[Federal Register Volume 79, Number 25 (Thursday, February 6, 2014)]
[Notices]
[Pages 7258-7267]
[FR Doc No: 2014-02502]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71456; File No. SR-NYSEArca-2013-116]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of Proposed Rule Change Relating to Listing and Trading of
Shares of AdvisorShares International Gold ETF, AdvisorShares Gartman
Gold/Yen ETF, AdvisorShares Gartman Gold/British Pound ETF, and
AdvisorShares Gartman Gold/Euro ETF Under NYSE Arca Equities Rule 8.600

January 31, 2014.

I. Introduction

    On November 29, 2013, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade shares (``Shares'') of the
AdvisorShares International Gold ETF (``International Gold ETF'');
AdvisorShares Gartman Gold/Yen ETF (``Gold/Yen ETF''); AdvisorShares
Gartman Gold/British Pound ETF (``Gold/British Pound ETF''); and
AdvisorShares Gartman Gold/Euro ETF (``Gold/Euro ETF,'' and, together
with the International Gold ETF, Gold/Yen ETF, and Gold/British Pound
ETF, collectively, ``Funds'') \3\ of the AdvisorShares Trust
(``Trust''). The proposed rule change was published for comment in the
Federal Register on December 19, 2013.\4\ The Commission received no
comments on the proposal. This order grants approval of the proposed
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Gold/Yen ETF, Gold/British Pound ETF, and Gold/Euro ETF
are also referred to collectively herein as the ``Gartman Funds.''
    \4\ See Securities Exchange Act Release No. 71076 (Dec. 13,
2013), 78 FR 76867 (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade Shares of the Funds under
NYSE Arca Equities Rule 8.600, which governs the listing and trading of
Managed Fund Shares. The Shares will be offered by the Trust,\5\ a
Delaware statutory trust that is registered with the Commission as an
open-end management investment company. The investment adviser to the
Funds will be AdvisorShares Investments, LLC (``Adviser''). Treesdale
Partners, LLC (``Sub-Adviser'') will be the Funds' sub-adviser.
Foreside Fund Services, LLC will be the principal underwriter and
distributor of the Funds' Shares. The Bank of New York Mellon will
serve as the administrator, custodian, transfer agent, and accounting
agent for the Funds. The Exchange represents that neither the Adviser
nor the Sub-Adviser is a broker-dealer or is affiliated with a broker-
dealer.\6\
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    \5\ The Trust is registered under the Investment Company Act of
1940 (``1940 Act''). On March 29, 2013, the Trust filed with the
Commission an amendment to its registration statement on Form N-1A
under the Securities Act of 1933 (``Securities Act'') and under the
1940 Act relating to the Fund (``Registration Statement''). In
addition, the Exchange states that the Trust has obtained certain
exemptive relief under the 1940 Act. See Investment Company Act
Release No. 29291 (May 28, 2010) (File No. 812-13677).
    \6\ See Commentary .06 to NYSE Arca Equities Rule 8.600. The
Exchange represents that, in the event that (a) the Adviser or Sub-
Adviser becomes a registered broker-dealer or becomes newly
affiliated with a broker-dealer, or (b) any new adviser or sub-
adviser is a registered broker-dealer, or becomes affiliated with a
broker-dealer, it will implement a fire wall with respect to its
relevant personnel or its broker-dealer affiliate, as the case may
be, regarding access to information concerning the composition of,
or changes to, a Fund's portfolio and will be subject to procedures
designed to prevent the use and dissemination of material, non-
public information regarding a Fund's portfolio.
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    The Exchange has made the following representations and statements
in describing the Funds and their respective investment strategies,
including other permitted portfolio holdings and investment
restrictions.\7\
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    \7\ The Commission notes that additional information regarding
the Trust, the Funds, and the Shares, including investment
strategies, risks, net asset value (``NAV'') calculation, creation
and redemption procedures, fees, portfolio holdings disclosure
policies, distributions, and taxes, among other information, is
included in the Notice and the Registration Statement, as
applicable. See Notice and Registration Statement, supra notes 4 and
5, respectively.
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International Gold ETF--Principal Investments

    The International Gold ETF will be considered a fund of funds that,
under normal circumstances,\8\ will seek to achieve its investment
objective by primarily taking long positions in other exchange-traded
funds (``ETFs'') that offer diversified exposure to the international
gold market.\9\ The Sub-Adviser will seek, as appropriate, to maintain
a balanced allocation of the International Gold ETF's assets in ETFs in
which it invests, which ETFs may be both affiliated and unaffiliated.
The affiliated ETFs are the Gartman Funds. In addition, the Fund may
seek to invest in long positions in exchange-traded notes
(``ETNs''),\10\ closed-end funds,\11\ and other exchange-traded
products (``ETPs,'' and, together with ETFs, ETNs, and closed-end
funds, collectively, ``Underlying ETPs'') \12\ that offer diversified
exposure to the international gold market. Under normal circumstances,
the Fund will invest at least 80% of its total assets in those
Underlying ETPs.
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    \8\ The term ``under normal circumstances'' includes, but is not
limited to, the absence of adverse market, economic, political, or
other conditions, including extreme volatility or trading halts in
the equities markets or the financial markets generally; operational
issues causing dissemination of inaccurate market information; or
force majeure type events such as systems failure, natural or man-
made disaster, act of God, armed conflict, act of terrorism, riot or
labor disruption, or any similar intervening circumstance.
    \9\ For purposes of this filing, ETFs include Investment Company
Units (as described in NYSE Arca Equities Rule 5.2(j)(3)); Portfolio
Depository Receipts (as described in NYSE Arca Equities Rule 8.100);
and Managed Fund Shares (as described in NYSE Arca Equities Rule
8.600). The ETFs in which a Fund will invest all will be listed and
traded on national securities exchanges. The Funds will invest in
the securities of ETFs registered under the 1940 Act consistent with
the requirements of Section 12(d)(1) of the 1940 Act, or any rule,
regulation, or order of the Commission or interpretation thereof.
The Funds will only make these investments in conformity with the
requirements of Regulation M of the Internal Revenue Code of 1986,
as amended (``Internal Revenue Code'').
    \10\ ETNs are securities listed and traded on the Exchange under
NYSE Arca Equities Rule 5.2(j)(6). ETNs are senior, unsecured
unsubordinated debt securities issued by an underwriting bank that
are designed to provide returns that are linked to a particular
benchmark less investor fees. ETNs have a maturity date and,
generally, are backed only by the creditworthiness of the issuer.
    \11\ A closed-end fund is a pooled investment vehicle that is
registered under the 1940 Act and whose shares are listed and traded
on U.S. national securities exchanges.
    \12\ For purposes of this filing, Underlying ETPs include Trust
Issued Receipts (as described in NYSE Arca Equities Rule 8.200);
Commodity-Based Trust Shares (as described in NYSE Arca Equities
Rule 8.201); Currency Trust Shares (as described in NYSE Arca
Equities Rule 8.202); Commodity Index Trust Shares (as described in
NYSE Arca Equities Rule 8.203); and Trust Units (as described in
NYSE Arca Equities Rule 8.500).
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    The Sub-Adviser's gold investment strategy will be an active
investment strategy that expresses a long position in gold, but
diversifies the currencies in which the purchase is financed. The
International Gold ETF will seek to provide an accessible method by
which

an investor is able to express a view on the value of gold versus any
one of a number of liquid currencies, including the U.S. dollar, the
Japanese Yen, the European Euro, and the British Pound.
    The Sub-Adviser, in determining the International Gold ETF's
investment allocation, will follow a proprietary investment process to
assess the relative value of gold versus each of the currencies
represented in the Underlying ETPs. In general, if the Sub-Adviser
determines that the price of gold versus a particular currency offers
an expected return that exceeds that offered by gold versus other
currencies, the Underlying ETP that offers that exposure, all things
being equal, will receive a larger allocation of the International Gold
ETF's assets for investment. While the Sub-Adviser will actively
determine the allocation of the International Gold ETF's investments
among Underlying ETPs, the value of these investments may change on any
day due to market fluctuations and thus alter the allocation.
    The Sub-Adviser will also consider the relative price volatility of
gold versus each of the currencies represented within an Underlying ETP
in making allocation decisions. In general, the higher the volatility
of the price of gold versus a particular currency (defined as the
standard deviation of historical daily returns), the lower the
allocation of capital to that Underlying ETP.
    In managing the International Gold ETF, the Sub-Adviser will
consider the asset size of the International Gold ETF, as well as
liquidity conditions in both the Gartman Funds and Underlying ETP
markets, in an effort to ensure best execution and minimize potential
market disruption.

Gold/Yen ETF--Principal Investments

    The Gold/Yen ETF will seek to provide positive returns by utilizing
the Japanese Yen to invest its assets in the gold market. In seeking to
achieve the Gold/Yen ETF's investment objective, the Sub-Adviser will
invest the Gold/Yen ETF's assets in instruments that provide exposure
to the international gold market utilizing the Japanese Yen. This
strategy will provide an investment vehicle for investors who believe
that the value of the Gold/Yen ETF's investments in gold purchased in
Japanese Yen will appreciate. Accordingly, in managing the Gold/Yen
ETF, the Sub-Adviser will use the Japanese Yen, obtained synthetically
through the sale of either exchange-traded currency futures or over-
the-counter (``OTC'') foreign exchange forward contracts, as the
currency in which purchases of gold are made. This ``Gold Financed in
Yen'' investment strategy will enable the Sub-Adviser to provide an
alternate gold investment vehicle that seeks to reduce U.S. dollar
exposure.
    The Gold/Yen ETF will seek to achieve its investment objective by
investing directly (and not through the Gold/Yen ETF Subsidiary, as
described below), under normal circumstances, at least 75% of its
assets in cash and cash equivalents, plus ``currency-linked
derivatives'' (consisting of exchange-traded Japanese Yen futures
traded on the Chicago Mercantile Exchange (``CME''), Japanese Yen
forward contracts, and currency (and not gold) swaps), with cash and
cash equivalents comprising the majority of the Gold/Yen ETF's assets.
Up to 25% of the Gold/Yen ETF's total assets will be invested in the
Gold/Yen ETF Subsidiary, as described below. The distribution of the
Gold/Yen ETF's investments in these currency-linked derivatives will be
at the discretion of the Sub-Adviser. All of the Gold/Yen ETF's
investments in these currency-linked derivatives will be backed by
collateral of the Gold/Yen ETF's assets, as required, and will be
diversified across multiple (generally more than 5) counterparties. In
addition, these currency-linked derivatives will be subject to the
limits on leverage imposed by the 1940 Act. Through its investment in a
wholly-owned and controlled subsidiary organized outside the United
States in the Cayman Islands (``Gold/Yen ETF Subsidiary''), the Gold/
Yen ETF will obtain long exposure to the international gold market.
Section 18(f) of the 1940 Act and related Commission guidance limit the
amount of leverage an investment company, and, in this case, the Gold/
Yen ETF Subsidiary, can obtain.
    The Gold/Yen ETF may also invest in Underlying ETPs. The Sub-
Adviser will rebalance its positions in the Gold/Yen ETF and in the
Gold/Yen ETF Subsidiary periodically as the value of gold relative to
the value of the Japanese Yen fluctuates in international markets.
    The Gold/Yen ETF may invest directly and indirectly in foreign
currencies. The Gold/Yen ETF may conduct foreign currency transactions
on a spot (i.e., cash) or forward basis (i.e., by entering into forward
contracts to purchase or sell foreign currencies). Currency
transactions made on a spot basis are for cash at the spot rate
prevailing in the currency exchange market for buying or selling
currency. Forward contracts are customized transactions that require a
specific amount of a currency to be delivered at a specific exchange
rate on a specific date or range of dates in the future and can have
substantial price volatility. Forward contracts are generally traded in
an interbank market directly between currency traders (usually large
commercial banks) and their customers.
    The Gold/Yen ETF, and certain Underlying ETPs in which the Gold/Yen
ETF invests, may enter into swap agreements, including, but not limited
to, total return swaps and index swaps. The Gold/Yen ETF may utilize
swap agreements in an attempt to gain exposure to the asset in a market
without actually purchasing the asset or to hedge a position. Any swaps
used will be cash collateralized as required.\13\
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    \13\ Each of the Gartman Funds will utilize cleared swaps if
available and to the extent practicable and not enter into any swap
agreement unless the Adviser believes that the other party to the
transaction is creditworthy. The Sub-Adviser will evaluate the
creditworthiness of counterparties on an ongoing basis. In addition
to information provided by credit agencies, the Sub-Adviser's credit
analysts will evaluate each approved counterparty using various
methods of analysis, including company visits, earnings updates, the
broker-dealer's reputation, past experience with the broker-dealer,
market levels for the counterparty's debt and equity, the
counterparty's liquidity, and its share of market participation.
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    On a daily basis, the Sub-Adviser will evaluate the gold market to
determine whether the exchange-traded markets or the OTC markets
provide the Gold/Yen ETF with optimal investment opportunities. As part
of its daily evaluation, the Sub-Adviser will utilize information from
The Gartman Letter, a daily commentary on the global capital markets,
including political, economic, and technical trends from both long-term
and short-term perspectives.\14\ The Sub-Adviser will carefully
consider the liquidity of the investment, the cost of executing the
purchase or sale, and the creditworthiness of the counterparty.
Similarly, the Sub-Adviser will evaluate the market for the Japanese
Yen to achieve the optimal duration at which

to finance gold purchases for the Gold/Yen ETF. The Sub-Adviser will
not participate in transactions in Japanese Yen where the maximum
duration exceeds ninety days.
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    \14\ The Adviser has contracted with Gartman Capital Management,
L.C. to provide the investment objectives of the Gartman Funds, to
provide data to the Adviser and to permit the use of the Gartman
name. Gartman Capital Management, L.C. is an affiliate of The
Gartman Letter. The Gartman Letter is written by Dennis Gartman. For
the services and license provided to the Gartman Funds, the Adviser
will pay Gartman Capital Management, L.C. a fee from its legitimate
profits and resources. Gartman Capital Management, L.C. and The
Gartman Letter, L.C. will have no involvement in the day-to-day
management of the Gartman Funds. Gartman Capital Management, L.C. is
neither a broker-dealer nor affiliated with a broker-dealer. In the
event Gartman Capital Management, L.C. becomes a broker-dealer, or
becomes newly affiliated with a broker-dealer, it will implement a
fire wall with respect to such broker-dealer regarding access to
information concerning the composition or changes to the applicable
portfolio, and will be subject to procedures designed to prevent the
use and dissemination of material, non-public information regarding
the applicable portfolio.
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    In managing the Gold/Yen ETF, the Sub-Adviser will consider the
asset size of the Gold/Yen ETF, as well as liquidity conditions in both
the gold and currency markets, in an effort to ensure best execution
and minimize potential market disruption.
    As discussed above, the Sub-Adviser will seek to gain additional
exposure to gold through its investment in the Gold/Yen ETF Subsidiary.
The Gold/Yen ETF's investment in the Gold/Yen ETF Subsidiary may not
exceed 25% of the Gold/Yen ETF's total assets at each quarter end of
the Gold/Yen ETF's fiscal year. The purpose of the Gold/Yen ETF's
investment in the Gold/Yen ETF Subsidiary will be to provide the Gold/
Yen ETF with additional exposure to commodity returns within the limits
of the federal tax requirements applicable to investment companies,
such as the Gold/Yen ETF. The Gold/Yen ETF Subsidiary's investments in
``commodity-linked derivative instruments'' (i.e., futures, forwards,
and swaps based on the price of gold) will be subject to limits on
leverage imposed by the 1940 Act. Section 18(f) of the 1940 Act and
related Commission guidance limit the amount of leverage an investment
company, and in this case the Gold/Yen ETF Subsidiary, can obtain.
Except as noted, references to the investment strategies and risks of
the Gold/Yen ETF include the investment strategies and risks of the
Gold/Yen ETF Subsidiary. The Gold/Yen ETF Subsidiary's shares will only
be offered to the Gold/Yen ETF, and the Gold/Yen ETF will not sell any
shares of the Gold/Yen ETF Subsidiary to any other investors.

Gold/British Pound ETF--Principal Investments

    The Gold/British Pound ETF will seek to provide positive returns by
utilizing the British Pound (GBP) to invest its assets in the gold
market. In seeking to achieve the Gold/British Pound ETF's investment
objective, the Sub-Adviser will invest the Gold/British Pound ETF's
assets in instruments that provide exposure to the international gold
market utilizing the British Pound. This strategy will provide an
investment vehicle for investors who believe that the value of the
Gold/British Pound ETF's investments in gold purchased in British
Pounds will appreciate. Accordingly, in managing the Gold/British Pound
ETF, the Sub-Adviser will use the British Pound, obtained synthetically
through the sale of either exchange-traded currency futures or OTC
foreign exchange forward contracts, as the currency in which purchases
of gold are made. This ``Gold Financed in British Pounds'' investment
strategy will enable the Sub-Adviser to provide an alternate gold
investment vehicle that seeks to reduce U.S. dollar exposure.
    The Gold/British Pound ETF will seek to achieve its investment
objective by investing directly (and not through the Gold/British Pound
Subsidiary, as described below), under normal circumstances, at least
75% of its assets in cash and cash equivalents, plus currency-linked
derivatives (consisting of exchange-traded British Pound futures
principally traded on the CME, British Pound forward contracts, and
currency (and not gold) swaps), with cash and cash equivalents
comprising the majority of the Gold/British Pound ETF's assets. Up to
25% of the Gold/British Pound ETF's total assets will be invested in
the Gold/British Pound ETF Subsidiary, as described below. The
distribution of the Gold/British Pound ETF's investments in these
currency-linked derivatives will be at the discretion of the Funds'
Sub-Adviser. All of the Gold/British Pound ETF's investments in these
currency-linked derivatives will be backed by collateral of the Gold/
British Pound ETF's assets, as required, and will be diversified across
multiple (generally more than 5) counterparties. In addition, these
currency-linked derivatives will be subject to the limits on leverage
imposed by the 1940 Act. Through its investment in a wholly-owned and
controlled subsidiary organized outside the United States in the Cayman
Islands (``Gold/British Pound ETF Subsidiary''), the Gold/British Pound
ETF will obtain long exposure to the international gold market. Section
18(f) of the 1940 Act and related Commission guidance limit the amount
of leverage an investment company, and in this case, the Gold/British
Pound ETF Subsidiary, can obtain.
    The Gold/British Pound ETF may also invest in Underlying ETPs. The
Sub-Adviser will rebalance its positions in the Gold/British Pound ETF
and in the Gold/British Pound ETF Subsidiary periodically as the value
of gold relative to the value of the British Pound fluctuates in
international markets.
    The Gold/British Pound ETF may invest directly, or indirectly, in
foreign currencies. The Gold/British Pound ETF may conduct foreign
currency transactions on a spot (i.e., cash) or forward basis (i.e., by
entering into forward contracts to purchase or sell foreign
currencies). Currency transactions made on a spot basis are for cash at
the spot rate prevailing in the currency exchange market for buying or
selling currency. Forward contracts are customized transactions that
require a specific amount of a currency to be delivered at a specific
exchange rate on a specific date or range of dates in the future and
can have substantial price volatility. Forward contracts are generally
traded in an interbank market directly between currency traders
(usually large commercial banks) and their customers.
    The Gold/British Pound ETF, and certain Underlying ETPs in which
the Gold/British Pound ETF invests, may enter into swap agreements,
including, but not limited to, total return and index swaps. The Gold/
British Pound ETF may utilize swap agreements in an attempt to gain
exposure to an asset in a market without actually purchasing the asset
or to hedge a position. Any swaps used will be cash collateralized as
required.\15\
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    \15\ See supra note 13.
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    On a daily basis, the Sub-Adviser will evaluate the gold market to
determine whether the exchange-traded markets or the OTC markets
provide the Gold/British Pound ETF with optimal investment
opportunities. As part of its daily evaluation, the Sub-Adviser will
utilize information from The Gartman Letter, as referenced above. The
Sub-Adviser will carefully consider the liquidity of the investment,
the cost of executing the purchase or sale, and the creditworthiness of
the counterparty. Similarly, the Sub-Adviser will evaluate the market
for the British Pound to achieve the optimal duration at which to
finance gold purchases for the Gold/British Pound ETF. The Sub-Adviser
will not participate in transactions in the British Pound where the
maximum duration exceeds ninety days.
    In managing the Gold/British Pound ETF, the Sub-Adviser will
consider the asset size of the Gold/British Pound ETF, as well as
liquidity conditions in both the gold and currency markets, in an
effort to ensure best execution and minimize potential market
disruption.
    As discussed above, the Sub-Adviser will seek to gain additional
exposure to gold through its investment in the Gold/British Pound ETF
Subsidiary The Gold/British Pound ETF's investment in the Gold/British
Pound ETF Subsidiary may not exceed 25% of the Gold/British Pound ETF's
total assets at each quarter end of the Gold/British Pound ETF's fiscal
year. The purpose of the Gold/British Pound ETF's investment in the
Gold/British Pound ETF Subsidiary will

be to provide the Gold/British Pound ETF with additional exposure to
commodity returns within the limits of the federal tax requirements
applicable to investment companies, such as the Gold/British Pound ETF.
The Gold/British Pound ETF Subsidiary's investments in commodity-linked
derivative instruments (i.e., futures, forwards, and swaps based on the
price of gold) will be subject to limits on leverage imposed by the
1940 Act. Section 18(f) of the 1940 Act and related Commission guidance
limit the amount of leverage an investment company, and in this case
the Gold/British Pound ETF Subsidiary, can obtain. Except as noted,
references to the investment strategies and risks of the Gold/British
Pound ETF include the investment strategies and risks of the Gold/
British Pound ETF Subsidiary. The Gold/British Pound ETF Subsidiary's
shares will only be offered to the Gold/British Pound ETF and the Gold/
British Pound ETF will not sell any shares of the Gold/British Pound
ETF Subsidiary to any other investors.

Gold/Euro ETF--Principal Investments

    The Gold/Euro ETF will seek to provide positive returns by
utilizing the Euro to invest its assets in the gold market. In seeking
to achieve the Gold/Euro ETF's investment objective, the Sub-Adviser
will invest the Gold/Euro ETF's assets in instruments that provide
exposure to the international gold market utilizing the Euro. This
strategy provides an investment vehicle for investors who believe that
the value of the Gold/Euro ETF's investments in gold purchased in Euros
will appreciate.
    Accordingly, in managing the Gold/Euro ETF, the Sub-Adviser will
use the Euro, obtained synthetically through the sale of either
exchange-traded currency futures or OTC foreign exchange forward
contracts, as the currency in which purchases of gold are made. This
``Gold Financed in Euro'' investment strategy will enable the Sub-
Adviser to provide an alternate gold investment vehicle that will seek
to reduce U.S. dollar exposure.
    The Gold/Euro ETF will seek to achieve its investment objective by
investing directly (and not through the Gold/Euro ETF Subsidiary, as
described below), under normal circumstances, at least 75% of its
assets in cash and cash equivalents, plus currency-linked derivatives
(consisting of exchange-traded Euro futures traded on the CME, Euro
forward contracts, and currency (and not gold) swaps), with cash and
cash equivalents comprising the majority of the Gold/Euro ETF's assets.
Up to 25% of the Gold/Euro ETF's assets will be invested in the Gold/
Euro ETF Subsidiary, as described below. The distribution of the Gold/
Euro ETF's investments in these currency-linked derivatives will be at
the discretion of the Fund's Sub-Adviser. All of the Gold/Euro ETF's
investments in these currency-linked derivatives will be backed by
collateral of the Gold/Euro ETF's assets, as required, and will be
diversified across multiple (generally more than 5) counterparties. In
addition, these currency-linked derivatives will be subject to the
limits on leverage imposed by the 1940 Act. Through its investment in a
wholly-owned and controlled subsidiary organized outside the United
States in the Cayman Islands (``Gold/Euro ETF Subsidiary''), the Gold/
Euro ETF will obtain long exposure to the international gold market.
The Gold/Euro ETF may also invest in Underlying ETPs. The Sub-Adviser
will rebalance its positions in the Gold/Euro ETF and in the Gold/Euro
ETF Subsidiary periodically as the value of gold relative to the value
of the Euro fluctuates in international markets.
    The Gold/Euro ETF may invest directly and indirectly in foreign
currencies. The Gold/Euro ETF may conduct foreign currency transactions
on a spot (i.e., cash) or forward basis (i.e., by entering into forward
contracts to purchase or sell foreign currencies). Currency
transactions made on a spot basis are for cash at the spot rate
prevailing in the currency exchange market for buying or selling
currency. Forward contracts are customized transactions that require a
specific amount of a currency to be delivered at a specific exchange
rate on a specific date or range of dates in the future and can have
substantial price volatility. Forward contracts are generally traded in
an interbank market directly between currency traders (usually large
commercial banks) and their customers.
    The Gold/Euro ETF, and certain Underlying ETPs in which the Gold/
Euro ETF invests, may enter into swap agreements, including, but not
limited to, total return swaps and index swaps. The Gold/Euro ETF may
utilize swap agreements in an attempt to gain exposure to an asset in a
market without actually purchasing the asset or to hedge a position.
Any swaps used will be cash collateralized as required.\16\
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    \16\ See supra note 13.
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    On a daily basis, the Sub-Adviser will evaluate the gold market to
determine whether the exchange-traded markets or the OTC markets
provide the Gold/Euro ETF with optimal investment opportunities. As
part of its daily evaluation, the Sub-Adviser will utilize information
from The Gartman Letter, as referenced above. The Sub-Adviser will
carefully consider the liquidity of the investment, the cost of
executing the purchase or sale, and the creditworthiness of the
counterparty. Similarly, the Sub-Adviser will evaluate the market for
Euros to achieve the optimal duration at which to finance gold
purchases for the Gold/Euro ETF. The Sub-Adviser will not participate
in transactions in the Euro where the maximum duration exceeds ninety
days.
    In managing the Gold/Euro ETF, the Sub-Adviser will consider the
asset size of the Gold/Euro ETF, as well as liquidity conditions in
both the gold and currency markets, in an effort to ensure best
execution and minimize potential market disruption.
    As discussed above, the Sub-Adviser seeks to gain additional
exposure to gold through its investment in the Gold/Euro ETF
Subsidiary. The Gold/Euro ETF's investment in the Gold/Euro ETF
Subsidiary may not exceed 25% of the Gold/Euro ETF's total assets at
each quarter end of the Gold/Euro ETF's fiscal year. The purpose of the
Gold/Euro ETF's investment in the Gold/Euro ETF Subsidiary will be to
provide the Gold/Euro ETF with additional exposure to commodity returns
within the limits of the federal tax requirements applicable to
investment companies, such as the Gold/Euro ETF. The Gold/Euro ETF
Subsidiary's investments in commodity-linked derivative instruments
(i.e., futures, forwards, and swaps based on the price of gold) will be
subject to limits on leverage imposed by the 1940 Act. Section 18(f) of
the 1940 Act and related Commission guidance limit the amount of
leverage an investment company, and in this case the Gold/Euro ETF
Subsidiary, can obtain. Except as noted, references to the investment
strategies and risks of the Gold/Euro ETF include the investment
strategies and risks of the Gold/Euro ETF Subsidiary. The Gold/Euro ETF
Subsidiary's shares will only be offered to the Gold/Euro ETF and the
Gold/Euro ETF will not sell any shares of the Gold/Euro ETF Subsidiary
to any other investors.

Other Investments of the Funds

    In the absence of normal circumstances,\17\ a Fund may have
temporary defensive positions to respond to adverse market, economic,
political, or other conditions. A Fund may invest 100% of its total
assets, without limitation, either directly or indirectly through
Underlying ETPs, in debt securities and money market

instruments, shares of other mutual funds, commercial paper,
certificates of deposit, bankers' acceptances, U.S. government
securities, repurchase agreements, or bonds that are rated BBB or
higher by Standard & Poor's Ratings Group (``S&P''). A Fund may be
invested in this manner for extended periods depending on the Sub-
Adviser's assessment of market conditions.
---------------------------------------------------------------------------

    \17\ See supra note 8.
---------------------------------------------------------------------------

    While each Fund's principal investments, under normal
circumstances, will be as described above, a Fund may invest up to 20%
of its assets in other investments, as described below.
    The International Gold ETF may invest directly and indirectly in
foreign currencies. The International Gold ETF may invest in foreign
currency transactions on a spot (i.e., cash) or forward basis (i.e., by
entering into forward contracts to purchase or sell foreign
currencies). Currency transactions made on a spot basis are for cash at
the spot rate prevailing in the currency exchange market for buying or
selling currency. Forward contracts are customized transactions that
require a specific amount of a currency to be delivered at a specific
exchange rate on a specific date, or range of dates, in the future and
can have substantial price volatility. Forward contracts are generally
traded in an interbank market directly between currency traders
(usually large commercial banks) and their customers.
    The International Gold ETF, and certain Underlying ETPs in which
the International Gold ETF invests, may enter into swap agreements,
including, but not limited to, total return and index swaps, which will
be expected to only be tied to the price of gold. The International
Gold ETF may utilize swap agreements in an attempt to gain exposure to
an asset in a market without actually purchasing the asset (in this
case, gold), or to hedge a position.\18\ The International Gold ETF
will utilize cleared swaps if available and to the extent practicable,
and will not enter into any swap agreement unless the Adviser believes
that the other party to the transaction is creditworthy.\19\ Any swaps
used will be cash collateralized as required.
---------------------------------------------------------------------------

    \18\ See supra note 13.
    \19\ See id.
---------------------------------------------------------------------------

    The International Gold ETF may also invest a proportion of its
assets in Underlying ETPs that do not offer diversified exposure to the
international gold market.
    Periodically, with respect to the International Gold ETF, the Sub-
Adviser may decide to purchase downside market protection to hedge
against the risk of a large downward movement in the price of gold
based on a proprietary assessment of the expected return from holding
gold over a time horizon of generally no more than ninety days. The
Sub-Adviser may implement this portion of its investment strategy by
employing a number of option-based strategies using U.S.-listed equity
options with maturities of no more than 90 days. The Sub-Adviser may
pay a premium to buy a put option tied to the price of gold, which
should rise in value when the price of gold declines, thus protecting
the value of the International Gold ETF in the event of a large
downward movement in the price of gold. The Sub-Adviser also may employ
a strategy of buying a put option tied to the price of gold and
simultaneously selling a call option tied to the price of gold, known
as a ``collar'' hedging strategy. Both options should increase in value
as the price of gold declines, while the combination of the put and
call options is intended to reduce the premium cost of the hedge
transaction. However, writing gold options may limit the potential
profit the International Gold ETF would earn if the price of gold
rises. Regardless of the option-based strategy employed, the Sub-
Adviser will not utilize any strategy in which the value of the options
sold exceeds the value of the International Gold ETF's portfolio
investments, thereby limiting potential losses. The Sub-Adviser will
utilize this option strategy only as a means to hedge its long position
in gold.
    The Gold/British Pound ETF, Gold/Yen ETF, and Gold/Euro ETF may
invest in ETFs that are primarily index-based ETFs that hold
substantially all of their assets in securities representing a specific
index. The Gold/British Pound ETF, Gold/Yen ETF, and Gold/Euro ETF also
may invest in ETFs that are actively managed and may invest in closed-
end funds.
    While the Funds do not anticipate doing so, they may borrow money
for investment purposes, a form of leverage. A Fund may also borrow
money to facilitate management of a Fund's portfolio by enabling a Fund
to meet redemption requests when the liquidation of portfolio
instruments would be inconvenient or disadvantageous. This borrowing
will not be for investment purposes, will be repaid by a Fund promptly,
and will be consistent with the requirements of the 1940 Act and the
rules thereunder.
    At the discretion of the Adviser, the Funds may, but are not
obligated to, enter into forward currency exchange contracts for
hedging purposes to help reduce the risks and volatility caused by
changes in foreign currency exchange rates.
    While the Funds do not expect to engage in currency hedging, they
may (and certain of the Underlying ETPs in which the Funds invest may)
use currency transactions in order to hedge the value of portfolio
holdings denominated in particular currencies against fluctuations in
relative value, including forward currency contracts, exchange-listed
currency futures and currency options, exchange-listed and OTC options
\20\ on currencies and currency swaps, and options on currency futures.
The Funds may use futures contracts and related options for bona fide
hedging; attempting to offset changes in the value of securities held
or expected to be acquired or be disposed of; or other risk management
purposes.\21\
---------------------------------------------------------------------------

    \20\ The Funds may trade put and call options on securities,
securities indices, and currencies as the Sub-Adviser determines is
appropriate in seeking a Fund's investment objective and except as
restricted by a Fund's investment limitations. A Fund may buy or
sell no more than 10% of its net assets in put and call options on
foreign currencies either on exchanges or in the OTC market. A put
option on a foreign currency gives the purchaser of the option the
right to sell a foreign currency at the exercise price until the
option expires. A call option on a foreign currency gives the
purchaser of the option the right to purchase the currency at the
exercise price until the option expires.
    \21\ The Exchange states that, to the extent a Fund invests in
futures, options on futures, or other instruments subject to
regulation by the Commodity Futures Trading Commission (``CFTC''),
it will do so in compliance with CFTC regulations in effect from
time to time and in accordance with the Fund's policies. To comply
with recent changes to the CFTC regulations pertaining to registered
investment companies that invest in derivatives regulated by the
CFTC, such as futures contracts, the Funds expect to register with
the CFTC as commodity pools, and the Adviser expects to register
with the CFTC as a commodity pool operator prior to the Funds'
commencement of operations. By registering with the CFTC, the Funds
and the Adviser will be subject to regulation by the CFTC and the
National Futures Association. The recent changes to CFTC regulations
went into effect on December 31, 2012, but because the CFTC has not
yet adopted regulations intended to ``harmonize'' the CFTC's
regulation of newly registered investment companies with that of the
Commission, the impact of registration on the Funds' operations is
not yet known. Once the compliance obligations of the Funds under
the CFTC's regulatory scheme are finalized, the Funds may consider
modifying their principal investment strategies and structure by
reducing substantially their investments in, or exposure to,
derivative instruments subject to regulation by the CFTC in order to
qualify for the exemption from CFTC regulation provided by CFTC
Regulation 4.5. Alternatively, the Funds may determine to continue
to be subject to CFTC regulation and comply with all applicable
requirements, including registration and disclosure requirements
governing commodity pools under the Commodity Exchange Act.
Compliance with the CFTC's additional regulatory requirements may
increase a Fund's operating expenses.
---------------------------------------------------------------------------

    A Fund's or an Underlying ETP's dealings in forward currency
contracts

and other currency transactions such as futures, options on futures,
options on currencies, and swaps will be limited to hedging involving
either specific transactions (``Transaction Hedging'') \22\ or
portfolio positions (``Position Hedging'').\23\
---------------------------------------------------------------------------

    \22\ Transaction Hedging is entering into a currency transaction
with respect to specific assets or liabilities of a Fund, or certain
Underlying ETPs in which a Fund invests, which will generally arise
in connection with the purchase or sale of its portfolio securities
or the receipt of income therefrom. A Fund, or certain Underlying
ETPs in which a Fund invests, may enter into Transaction Hedging out
of a desire to preserve the U.S. dollar price of a security when it
enters into a contract for the purchase or sale of a security
denominated in a foreign currency.
    \23\ Position Hedging is entering into a currency transaction
with respect to portfolio security positions denominated or
generally quoted in that currency. A Fund, or certain Underlying
ETPs in which a Fund invests, may use Position Hedging when the
Adviser believes that the currency of a particular foreign country
may suffer a substantial decline against the U.S. dollar. A Fund, or
certain Underlying ETPs in which a Fund invests, may enter into a
forward foreign currency contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of
some or all of its portfolio securities denominated in the foreign
currency. A Fund, or certain Underlying ETPs in which a Fund
invests, will not enter into a transaction to hedge currency
exposure to an extent greater, after netting all transactions
intended wholly or partially to offset other transactions, than the
aggregate market value (at the time of entering into the
transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into the
currency, other than with respect to proxy hedging as described
below.
---------------------------------------------------------------------------

    The Funds, or certain Underlying ETPs in which the Funds invest,
may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in
value relative to other currencies to which the Funds, or certain
Underlying ETPs in which the Funds invest, have or in which the Funds,
or certain Underlying ETPs in which the Funds invest, expect to have
portfolio exposure.
    To reduce the effect of currency fluctuations on the value of
existing or anticipated holdings of portfolio securities, a Fund, or
certain of the Underlying ETPs in which a Fund invests, may also engage
in proxy hedging. Proxy hedging is often used when the currency to
which the portfolio of a Fund, or of an Underlying ETP in which a Fund
invests, is exposed is difficult to hedge or to hedge against the
dollar. Proxy hedging entails entering into a forward contract to sell
a currency whose changes in value are generally considered to be linked
to a currency or currencies in which some or all of a Fund's portfolio
securities, or the portfolio securities of an Underlying ETP in which a
Fund invests, are or are expected to be denominated, and to buy U.S.
dollars. The amount of the contract would not exceed the value of a
Fund's securities, or the securities and financial instruments held by
the Underlying ETPs in which a Fund invests.
    The Funds currently do not intend to enter into forward currency
contracts with a term of more than one year, or to engage in Position
Hedging with respect to the currency of a particular country to more
than the aggregate market value (at the time the hedging transaction is
entered into) of its portfolio securities denominated in (or quoted in
or currently convertible into or directly related through the use of
forward currency contracts in conjunction with money market instruments
to) that particular currency.
    The Funds may invest in performance indexed paper
(PIPsSM ), which is U.S. dollar-denominated commercial paper
the yield of which is linked to certain foreign exchange rate
movements. The yield to the investor on PIPs is established at maturity
as a function of spot exchange rates between the U.S. dollar and a
designated currency as of or about that time (generally, the index
maturity is two days prior to maturity). The yield to the investor will
be within a range stipulated at the time of purchase of the obligation,
generally with a guaranteed minimum rate of return that is below, and a
potential maximum rate of return that is above, market yields on U.S.
dollar-denominated commercial paper, with both the minimum and maximum
rates of return on the investment corresponding to the minimum and
maximum values of the spot exchange rate two business days prior to
maturity.
    The Funds, and certain Underlying ETPs in which the Funds invest,
may invest in commercial paper. Commercial paper is a short-term
obligation with a maturity ranging from one to 270 days issued by
banks, corporations, and other borrowers. These investments are
unsecured and usually discounted. To the extent a Fund invests in
commercial paper, a Fund will seek to invest in commercial paper rated
A-1 or A-2 by S&P or Prime-1 or Prime-2 by Moody's Investors Service,
Inc. (``Moody's'').
    The Funds, and certain of the Underlying ETPs in which the Funds
invest, may invest in fixed income securities, as described below.
    The Funds, and certain Underlying ETPs in which the Funds invest,
may seek to invest in debt securities, which are securities consisting
of a certificate or other evidence of a debt (secured or unsecured) on
which the issuing company or governmental body promises to pay the
holder thereof a fixed, variable, or floating rate of interest for a
specified length of time, and to repay the debt on the specified
maturity date. Some debt securities, such as zero coupon bonds, do not
make regular interest payments, but are issued at a discount to their
principal or maturity value. Debt securities include a variety of fixed
income obligations, including, but not limited to, corporate debt
securities, government securities, municipal securities, convertible
securities, and mortgage-backed securities. Debt securities include
investment-grade securities, non-investment-grade securities, and
unrated securities.
    The Funds may invest in U.S. government securities. Securities
issued or guaranteed by the U.S. government or its agencies or
instrumentalities include U.S. Treasury securities, which are backed by
the full faith and credit of the U.S. Treasury and which differ only in
their interest rates, maturities, and times of issuance. U.S. Treasury
bills have initial maturities of one year or less; U.S. Treasury notes
have initial maturities of one to ten years; and U.S. Treasury bonds
generally have initial maturities of greater than ten years.\24\
---------------------------------------------------------------------------

    \24\ Certain U.S. government securities are issued or guaranteed
by agencies or instrumentalities of the U.S. government including,
but not limited to, obligations of U.S. government agencies or
instrumentalities such as the Federal National Mortgage Association,
the Federal Home Loan Mortgage Corporation, the Government National
Mortgage Association, the Small Business Administration, the Federal
Farm Credit Administration, the Federal Home Loan Banks, Banks for
Cooperatives (including the Central Bank for Cooperatives), the
Federal Land Banks, the Federal Intermediate Credit Banks, the
Tennessee Valley Authority, the Export-Import Bank of the United
States, the Commodity Credit Corporation, the Federal Financing
Bank, the National Credit Union Administration, and the Federal
Agricultural Mortgage Corporation.
---------------------------------------------------------------------------

    The Funds, and certain Underlying ETPs in which the Funds invest,
may invest in U.S. Treasury zero-coupon bonds. These securities are
U.S. Treasury bonds which have been stripped of their unmatured
interest coupons, the coupons themselves, and receipts or certificates
representing interests in the stripped debt obligations and coupons.
Interest is not paid in cash during the term of these securities, but
is accrued and paid at maturity.
    The Funds may invest in all grades of corporate debt securities
including non-investment grade securities, as described below.
    The Funds, and certain Underlying ETPs in which the Funds invest,
to the extent a Fund invests in non-investment grade debt securities,
will seek to invest no more than 10% of a Fund's net assets in these
debt securities. Non-investment-grade debt securities, also

referred to as ``high yield securities'' or ``junk bonds,'' are debt
securities that are rated lower than the four highest rating categories
by a nationally recognized statistical rating organization (for
example, lower than Baa3 by Moody's or lower than BBB by S&P) or are
determined to be of comparable quality by the Sub-Adviser.
    The Funds, and certain Underlying ETPs in which the Funds invest,
may seek to invest in unrated debt securities. The creditworthiness of
the issuer, as well as any financial institution or other party
responsible for payments on the security, will be analyzed to determine
whether to purchase unrated bonds.
    The Funds, and certain Underlying ETPs in which the Funds invest,
will seek to invest no more than 10% of their net assets in asset-
backed and mortgaged-backed securities.
    The Funds, and certain of the Underlying ETPs in which the Funds
invest, may invest in U.S. equity securities, including common stock,
preferred stock, warrants, convertible securities, master limited
partnerships, and rights traded in the U.S. or on other registered
exchanges.
    Each Fund may invest in issuers located outside the United States
directly, or in financial instruments or Underlying ETPs that are
indirectly linked to the performance of foreign issuers. These
financial instruments may be one of the following: American Depositary
Receipts (``ADRs''), Global Depositary Receipts (``GDRs''), European
Depositary Receipts (``EDRs''), International Depository Receipts
(``IDRs''), ordinary shares, and New York shares issued and traded in
the U.S. (collectively, ``Equity Financial Instruments'').\25\
---------------------------------------------------------------------------

    \25\ ADRs are U.S. dollar denominated receipts typically issued
by U.S. banks and trust companies that evidence ownership of
underlying securities issued by a foreign issuer. The underlying
securities may not necessarily be denominated in the same currency
as the securities into which they may be converted. The underlying
securities are held in trust by a custodian bank or similar
financial institution in the issuer's home country. The depositary
bank may not have physical custody of the underlying securities at
all times and may charge fees for various services, including
forwarding dividends and interest and corporate actions. Generally,
ADRs in registered form are equity securities designed for use in
domestic securities markets and are traded on exchanges or OTC in
the U.S. GDRs, EDRs, and IDRs are similar to ADRs in that they are
certificates evidencing ownership of shares of a foreign issuer;
however, GDRs, EDRs, and IDRs may be issued in bearer form and
denominated in other currencies, and are generally designed for use
in specific or multiple securities markets outside the U.S. EDRs,
for example, are designed for use in European securities markets,
while GDRs are designed for use throughout the world. Ordinary
shares are shares of foreign issuers that are traded abroad and on a
U.S. exchange. New York shares are shares that a foreign issuer has
allocated for trading in the U.S. ADRs, ordinary shares, and New
York shares all may be purchased with and sold for U.S. dollars.
ADRs may be sponsored or unsponsored, but unsponsored ADRs will not
exceed 10% of a Fund's net assets. With respect to its investments
in equity securities (including Equity Financial Instruments), each
Fund will invest at least 90% of its assets invested in these equity
securities in securities that trade in markets that are members of
the Intermarket Surveillance Group (``ISG'') or are parties to a
comprehensive surveillance sharing agreement with the Exchange.
---------------------------------------------------------------------------

    A Fund, and certain Underlying ETPs in which a Fund invests, may
invest in hybrid instruments. A hybrid instrument is a type of
potentially high-risk derivative that combines a traditional stock,
bond, or commodity with an option or forward contract. An example of a
hybrid instrument could be a bond issued by an oil company that pays a
small base level of interest with additional interest that accrues in
correlation with the extent to which oil prices exceed a certain
predetermined level. This hybrid instrument would be a combination of a
bond and a call option on oil. Generally, the principal amount, amount
payable upon maturity or redemption, or interest rate of a hybrid is
tied (positively or negatively) to the price of some security,
commodity, currency, securities index, or another interest rate or some
other economic factor (each a ``benchmark''). The interest rate or
(unlike most fixed income securities) the principal amount payable at
maturity of a hybrid security may be increased or decreased, depending
on changes in the value of the benchmark.
    Each Fund may invest in structured notes, which are debt
obligations that also contain an embedded derivative component with
characteristics that adjust the obligation's risk/return profile.
Generally, the performance of a structured note will track that of the
underlying debt obligation and the derivative embedded within it. Each
Fund has the right to receive periodic interest payments from the
issuer of the structured notes at an agreed-upon interest rate and a
return of the principal at the maturity date.\26\
---------------------------------------------------------------------------

    \26\ In the case of structured notes on credit default swaps, a
Fund, or the Underlying ETP in which a Fund invests, will also be
subject to the credit risk of the corporate credits underlying the
credit default swaps.
---------------------------------------------------------------------------

    The Funds may invest in the securities of exchange-traded pooled
vehicles that are not investment companies and, thus, not required to
comply with the provisions of the 1940 Act.\27\ The International Gold
ETF may principally invest in these securities through Underlying ETPs
while the other Funds (Gold/British Pound ETF, Gold/Yen ETF, and Gold/
Euro ETF) may, but are not expected to, invest in these securities as
non-principal investments. As a result, as a shareholder of these
pooled vehicles, a Fund will not have all of the investor protections
afforded by the 1940 Act. These pooled vehicles may, however, be
required to comply with the provisions of other federal securities
laws, such as the Securities Act. These pooled vehicles typically hold
currency or commodities, such as gold or oil, or other property that is
itself not a security.
---------------------------------------------------------------------------

    \27\ These securities include Trust Issued Receipts (as
described in NYSE Arca Equities Rule 8.200); Commodity-Based Trust
Shares (as described in NYSE Arca Equities Rule 8.201); Currency
Trust Shares (as described in NYSE Arca Equities Rule 8.202);
Commodity Index Trust Shares (as described in NYSE Arca Equities
Rule 8.203); and Trust Units (as described in NYSE Arca Equities
Rule 8.500).
---------------------------------------------------------------------------

    The Funds, and certain Underlying ETPs in which the Funds invest,
may invest in exchange-traded shares of real estate investment trusts
(``REITs''). REITs are pooled investment vehicles which invest
primarily in real estate or real estate-related loans. REITs are
generally classified as equity REITs, mortgage REITs, or a combination
of equity and mortgage REITs.
    The Funds, and certain Underlying ETPs in which the Funds invest,
may enter into repurchase agreements with financial institutions, which
may be deemed to be loans. The Funds will follow certain procedures
designed to minimize the risks inherent in these agreements. These
procedures will include effecting repurchase transactions only with
large, well-capitalized and well-established financial institutions
whose condition will be continually monitored by the Sub-Adviser. In
addition, the value of the collateral underlying the repurchase
agreement will always be at least equal to the repurchase price,
including any accrued interest earned on the repurchase agreement.
    The Funds, and certain Underlying ETPs in which the Funds invest,
may enter into reverse repurchase agreements as part of a Fund's
investment strategy. However, the Funds do not expect to engage, under
normal circumstances, in reverse repurchase agreements with respect to
more than 33\1/3\% of their respective assets. Reverse repurchase
agreements involve sales by a Fund of portfolio assets concurrently
with an agreement by a Fund to repurchase the same assets at a later
date at a fixed price.
    The Funds may engage in short sales transactions in which a Fund
sells a security it does not own. To complete such a transaction, a
Fund must borrow

or otherwise obtain the security to make delivery to the buyer. A Fund
then is obligated to replace the security borrowed by purchasing the
security at the market price at the time of replacement.
    The Funds, and certain of the Underlying ETPs in which the Funds
invest, may enter into time deposits and Eurodollar time deposits. Time
deposits are non-negotiable deposits, such as savings accounts or
certificates of deposit, held by a financial institution for a fixed
term with the understanding that the depositor can withdraw its money
only by giving notice to the institution.
    The Funds, and certain Underlying ETPs in which the Funds invest,
from time to time, in the ordinary course of business, may purchase
securities on a when-issued or delayed-delivery basis (i.e., delivery
and payment can take place between a month and 120 days after the date
of the transaction). These securities are subject to market fluctuation
and no interest accrues to the purchaser during this period.
    The Funds may not purchase or sell commodities or commodity
contracts unless acquired as a result of ownership of securities or
other instruments issued by persons that purchase or sell commodities
or commodities contracts; but this shall not prevent a Fund from
purchasing, selling, and entering into financial futures contracts
(including futures contracts on indices of securities, interest rates,
and currencies), options on financial futures contracts (including
futures contracts on indices of securities, interest rates, and
currencies), warrants, swaps, forward contracts, foreign currency spot
and forward contracts, or other derivative instruments that are not
related to physical commodities.

Other Restrictions of the Funds

    A Fund may not, with respect to 75% of its total assets, purchase
securities of any issuer (except securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities or shares of
investment companies) if, as a result, more than 5% of its total assets
would be invested in the securities of the issuer, or acquire more than
10% of the outstanding voting securities of any one issuer (and for
purposes of this policy, the issuer of the underlying security will be
deemed to be the issuer of any respective depositary receipt).
    A Fund may not invest 25% or more of its total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry or group of industries. This limitation
does not apply to investments in securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities, or shares of
investment companies. A Fund will not invest 25% or more of its total
assets in any investment company that so concentrates.
    Each Fund may invest up to an aggregate amount of 15% of its net
assets in illiquid securities (calculated at the time of investment),
including Rule 144A securities deemed illiquid by the Adviser,\28\
consistent with Commission guidance. Each Fund will monitor its
portfolio liquidity on an ongoing basis to determine whether, in light
of current circumstances, an adequate level of liquidity is being
maintained, and will consider taking appropriate steps in order to
maintain adequate liquidity if, through a change in values, net assets,
or other circumstances, more than 15% of a Fund's net assets are
invested in illiquid securities. Illiquid securities include securities
subject to contractual or other restrictions on resale and other
instruments that lack readily available markets as determined in
accordance with Commission staff guidance.
---------------------------------------------------------------------------

    \28\ In reaching liquidity decisions, the Adviser may consider
the following factors: The frequency of trades and quotes for the
security; the number of dealers wishing to purchase or sell the
security and the number of other potential purchasers; dealer
undertakings to make a market in the security; and the nature of the
security and the nature of the marketplace in which it trades (e.g.,
the time needed to dispose of the security, the method of soliciting
offers and the mechanics of transfer).
---------------------------------------------------------------------------

    Each Fund will seek to qualify for treatment as a Regulated
Investment Company under the Internal Revenue Code.
    Each Fund's investments will be consistent with its investment
objective and will not be used to enhance leverage. While a Fund may
invest in inverse ETFs, a Fund will not invest in leveraged (e.g., 2X,
-2X, 3X, or -3X) ETFs.

III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of Section 6 of the Act \29\
and the rules and regulations thereunder applicable to a national
securities exchange.\30\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(5) of the Act,\31\ which
requires, among other things, that the Exchange's rules be designed to
promote just and equitable principles of trade, to remove impediments
to, and perfect the mechanism of, a free and open market and a national
market system, and, in general, to protect investors and the public
interest. The Commission notes that the Funds and the Shares must
comply with the initial and continued listing criteria in NYSE Arca
Equities Rule 8.600 for the Shares to be listed and traded on the
Exchange.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78f.
    \30\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \31\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission finds that the proposal to list and trade the Shares
on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the
Act,\32\ which sets forth Congress' finding that it is in the public
interest and appropriate for the protection of investors and the
maintenance of fair and orderly markets to assure the availability to
brokers, dealers, and investors of information with respect to
quotations for, and transactions in, securities. Quotation and last-
sale information for the Shares, Underlying ETPs, REITs, certain Equity
Financial Instruments, pooled vehicles, and other U.S. exchange-traded
equities will be available via the Consolidated Tape Association
(``CTA'') high-speed line, and, for the underlying securities that are
U.S. exchange-listed, will be available from the national securities
exchange on which they are listed. Price information relating to non-
U.S. exchange-traded Equity Financial Instruments will be available
from major market data vendors or the foreign exchanges on which these
securities are traded. Price information relating to fixed income
securities will be available from major market data vendors.
Information relating to futures and options on futures also will be
available from the exchange on which such instruments are traded.
Information relating to exchange-traded options will be available via
the Options Price Reporting Authority. Quotation information from
brokers and dealers or pricing services will be available for spot
currency transactions, hybrid instruments, and non-exchange-traded
derivatives, including forwards, swaps, and certain options.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    On each business day, before commencement of trading of Shares in
the Core Trading Session on the Exchange, the Funds' Web site will
disclose the Disclosed Portfolio that will form the basis for each
Fund's calculation of NAV at the end of the business day.\33\ In
addition, the Portfolio

Indicative Value, as defined in NYSE Arca Equities Rule 8.600(c)(3),
will be widely disseminated at least every 15 seconds during the Core
Trading Session by one or more major market data vendors.\34\ The NAV
per Share for a Fund will be calculated by the administrator and
determined as of the close of the regular trading session on the New
York Stock Exchange (``NYSE'') (ordinarily 4:00 p.m., Eastern Time) on
each day that such exchange is open. Information regarding market price
and trading volume of the Shares will be continually available on a
real-time basis throughout the day on brokers' computer screens and
other electronic services. Information regarding the previous day's
closing price and trading volume information for the Shares will be
published daily in the financial section of newspapers. In addition, a
basket composition file, which includes the security names and share
quantities (as applicable) required to be delivered in exchange for
Fund Shares, together with estimates and actual cash components, will
be publicly disseminated daily prior to the opening of the NYSE via the
National Securities Clearing Corporation. The Funds' Web site will
include a form of the prospectus for the Funds as well as additional
quantitative information updated on a daily basis.
---------------------------------------------------------------------------

    \33\ On a daily basis, the Funds' Web site, or, if applicable, a
Fund's subsidiary's Web site, will disclose for each portfolio
security and other financial instrument (e.g., futures, forwards,
swaps) of each Fund and each Fund's subsidiary, the following
information: Ticker symbol (if applicable); name and, when
available, the individual identifier (CUSIP) of the security and/or
financial instrument; number of shares, if applicable, and dollar
value of securities and financial instruments held in the portfolio;
and percentage weighting of the security and financial instrument in
the portfolio. The Web site information will be publicly available
at no charge.
    \34\ According to the Exchange, several major market data
vendors display or make widely available Portfolio Indicative Values
taken from CTA or other data feeds.
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    The Commission further believes that the proposal to list and trade
the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading when a reasonable degree of transparency cannot be
assured. The Exchange will obtain a representation from the issuer of
the Shares that the NAV per Share will be calculated daily and that the
NAV and the Disclosed Portfolio will be made available to all market
participants at the same time. Trading in Shares of the Funds will be
halted if the circuit breaker parameters in NYSE Arca Equities Rule
7.12 have been reached or because of market conditions or for reasons
that, in the view of the Exchange, make trading in the Shares
inadvisable,\35\ and trading in the Shares will be subject to NYSE Arca
Equities Rule 8.600(d)(2)(D), which sets forth additional circumstances
under which Shares of a Fund may be halted. The Exchange states that it
has a general policy prohibiting the distribution of material, non-
public information by its employees. Consistent with NYSE Arca Equities
Rule 8.600(d)(2)(B)(ii), the Adviser must implement and maintain, or be
subject to, procedures designed to prevent the use and dissemination of
material, non-public information regarding the actual components of the
Fund's portfolio. In addition, the Exchange states that neither the
Adviser nor Sub-Adviser is a broker-dealer or is affiliated with a
broker-dealer.\36\ The Exchange represents that trading in the Shares
will be subject to the existing trading surveillances, administered by
the Financial Industry Regulatory Authority (``FINRA'') on behalf of
the Exchange, which are designed to detect violations of Exchange rules
and applicable federal securities laws.\37\ The Exchange further
represents that these procedures are adequate to properly monitor
Exchange trading of the Shares in all trading sessions and to deter and
detect violations of Exchange rules and applicable federal securities
laws. Moreover, prior to the commencement of trading, the Exchange
states that it will inform its Equity Trading Permit Holders in an
Information Bulletin of the special characteristics and risks
associated with trading the Shares.
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    \35\ These reasons may include: (1) The extent to which trading
is not occurring in the securities or the financial instruments
composing the Disclosed Portfolio of the Funds; or (2) whether other
unusual conditions or circumstances detrimental to the maintenance
of a fair and orderly market are present. With respect to trading
halts, the Exchange may consider all relevant factors in exercising
its discretion to halt of suspend trading in the Shares of a Fund.
    \36\ See supra note 6 and accompanying text. The Exchange states
that an investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (``Advisers
Act''). As a result, the Adviser, Sub-Advisor, and their related
personnel are subject to the provisions of Rule 204A-1 under the
Advisers Act relating to codes of ethics. This Rule requires
investment advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as well as
compliance with other applicable securities laws. Accordingly,
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under
the Advisers Act makes it unlawful for an investment adviser to
provide investment advice to clients unless the investment adviser
has (i) adopted and implemented written policies and procedures
reasonably designed to prevent violation, by the investment adviser
and its supervised persons, of the Advisers Act and the Commission
rules adopted thereunder; (ii) implemented, at a minimum, an annual
review regarding the adequacy of the policies and procedures
established pursuant to subparagraph (i) above and the effectiveness
of their implementation; and (iii) designated an individual (who is
a supervised person) responsible for administering the policies and
procedures adopted under subparagraph (i) above.
    \37\ The Exchange states that FINRA surveils trading on the
Exchange pursuant to a regulatory services agreement and that the
Exchange is responsible for FINRA's performance under this
regulatory services agreement.
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    The Exchange represents that the Shares are deemed to be equity
securities, thus rendering trading in the Shares subject to the
Exchange's existing rules governing the trading of equity securities.
In support of this proposal, the Exchange has made representations,
including the following:
    (1) The Shares of each Fund will conform to the initial and
continued listing criteria under NYSE Arca Equities Rule 8.600.
    (2) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.
    (3) FINRA, on behalf of the Exchange, will communicate as needed
regarding trading in the Shares, Underlying ETPs, exchange-listed
equity securities (including Equity Financial Instruments), futures,
options on futures, exchange-traded options, REITs, and pooled vehicles
with other markets and other entities that are members of the ISG, and
FINRA, on behalf of the Exchange, may obtain trading information
regarding trading such securities and financial instruments from such
markets and other entities. In addition, the Exchange may obtain
information regarding trading in the Shares, Underlying ETPs, exchange-
listed equity securities (including Equity Financial Instruments),
futures, options on futures, exchange-traded options, REITs, and pooled
vehicles from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement. With respect to its investments in exchange-listed
equity securities (including Equity Financial Instruments), a Fund will
invest at least 90% of its assets in equity securities that trade in
markets that are members of the ISG or are parties to a comprehensive
surveillance sharing agreement with the Exchange.
    (4) Prior to the commencement of trading, the Exchange will inform
its Equity Trading Permit Holders in an Information Bulletin of the
special characteristics and risks associated with trading the Shares.
Specifically, the Information Bulletin will discuss the following: (a)
The procedures for purchases and redemptions of Shares in creation unit
aggregations (and that Shares are not individually redeemable); (b)
NYSE Arca Equities Rule 9.2(a),

which imposes a duty of due diligence on its Equity Trading Permit
Holders to learn the essential facts relating to every customer prior
to trading the Shares; (c) the risks involved in trading the Shares
during the Opening and Late Trading Sessions when an updated Portfolio
Indicative Value will not be calculated or publicly disseminated; (d)
how information regarding the Portfolio Indicative Value is
disseminated; (e) the requirement that Equity Trading Permit Holders
deliver a prospectus to investors purchasing newly issued Shares prior
to or concurrently with the confirmation of a transaction; and (f)
trading information.
    (5) For initial and continued listing, the Funds must be in
compliance with Rule 10A-3 under the Act,\38\ as provided by NYSE Arca
Equities Rule 5.3.
---------------------------------------------------------------------------

    \38\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    (6) The Funds may invest up to an aggregate amount of 15% of its
net assets in illiquid securities (calculated at the time of
investment), including Rule 144A securities deemed illiquid by the
Adviser consistent with Commission guidance.
    (7) The Funds will utilize cleared swaps if available and to the
extent practicable and not enter into any swap agreement unless the
Adviser believes that the other party to the transaction is
creditworthy. The Sub-Adviser will evaluate the creditworthiness of
counterparties on an ongoing basis. Any swaps used will be cash
collateralized as required.
    (8) The Funds, and certain Underlying ETPs in which the Funds
invest, will invest no more than 10% of a Fund's net assets in non-
investment grade debt securities. In addition, the Funds, and certain
Underlying ETPs in which the Funds invest, will invest no more than 10%
of their net assets in asset-backed and mortgaged-backed securities.
    (9) The Funds will effect repurchase transactions only with large,
well-capitalized and well-established financial institutions whose
condition will be continually monitored by the Sub-Adviser. In
addition, the value of the collateral underlying the repurchase
agreement will always be at least equal to the repurchase price,
including any accrued interest earned on the repurchase agreement. The
Funds do not expect to engage, under normal circumstances, in reverse
repurchase agreements with respect to more than 33\1/3\% of their
respective assets.
    (10) The Funds will not invest in leveraged (e.g., 2X, -2X, 3X, or
-3X) ETFs.
    (11) A minimum of 100,000 Shares of each Fund will be outstanding
at the commencement of trading on the Exchange.
    This approval order is based on all of the Exchange's
representations, including those set forth above and in the Notice, and
the Exchange's description of the Funds.
    For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act \39\ and the
rules and regulations thereunder applicable to a national securities
exchange.
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\40\ that the proposed rule change (SR-NYSEArca-2013-116), be, and
it hereby is, approved.
---------------------------------------------------------------------------

    \40\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\41\
Kevin M. O'Neill,
Deputy Secretary.
---------------------------------------------------------------------------

    \41\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2014-02502 Filed 2-5-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: May 21, 2009 (Volume 74, Number 97)]
[Notices]
[Page 23856]
[DOCID:fr21my09-43]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. ER06-615-000; ER07-1257-000; ER08-1178-000; EL08-88-000]

California Independent System Operator Corporation; Notice of
FERC Staff Attendance

May 14, 2009.
    The Federal Energy Regulatory Commission (Commission) hereby gives
notice that on May 15, 2009, members of its staff will attend a
California Independent System Operator (CAISO) stakeholder conference
call on Exceptional Dispatch. The agenda and other documents for the
teleconference are available on the CAISO's Web site, http://
www.caiso.com.
    Sponsored by the CAISO, the teleconference is open to all market
participants, and Commission staff's attendance is part of the
Commission's ongoing outreach efforts. The teleconference may discuss
matters at issue in the above captioned dockets.
    For further information, contact Saeed Farrokhpay at
<EMAIL_ADDRESS>(916) 294-0322 or Maury Kruth at
<EMAIL_ADDRESS>(916) 294-0275.

Kimberly D. Bose,
Secretary.
[FR Doc. E9-11798 Filed 5-20-09; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register: October 9, 2008 (Volume 73, Number 197)]
[Notices]
[Page 59686]
[DOCID:fr09oc08-145]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

Proposed Collection; Comment Request

Upon written request, copies available from: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.

Extension:
    Rule 31a-1, SEC File No. 270-173, OMB Control No. 3235-0178.

    Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange Commission
(``Commission'') is soliciting comments on the collection of
information summarized below. The Commission plans to submit this
existing collection of information to the Office of Management and
Budget for extension.
    Rule 31a-1 (17 CFR 270.31a-1) under the Investment Company Act of
1940 (the ``Act'') (15 U.S.C. 80a) is entitled ``Records to be
maintained by registered investment companies, certain majority-owned
subsidiaries thereof, and other persons having transactions with
registered investment companies.'' Rule 31a-1 requires registered
investment companies (``funds''), and every underwriter, broker,
dealer, or investment adviser that is a majority-owned subsidiary of a
fund, to maintain and keep current accounts, books, and other documents
which constitute the record forming the basis for financial statements
required to be filed pursuant to section 31 of the Act (15 U.S.C. 80a-
30) and of the auditor's certificates relating thereto. The rule lists
specific records to be maintained by funds. The rule also requires
certain underwriters, brokers, dealers, depositors, and investment
advisers to maintain the records that they are required to maintain
under federal securities laws.
    There are approximately 4,621 investment companies registered with
the Commission, all of which are required to comply with rule 31a-1.
For purposes of determining the burden imposed by rule 31a-1, the
Commission staff estimates that each fund is divided into approximately
four series, on average, and that each series is required to comply
with the recordkeeping requirements of rule 31a-1. Based on
conversations with fund representatives, it is estimated that rule 31a-
1 imposes an average burden of approximately 1,750 hours annually per
series for a total of 7,000 annual hours per fund. The estimated total
annual burden for all 4,621 funds subject to the rule therefore is
approximately 32,347,000 hours. Based on conversations with fund
representatives, however, the Commission staff estimates that even
absent the requirements of rule 31a-1, 90 percent of the records
created pursuant to the rule are the type that generally would be
created as a matter of normal business practice and to prepare
financial statements. Thus, the Commission staff estimates that the
total annual burden associated with rule 31a-1 is 3,234,700 hours.
    The estimate of average burden hours is made solely for the
purposes of the Paperwork Reduction Act, and is not derived from a
comprehensive or even a representative survey or study. An agency may
not conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid OMB
control number.
    Written comments are requested on: (a) Whether the collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information has practical
utility; (b) the accuracy of the Commission's estimate of the burden(s)
of the collection of information; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques or other
forms of information technology. Consideration will be given to
comments and suggestions submitted in writing within 60 days of this
publication.
    Please direct your written comments to Lewis W. Walker, Acting
Director/CIO, Securities and Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way, Alexandria, VA 22312; or send an e-
mail to<EMAIL_ADDRESS>
    Dated: October 1, 2008.
Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-23924 Filed 10-8-08; 8:45 am]

BILLING CODE 8011-01-P


United States Office of Research and EPA/ 600/ P 93/ 004cF Environmental Protection Development July 1996 Agency Washington, DC 20460 EPA Air Quality Criteria for Ozone and Related Photochemical Oxidants Volume III of III EPA/ 600/ P 93/ 004cF July 1996 Air Quality Criteria for Ozone and Related Photochemical Oxidants Volume III of III National Center for Environmental Assessment Office of Research and Development U. S. Environmental Protection Agency Research Triangle Park, NC 27711


[Federal Register Volume 88, Number 202 (Friday, October 20, 2023)]
[Notices]
[Page 72512]
[FR Doc No: 2023-23210]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Internal Agency Docket No. FEMA-4734-DR; Docket ID FEMA-2023-0001]

Florida; Amendment No. 2 to Notice of a Major Disaster
Declaration

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

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SUMMARY: This notice amends the notice of a major disaster declaration
for the State of Florida (FEMA-4734-DR), dated August 31, 2023, and
related determinations.

DATES: This amendment was issued September 3, 2023.

FOR FURTHER INFORMATION CONTACT: Dean Webster, Office of Response and
Recovery, Federal Emergency Management Agency, 500 C Street SW,
Washington, DC 20472,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration
for the State of Florida is hereby amended to include the following
area among those areas determined to have been adversely affected by
the event declared a major disaster by the President in his declaration
of August 31, 2023.

    Pinellas County for Individual Assistance.
    Pinellas County for debris removal and emergency protective
measures (Categories A and B), including direct federal assistance,
under the Public Assistance program.

    The following Catalog of Federal Domestic Assistance Numbers
(CFDA) are to be used for reporting and drawing funds: 97.030,
Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis
Counseling; 97.033, Disaster Legal Services; 97.034, Disaster
Unemployment Assistance (DUA); 97.046, Fire Management Assistance
Grant; 97.048, Disaster Housing Assistance to Individuals and
Households In Presidentially Declared Disaster Areas; 97.049,
Presidentially Declared Disaster Assistance--Disaster Housing
Operations for Individuals and Households; 97.050, Presidentially
Declared Disaster Assistance to Individuals and Households--Other
Needs; 97.036, Disaster Grants--Public Assistance (Presidentially
Declared Disasters); 97.039, Hazard Mitigation Grant.

Deanne Criswell,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2023-23210 Filed 10-19-23; 8:45 am]
BILLING CODE 9111-23-P