[Federal Register Volume 79, Number 219 (Thursday, November 13, 2014)]
[Notices]
[Pages 67471-67479]
[FR Doc No: 2014-26817]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31333; 812-14139]

Eaton Vance Management, et al.; Notice of Application

November 6, 2014.
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, under sections 6(c) and 17(b) of the Act for an exemption from
sections 17(a)(1) and (a)(2) of the Act, and under section 12(d)(1)(J)
of the Act for an exemption from sections 12(d)(1)(A) and (B) of the
Act.

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Applicants:  Eaton Vance Management (``Eaton Vance''), Eaton Vance ETMF
Trust (``ETMF Trust'') and Eaton Vance ETMF Trust II (``ETMF Trust
II'').

SUMMARY: Applicants request an order that permits: (a) Actively managed
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 the
next-determined net asset value (``NAV'') plus or minus a market-
determined premium or discount (``premium/discount'') that may vary
during the trading day (``NAV-based Trading''); (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; (e) certain registered management
investment companies and unit investment trusts outside of the same
group of investment companies as the series to acquire Shares; and (f)
certain series to create and redeem Shares in kind in a master-feeder
structure.

DATES: The application was filed on March 27, 2013 and amended on
September 12, 2013, January 23, 2014, September 15, 2014, and September
25, 2014.

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 December 1, 2014, 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, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090. Applicants: Frederick S. Marius,
Esq., Eaton Vance Management, Two International Place, Boston, MA
02110.

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel,
Daniele Marchesani, Branch Chief or Dalia Osman Blass, Assistant Chief
Counsel, at<PHONE_NUMBER> (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

    1. ETMF Trust and ETMF Trust II (each, a ``Trust'' and, together
the ``Trusts'') will be registered as open-end management investment
companies under the Act and are business trusts organized under the
laws of Massachusetts. ETMF Trust and ETMF Trust II will initially
offer ten and eightseries, respectively (the ``Initial ETMFs''). Each
ETMF (as defined below) will invest in securities and other assets
selected to pursue the ETMF's investment objective (``Portfolio
Positions'').\1\
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    \1\ If an ETMF (or, in the case of an ETMF Feeder (as defined
below), its Master Fund (as defined below)) invests in derivatives,
then (a) the board of trustees (``Board'') of the ETMF will
periodically review and approve the ETMF's (or, in the case of an
ETMF Feeder, its Master Fund's) use of derivatives and how the
ETMF's Adviser assesses and manages risk with respect to the ETMF's
(or, in the case of an ETMF Feeder, its Master Fund's investment
adviser's) use of derivatives and (b) the ETMF's disclosure of its
(or in the case of an ETMF Feeder, its Master Fund's) use of
derivatives in its offering documents and periodic reports will be
consistent with relevant Commission and staff guidance.
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    2. Eaton Vance, a Massachusetts business trust, will serve as
investment adviser to the Initial ETMFs. An Adviser (as defined below)
will serve as investment adviser to each ETMF. Eaton Vance is, and any
other Adviser will be, registered as an investment adviser under the
Investment Advisers Act of 1940 (``Advisers Act''). The Adviser may
retain one or more subadvisers (each a ``Subadviser'') to manage the
portfolios of the ETMFs (as defined below). Any Subadviser will be
registered, or not subject to registration, under the Advisers Act.

Applicants' Proposal

    3. Applicants seek an exemptive order that would permit them to
offer

exchange-traded managed funds, a new kind of registered investment
company that is a hybrid between traditional mutual funds and exchange-
traded funds (``exchange-traded managed funds'' or ETMFs, as defined
below).\2\ Like exchange-traded funds (``ETFs''), ETMFs would: List and
trade on a national securities exchange, as defined in section 2(a)(26)
of the Act (``Exchange''); directly issue and redeem Shares only in
Creation Units; impose fees on Creation Units issued and redeemed to
Authorized Participants (as defined below) to offset the related costs
to the ETMFs; and primarily utilize in-kind transfers of Portfolio
Positions in issuing and redeeming Creation Units. Like mutual funds,
ETMFs would be bought and sold at prices linked to NAV and would seek
to maintain the confidentiality of their current Portfolio Positions.
Applicants have structured the product in this manner to provide
certain cost and tax efficiencies of ETFs to investors, while
maintaining the confidentiality of current Portfolio Positions.\3\
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    \2\ In accordance with the conditions to the requested relief,
neither the Trusts nor any ETMF would be marketed or otherwise held
out as an ``open-end investment company,'' a ``mutual fund'' or
``exchange-traded fund.'' Instead, each ETMF would be marketed as an
``exchange-traded managed fund'' or ``ETMF.''
    \3\ Through in-kind redemptions (as described below), ETMFs
would seek to achieve tax efficiencies for its shareholders by
avoiding the tax consequences of selling portfolio positions to meet
redemption requests in cash. ETMFs could also limit the costs
associated with managing inflows and outflows (e.g., trading costs
and ``cash drag''). By trading on an Exchange, ETMFs would greatly
reduce their expenses for transfer agency services. (ETMF
shareholders would still be able to receive comparable services
through their brokers and would pay only for those services that
they elect to receive.) Finally, applicants represent that ETMFs
will not charge sales loads or pay any asset-based distribution or
service fees.
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    4. Applicants request that the order apply to the Initial ETMFs and
any future series of the Trusts as well as any other open-end
management investment companies or series thereof that: (a) Are advised
by Eaton Vance or an entity controlling, controlled by, or under common
control with Eaton Vance (Eaton Vance and each such other entity, and
any successor thereto, included in the term ``Adviser''); \4\ and (b)
comply with the terms and conditions of the requested order (``Future
ETMFs'').\5\ An ETMF would offer its Shares in Creation Units only;
individual Shares would trade on an Exchange using NAV-based Trading.
The Initial ETMFs and the Future ETMFs together are the ``ETMFs.'' \6\
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    \4\ For the purposes of the requested order, a ``successor'' is
limited to an entity that results from a reorganization into another
jurisdiction or a change in the type of business organization.
    \5\ Eaton Vance has obtained patents with respect to certain
aspects of ETMF's NAV-based Trading. Applicants anticipate that
Eaton Vance or an affiliate thereof will license the patents to
other registered investment advisers (each a ``Licensed Adviser'')
advising a trust that intends to launch new series that will operate
as exchange-traded managed funds (the Licensed Adviser and such
trust together, the ``Future Applicants''). Future Applicants will
apply for a separate exemptive order that incorporates by reference
all the terms and conditions of this requested order and any
amendments thereto. Therefore, any future amendments to the
requested order would become part of any separate exemptive orders
granted to Future Applicants. Any separate order granted to Future
Applicants also would contain a condition that the Future Applicants
must ensure that they comply with any terms and conditions of the
requested order and any amendments thereto.
    \6\ All 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
requested order.
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A. Exchange Trading and NAV-Based Trading

    5. Shares would be listed and traded on an Exchange (``Listing
Exchange'').\7\ Shares would trade throughout the day at NAV \8\ plus
or minus a premium/discount that may vary during the trading day.\9\
This premium/discount (solely by way of example, +$0.20/Share, -$0.30/
Share) would be quoted by Market Makers in Shares.\10\ Although Share
prices would be quoted throughout the trading day relative to NAV
(solely by way of example, NAV+$0.20/share, NAV-$0.30/share), there
would not be a fixed relationship between Share trading prices and
their NAVs. For each trade, the premium/discount (which may be zero)
would be locked in at trade execution and the final transaction price
(i.e., NAV plus or minus the premium/discount) would be determined at
the end of the Business Day when the ETMF's NAV is calculated.\11\
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    \7\ Applicants currently expect that The NASDAQ Stock Market LLC
(``Nasdaq'') will be the Listing Exchange for the Initial ETMFs. One
or more member firms of the Listing Exchange will act as market
maker (``Market Maker'') and maintain a market for Shares trading on
the Listing Exchange.
    \8\ An ETMF's NAV will be determined at the end of each Business
Day. A ``Business Day'' is any day the ETMF is open, including any
day when it satisfies redemption requests as required by section
22(e) of the Act. ETMFs may compute their NAV more than once each
Business Day or once daily at times other than 4:00 p.m. ET,
consistent with rule 22c-1 under the Act.
    \9\ Unlike other exchange-traded securities, there would not be
an absolute dollar amount per Share until the end of the day.
Accordingly, prior to the initial operations of ETMFs, the Exchanges
and brokers would install systems for the entry of orders to buy and
sell shares using NAV-based Trading. Applicants have been working
with intermediaries and Nasdaq to ensure they are implementing
appropriate operational arrangements to accommodate the unique
pricing mechanism of ETMFs (e.g., the convention for reporting the
intraday pricing of Shares on the consolidated tape). Applicants
have also represented that they would establish and support a robust
education program to ensure that investors and the marketplace
understand, among other things, how to buy and sell Shares.
Applicants would also provide related information in the ETMFs'
registration statements, Web site and advertising and marketing
materials.
    \10\ The amount of the premium/discount would depend on market
factors, including the balance of supply and demand for Shares among
investors, the Transaction Fees (as defined below) and other costs
associated with creating and redeeming Creation Units, competition
among Market Makers, Share inventory positions, inventory strategies
of Market Makers, and the volume of Share trading. Premiums/
discounts on market transactions in Shares are not sales charges,
and therefore would not be subject to the limitation applicable to
sales charges under NASD Conduct Rule 2830 or any other set
limitation. Any reference to NASD Conduct Rule 2830 includes any
successor or replacement rule that may be adopted by the Financial
Industry Regulatory Authority.
    \11\ Transactions involving the purchases and sales of Shares on
the Exchange would also be subject to customary brokerage
commissions and charges.
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    6. Accordingly, unlike ETFs, NAV-based Trading would not offer
investors the opportunity to transact intraday at prices based on
current (versus end-of-day) determinations of the Shares' value.
Instead, like intraday orders to buy or sell shares of mutual funds, an
ETMF investor would not know the NAV at the time the order is placed,
but the levels of premium/discount would be fully transparent allowing
investors to see the execution costs of buying or selling Shares.\12\
Market Makers and other dealers, in turn, would compete for
transactions in Shares at a profitable premium/discount level.
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    \12\ Trading prices of Shares would be available intraday
through market data services and on the ETMFs' Web site. Quotations,
however, would be expressed relative to NAV (solely by way of
example, NAV+$0.20/Share, NAV-$0.20/Share) rather than as absolute
dollar prices like ETF prices. Historical information regarding
levels of premiums/discounts also would be available on the ETMFs'
Web site.
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B. Issuance and Redemption of Creation Units

    7. Shares would not be individually redeemable and owners of Shares
may acquire those Shares from an ETMF, or tender such shares for
redemption to the ETMF, in Creation Units only.\13\ Like ETFs, all
orders to purchase Creation Units must be placed with a distributor
(``Distributor'') that is a broker-dealer registered under the
Securities Exchange Act of 1934 (``Exchange Act'') by or through a
party (an ``Authorized Participant'') that has entered into a

participant agreement with the Distributor with respect to the creation
and redemption of Creation Units.\14\
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    \13\ In any advertising material that describes the purchase or
sale of Creation Units or refers to redeemability there would be an
appropriate statement to the effect that Shares are not individually
redeemable. The Adviser also would maintain a public Web site
disclosing current ETMF information and containing links to the
current prospectus and other ETMF documents. The Web site also would
include the disclosure required by condition 3 under ETMF Relief.
    \14\ An Authorized Participant would be either: (a) A Broker (as
defined below) or other participant in the Continuous Net Settlement
System of the National Securities Clearing Corporation (``NSCC''), a
clearing agency registered with the Commission; or (b) a participant
in The Depository Trust Company (``DTC'') (such participant, ``DTC
Participant'').
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    8. Like ETFs, and to keep trading costs low and permit each ETMF to
be as fully invested as possible, Shares would be purchased and
redeemed in Creation Units and primarily on an in-kind basis.
Authorized Participants would be required to purchase Creation Units by
making an in-kind deposit of specified instruments (these instruments
are referred to, in the case of either a purchase or redemption, as the
``Basket Instruments,'' and, together as the ``Basket''), specified by
the ETMF at the beginning of each Business Day and Authorized
Participants redeeming their Shares would receive an in-kind transfer
of Basket Instruments.\15\ The Basket would not necessarily include all
Portfolio Positions of the applicable ETMF in order to protect the
confidentiality of current Portfolio Positions.
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    \15\ ETMFs must comply with the federal securities laws in
accepting Basket Instruments and satisfying redemptions with Basket
Instruments, including that the Basket Instruments would be sold in
transactions that would be exempt from registration under the
Securities Act of 1933 (``Securities Act''). In accepting Basket
Instruments and satisfying redemptions with Basket Instruments that
are restricted securities eligible for resale pursuant to Rule 144A
under the Securities Act, ETMFs would comply with the conditions of
Rule 144A.
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    9. Each ETMF would process purchases and redemptions of Creation
Units in a manner that would protect the ETMF from any investor who
might seek advantageous treatment vis-[agrave]-vis other investors.
Therefore, each Business Day, the Basket would be constructed in
accordance with policies and procedures that: (a) Have been approved by
the relevant ETMF's Board based on a determination that such policies
and procedures are in the best interests of the ETMF; and (b) are
administered in accordance with rule 38a-1 under the Act by the chief
compliance officer designated by the ETMF under that rule. Moreover,
the names and quantities of the instruments that constitute the Basket
Instruments on a given Business Day would be identical for all
purchasers and redeemers of an ETMF's Creation Units that day, except
in certain limited circumstances.\16\
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    \16\ An ETMF's Basket could vary if the required policies and
procedures of the ETMF allowed such differences by permitting an
Authorized Participant to deposit cash in lieu of some or all of the
Basket Instruments solely because: (a) Such Basket Instruments, in
the case of a purchase of a Creation Unit, are not available in
sufficient quantity; (b) such Basket Instruments are not eligible
for trading by the Authorized Participant or the investor on whose
behalf the Authorized Participant is acting; or (c) a holder of
Shares of an ETMF investing in foreign instruments would be subject
to unfavorable income tax treatment if the holder received
redemption proceeds in kind. A ``custom order'' is any purchase or
redemption of Shares made in whole or in part on a cash basis in
reliance on clause (a) or (b). An ETMF may also determine, upon
receiving a purchase or redemption order from an Authorized
Participant, to require the purchase or redemption, as applicable,
to be made entirely in cash.
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    10. To preserve the confidentiality of an ETMF's trading
activities, the Basket would normally not be a pro rata slice of the
Portfolio Positions. Instruments being acquired by the ETMF would
generally be excluded from the Basket until their purchase is completed
and Basket Instruments being sold may not be removed from the Basket
until the sale program is substantially completed. Further, when deemed
by the Adviser to be in the best interests of an ETMF and its
shareholders, other Portfolio Positions would be excluded from the
Basket. Whenever Portfolio Positions are excluded from the Basket, the
Basket may include proportionately more cash than is in the portfolio.
Furthermore, if there is a difference between the NAV attributable to a
Creation Unit and the aggregate market value of the Basket exchanged
for the Creation Unit, the party conveying a Basket with the lower
value would also pay to the other an amount in cash equal to that
difference (the ``Balancing Amount'').
    11. Each Business Day, before the open of trading on the Listing
Exchange, the Adviser would cause to be published through the NSCC the
names and quantities of the Basket Instruments, as well as the
estimated Balancing Amount (if any), for that day. The published Basket
would apply until a new Basket is announced on the following Business
Day, and there would be no intraday changes to the Basket except to
correct errors in the published Basket.\17\
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    \17\ ETMFs would arrange for an independent third party to
disseminate every 15 minutes an amount representing, on a per Share
basis, the intraday indicative value (``IIV'') of the ETMFs' Shares
throughout the regular trading session of the Listing Exchange each
Business Day. An investor may use the IIV to estimate the number of
Shares to buy or sell based on the dollar amount the investor wants
to transact in. Applicants note that unlike for ETFs, IIVs for ETMFs
would not provide pricing signals for market intermediaries or other
buyers or sellers of Shares seeking to estimate the difference
between the current value of the ETMF's portfolio and the price at
which Shares are currently trading. With ETMF's NAV-based Trading,
market intermediaries and other buyers or sellers of Shares assume
no intraday market risk in their Share inventory positions and
therefore would not need to estimate any such difference.
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    12. Any purchasers or redeemers of Creation Units are expected to
incur a transaction fee (``Transaction Fee'') to cover the estimated
cost to the ETMF of processing the transaction, including the costs of
clearance and settlement charged to it by NSCC or DTC, and the
estimated trading costs incurred in converting the Basket to the
desired Portfolio Positions. The Transaction Fee would be borne only by
purchasers and redeemers of Creation Units and would be limited to
amounts that have been authorized by the Board and determined
appropriate by the Adviser to defray the transaction expenses that
would be incurred by an ETMF when an investor purchases or redeems
Creation Units.\18\ With respect to ETMFs operating in a master-feeder
structure (as discussed below), the Transaction Fee may be paid to the
Master Fund as a Master Fund Transaction Fee.\19\
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    \18\ Where an ETMF permits an in-kind purchaser to deposit cash
in lieu of depositing one or more Basket Instruments, the purchaser
may be assessed a higher Transaction Fee to offset the cost to the
ETMF of buying those particular Basket Instruments. In all cases,
the Transaction Fee and the Master Fund Transaction Fee (as defined
below) will be limited in accordance with the requirements of the
Commission applicable to open-end management investment companies
offering redeemable securities.
    \19\ Applicants believe that, to treat investors fairly and
consistently, a Master Fund with two or more Feeder Funds should
transact with each Feeder Fund on a basis that protects the Master
Fund (and, indirectly, other Feeder Funds) against the costs of
accommodating the Feeder Fund's inflows and outflows. In the
proposed structure, the Master Fund would accomplish this by
imposing a fee (``Master Fund Transaction Fee'') on Feeder Fund
inflows and outflows, sized to cover the estimated cost to the
Master Fund of, in connection with a sale of its interests,
converting the cash and/or other instruments it receives to the
desired Portfolio Positions and, in connection with a redemption of
its interests, converting Portfolio Positions to cash and/or other
instruments to be distributed. The Master Fund Transaction Fee would
be applied to all Feeder Funds in the same manner so as to avoid
discrimination by the Master Fund among Feeder Funds.
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C. The Role of Market Intermediaries and Portfolio Transparency

    13. Applicants assert that in light of NAV-based Trading, daily
portfolio transparency is not necessary for ETMFs. Applicants recognize
that contemporaneous portfolio holdings disclosure has been viewed as
necessary for effective arbitrage and efficient secondary market
trading of ETFs.\20\ In particular, applicants note that in ETF
trading, tight bid-ask spreads and narrow premiums/discounts cannot be
assured unless Market Makers have

sufficient knowledge of portfolio holdings to enable them to
effectively arbitrage differences between an ETF's market price and its
underlying portfolio value and to hedge the intraday market risk they
assume as they take inventory positions in connection with their
market-making activities. According to applicants, in NAV-based
Trading, by contrast, Market Makers do not engage in arbitrage and
assume no intraday market risk in their Share inventory positions
because all trading prices are linked to NAV.\21\ Applicants state that
no intraday market risk means no need for Market Makers to engage in
intraday hedging activity, and therefore no associated requirement for
current portfolio holdings disclosure to maintain a tight relationship
between Share trading prices and NAV.\22\ Accordingly, applicants
maintain that because Share transaction prices would be based on end-
of-day NAV, ETMFs can be expected to trade at consistently narrow
premiums/discounts to NAV and tight bid-ask spreads even in the absence
of full portfolio holdings disclosure.
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    \20\ See Exchange-Traded Funds, Investment Company Act Release
No. 28193 (Mar. 11, 2008) at text following note 29; ICI, 2014
INVESTMENT COMPANY FACT BOOK (2014) (``ICI Fact Book''), at 59,
available at www.ici.org/pdf/2014_factbook.pdf.
    \21\ Applicants state that Market Makers would realize a profit
to the extent the premium/discount exceeded their cost in entering
into these transactions. Applicants assert that these costs would
include, indirectly if the Market Maker is not an Authorized
Participant, the Transaction Fees paid to an ETMF and the cost of
purchasing or selling the Basket Instruments exchanged with the
ETMF. According to applicants, these costs would not include a cost
of hedging an intraday position in Shares. Applicants assert that
the cost of intermediation would be lower with respect to ETMFs than
for ETFs and profits would be relatively more predictable, which
should foster intermediary participation in the market for Shares
and therefore the competition necessary to limit the levels of the
premium/discount.
    \22\ Applicants believe that Market Makers will generally seek
to minimize their exposure to price risk in Shares by holding little
or no overnight inventory. ETMFs also will have smaller creation
unit sizes than ETFs. Applicants also believe that these smaller
creation unit sizes will support secondary market trading efficiency
by facilitating tighter market maker inventory management because it
facilitates closing out positions at the end of each trading day. To
the extent that Market Makers hold small positions in Shares
overnight, applicants expect them to aggregate such holdings with
any other risk positions that they are holding and transact at or
near the market close to buy or sell offsetting positions in
appropriate, broad-based hedging instruments, such as S&P 500 and
other index futures and ETFs.
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    14. Applicants claim that ETMFs, not being required to provide
daily portfolio transparency, have the potential for providing
investors with access to a broad range of active strategies in a
structure that provides the cost and tax efficiencies and shareholder
protections of an ETF.

Requested Exemptive Relief

    15. Applicants request an order under section 6(c) of the Act for
an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the
Act and rule 22c-1 under the Act, under sections 6(c) and 17(b) of the
Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act,
and under section 12(d)(1)(J) of the Act for an exemption from sections
12(d)(1)(A) and (B) of the Act.
    16. Applicants' request for relief is novel only under section
22(d) and rule 22c-1 under the Act with respect to NAV-based Trading.
In all other respects, applicants are seeking the same relief that the
Commission has previously granted to permit the operation of ETFs. As
discussed above, the requested relief would be available to any
existing or future investment company that is an ETMF operating in
compliance with the terms and conditions of the order and that is
advised by an Adviser. In support of future ETMF relief, applicants
assert that Future ETMFs raise no legal or policy questions different
from those presented by the Initial ETMFs and that the arguments for
exemptive relief are equally valid regardless of the type of assets or
investment strategy utilized by a specific ETMF. The Commission
preliminarily agrees with these assertions.
    17. 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 provisions 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 purposes 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.

A. Novel Relief Under Section 22(d) and Rule 22c-1

    18. 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 a principal underwriter other than
at a current public offering price described in the fund's prospectus.
Rule 22c-1 under the Act requires open-end funds, their principal
underwriters, and dealers in fund shares (and certain others) to sell
and redeem fund shares at a price based on the current NAV next
computed after receipt of an order to buy or redeem. Together, these
provisions are designed to prevent dilution caused by riskless trading
schemes, require that shareholders are treated equitably when buying
and selling fund shares, and assure an orderly distribution system of
investment company shares.
    19. Applicants request relief from these provisions to permit NAV-
based Trading of Shares. Because of ETMFs' NAV-based Trading, the need
for exemptive relief from section 22(d) and rule 22c-1 for ETMFs arises
due to the portion of the trading price that is the negotiated amount
(i.e., premium/discount).
    20. Applicants assert that the concerns underlying section 22(d) of
the Act and rule 22c-1 under the Act with respect to pricing are
addressed by the NAV-based Trading of 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
system 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.
    21. Applicants believe that none of these purposes would be
thwarted by permitting NAV-based Trading of Shares. Applicants state
that NAV-based Trading in Shares would not cause dilution of the
shareholders' beneficial interests in ETMFs because secondary market
trading in Shares would not involve the ETMF's portfolio. Applicants
assert that NAV-Based Trading responds to concerns of unjust price
discrimination among purchasers and preserving an orderly distribution
of Shares. Shares would trade on an Exchange, a regulated venue, at
market-determined premiums/discounts. The current and historical
premiums/discounts also would be transparent to investors and
intermediaries.

Applicants assert that transparent pricing on an Exchange should foster
competition among market intermediaries, which would create downward
pressure on intermediaries' profits embedded in the premium/discount
and therefore on the total amount of any such premium/discount.
Accordingly, applicants contend that the mechanics of the distribution
of Shares and competitive market forces on an Exchange would work to
limit the premium/discount and allow contemporaneous investors to buy
or sell Shares at approximately the same intraday price.
    22. The relief from section 22(d) and rule 22c-1 requested by
applicants is significantly different from the relief previously
granted by the Commission to actively managed ETFs. ETFs require relief
from these provisions because certain investors may purchase and sell
individual ETF shares on the secondary market at current market prices;
i.e., at prices other than those described in the ETF's prospectus or
based on the ETF's NAV. Among other things, the market prices are
affected by changes in the value of the underlying portfolio positions
of the ETF.
    23. Historically, in making the findings necessary to grant
exemptive relief from section 22(d) and rule 22c-1, the Commission has
relied on representations by ETF sponsors that an arbitrage mechanism
functions to keep the market price of the ETF's shares at or close to
the NAV per share of the ETF. The close tie between the market price
and the NAV per share of the ETF is the foundation for why the prices
at which retail investors buy and sell shares are similar to the prices
at which Authorized Participants are able to buy and redeem shares
directly from the ETF at NAV.
    24. ETMF trading prices, as discussed above, would be directly tied
to NAV. Unlike ETFs, ETMFs' need for relief arises because their
trading price deviate from NAV only with respect to the execution costs
of buying and selling ETMF Shares (i.e., the premium/discount). In
contrast, ETFs need relief because of differences related to the value
of the underlying portfolio positions. Therefore, because ETMF Shares'
trading prices are directly tied to NAV, an arbitrage mechanism that
would keep market price close to or at NAV is not necessary.
    25. Accordingly, the Commission preliminarily agrees that any
amount of premium or discount will be limited in the manner explained
by applicants and that the concerns underlying section 22(d) and rule
22c-1 thereunder are addressed by the NAV-based Trading of Shares
proposed by the applicants. Any differences from the ETMF proposed
model, however, would not necessarily address those concerns.

B. Other Relief \23\
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    \23\ This other relief is the same relief that the Commission
has previously granted to permit the operation of ETFs, as stated
above.
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Sections 5(a)(1) and 2(a)(32) of the Act
    26. 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 would not be individually redeemable,
applicants request an order that would permit the Trusts to register as
open-end investment companies and each ETMF to redeem Shares in
Creation Units only.\24\ Applicants state that investors may purchase
Shares in Creation Units from each ETMF and redeem Creation Units from
each ETMF. Applicants further state all investors would have the
ability to buy and sell Shares throughout the day using NAV-based
Trading at trading prices that are directly linked to NAV and that can
be expected to reflect narrow premium/discounts to NAV.
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    \24\ The Master Funds will not require relief from sections
2(a)(32) and 5(a)(1) because the Master Funds will operate as
traditional mutual funds and issue individually redeemable
interests.
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Section 22(e) of the Act
    27. 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
observe that settlement of redemptions of Creation Units of ETMFs
holding Portfolio Positions traded on global markets (``Global ETMFs'')
is contingent not only on the settlement cycle of the U.S. securities
markets but also on the delivery cycles present in foreign markets in
which those ETMFs invest. Applicants represent that, under certain
circumstances, the delivery cycles for transferring foreign-traded
Basket Instruments to redeeming investors, coupled with local market
holiday schedules, would require a delivery process of up to 14
calendar days. Applicants therefore request relief from section 22(e)
in order to provide payment or satisfaction of redemptions within the
maximum number of calendar days required for such payment or
satisfaction in the principal local markets where transactions in the
foreign-traded Basket Instruments of each Global ETMF customarily clear
and settle, but in all cases no later than 14 calendar days following
the tender of a Creation Unit.\25\
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    \25\ Applicants acknowledge that no relief obtained from the
requirements of section 22(e) would affect any obligations that
applicants may otherwise have under rule 15c6-1 under the Exchange
Act. Rule 15c6-1 requires that most securities transactions be
settled within three business days of the trade date. Mutual Fund
Feeders (as defined below) may need to separately seek relief from
section 22(e) if they intend to permit or require their shareholders
to redeem in kind. Mutual Fund Feeders are not seeking, and would
not rely on, the section 22(e) relief requested herein.
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    28. Applicants state that section 22(e) was designed to prevent
unreasonable, undisclosed and unforeseen delays in the actual payment
of redemption proceeds. Applicants state that allowing redemption
payments in kind for Creation Units of a Global ETMF to be made within
a maximum of 14 calendar days would not be inconsistent with the spirit
and intent of section 22(e). Applicants state each ETMF's statement of
additional information (``SAI'') would disclose those local holidays
(over the period of at least one year following the date of the SAI),
if any, that are expected to prevent the delivery of redemption
proceeds in kind in seven calendar days and the maximum number of days
(not to exceed 14 calendar days) needed to deliver the proceeds in kind
for each affected ETMF. Applicants are not seeking relief from section
22(e) with respect to Global ETMFs that do not effect redemptions in
kind.
Section 12(d)(1) of the Act
    29. 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.
    30. Applicants are seeking relief so that an ETMF may be an
acquired fund in a fund of funds structure. In particular, applicants
request that pursuant to section 12(d)(1)(J) of the Act the order
permit Acquiring Funds (as defined below) to acquire Shares of an ETMF
beyond the limitations in section 12(d)(1)(A) and permit an ETMF, any
principal underwriter for the ETMFs,\26\ and any Brokers (as defined
below) to sell Shares to Acquiring Funds beyond the limitations in
section 12(d)(1)(B) (``Section 12(d)(1) Relief''). Applicants request
that the Section 12(d)(1) Relief apply to each management investment
company or unit investment trust registered under the Act that is not
part of the same ``group of investment companies'' as an ETMF within
the meaning of section 12(d)(1)(G)(ii) of the Act and that enters into
an Acquiring Fund Agreement (as defined below) with an ETMF (such
management investment companies, ``Acquiring Management Companies,''
such unit investment trusts, ``Acquiring Trusts,'' and Acquiring
Management Companies and Acquiring Trusts together, ``Acquiring
Funds'').\27\ Acquiring Funds do not include the ETMFs.\28\ 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.
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    \26\ Applicants further request that the order apply to any
future distributor and principal underwriter of the ETMFs (included
in the term ``Distributor''), which would be a registered broker-
dealer under the Exchange Act (any registered broker-dealers,
``Brokers'') and would comply with the terms and conditions of the
requested order. The Distributor of any ETMF may be an affiliated
person of the Adviser.
    \27\ Under condition 11, the Section 12(d)(1) Relief would
generally not apply to any ETMF that is, either directly or through
a master-feeder structure, 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 in section 12(d)(1)(A) of the Act.
    \28\ An Acquiring Fund may rely on the order only to invest in
ETMFs and not in any other registered investment companies.
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    31. Applicants submit that their proposed conditions address any
concerns regarding the potential for undue influence. To limit the
control that an Acquiring Fund may have over an ETMF, applicants
propose a condition prohibiting the adviser of an Investing Management
Company (``Acquiring Fund Adviser''), sponsor of an Acquiring Trust
(``Sponsor''), any person controlling, controlled by, or under common
control with the Acquiring Fund Adviser or Sponsor, and any investment
company or issuer that would be an investment company but for sections
3(c)(1) or 3(c)(7) of the Act that is advised or sponsored by the
Acquiring Fund Adviser, the Sponsor, or any person controlling,
controlled by, or under common control with the Acquiring Fund Adviser
or Sponsor (``Acquiring Fund's Advisory Group'') from controlling
(individually or in the aggregate) an ETMF within the meaning of
section 2(a)(9) of the Act. The same prohibition would apply to any
sub-adviser to an Acquiring Management Company (``Acquiring Fund Sub-
Adviser''), any person controlling, controlled by or under common
control with the Acquiring Fund Sub-Adviser, and any investment company
or issuer that would be an investment company but for sections 3(c)(1)
or 3(c)(7) of the Act (or portion of such investment company or issuer)
advised or sponsored by the Acquiring Fund Sub-Adviser or any person
controlling, controlled by or under common control with the Acquiring
Fund Sub-Adviser (``Acquiring Fund's Sub-Advisory Group'').
    32. To limit undue influence, applicants propose a condition to
ensure that no Acquiring Fund or Acquiring Fund Affiliate \29\ (except
to the extent it is acting in its capacity as an investment adviser to
an ETMF) will cause an ETMF (or, in the case of an ETMF Feeder, its
Master 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, Acquiring Fund Adviser,
Acquiring Fund Sub-Adviser, Sponsor, or employee of the Acquiring Fund,
or a person of which any such officer, director, member of an advisory
board, Acquiring Fund Adviser, Acquiring Fund Sub-Adviser, Sponsor, or
employee is an affiliated person (except any person whose relationship
to the ETMF is covered by section 10(f) of the Act is not an
Underwriting Affiliate).
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    \29\ An ``Acquiring Fund Affiliate'' is any Acquiring Fund
Adviser, Acquiring Fund Sub-Adviser, Sponsor, promoter and principal
underwriter of an Acquiring Fund, and any person controlling,
controlled by or under common control with any of these entities.
``ETMF Affiliate'' is an investment adviser, promoter, or principal
underwriter of an ETMF (or, in the case of an ETMF Feeder, its
Master Fund) and any person controlling, controlled by or under
common control with any of these entities.
---------------------------------------------------------------------------

    33. Applicants propose several conditions to address the potential
for layering of fees. Applicants note that the board of directors or
trustees of any Acquiring 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''), would be required to find that the advisory fees charged
under the Acquiring Management Company's advisory contract are based on
services provided that would be in addition to, rather than duplicative
of, services provided under the advisory contract of any ETMF (or, in
the case of an ETMF Feeder, its Master Fund) in which the Acquiring
Management Company may invest. Applicants also state that any sales
charges and/or service fees charged with respect to shares of an
Acquiring Fund will not exceed the limits applicable to a fund of funds
as set forth in NASD Conduct Rule 2830.
    34. Applicants submit that the proposed arrangement would not
create an overly complex fund structure. Applicants note that an ETMF
(and, in the case of an ETMF Feeder, the Master Fund) would 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 that the ETMF acquires such securities in compliance with
section 12(d)(1)(E) of the Act or this order or the ETMF (or, in the
case of an ETMF Feeder, the Master Fund): (a) Receives securities of
another investment company as a dividend or as a result of a plan of
reorganization of a company (other than a plan devised for the purpose
of evading section 12(d)(1) of the Act); or (b) acquires (or is deemed
to have acquired) securities of another investment company pursuant to
exemptive relief from the Commission permitting the ETMF (or in the
case of a ETMF Feeder, the Master Fund) to (i) acquire securities of
one or more investment companies for short-term cash management
purposes or (ii) engage in interfund borrowing and lending
transactions.
    35. To ensure that an Acquiring Fund is aware of the terms and
conditions of the requested order, the Acquiring Fund must enter into
an agreement with the respective ETMFs (``Acquiring Fund Agreement'').
The Acquiring Fund Agreement will include an acknowledgement from the
Acquiring Fund that it may rely on the order only

to invest in an ETMF and not in any other investment company.
    36. Applicants further request relief to permit an ETMF to be a
feeder (an ``ETMF Feeder'') in a master-feeder structure alongside one
or more other registered open-end investment companies advised by the
same Adviser (each such other open-end investment company, a ``Mutual
Fund Feeder,'' and together with any ETMF Feeder, the ``Feeder
Funds''). The requested relief would permit the ETMF Feeder to acquire
shares of another registered investment company in the same group of
investment companies having substantially the same investment
objectives as the ETMF Feeder (a ``Master Fund'') beyond the
limitations in section 12(d)(1)(A) of the Act and permit the Master
Fund, and any principal underwriter for the Master Fund, to sell shares
of the Master Fund to the ETMF Feeder beyond the limitations in section
12(d)(1)(B) of the Act (``Master-Feeder Relief'').\30\ There would be
no ability by shareholders to exchange Shares of ETMF Feeders for
shares of another Feeder Fund of the Master Fund or vice versa.
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    \30\ Applicants may structure certain ETMFs as ETMF Feeders to
generate economies of scale for shareholders of all Feeder Funds of
the Master Fund that could not be otherwise realized. Operating in a
master-feeder structure could also impose costs on an ETMF Feeder
and reduce its tax efficiency. In determining whether an ETMF would
operate in a master-feeder structure, the Board would weigh the
potential advantages and disadvantages of such a structure for the
ETMF. In a master-feeder structure, the Master Fund--rather than the
ETMF Feeder--would invest the portfolio in compliance with the
order.
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    37. Applicants are seeking the Master-Feeder Relief to permit ETMF
Feeders to create and redeem in kind Shares with their Master Funds.
Applicants assert that this structure is substantially identical to
traditional master-feeder structures permitted pursuant to the
exception provided in section 12(d)(1)(E) of the Act. Section
12(d)(1)(E) provides that the percentage limitations of sections
12(d)(1)(A) and (B) will not apply to a security issued by an
investment company (in this case, the shares of the applicable Master
Fund) if, among other things, that security is the only investment
security held in the investing fund's portfolio (in this case, the ETMF
Feeder's portfolio). Applicants believe the proposed master-feeder
structure complies with section 12(d)(1)(E) because each ETMF Feeder
would hold only investment securities issued by its corresponding
Master Fund; however, the ETMF Feeders may receive securities other
than securities of its corresponding Master Fund if an ETMF Feeder
accepts an in-kind creation. To the extent that an ETMF Feeder may be
deemed to be holding both shares of the Master Fund and other
securities, applicants request relief from sections 12(d)(1)(A) and
(B). The ETMF Feeders would operate in compliance with all other
provisions of section 12(d)(1)(E).
Sections 17(a)(1) and (2) of the Act
    38. Section 17(a) of the Act generally prohibits an affiliated
person of a registered investment company, or an affiliated person of
such a person (``second-tier affiliate''), from selling any security to
or purchasing any security from the company. Section 2(a)(3) of the Act
defines ``affiliated person'' to include 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
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 another person's voting securities. Each ETMF may be deemed to
be controlled by an Adviser and hence affiliated persons of each other.
In addition, the ETMFs may be deemed to be under common control with
any other registered investment company (or series thereof) advised by
an Adviser (an ``Affiliated Fund'').
    39. 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 to permit in-
kind purchases and redemptions of Creation Units by persons that are
affiliated persons or second-tier affiliates of the ETMFs 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 ETMFs; (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.\31\ Applicants also request an
exemption in order to permit an ETMF to sell its Shares to and redeem
its Shares from, and engage in the in-kind transactions that would
accompany such sales and redemptions with, an Acquiring Fund of which
the ETMF is an affiliated person or a second-tier affiliate.\32\
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    \31\ Applicants are not seeking relief from section 17(a) for,
and the requested relief will not apply to, transactions where an
ETMF could be deemed an affiliated person, or an affiliated person
of an affiliated person, of an Acquiring Fund because the Adviser to
the ETMF is also an investment adviser to an Acquiring Fund.
    \32\ To the extent that purchases and sales of Shares occur in
the secondary market and not through principal transactions directly
between an Acquiring Fund and an ETMF, relief from section 17(a)
would not be necessary. The requested relief is intended to cover,
however, transactions directly between an Acquiring Fund and an
ETMF.
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    40. 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 an ETMF in Creation Units. Absent the
limited circumstances discussed in the application, the Basket
Instruments available for an ETMF would be the same for all purchasers
and redeemers, respectively. The deposit procedures for in-kind
purchases of Creation Units and the redemption procedures for in-kind
redemptions would be the same for all purchases and redemptions. All
Basket Instruments would be valued in the same manner as they are
valued for purposes of calculating the ETMF's NAV, and such valuation
would be made in the same manner regardless of the identity of the
purchaser or redeemer. Applicants do not believe that in-kind purchases
and redemptions would result in abusive self-dealing or overreaching of
the ETMF.
    41. Applicants also submit that the sale of Shares to and
redemption of Shares from an Acquiring Fund meets 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 an ETMF would be based on the NAV of the ETMF in
accordance with policies and procedures set forth in the ETMF's
registration statement.\33\ The Acquiring Fund Agreement will require
any Acquiring Fund that purchases Creation Units directly from an ETMF
to represent that the purchase of Creation Units from an ETMF by an
Acquiring Fund will be accomplished in compliance with the investment
restrictions of the Acquiring Fund and will be consistent with the
investment policies set forth in the Acquiring Fund's registration
statement. Applicants also state that the proposed transactions are
consistent with the general purposes of the Act and appropriate in the
public interest.
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    \33\ Applicants acknowledge that the receipt of compensation by
(a) an affiliated person of an Acquiring Fund, or a second-tier
affiliate, for the purchase by the Acquiring Fund of Shares of the
ETMF or (b) an affiliated person of an ETMF, or a second-tier
affiliate, for the sale by the ETMF of its Shares to an Acquiring
ETMF, may be prohibited by section 17(e)(1) of the Act. The
Acquiring Fund Agreement also will include this acknowledgment.
---------------------------------------------------------------------------

    42. To the extent that an ETMF operates in a master-feeder
structure,

applicants also request relief permitting the ETMF Feeders to engage in
in-kind creations and redemptions with the applicable Master Fund.
Applicants state that the customary section 17(a)(1) and 17(a)(2)
relief would not be sufficient to permit such transactions because the
ETMF Feeders and the applicable Master Fund could also be affiliated by
virtue of having the same investment adviser.
    However, applicants believe that in-kind creations and redemptions
between an ETMF Feeder and a Master Fund advised by the same investment
adviser do not involve ``overreaching'' by an affiliated person. Such
transactions would occur only at the ETMF Feeder's proportionate share
of the Master Fund's net assets, and the Basket Instruments would be
valued in the same manner as they are valued for the purposes of
calculating the applicable Master Fund's NAV. Further, all such
transactions would be effected with respect to the Basket and on the
same terms with respect to all investors. Finally, such transactions
would only occur as a result of, and to effectuate, a creation or
redemption transaction between the ETMF Feeder and a third party
investor. Applicants believe that the terms of the proposed
transactions are reasonable and fair and do not involve overreaching on
the part of any person concerned and that the transactions are
consistent with the general purposes of the Act.

Applicants' Conditions

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

A. ETMF Relief

    1. As long as an ETMF operates in reliance on the requested order,
its Shares will be listed on an Exchange.
    2. Neither the Trusts nor any ETMF will be advertised or marketed
as an open-end investment company, a mutual fund or an ETF. 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 an ETMF and tender those Shares for redemption to the
ETMF in Creation Units only.
    3. The Web site for the ETMFs, which will be publicly accessible at
no charge, will contain, on a per Share basis, for each ETMF, the prior
Business Day's NAV; intraday high, low, average and closing trading
prices (expressed as premiums/discounts to NAV); the midpoint of the
highest bid and lowest offer prices as of the close of Exchange trading
(``Closing Bid/Ask Midpoint'') (expressed as a premium/discount to
NAV); and the spread between the highest bid and lowest offer prices as
of the close of Exchange trading (``Closing Bid/Ask Spread''). The Web
site for the ETMFs also will contain charts showing the frequency
distribution and range of values of trading prices, Closing Bid/Ask
Midpoints and Closing Bid/Ask Spreads over time.
    4. The Adviser or any Subadviser, directly or indirectly, will not
cause any Authorized Participant (or any investor on whose behalf an
Authorized Participant may transact with the ETMF) to acquire any
Basket Instrument for the ETMF through a transaction in which the ETMF
could not engage directly.

B. Section 12(d)(1) Relief

    1. The members of an Acquiring Fund's Advisory Group will not
control (individually or in the aggregate) an ETMF (or, in the case of
an ETMF Feeder, its Master Fund) within the meaning of section 2(a)(9)
of the Act. The members of an Acquiring Fund's Subadvisory Group will
not control (individually or in the aggregate) an ETMF (or, in the case
of an ETMF Feeder, its Master 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 the ETMF, the Acquiring Fund's Advisory Group or
the Acquiring Fund's Subadvisory Group, each in the aggregate, becomes
a holder of more than 25 percent of the outstanding voting securities
of an ETMF, it will vote its Shares of the ETMF in the same proportion
as the vote of all other holders of such Shares. This condition does
not apply to the Acquiring Fund's Subadvisory Group with respect to an
ETMF (or, in the case of an ETMF Feeder, its Master Fund) for which the
Acquiring Fund Subadviser or a person controlling, controlled by or
under common control with the Acquiring Fund Subadviser acts as the
investment adviser within the meaning of section 2(a)(20)(A) of the
Act.
    2. No Acquiring Fund or Acquiring Fund Affiliate will cause any
existing or potential investment by the Acquiring Fund in an ETMF to
influence the terms of any services or transactions between the
Acquiring Fund or an Acquiring Fund Affiliate and the ETMF (or, in the
case of an ETMF Feeder, its Master Fund) or an ETMF Affiliate.
    3. The board of directors or trustees of an Acquiring Management
Company, including a majority of the disinterested directors or
trustees, will adopt procedures reasonably designed to ensure that the
Acquiring Fund Adviser and any Acquiring Fund Subadviser are conducting
the investment program of the Acquiring Management Company without
taking into account any consideration received by the Acquiring
Management Company or an Acquiring Fund Affiliate from an ETMF (or, in
the case of an ETMF Feeder, its Master Fund) or an ETMF Affiliate in
connection with any services or transactions.
    4. Once an investment by an Acquiring Fund in the Shares of an ETMF
exceeds the limit in section 12(d)(1)(A)(i) of the Act, the Board of
the ETMF, including a majority of the disinterested directors or
trustees, will determine that any consideration paid by the ETMF (or,
in the case of an ETMF Feeder, its Master Fund) to an Acquiring Fund or
an Acquiring 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 ETMF (or, in the
case of an ETMF Feeder, its Master Fund); (ii) is within the range of
consideration that the ETMF (or, in the case of an ETMF Feeder, its
Master 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 to any services or transactions between an
ETMF (or, in the case of an ETMF Feeder, its Master Fund) and its
investment adviser(s), or any person controlling, controlled by or
under common control with such investment adviser(s).
    5. No Acquiring Fund or Acquiring Fund Affiliate (except to the
extent it is acting in its capacity as an investment adviser to an ETMF
(or, in the case of an ETMF Feeder, its Master Fund)) will cause an
ETMF (or, in the case of an ETMF Feeder, its Master Fund) to purchase a
security in an Affiliated Underwriting.
    6. The Board of an ETMF (or, in the case of an ETMF Feeder, its
Master Fund), including a majority of the disinterested directors or
trustees, will adopt procedures reasonably designed to monitor any
purchases of securities by the ETMF (or, in the case of an ETMF Feeder,
its Master Fund) in an Affiliated Underwriting, once an investment by
an Acquiring Fund in the securities of the ETMF 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 Acquiring Fund in the ETMF. The Board will consider, among other
things: (i) Whether the purchases were consistent with the investment
objectives and policies of the ETMF (or, in the case of an ETMF Feeder,
its Master 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 ETMF (or, in the case of an ETMF Feeder,
its Master Fund) in Affiliated Underwritings and the amount purchased
directly from an Underwriting Affiliate have changed significantly from
prior years. The Board will take any appropriate actions based on its
review, including, if appropriate, the institution of procedures
designed to assure that purchases of securities in Affiliated
Underwritings are in the best interest of shareholders of the ETMF.
    7. Each ETMF (or, in the case of an ETMF Feeder, its Master 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 Acquiring Fund in the securities of the ETMF
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
were made.
    8. Before investing in an ETMF in excess of the limits in section
12(d)(1)(A), an Acquiring Fund and the ETMF will execute an Acquiring
Fund Agreement stating that their 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 an ETMF in excess of the limit in section 12(d)(1)(A)(i),
an Acquiring Fund will notify the ETMF of the investment. At such time,
the Acquiring Fund will also transmit to the ETMF a list of the names
of each Acquiring Fund Affiliate and Underwriting Affiliate. The
Acquiring Fund will notify the ETMF of any changes to the list of the
names as soon as reasonably practicable after a change occurs. The ETMF
and the Acquiring Fund will maintain and preserve a copy of the order,
the Acquiring Fund Agreement, and the list with any updated information
for the duration of the investment and for a period of not less than
six years thereafter, the first two years in an easily accessible
place.
    9. The Acquiring Fund Adviser, or Trustee or Sponsor, as
applicable, will waive fees otherwise payable to it by the Acquiring
Fund in an amount at least equal to any compensation received from an
ETMF (or, in the case of an ETMF Feeder, its Master Fund) by the
Acquiring Fund Adviser, or Trustee, or Sponsor, or an affiliated person
of the Acquiring Fund Adviser, or Trustee, or Sponsor, other than any
advisory fees paid to the Acquiring Fund Adviser, or Trustee, or
Sponsor, or its affiliated person by the ETMF (or, in the case of an
ETMF Feeder, its Master Fund), in connection with the investment by the
Acquiring Fund in the ETMF. Any Acquiring Fund Subadviser will waive
fees otherwise payable to the Acquiring Fund Subadviser, directly or
indirectly, by the Acquiring Management Company in an amount at least
equal to any compensation received from an ETMF (or, in the case of an
ETMF Feeder, its Master Fund) by the Acquiring Fund Subadviser, or an
affiliated person of the Acquiring Fund Subadviser, other than any
advisory fees paid to the Acquiring Fund Subadviser or its affiliated
person by the ETMF (or, in the case of an ETMF Feeder, its Master
Fund), in connection with any investment by the Acquiring Management
Company in the ETMF made at the direction of the Acquiring Fund
Subadviser. In the event that the Acquiring Fund Subadviser waives
fees, the benefit of the waiver will be passed through to the Acquiring
Management Company.
    10. Any sales charges and/or service fees charged with respect to
shares of an Acquiring Fund will not exceed the limits applicable to a
fund of funds as set forth in NASD Conduct Rule 2830.
    11. No ETMF (or, in the case of an ETMF Feeder, its Master Fund)
relying on the Section 12(d)(1) relief 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 that the ETMF acquires such securities in
compliance with section 12(d)(1)(E) of the Act or acquires shares of a
Master Fund; or the ETMF (or, in the case of an ETMF Feeder, its Master
Fund) (a) Receives securities of another investment company as a
dividend or as a result of a plan of reorganization of a company (other
than a plan devised for the purpose of evading section 12(d)(1) of the
Act), or (b) acquires securities of another investment company pursuant
to exemptive relief from the Commission permitting such ETMF (or, in
the case of an ETMF Feeder, its Master Fund) to (i) Acquire securities
of one or more investment companies for short-term cash management
purposes or (ii) engage in interfund borrowing and lending
transactions.
    12. Before approving any advisory contract under section 15 of the
Act, the board of each Acquiring 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 contracts of any ETMF (or,
in the case of an ETMF Feeder, its Master Fund) in which the Acquiring
Management Company may invest. These findings and their basis will be
recorded fully in the minute books of the appropriate Acquiring
Management Company.

    By the Commission.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26817 Filed 11-12-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 98 (Friday, May 20, 2016)]
[Notices]
[Pages 31944-31945]
[FR Doc No: 2016-11856]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket Nos. FDA-2015-M-4948, FDA-2015-M-4949, FDA-2015-M-4950, FDA-
2016-M-0120, FDA-2016-M-0121, FDA-2016-M-0122, FDA-2016-M-0123, FDA-
2016-M-0803, FDA-2016-M-0804, FDA-2016-M-0805, FDA-2016-M-0806, FDA-
2016-M-0807, FDA-2016-M-0926, FDA-2016-M-0928]

Medical Devices; Availability of Safety and Effectiveness
Summaries for Premarket Approval Applications

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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

SUMMARY: The Food and Drug Administration (FDA) is publishing a list of
premarket approval applications (PMAs) that have been approved. This
list is intended to inform the public of the availability of safety and
effectiveness summaries of approved PMAs through the Internet and the
Agency's Division of Dockets Management.

ADDRESSES: You may submit comments as follows:

Electronic Submissions

    Submit electronic comments in the following way:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. Comments submitted
electronically, including attachments, to http://www.regulations.gov
will be posted to the docket unchanged. Because your comment will be
made public, you are solely responsible for ensuring that your comment
does not include any confidential information that you or a third party
may not wish to be posted, such as medical information, your or anyone
else's Social Security number, or confidential business information,
such as a manufacturing process. Please note that if you include your
name, contact information, or other information that identifies you in
the body of your comments, that information will be posted on http://www.regulations.gov.
     If you want to submit a comment with confidential
information that you do not wish to be made available to the public,
submit the comment as a written/paper submission and in the manner
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand delivery/Courier (for written/paper
submissions): Division of Dockets Management (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For written/paper comments submitted to the Division of
Dockets Management, FDA will post your comment, as well as any
attachments, except for information submitted, marked and identified,
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All submissions received must include the Docket Nos.
FDA-2015-M-4948, FDA-2015-M-4949, FDA-2015-M-4950, FDA-2016-M-0120,
FDA-2016-M-0121, FDA-2016-M-0122, FDA-2016-M-0123, FDA-2016-M-0803,
FDA-2016-M-0804, FDA-2016-M-0805, FDA-2016-M-0806, FDA-2016-M-0807,
FDA-2016-M-0926, FDA-2016-M-0928 for ``Medical Devices; Availability of
Safety and Effectiveness Summaries for Premarket Approval
Applications.'' Received comments will be placed in the docket and,
except for those submitted as ``Confidential Submissions,'' publicly
viewable at http://www.regulations.gov or at the Division of Dockets
Management between 9 a.m. and 4 p.m., Monday through Friday.
     Confidential Submissions--To submit a comment with
confidential information that you do not wish to be made publicly
available, submit your comments only as a written/paper submission. You
should submit two copies total. One copy will include the information
you claim to be confidential with a heading or cover note that states
``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The Agency will
review this copy, including the claimed confidential information, in
its consideration of comments. The second copy, which will have the
claimed confidential information redacted/blacked out, will be
available for public viewing and posted on http://www.regulations.gov.
Submit both copies to the Division of Dockets Management. If you do not
wish your name and contact information to be made publicly available,
you can provide this information on the cover sheet and not in the body
of your comments and you must identify this information as
``confidential.'' Any information marked as ``confidential'' will not
be disclosed except in accordance with 21 CFR 10.20 and other
applicable disclosure law. For more information about FDA's posting of
comments to public dockets, see 80 FR 56469, September 18, 2015, or
access the information at: http://www.fda.gov/regulatoryinformation/dockets/default.htm.
    Docket: For access to the docket to read background documents or
the electronic and written/paper comments received, go to http://www.regulations.gov and insert the docket number, found in brackets in
the heading of this document, into the ``Search'' box and follow the
prompts and/or go to the Division of Dockets Management, 5630 Fishers
Lane, Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Joshua Nipper, Center for Devices and
Radiological Health, Food and Drug Administration, 10903 New Hampshire

Ave., Bldg. 66, Rm. 1650, Silver Spring, MD 20993-0002,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    In accordance with sections 515(d)(4) and (e)(2) of the Federal
Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 360e(d)(4) and
(e)(2)), notification of an order approving, denying, or withdrawing
approval of a PMA will continue to include a notice of opportunity to
request review of the order under section 515(g) of the FD&C Act. The
30-day period for requesting reconsideration of an FDA action under
Sec.  10.33(b) (21 CFR 10.33(b)) for notices announcing approval of a
PMA begins on the day the notice is placed on the Internet. Section
10.33(b) provides that FDA may, for good cause, extend this 30-day
period. Reconsideration of a denial or withdrawal of approval of a PMA
may be sought only by the applicant; in these cases, the 30-day period
will begin when the applicant is notified by FDA in writing of its
decision.
    The regulations provide that FDA publish a quarterly list of
available safety and effectiveness summaries of PMA approvals and
denials that were announced during that quarter. The following is a
list of approved PMAs for which summaries of safety and effectiveness
were placed on the Internet from January 1, 2016, through March 31,
2016. There were no denial actions during this period. The list
provides the manufacturer's name, the product's generic name or the
trade name, and the approval date.

   Table 1--List of Safety and Effectiveness Summaries for Approved PMAs Made Available From January 1, 2016,
                                             Through March 31, 2016
----------------------------------------------------------------------------------------------------------------
          PMA No., Docket No.                   Applicant                    Trade name            Approval date
----------------------------------------------------------------------------------------------------------------
H130006, FDA-2015-M-4950..............  Torax Medical, Inc.......  FENIX Continence Restoration       12/18/2015
                                                                    System.
H140005, FDA-2015-M-4948..............  ARUP Laboratories........  PDGFRB FISH for Gleevec            12/18/2015
                                                                    Eligibility in
                                                                    Myelodysplastic Syndrome/
                                                                    Myeloproliferative Disease
                                                                    (MDS/MPD).
H140006, FDA-2015-M-4949..............  ARUP Laboratories........  KIT D816V Mutation Detection       12/18/2015
                                                                    by PCR for Gleevec
                                                                    Eligibility in Aggressive
                                                                    Systemic Mastocytosis (ASM).
P130007/S004, FDA-2016-M-0120.........  Animas Corp..............  Animas Vibe System...........      12/24/2015
P900033/S042, FDA-2016-M-0121.........  Integra LifeSciences Corp  Integra Omnigraft Dermal             1/7/2016
                                                                    Regeneration Matrix and
                                                                    Integra Dermal Regeneration
                                                                    Template.
P080028, FDA-2016-M-0122..............  Storz Medical Ag.........  Storz Medical Duolith SD1            1/8/2016
                                                                    Shock Wave Therapy.
P150011, FDA-2016-M-0123..............  LivaNova Canada Corp.....  Perceval Sutureless Heart            1/8/2016
                                                                    Valve.
P150027, FDA-2016-M-0803..............  Dako North America, Inc..  PD-L1 IHC 28-8 pharmDx.......       1/23/2016
P150004, FDA-2016-M-0804..............  Spinal Modulation, Inc...  Axium Neurostimulator System.       2/11/2016
P150022, FDA-2016-M-0805..............  Rex Medical, L.P.........  Closer Vascular Sealing             2/12/2016
                                                                    System.
P120018, FDA-2016-M-0806..............  Sharps Terminator, LLC...  Sharps Terminator............       2/17/2016
P150005, FDA-2016-M-0807..............  Boston Scientific Corp...  Blazer Open-Irrigated               2/24/2016
                                                                    Ablation Catheter System.
P130009/S037, FDA-2016-M-0926.........  Edwards Lifesciences, LLC  SAPIEN XT Transcatheter Heart       2/29/2016
                                                                    Valve and Accessories.
P020004/S123, FDA-2016-M-0928.........  W.L. Gore & Associates,    GORE EXCLUDER Iliac Branch          2/29/2016
                                         Inc.                       Endoprosthesis.
----------------------------------------------------------------------------------------------------------------

II. Electronic Access

    Persons with access to the Internet may obtain the documents at
http://www.fda.gov/MedicalDevices/ProductsandMedicalProcedures/DeviceApprovalsandClearances/PMAApprovals/default.htm.

    Dated: May 16, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016-11856 Filed 5-19-16; 8:45 am]
 BILLING CODE 4164-01-P