(a)(9) of the Act. The members of a Fund of Funds'
Sub-Advisory Group will not control (individually or in the aggregate)
an Underlying 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
an Underlying Fund, the Fund of Funds' Advisory Group or the Fund of
Funds' Sub-Advisory Group, each in the aggregate, becomes a holder of
more than 25 percent of the outstanding voting securities of an
Underlying Fund, it will vote its Underlying Fund Shares of the
Underlying Fund in the same proportion as the vote of all other holders
of the Underlying Fund's Shares. This condition does not apply to the
Fund of Funds' Sub-Advisory Group with respect to an Underlying Fund
for which the Fund of Funds' Sub-Adviser or a person controlling,
controlled by or under common control with the Fund of Funds' Sub-
Adviser acts as the investment adviser within the meaning of section
2(a)(20)(A) of the Act.
    2. No Fund of Funds or Fund of Funds Affiliate will cause any
existing or potential investment by the Fund of Funds in an Underlying
Fund to influence the terms of any services or transactions between the
Fund of Funds or Fund of Funds Affiliate and the Underlying Fund or an
Underlying 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 ensure that the
Fund of Funds Adviser and Fund of Funds 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 a Fund of Funds Affiliate from an Underlying Fund or
Underlying Fund Affiliate in

connection with any services or transactions.
    4. Once an investment by a Fund of Funds in Underlying Fund Shares
exceeds the limits in section 12(d)(1)(A)(i) of the Act, the Board of
the Underlying Fund, including a majority of the disinterested
directors or trustees, will determine that any consideration paid by
the Underlying Fund to the Fund of Funds or a Fund of Funds 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 Underlying Fund; (ii) is within the range of
consideration that the Underlying 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 an Underlying Fund and its investment
adviser(s), or any person controlling, controlled by or under common
control with such investment adviser(s).
    5. The Fund of Funds Adviser, or trustee or Sponsor of an Investing
Trust, as applicable, will waive fees otherwise payable to it by the
Fund of Funds in an amount at least equal to any compensation
(including fees received pursuant to any plan adopted by an Underlying
Fund under rule 12b-l under the Act) received from an Underlying Fund
by the Fund of Funds Adviser, or trustee or Sponsor of the Investing
Trust, or an affiliated person of the Fund of Funds Adviser, or trustee
or Sponsor of the Investing Trust, other than any advisory fees paid to
the Fund of Funds Adviser, trustee or Sponsor of an Investing Trust, or
its affiliated person by the Underlying Fund, in connection with the
investment by the Fund of Funds in the Underlying Fund. Any Fund of
Funds Sub-Adviser will waive fees otherwise payable to the Fund of
Funds Sub-Adviser, directly or indirectly, by the Investing Management
Company in an amount at least equal to any compensation received from
an Underlying Fund by the Fund of Funds Sub-Adviser, or an affiliated
person of the Fund of Funds Sub-Adviser, other than any advisory fees
paid to the Fund of Funds Sub-Adviser or its affiliated person by the
Underlying Fund, in connection with the investment by the Investing
Management Company in the Underlying Fund made at the direction of the
Fund of Funds Sub-Adviser. In the event that the Fund of Funds Sub-
Adviser waives fees, the benefit of the waiver will be passed through
to the Investing Management Company.
    6. No Fund of Funds or Fund of Funds Affiliate (except to the
extent it is acting in its capacity as an investment adviser to an
Underlying Fund) will cause an Underlying Fund to purchase a security
in any Affiliated Underwriting.
    7. The Board of an Underlying Fund, including a majority of the
disinterested directors or trustees, will adopt procedures reasonably
designed to monitor any purchases of securities by the Underlying Fund
in an Affiliated Underwriting, once an investment by a Fund of Funds in
the securities of the Underlying 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 of the Underlying Fund will review
these purchases periodically, but no less frequently than annually, to
determine whether the purchases were influenced by the investment by
the Fund of Funds in the Underlying Fund. The Board of the Underlying
Fund will consider, among other things: (i) Whether the purchases were
consistent with the investment objectives and policies of the
Underlying Fund; (ii) 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 (iii) whether the amount of
securities purchased by the Underlying 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 ensure that purchases of
securities in Affiliated Underwritings are in the best interest of
shareholders of the Underlying Fund.
    8. Each Underlying 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 Fund of Funds in the securities
of the Underlying 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
determinations of the Board of the Underlying Fund were made.
    9. Before investing in an Underlying Fund in excess of the limit in
section 12(d)(1)(A), a Fund of Funds and the Trust will execute a FOF
Participation Agreement stating without limitation 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
Underlying Fund Shares in excess of the limit in section
12(d)(1)(A)(i), a Fund of Funds will notify the Underlying Fund of the
investment. At such time, the Fund of Funds will also transmit to the
Underlying Fund a list of the names of each Fund of Funds Affiliate and
Underwriting Affiliate. The Fund of Funds will notify the Underlying
Fund of any changes to the list of the names as soon as reasonably
practicable after a change occurs. The Underlying Fund and the Fund of
Funds 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 advisory
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 Underlying Fund in which the Investing Management
Company may invest. These findings and their basis will be fully
recorded in the minute books of the appropriate Investing Management
Company.
    11. Any sales charges and/or service fees charged with respect to
shares of a Fund of Funds will not exceed the limits applicable to a
fund of funds as set forth in NASD Conduct Rule 2830.
    12. No Underlying Fund will acquire securities of an 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 the Underlying Fund acquires securities of another
investment company pursuant to exemptive relief from the Commission

permitting the Underlying Fund to acquire securities of one or more
investment companies for short term cash management purposes.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-20660 Filed 8-20-15; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 47 (Tuesday, March 11, 2014)]
[Notices]
[Pages 13649-13650]
[FR Doc No: 2014-05217]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OECA-2013-0350; FRL-9907-44-OEI]

Information Collection Request Submitted to OMB for Review and
Approval; Comment Request; The Consolidated Air Rule (CAR) for the
Synthetic Organic Chemical Manufacturing Industry (SOCMI) (Renewal)

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Environmental Protection Agency has submitted an
information collection request (ICR), ``The Consolidated Air Rule (CAR)
for the Synthetic Organic Chemical Manufacturing Industry (SOCMI)
(Renewal)'' (EPA ICR No. 1854.09, OMB Control No. 2060-0443), to the
Office of Management and Budget (OMB) for review and approval in
accordance with the Paperwork Reduction Act (44 U.S.C. 3501 et seq).
This is a proposed extension of the ICR, which is currently approved
through April 30, 2014. Public comments were previously requested via
the Federal Register (78 FR 35023) on June 11, 2013 during a 60-day
comment period. This notice allows for an additional 30 days for public
comments. A fuller description of the ICR is given below, including its
estimated burden and cost to the public. An Agency may not conduct or
sponsor and a person is not required to respond to a collection of
information unless it displays a currently valid OMB control number.

DATES: Additional comments may be submitted on or before April 10,
2014.

ADDRESSES: Submit your comments, referencing Docket ID Number EPA-HQ-
OECA-2013-0350, to: (1) EPA online using www.regulations.gov (our
preferred method), or by email to<EMAIL_ADDRESS>or by mail to:
EPA Docket Center, Environmental Protection Agency, Mail Code 28221T,
1200 Pennsylvania Ave. NW., Washington, DC 20460, and (2) OMB via email
to<EMAIL_ADDRESS>Address comments to OMB Desk Officer
for EPA.
    EPA's policy is that all comments received will be included in the
public docket without change including any personal information
provided, unless the comment includes profanity, threats, information
claimed to be Confidential Business Information (CBI) or other
information whose disclosure is restricted by statute.

FOR FURTHER INFORMATION CONTACT: Learia Williams, Monitoring,
Assistance, and Media Programs Division, Office of Compliance, Mail
Code 2227A, Environmental Protection Agency, 1200 Pennsylvania Ave.
NW., Washington, DC 20460; telephone number:<PHONE_NUMBER>; fax
number:<PHONE_NUMBER>; email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Supporting documents which explain in detail
the information that the EPA will be collecting are available in the
public docket for this ICR. The docket can be viewed online at
www.regulations.gov or in person at the EPA Docket Center, WJC West,
Room 3334, 1301 Constitution Ave. NW., Washington, DC. The telephone
number for the Docket Center is<PHONE_NUMBER>. For additional
information about EPA's public docket, visit: http://www.epa.gov/dockets.
    Abstract: The synthetic organic chemical manufacturing industry
(SOCMI) is regulated by both the New Source Performance Standards
(NSPS) and National Emission Standards for Hazardous Air Pollutants
(NESHAP) standards. The affected entities are

subject to the General Provisions of the NSPS at 40 CFR part 60,
subpart A, and any changes or additions to the Provisions specified at
40 CFR part 60, subparts Ka, Kb, VV, VVa, DDD, III, NNN and RRR. The
affected entities are also subject to the General Provisions of the
NESHAP at 40 CFR part 63, subpart A, and any changes, or additions to
the Provisions specified at 40 CFR part 63, subparts BB, Y, V, F, G, H
and I. As an alternative, SOCMI sources may choose to comply with the
above standards under the consolidated air rule (CAR) at 40 CFR part 65
as promulgated December 14, 2000. Synthetic organic chemical
manufacturing facilities subject to NSPS requirements must notify EPA
of construction, modification, startups, shutdowns, date and results of
initial performance test and excess emissions. Semiannual reports are
also required. Synthetic organic chemical manufacturing facilities
subject to NESHAP requirements must submit one-time-only reports of any
physical or operational changes and the results of initial performance
tests. Owners or operators are also required to maintain records of the
occurrence and duration of any startup, shutdown, or malfunction in the
operation of an affected facility, or any period during which the
monitoring system is inoperative. Periodic reports are also required
semiannually at a minimum.
    Form Numbers: None.
    Respondents/affected entities: Owners or operators of synthetic
organic chemical manufacturing facilities.
    Respondent's obligation to respond: Mandatory (40 CFR part 60,
subpart A, Ka, Kb, VV, VVa, DDD, III, NNN and RRR; and 40 CFR part 63,
subpart A, BB, Y, V, F, G, H and I).
    Estimated number of respondents: 4,618 (total).
    Frequency of response: Initially, occasionally, semiannually and
annually.
    Total estimated burden: 2,130,669 hours (per year). ``Burden'' is
defined at 5 CFR 1320.3(b).
    Total estimated cost: $309,692,801 (per year), which includes
$101,277,000 in annualized capital/startup and/or operation &
maintenance costs.
    Changes in the Estimates: There is an increase in the total
estimated respondent labor burden and associated labor, capital/
startup, and O&M costs. Overall, the change in burden from the most
recently approved ICR is due to an increase in the number of sources
subject to the standard, and is not due to any program changes. The
number of sources has been increased to reflect industry growth, which
in turn increased the cost of those subparts where growth is expected.
    There is a further overall increase in respondent burden costs from
the most recently approved ICR due to the use of updated labor rates.
This ICR references labor rates from the Bureau of Labor Statistics to
calculate respondent burden costs. Note that this ICR also references
labor rates from OPM to calculate Agency costs; however, the update did
not affect Agency costs since the rates are identical between this and
the most recently-approved ICR.

Richard T. Westlund,
Acting Director, Collection Strategies Division.
[FR Doc. 2014-05217 Filed 3-10-14; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 77, Number 196 (Wednesday, October 10, 2012)]
[Notices]
[Pages 61592-61593]
[FR Doc No: 2012-24907]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. EL13-9-000]

American Transmission Company LLC v. Midwest Independent
Transmission System Operator, Inc., Xcel Energy Services Inc,. Northern
States Power Company, a Wisconsin Corporation, Northern States Power
Company, a Minnesota Corporation; Notice of Complaint

    Take notice that on October 1, 2012, American Transmission Company
LLC (ATC), by its corporate manager, ATC Management Inc. (collectively,
ATCLLC) (Complainant) filed a formal complaint against Midwest
Independent Transmission System Operator, Inc. (MISO) and Xcel Energy
Services Inc., on behalf of its operating company affiliates Northern
States Power Company Wisconsin (NSPW) and Northern States Power Company
Minnesota (NSPM) (collectively, Xcel Energy) (Respondent), pursuant to
section 306 of the Federal Power Act, 16 U.S.C. 825e (2006), and Rule
206 of the Commission's Rules of Practice and Procedure, 18 CFR 385.206
(2012). The complaint alleges that, pursuant to relevant provisions of
the MISO Tariff and the MISO Transmission Owners Agreement, ATC and the
Xcel Energy

(on behalf of NSPM and NSPW) are each entitled to own and construct
fifty percent of the 345 kV facilities from the Twin Cities area in
Minnesota to the Madison area in Wisconsin.
    ATCLLC certifies that copies of the complaint were served on the
contacts for Xcel Energy and the state public utility commissions of
Minnesota and Wisconsin.
    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as appropriate. The Respondent's
answer and all interventions, or protests must be filed on or before
the comment date. The Respondent's answer, motions to intervene, and
protests must be served on the Complainants.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper using the ``eFiling'' link at http://www.ferc.gov. Persons unable to file electronically should submit an
original and 14 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street NE., Washington, DC
20426.
    This filing is accessible on-line at http://www.ferc.gov, using the
``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive email
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please email
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.
    Comment Date: 5 p.m. Eastern Time on October 22, 2012.

    Dated: October 3, 2012.
Kimberly D. Bose,
Secretary.
[FR Doc. 2012-24907 Filed 10-9-12; 8:45 am]
BILLING CODE 6717-01-P


From:	Szabo, Aaron<EMAIL_ADDRESS>Sent:	Monday, April 18, 2016 11:18 PM
To:	Hambrick, Amy; Moore, Bruce
Cc:	Gilbreath, Jan; Szabo, Aaron
Subject:	Summary of Interagency Comments under EO12866 and 13563: EPA Final
Rule -- Oil and Natural Gas Sector: Emission Standards for New,
Reconstructed, and Modified Sources (RIN 2060-AS30)
Attachments:	Summary of Interagency Comments Under EO12866_13563 EPA
OilGasNSPS_2060-AS30.docx

Attached please find the summary of interagency comments under EO 12866 and 13563 for the draft
final rule entitled, "Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and
Modified Sources" (RIN 2060-AS30).  These interagency comments do not reflect a review of the Final
Regulatory Flexibility Analysis (FRFA) or the Technical Support Document (TSD).  Therefore, after review
of these documents, interagency reviewers may revise previously provided comments to EPA or provide
additional comments on the preamble, rule text, and/or regulatory impact analysis.  To the extent that
there are conflicts, interagency reviewers will try and identify those beforehand to mitigate unnecessary
burden on EPA.

Thank you and please let me know if you have any comments or questions.

Aaron L. Szabo
Policy Analyst
Office of Information and Regulatory Affairs
Office of Management and Budget
202-395-3621
<EMAIL_ADDRESS>