[Federal Register Volume 75, Number 127 (Friday, July 2, 2010)]
[Notices]
[Page 38536]
[FR Doc No: 2010-16112]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

[USCG-2010-0586]

National Maritime Security Advisory Committee; Meeting

AGENCY: Coast Guard, DHS.

ACTION: Notice of meeting.

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SUMMARY: The National Maritime Security Advisory Committee (NMSAC) will
meet in Washington, DC to discuss various issues relating to national
maritime security. This meeting will be open to the public.

DATES: The Committee will meet on Tuesday, July 20, 2010 from 9 a.m. to
4 p.m. This meeting may close early if all business is finished.
Written material and requests to make oral presentations should reach
the Coast Guard on or before July 13, 2010. Requests to have a copy of
your material distributed to each member of the committee should reach
the Coast Guard on or before July 13, 2010.

ADDRESSES: The Committee will meet at Coast Guard Headquarters, Room
4202, 2100 2nd Street, SW., Washington, DC 20593. Additionally, this
meeting will be broadcast via a web enabled interactive online format.
Send written material and requests to make oral presentations to Mr.
Ryan Owens, Assistant Designated Federal Officer (ADFO) of the National
Maritime Security Advisory Committee, 2100 2nd Street SW., Stop 7581;
Washington, DC 20593-7581. You may also e-mail material to
<EMAIL_ADDRESS>This notice may be viewed in our online docket,
USCG-2010-0586, at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:  Mr. Ryan Owens, ADFO of NMSAC,
telephone<PHONE_NUMBER> or<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Notice of this meeting is given under the
Federal Advisory Committee Act, 5 U.S.C. App. (Pub. L. 92-463).

Agenda of Public Meeting

    The agenda for the Public part of the May 4 Committee meeting is as
follows:
    (1) TWIC Update.
    (2) Discussion on creation of a National Infrastructure Protection
Plan (NIPP) Sub-Committee.
    (3) DHS Global Supply Chain Security Strategy initiative.
    (4) Maritime Transportation Security Act update.
    (5) Update from CDC Strategy Working Group.
    (6) Update on the Small Vessel Security Strategy.

Procedural

    This meeting is open to the public for the morning session and will
also be conducted via an online meeting format. Please note that the
public portion of the meeting may close early if all business is
finished. Seating is very limited, and members of the public will
require additional screening and an escort while in Coast Guard
Headquarters. Members of the public wishing to attend should register
with Mr. Ryan Owens, ADFO of NMSAC, telephone<PHONE_NUMBER> or
<EMAIL_ADDRESS>no later than July 13, 2010. Additionally, if you
would like to participate in this meeting via the online Web format,
please log onto https://connect.hsin.gov/uscgnmsac/ and follow the
online instructions to register for this meeting. At the Chair's
discretion, members of the public may make oral presentations during
the public portion of the meeting. If you would like to make an oral
presentation at the public portion of the meeting, please notify the
ADFO no later than Tuesday, July 13, 2010. Written material for
distribution at a meeting should reach the Coast Guard no later than
Tuesday, July 13, 2010. If you would like a copy of your material
distributed to each member of the committee in advance of a meeting,
please submit 25 copies to the ADFO no later than Tuesday, July 13,
2010.

Information on Services for Individuals With Disabilities

    For information on facilities or services for individuals with
disabilities or to request special assistance at the meeting, contact
the ADFO as soon as possible.

    Dated: June 28, 2010.
K.C. Kiefer,
Captain, U.S. Coast Guard Chief, Office of Port and Facility
Activities, Designated Federal Official, NMSAC.
[FR Doc. 2010-16112 Filed 7-1-10; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register: November 12, 2009 (Volume 74, Number 217)]
[Notices]
[Page 58325-58332]
[DOCID:fr12no09-113]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28991; File No. 812-13638]

FaithShares Trust, et al.; Notice of Application

November 5, 2009.
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; 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; 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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Applicants: FaithShares Trust (``Trust''), FaithShares Advisors, LLC
(``Advisor'') and SEI Investments Distribution Company.

Summary of Application: Applicants request an order that would permit:
(a) Series of an open-end management investment company to issue shares
(``Fund Shares'') that can be redeemed only in large aggregations
(``Creation Unit Aggregations''); (b) secondary market transactions in
Fund Shares to occur at negotiated prices; (c) certain series to pay
redemption proceeds, under certain circumstances, more than seven days
after the tender of Fund Shares for redemption; (d) certain affiliated
persons of the series to deposit securities into, and receive
securities from, the series in connection with the purchase and
redemption of Creation Unit Aggregations; and (e) certain registered
management investment companies and unit investment trusts outside of
the same group of investment companies as the series to acquire Fund
Shares.

Filing Dates: The application was filed on March 4, 2009, and amended
on April 21, 2009, October 23, 2009, and November 4, 2009.

Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on November 30, 2009, and should be accompanied by proof of
service on applicants, in the form of an affidavit, or for lawyers, a
certificate of

service. Hearing requests should state the nature of the writer's
interest, the reason for the request, and the issues contested. Persons
who wish to be notified of a hearing may request notification by
writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090; Applicants: FaithShares Trust
and FaithShares Advisors, LLC, c/o Mr. J. Garrett Stevens, 3555
Northwest 58th Street, Suite 410, Oklahoma City, OK 73112 and SEI
Investments Distribution Company, c/o John Munch, Esq., 1 Freedom
Valley Drive, Oaks, PA 19456.

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel at
(202) 551-6811 or Julia Kim Gilmer, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Office of Investment Company
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling<PHONE_NUMBER>.

Applicants' Representations

    1. The Trust is registered as an open-end management investment
company under the Act and is organized as a Delaware statutory trust.
The Trust will initially offer Fund Shares of five series (``Initial
Funds''), each of which will track a specified equity securities index
(``Underlying Index'').\1\ Applicants may offer additional series of
the Trust (together with any other future registered open-end
investment company and its series advised by the Advisor or an entity
controlling, controlled by, or under common control with the Advisor,
the ``Future Funds,'' and the Future Funds together with the Initial
Funds, the ``Funds'').\2\
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    \1\ The Initial Funds are: FaithShares Baptist Values Fund,
FaithShares Catholic Values Fund, FaithShares Christian Values Fund,
FaithShares Lutheran Values Fund and FaithShares Methodist Values
Fund.
    \2\ All existing entities that currently intend to rely on the
requested order have been named as applicants. Any other existing or
future entity that relies on the order in the future will comply
with the terms and conditions of the application.
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    2. The Advisor, an Oklahoma limited liability company, or an entity
controlling, controlled by or under common control with the Advisor
will be the investment adviser to the Funds. The Advisor is registered
as an investment adviser under the Investment Advisers Act of 1940, as
amended (the ``Advisers Act''). The Advisor may enter into sub-advisory
agreements with one or more additional investment advisers to act as
sub-advisors to one or more Funds (``Sub-Advisors''). Any Sub-Advisor
will be registered under the Advisers Act. SEI Investments Distribution
Company, a broker-dealer registered under the Securities Exchange Act
of 1934 (the ``Exchange Act''), will act as the principal underwriter
and distributor for the Creation Unit Aggregations of Fund Shares (each
such broker-dealer, a ``Distributor''). Applicants request that the
requested order also apply to any other Distributor to the Funds in the
future that complies with the terms and conditions of the application.
    3. The Funds will seek investment results that correspond, before
fees and expenses, generally to the price and yield performance of a
specified Underlying Index.\3\ The Initial Funds' Underlying Indexes
are comprised of domestic equity securities (securities which are
issued by U.S. issuers and non-U.S. issuers meeting the requirements
for trading in U.S. markets). A Future Fund's Underlying Index may be
based on domestic equity securities or foreign equity securities
(securities traded on a non-U.S. securities market) (such Future Fund,
a ``Foreign Fund''). Any entity that creates, compiles, sponsors or
maintains an Underlying Index (``Index Provider'') will not be an
affiliated person, as defined in section 2(a)(3) of the Act, or an
affiliated person of an affiliated person, of the Trust or a Fund, the
Advisor, any promoter of the Funds, Sub-Advisor or Distributor.\4\
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    \3\ The Underlying Indexes for the Initial Funds are the:
FaithShares Baptist Values Index, FaithShares Catholic Values Index,
FaithShares Christian Values Index, FaithShares Lutheran Values
Index and FaithShares Methodist Values Index.
    \4\ The Index Provider to the Initial Funds is FTSE/KLD Research
and Analytics, Inc.
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    4. The investment objective of each Fund will be to seek to track
the performance, before fees and expenses, of its Underlying Index.\5\
Intra-day values of each Underlying Index will be disseminated every 15
seconds throughout the trading day except for the values of Underlying
Indices based on foreign equity securities which will be disseminated
every 60 seconds throughout the trading day. A Fund will utilize either
a replication or representative sampling strategy which will be
disclosed with regard to each Fund in its prospectus
(``Prospectus'').\6\ A Fund using a replication strategy will invest in
the Component Securities in its Underlying Index in approximately the
same proportions as in the Underlying Index. In certain circumstances,
such as when there are practical difficulties or substantial costs
involved in holding every security in an Underlying Index or when one
or more Component Securities is less liquid, illiquid or unavailable, a
Fund may use a representative sampling strategy pursuant to which it
will invest in some, but not all of the Component Securities of its
Underlying Index.\7\ Applicants anticipate that a Fund that utilizes a
representative sampling strategy will not track the performance of its
Underlying Index with the same degree of accuracy as an investment
vehicle that invests in every Component Security of the Underlying
Index with the same weighting as the Underlying Index. Applicants
expect that each Fund will have an annual tracking error relative to
the performance of its Underlying Index of less than 5 percent.
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    \5\ Applicants represent that each Fund will invest at least 80%
of its assets in the component securities (``Component Securities'')
of its Underlying Index. In the case of Foreign Funds, at least 80%
of the Fund's assets will be invested in Component Securities and
Depositary Receipts (as defined below) representing such Component
Securities. A Fund may invest up to 20% of its assets in cash and
cash equivalents, such as money market instruments or other types of
investments not included in its Underlying Index, but which the
Advisor or Sub-Advisor believes will help the Fund track its
Underlying Index. ``Depositary Receipts'' will typically be American
Depositary Receipts, as well as Global Depositary Receipts and Euro
Depositary Receipts.
    \6\ All representations and conditions contained in the
application that require a Fund to disclose particular information
in the Fund's Prospectus and/or annual report shall be effective
with respect to the Fund until the time that the Fund complies with
the disclosure requirements adopted by the Commission in Investment
Company Act Release No. 28584 (Jan. 13, 2009).
    \7\ Under the representative sampling strategy, the Advisor and
any Sub-Advisor will seek to construct a Fund's portfolio so that
its market capitalization, industry weightings, fundamental
investment characteristics (such as return variability, earnings
valuation and yield) and liquidity measures perform like those of
the Underlying Index.
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    5. The Funds will issue Creation Unit Aggregations in groups of
50,000 Fund Shares. Applicants expect that the initial price of a
Creation Unit Aggregation will fall in the range of $1,000,000 to
$2,000,000. All orders to purchase Creation Unit Aggregations must be
placed with the Distributor, by or through a party that has entered
into an agreement with the Distributor (``Authorized Participant'').
The Distributor will be responsible for transmitting the orders to the
Funds. An Authorized Participant must be either: (a) A broker-dealer or
other participant in the continuous net settlement system of the
National Securities Clearing Corporation, a clearing agency registered
with the Commission, or (b)

a participant in the Depository Trust Company (``DTC'', and such
participant, ``DTC Participant''). Fund Shares of each Fund generally
will be sold in Creation Unit Aggregations in exchange for an in-kind
deposit by the purchaser of a portfolio of securities designated by the
Advisor or Sub-Advisor to correspond generally to the price and yield
performance of the relevant Underlying Index (the ``Deposit
Securities''), together with the deposit of a specified cash payment
(``Balancing Amount,'' together with the Deposit Securities, the
``Portfolio Deposit''). The Balancing Amount is an amount equal to the
difference between (a) the net asset value (``NAV'') (per Creation Unit
Aggregation) of a Fund and (b) the total aggregate market value (per
Creation Unit Aggregation) of the Deposit Securities.\8\ Each Fund may
permit a purchaser of Creation Unit Aggregations to substitute cash in
lieu of depositing some or all of the Deposit Securities if a Fund and
the Advisor believe such method would reduce the Fund's transaction
costs or enhance the Fund's operating efficiency.\9\
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    \8\ Each Fund will sell and redeem Creation Unit Aggregations
only on a ``Business Day,'' which is any day that a Fund is required
to be open under Section 22(e) of the Act. Each Business Day, prior
to the opening of trading on the Exchange (defined below), the list
of names and the required number of shares of each security included
in the current Portfolio Deposit and the Balancing Amount will be
made available. Any national securities exchange (as defined in
section 2(a)(26) of the Act) (``Exchange'') on which Fund Shares are
listed will disseminate, every 15 seconds during its regular trading
hours, an amount per Fund Share representing the sum of the
estimated Balancing Amount and the current value of the Deposit
Securities.
    \9\ Applicants state that in some circumstances or in certain
countries, it may not be practicable or convenient, or permissible
under the laws of certain countries or the regulations of certain
foreign stock exchanges, for a Foreign Fund to operate exclusively
on an ``in-kind'' basis. Applicants also note that when a
substantial rebalancing of a Fund's portfolio is required, the
Advisor might prefer to receive cash rather than in-kind securities
so that the Fund may avoid transaction costs involved in liquidating
part of its portfolio to achieve the rebalancing.
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    6. An investor purchasing or redeeming a Creation Unit Aggregation
from a Fund will be charged a fee (``Transaction Fee'') to prevent the
dilution of the interests of the remaining shareholders resulting from
costs in connection with the purchase or redemption of Creation Unit
Aggregations.\10\ The maximum Transaction Fees, and any variations or
waivers thereof, will be disclosed in each Fund's Prospectus. The
Distributor will be responsible for delivering the Fund's Prospectus to
those persons purchasing Creation Unit Aggregations, and for
maintaining records of both the orders placed and the confirmations of
acceptance furnished. In addition, the Distributor will maintain a
record of the instructions given to the applicable Fund to implement
the delivery of its Fund Shares.
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    \10\ Where a Fund permits a purchaser to substitute cash in lieu
of depositing a portion of the requisite Deposit Securities, the
purchaser may be assessed a higher Transaction Fee to cover the cost
of purchasing such Deposit Securities, including operational
processing and brokerage costs, and part or all of the spread
between the expected bid and the offer side of the market relating
to such Deposit Securities.
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    7. Purchasers of Fund Shares in Creation Unit Aggregations may hold
such Fund Shares or may sell such Fund Shares into the secondary
market. Fund Shares will be listed and traded on an Exchange. It is
expected that one or more member firms of a listing Exchange will be
designated to act as a specialist or a market maker (each, a ``Market
Maker'') and maintain a market for Fund Shares trading on the listing
Exchange. The price of Fund Shares trading on an Exchange will be based
on the current bid/offer market. Fund Shares sold in the secondary
market will be subject to customary brokerage commissions and charges.
    8. Applicants expect that purchasers of Creation Unit Aggregations
will include institutional investors and arbitrageurs (which could
include institutional investors). A Market Maker, in providing a fair
and orderly secondary market for the Fund Shares, also may purchase
Creation Unit Aggregations for use in its market-making activities.
Applicants expect that secondary market purchasers of Fund Shares will
include both institutional investors and retail investors.\11\
Applicants expect that the price at which Fund Shares trade will be
disciplined by arbitrage opportunities created by the option to
continually purchase or redeem Creation Unit Aggregations at their NAV,
which should ensure that Fund Shares will not trade at a material
discount or premium in relation to their NAV.
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    \11\ Fund Shares will be registered in book-entry form only. DTC
or its nominee will be the registered owner of all outstanding Fund
Shares. DTC or DTC Participants will maintain records reflecting
beneficial owners of Fund Shares.
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    9. Fund Shares will not be individually redeemable, and owners of
Fund Shares may acquire those Fund Shares from a Fund, or tender such
Fund Shares for redemption to the Fund, in Creation Unit Aggregations
only. To redeem, an investor will have to accumulate enough Fund Shares
to constitute a Creation Unit Aggregation. Redemption orders must be
placed by or through an Authorized Participant. An investor redeeming a
Creation Unit Aggregation generally will receive (a) Portfolio
Securities designated to be delivered for Creation Unit Aggregation
redemptions on the date that the request for redemption is made (``Fund
Securities'') \12\ and (b) a ``Cash Redemption Payment,'' consisting of
an amount calculated in the same manner as the Balancing Amount,
although the actual amount of the Cash Redemption Payment may differ if
the Fund Securities are not identical to the Deposit Securities on that
day. An investor may receive the cash equivalent of a Fund Security in
certain circumstances, such as if the investor is constrained from
effecting transactions in the security by regulation or policy.
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    \12\ The Funds will comply with the federal securities laws in
accepting Deposit Securities and satisfying redemptions with Fund
Securities, including that the Deposit Securities and Fund
Securities are sold in transactions that would be exempt from
registration under the Securities Act of 1933. As a general matter,
the Deposit Securities and Fund Securities will correspond pro rata
to the securities held by a Fund, although Fund Securities received
on redemption may not be identical to Deposit Securities deposited
in connection with the purchase of Creation Unit Aggregations for
the same day.
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    10. No Fund will be advertised or marketed or otherwise held out as
a traditional open-end investment company or a mutual fund. Instead,
each Fund will be marketed as an ``exchange-traded fund'' or ``ETF,''
``investment company'' and ``fund.'' All marketing materials that
describe the features or method of obtaining, buying or selling
Creation Unit Aggregations or Fund Shares, or refer to redeemability,
will prominently disclose that Fund Shares are not individually
redeemable and that the owners of Fund Shares may acquire or redeem
Fund Shares from the Fund in Creation Unit Aggregations only. The same
approach will be followed in the statement of additional information
(``SAI''), shareholder reports and investor educational materials
issued or circulated in connection with the Fund Shares. Each Fund will
provide copies of its annual and semi-annual shareholder reports to DTC
Participants for distribution to shareholders.

 Applicants' Legal Analysis

    1. Applicants request an order under section 6(c) of the Act for an
exemption from sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act
and rule 22c-1 under the Act; under sections 6(c) and 17(b) of the Act
for an exemption from sections 17(a)(1) and 17(a)(2) of the Act; and
under section 12(d)(1)(J) of the Act for an exemption from sections
12(d)(1)(A) and 12(d)(1)(B) of the Act.

    2. Section 6(c) of the Act provides that the Commission may exempt
any person, security or transaction, or any class of persons,
securities or transactions, from any provision of the Act, if and to
the extent that such exemption is necessary or appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
Section 17(b) of the Act authorizes the Commission to exempt a proposed
transaction from section 17(a) of the Act if evidence establishes that
the terms of the transaction, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned, and the proposed transaction is
consistent with the policies of the registered investment company and
the general 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 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 holder, upon
its presentation to the issuer, is entitled to receive approximately
the holder's proportionate share of the issuer's current net assets, or
the cash equivalent. Because Fund Shares will not be individually
redeemable, applicants request an order that would permit each Fund to
issue Fund Shares that are redeemable in Creation Unit Aggregations
only. Applicants state that investors may purchase Fund Shares in
Creation Unit Aggregations and redeem Creation Unit Aggregations from
each Fund. Applicants state that because Creation Unit Aggregations may
always be purchased and redeemed at NAV, the market price of Fund
Shares should not vary substantially from their NAV.

Section 22(d) of the Act and Rule 22c-1 under the Act

    4. Section 22(d) of the Act, among other things, prohibits a dealer
from selling a redeemable security, which is currently being offered to
the public by or through a principal underwriter, except at a current
public offering price described in the prospectus. Rule 22c-1 under the
Act generally requires that a dealer selling, redeeming or repurchasing
a redeemable security do so only at a price based on its NAV.
Applicants state that secondary market trading in Fund Shares will take
place at negotiated prices, not at a current offering price described
in a Fund's Prospectus, and not at a price based on NAV. Thus,
purchases and sales of Fund Shares in the secondary market will not
comply with section 22(d) of the Act and rule 22c-1 under the Act.
Applicants request an exemption under section 6(c) from these
provisions.
    5. Applicants assert that the concerns sought to be addressed by
section 22(d) of the Act and rule 22c-1 under the Act with respect to
pricing are equally satisfied by the proposed method of pricing Fund
Shares. Applicants maintain that while there is little legislative
history regarding section 22(d), its provisions, as well as those of
rule 22c-1, appear to have been designed to (a) prevent dilution caused
by certain riskless-trading schemes by principal underwriters and
contract dealers, (b) prevent unjust discrimination or preferential
treatment among buyers, and (c) ensure an orderly distribution of
investment company shares by eliminating price competition from dealers
offering shares at less than the published sales price and repurchasing
shares at more than the published redemption price.
    6. Applicants believe that none of these purposes will be thwarted
by permitting Fund Shares to trade in the secondary market at
negotiated prices. Applicants state that (a) secondary market trading
in Fund Shares do not directly involve Fund assets and will not cause
dilution of an investment in Fund Shares, and (b) to the extent
different prices exist during a given trading day, or from day to day,
such variances occur as a result of third-party market forces, such as
supply and demand. Therefore, applicants assert that secondary market
transactions in Fund Shares will not lead to discrimination or
preferential treatment among purchasers. Finally, applicants contend
that the proposed distribution system will be orderly because
competitive forces will ensure that the difference between the market
price of Fund Shares and their NAV remains narrow.

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 the Foreign Funds is
contingent not only on the settlement cycle of the United States
market, but also on the delivery cycles in local markets for the
underlying foreign securities held by Foreign Funds. Applicants state
that delivery cycles currently practicable for transferring Fund
Securities to redeeming investors, coupled with local market holiday
schedules, will, in certain circumstances, require a delivery process
longer than seven calendar days for Foreign Funds. Applicants request
relief under section 6(c) of the Act from section 22(e) to permit
Foreign Funds to pay redemption proceeds up to a maximum of 14 calendar
days following the tender of a Creation Unit Aggregation of such Funds.
Except as disclosed in a Foreign Fund's Prospectus and/or SAI,
applicants expect that each Foreign Fund will be able to deliver
redemption proceeds within seven days.\13\
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    \13\ Rule 15c6-1 under the Exchange Act requires that most
securities transactions be settled within three business days of the
trade. Applicants acknowledge that no relief obtained from the
requirements of section 22(e) will affect any obligations applicants
may have under rule 15c6-1.
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    8. Applicants state that section 22(e) was designed to prevent
unreasonable, undisclosed and unforeseen delays in the payment of
redemption proceeds. Applicants assert that the requested relief will
not lead to the problems that section 22(e) was designed to prevent.
Applicants state that the SAI will disclose those local holidays in a
given year where more than seven days will be needed to deliver
redemption proceeds and the maximum number of days needed to deliver
the proceeds. Applicants are not seeking relief from section 22(e) with
respect to Foreign Funds that do not effect redemptions of Creation
Unit Aggregations in-kind.

Section 12(d)(1)

    9. Section 12(d)(1)(A) of the Act, in relevant part, prohibits a
registered investment company from acquiring securities of an
investment company if such securities represent more than 3% of the
total outstanding voting stock of the acquired company, more than 5% of
the total assets of the acquiring company, or, together with the
securities of any other investment companies, more than 10% of the
total assets of the acquiring company. Section 12(d)(1)(B) of the Act
prohibits a registered open-end investment company, its principal
underwriter, or any other broker or dealer from selling

the investment company's shares to another investment company if the
sale will cause the acquiring company to own more than 3% of the
acquired company's voting stock, or if the sale will cause more than
10% of the acquired company's voting stock to be owned by investment
companies generally.
    10. Applicants request an exemption to permit management investment
companies (``Investing Management Companies'') and unit investment
trusts (``Investing Trusts,'' and collectively with the Investing
Management Companies, ``Investing Funds'') registered under the Act
that are not sponsored or advised by the Advisor or any entity
controlling, controlled by, or under common control with the Advisor
and are not part of the same ``group of investment companies,'' as
defined in section 12(d)(1)(G)(ii) of the Act, as the Funds to acquire
Fund Shares beyond the limits of section 12(d)(1)(A). Investing Funds
do not include the Funds. In addition, applicants seek relief to permit
the Distributor and any broker or dealer that is registered under the
Exchange Act to sell Fund Shares to an Investing Fund in excess of the
limits of section 12(d)(1)(B).
    11. Each Investing Management Company will be advised by an
investment adviser within the meaning of section 2(a)(20)(A) of the Act
(the ``Investing Fund Advisor'') and may be sub-advised by one or more
investment advisers within the meaning of section 2(a)(20)(B) of the
Act (each an ``Investing Fund Sub-Advisor''). Any Investing Fund
Advisor or Investing Fund Sub-Advisor will be registered under the
Advisers Act. Each Investing Trust will be sponsored by a sponsor
(``Sponsor'').
    12. 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.
    13. Applicants believe that neither the Investing Funds nor an
Investing Fund Affiliate would be able to exert undue influence over
the Funds.\14\ To limit the control that an Investing Fund may have
over a Fund, applicants propose a condition prohibiting an Investing
Fund Advisor or a Sponsor, any person controlling, controlled by, or
under common control with an Investing Fund Advisor 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 an Investing Fund Advisor or Sponsor, or any person
controlling, controlled by, or under common control with an Investing
Fund Advisor or Sponsor (``Investing Fund's Advisory Group'') from
controlling (individually or in the aggregate) a Fund within the
meaning of section 2(a)(9) of the Act. The same prohibition would apply
to any Investing Fund Sub-Advisor, any person controlling, controlled
by or under common control with the Investing Fund Sub-Advisor, 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 Investing
Fund Sub-Advisor or any person controlling, controlled by or under
common control with the Investing Fund Sub-Advisor (``Investing Fund's
Sub-Advisor Group'').
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    \14\ An ``Investing Fund Affiliate'' is an Investing Fund
Advisor, Investing Fund Sub-Advisor, Sponsor, promoter, and
principal underwriter of an Investing Fund, and any person
controlling, controlled by, or under common control with any of
these entities. A ``Fund Affiliate'' is an investment adviser,
promoter, or principal underwriter of a Fund and any person
controlling, controlled by or under common control with any of these
entities.
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    14. Applicants propose other conditions to limit the potential for
undue influence over the Funds, including that no Investing Fund or
Investing Fund Affiliate (except to the extent it is acting in its
capacity as an investment adviser to a Fund) will cause a Fund to
purchase a security in any offering of securities during the existence
of any underwriting or selling syndicate of which a principal
underwriter is an Underwriting Affiliate (``Affiliated Underwriting'').
An ``Underwriting Affiliate'' is a principal underwriter in any
underwriting or selling syndicate that is an officer, director, member
of an advisory board, Investing Fund Advisor, Investing Fund Sub-
Advisor, employee or Sponsor of an Investing Fund, or a person of which
any such officer, director, member of an advisory board, Investing Fund
Advisor, Investing Fund Sub-Advisor, employee, or Sponsor is an
affiliated person (except that any person whose relationship to the
Fund is covered by section 10(f) of the Act is not an Underwriting
Affiliate).
    15. Applicants assert that the proposed conditions address any
concerns regarding excessive layering of fees. The board of directors
or trustees of any 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 (``independent directors or
trustees''), will find that the advisory fees charged to the Investing
Management Company are based on services provided that will be in
addition to, rather than duplicative of, services provided under the
advisory contract(s) of any Fund in which the Investing Management
Company may invest. In addition, except as provided in condition 11, an
Investing Fund Advisor or a trustee (``Trustee'') or Sponsor of an
Investing Trust, as applicable, will waive fees otherwise payable to it
by the Investing Fund in an amount at least equal to any compensation
(including fees received pursuant to any plan adopted by a Fund under
rule 12b-1 under the Act) received by the Investing Fund Advisor or
Trustee or Sponsor or an affiliated person of the Investing Fund
Advisor, Trustee or Sponsor, from a Fund in connection with the
investment by the Investing Fund in the Fund. Applicants also state
that any sales charges or service fees charged with respect to shares
of an Investing Fund will not exceed the limits applicable to a fund of
funds set forth in Conduct Rule 2830 of the National Association of
Securities Dealers (``NASD'').\15\
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    \15\ Any references to NASD Conduct Rule 2830 include any
successor or replacement rule to NASD Conduct Rule 2830 that may be
adopted by the Financial Industry Regulatory Authority.
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    16. Applicants submit that the proposed conditions address the
concern about complexity. Applicants note that no Fund may acquire
securities of any investment company or company relying on sections
3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in
section 12(d)(1)(A) of the Act except as permitted pursuant to rule
12d1-1 under the Act. To ensure that Investing Funds comply with the
terms and conditions of the requested relief from section 12(d)(1), any
Investing Fund that intends to invest in a Fund in reliance on the
requested order will enter into a written agreement with such Fund
regarding the terms of such Investing Fund's investment
(``Participation Agreement'') requiring the Investing Fund to adhere to
the terms and conditions of the requested order. The Participation
Agreement also will include an acknowledgement from the Investing Fund
that it may rely on the requested order only to invest in the Funds and
not in any other investment company.

    17. Applicants also note that a Fund may choose to reject a direct
purchase of Fund Shares in Creation Unit Aggregations by an Investing
Fund. To the extent that an Investing Fund purchases Fund Shares in the
secondary market, a Fund would still retain its ability to reject
purchases of Fund Shares made in reliance on the requested order by
declining to enter into the Participation Agreement prior to any
investment by an Investing Fund in excess of the limits of section
12(d)(1)(A).

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

    18. Section 17(a) of the Act generally prohibits an affiliated
person of a registered investment company, or an affiliated person of
such a person (``Second-Tier 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 (a) any person directly or
indirectly owning, controlling or holding with power to vote 5% or more
of the outstanding voting securities of the other person, (b) any
person 5% or more of whose outstanding voting securities are directly
or indirectly owned, controlled or held with the power to vote by the
other person, and (c) any person directly or indirectly controlling,
controlled by or under common control with the other person. Section
2(a)(9) of the Act provides that a control relationship will be
presumed where one person owns more than 25% of another person's voting
securities.
    19. Applicants request an exemption from section 17(a) of the Act
pursuant to sections 6(c) and 17(b) of the Act to permit persons to
effectuate in-kind purchases and redemptions with a Fund when they are
affiliated persons or Second-Tier Affiliates of the Funds solely by
virtue of one or more of the following: (a) Holding 5% or more, or in
excess of 25%, of the outstanding Fund Shares of one or more Funds; (b)
having an affiliation with a person with an ownership interest
described in (a); or (c) holding 5% or more, or more than 25%, of the
shares of any other registered investment company (or series thereof)
advised by the Advisor or an entity controlling, controlled by or under
common control with the Advisor.
    20. Applicants assert that no useful purpose would be served by
prohibiting these types of affiliated persons from purchasing or
redeeming Creation Unit Aggregations through ``in-kind transactions.''
The procedures for both in-kind purchases and in-kind redemptions of
Creation Unit Aggregations will be the same for all purchases and
redemptions. Deposit Securities and Fund Securities will be valued in
the same manner as Portfolio Securities. Therefore, applicants state
that in-kind purchases and redemptions will afford no opportunity for
the specified affiliated persons, or Second-Tier Affiliates, of a Fund
to effect a transaction detrimental to other holders of Fund Shares.
Applicants also believe that in-kind purchases and redemptions will not
result in self-dealing or overreaching of a Fund.
    21. Applicants also seek relief from section 17(a) to permit a Fund
that is an affiliated person of an Investing Fund to sell its Fund
Shares to and redeem its Fund Shares from an Investing Fund, and to
engage in the accompanying in-kind transactions with the Investing
Fund.\16\ Applicants state that the terms of the transactions are fair
and reasonable and do not involve overreaching. Applicants note that
any consideration paid by an Investing Fund for the purchase or
redemption of Fund Shares directly from a Fund will be based on the NAV
of the Fund.\17\ Applicants believe that any proposed transactions
directly between the Funds and Investing Funds will be consistent with
the policies of each Investing Fund. The purchase of Creation Unit
Aggregations by an Investing Fund directly from a Fund will be
accomplished in accordance with the investment restrictions of any such
Investing Fund and will be consistent with the investment policies set
forth in the Investing Fund's registration statement. The Participation
Agreement will require any Investing Fund that purchases Creation Unit
Aggregations directly from a Fund to represent that the purchase of
Creation Unit Aggregations from a Fund by an Investing Fund will be
accomplished in compliance with the investment restrictions of the
Investing Fund and will be consistent with the investment policies set
forth in the Investing Fund's registration statement.
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    \16\ Applicants acknowledge that receipt of compensation by (a)
an affiliated person of an Investing Fund, or an affiliated person
of such person, for the purchase by the Investing Fund of Fund
Shares or (b) an affiliated person of a Fund, or an affiliated
person of such person, for the sale by the Fund of its Fund Shares
to an Investing Fund may be prohibited by section 17(e)(1) of the
Act. The Participation Agreement also will include this
acknowledgment.
    \17\ Applicants believe that most Investing Funds will purchase
Fund Shares in the secondary market and will not purchase Creation
Unit Aggregations directly from a Fund. However, the requested
relief would apply to direct sales of Creation Unit Aggregations by
a Fund to an Investing Fund and redemptions of those Fund Shares.
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Applicants' Conditions

    Applicants agree that any order granting the requested relief will
be subject to the following conditions: \18\
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    \18\ See note 6, supra.
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ETF Relief

    1. Each Fund's Prospectus will clearly disclose that, for purposes
of the Act, the Fund Shares are issued by the Funds, which are
registered investment companies, and that the acquisition of Fund
Shares by investment companies is subject to the restrictions of
section 12(d)(1) of the Act, except as permitted by an exemptive order
that permits registered investment companies to invest in a Fund beyond
the limits in Section 12(d)(1), subject to certain terms and
conditions, including that the registered investment company enter into
a Participation Agreement with the Fund regarding the terms of the
investment.
    2. As long as a Fund operates in reliance on the requested order,
its Fund Shares 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. Each Fund's Prospectus
will prominently disclose that Fund Shares are not individually
redeemable shares and will disclose that the owners of Fund Shares may
acquire those Fund Shares from the Fund and tender those Fund Shares
for redemption to the Fund in Creation Unit Aggregations only. Any
advertising material that describes the purchase or sale of Creation
Unit Aggregations or refers to redeemability will prominently disclose
that Fund Shares are not individually redeemable, and that owners of
Fund Shares may acquire those Fund Shares from the Fund and tender
those Fund Shares for redemption to the Fund in Creation Unit
Aggregations only.
    4. The Web sites maintained for the Funds, which are and will be
publicly accessible at no charge, will contain the following
information, on a per Fund Share basis: (a) The prior Business Day's
NAV and the mid-point of the bid-ask spread at the time of the
calculation of NAV (``Bid/Ask Price''), and a calculation of the
premium or discount of the Bid/Ask Price at the time of calculation of
the NAV against such NAV; and (b) data in chart format displaying the
frequency distribution of discounts and premiums of the daily Bid/Ask
Price against the NAV, within appropriate ranges, for each of the four
previous calendar quarters.
    5. Each Fund's Prospectus and annual report will also include: (a)
The

information listed in condition 4(b), (i) in the case of the
Prospectus, for the most recently completed year (and the most recently
completed quarter or quarters, as applicable) and (ii) in the case of
the annual report, for the immediately preceding five years, as
applicable; and (b) the following data, calculated on a per Fund Share
basis for one, five and ten year periods (or life of the Fund): (i) The
cumulative total return and the average annual total return based on
NAV and Bid/Ask Price, and (ii) the cumulative total return of the
relevant Underlying Index.
    6. The requested relief to permit ETF operations will expire on the
effective date of any Commission rule under the Act that provides
relief permitting the operation of index-based ETFs.

Section 12(d)(1) Relief

    7. The members of an Investing Fund's Advisory Group will not
control (individually or in the aggregate) any Fund within the meaning
of section 2(a)(9) of the Act. The members of an Investing Fund's Sub-
Advisor Group will not control (individually or in the aggregate) any
Fund within the meaning of section 2(a)(9) of the Act. If, as a result
of a decrease in the outstanding Fund Shares, an Investing Fund's
Advisory Group or an Investing Fund's Sub-Advisor Group, each in the
aggregate, becomes a holder of more than 25 percent of the Fund Shares,
it will vote its Fund Shares in the same proportion as the vote of all
other holders of the Fund Shares. This condition does not apply to the
Investing Fund's Sub-Advisor Group if the Investing Fund Sub-Advisor or
a person controlling, controlled by, or under common control with the
Investing Fund Sub-Advisor acts as the investment adviser within the
meaning of section 2(a)(20)(A) of the Act.
    8. No Investing Fund or Investing Fund Affiliate will cause any
existing or potential investment by the Investing Fund in a Fund to
influence the terms of any services or transactions between the
Investing Fund or Investing Fund Affiliate and the Fund or Fund
Affiliate.
    9. The board of directors or trustees of an Investing Management
Company, including a majority of the independent directors or trustees,
will adopt procedures reasonably designed to ensure that the Investing
Fund's Advisor and any Investing Fund Sub-Advisor are conducting the
investment program of the Investing Management Company without taking
into account any consideration received by the Investing Management
Company or an Investing Fund Affiliate from a Fund or a Fund Affiliate
in connection with any services or transactions.
    10. Once an investment by an Investing Fund in Fund Shares exceeds
the limit in section 12(d)(1)(A)(i) of the Act, the board of directors
or trustees of a Fund (``Board''), including a majority of the
directors or trustees that are not ``interested persons'' within the
meaning of section 2(a)(19) of the Act (``independent Board members''),
will determine that any consideration paid by the Fund to the Investing
Fund or an Investing Fund Affiliate in connection with any services or
transactions: (a) Is fair and reasonable in relation to the nature and
quality of the services and benefits received by the Fund; (b) is
within the range of consideration that the Fund would be required to
pay to another unaffiliated entity in connection with the same services
or transactions; and (c) does not involve overreaching on the part of
any person concerned. This condition does not apply with respect to any
services or transactions between a Fund and its investment adviser(s),
or any person controlling, controlled by, or under common control with
such investment adviser.
    11. An Investing Fund Advisor, Trustee or Sponsor will waive fees
otherwise payable to it by the Investing Management Company or
Investing Trust in an amount at least equal to any compensation
(including fees received pursuant to any plan adopted by the Fund under
rule 12b-1 under the Act) received from a Fund by the Investing Fund
Advisor or Trustee or Sponsor, or an affiliated person of the Investing
Fund Advisor, Trustee or Sponsor, other than any advisory fees paid to
the Investing Fund Advisor, Trustee or Sponsor by the Fund, in
connection with the investment by the Investing Management Company or
Investing Trust in the Fund. Any Investing Fund Sub-Advisor will waive
fees otherwise payable to the Investing Fund Sub-Advisor, directly or
indirectly, by the Investing Management Company in an amount at least
equal to any compensation received from a Fund by the Investing Fund
Sub-Advisor, or an affiliated person of the Investing Fund Sub-Advisor,
other than any advisory fees paid to the Investing Fund Sub-Advisor or
its affiliated person by a Fund, in connection with the investment by
the Investing Management Company in a Fund made at the direction of the
Investing Fund Sub-Advisor. In the event that the Investing Fund Sub-
Advisor waives fees, the benefit of the waiver will be passed through
to the Investing Management Company.
    12. No Investing Fund or Investing Fund Affiliate (except to the
extent it is acting in its capacity as an investment adviser to a Fund)
will cause a Fund to purchase a security in an Affiliated Underwriting.
    13. The Board, including a majority of the independent Board
members, will adopt procedures reasonably designed to monitor any
purchases of securities by a Fund in an Affiliated Underwriting once an
investment by an Investing Fund in the Fund Shares exceeds the limit of
section 12(d)(1)(A)(i) of the Act, including any purchases made
directly from an Underwriting Affiliate. The Board will review these
purchases periodically, but no less frequently than annually, to
determine whether the purchases were influenced by the investment by
the Investing Fund in the Fund. The Board will consider, among other
things: (a) Whether the purchases were consistent with the investment
objectives and policies of the Fund; (b) how the performance of
securities purchased in an Affiliated Underwriting compares to the
performance of comparable securities purchased during a comparable
period of time in underwritings other than Affiliated Underwritings or
to a benchmark such as a comparable market index; and (c) whether the
amount of securities purchased by the Fund in Affiliated Underwritings
and the amount purchased directly from an Underwriting Affiliate have
changed significantly from prior years. The Board will take any
appropriate actions based on its review, including, if appropriate, the
institution of procedures designed to assure that purchases of
securities in Affiliated Underwritings are in the best interests of
shareholders.
    14. Each Fund will maintain and preserve permanently in an easily
accessible place a written copy of the procedures described in the
preceding condition, and any modifications to such procedures, and will
maintain and preserve for a period not less than six years from the end
of the fiscal year in which any purchase in an Affiliated Underwriting
occurred, the first two years in an easily accessible place, a written
record of each purchase of securities in Affiliated Underwritings once
an investment by an Investing Fund in Fund Shares 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 material
upon which the Board's determinations were made.

    15. Before investing in a Fund in excess of the limits in section
12(d)(1)(A), the Investing Fund and the Fund will execute a
Participation Agreement stating, without limitation, that their boards
of directors or trustees and their investment advisers, and the 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 Fund Shares in excess of the limit in
section 12(d)(1)(A)(i), an Investing Fund will notify the Fund of the
investment. At such time, the Investing Fund will also transmit to such
Fund a list of names of each Investing Fund Affiliate and Underwriting
Affiliate. The Investing Fund will notify the Fund of any changes to
the list of names as soon as reasonably practicable after a change
occurs. The Fund and the Investing Fund will maintain and preserve a
copy of the order, the 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.
    16. 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 independent 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 Fund in which the Investing Management Company may invest. These
findings and their basis will be recorded fully in the minute books of
the appropriate Investing Management Company.
    17. Any sales charges and/or service fees charged with respect to
shares of an Investing Fund will not exceed the limits applicable to a
fund of funds as set forth in Conduct Rule 2830 of the NASD.
    18. No Fund will acquire securities of any investment company or
companies relying on sections 3(c)(1) or 3(c)(7) of the Act in excess
of the limits contained in section 12(d)(1)(A) of the Act, except as
permitted pursuant to rule 12d1-1 under the Act.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-27130 Filed 11-10-09; 8:45 am]

BILLING CODE 8011-01-P