[Federal Register Volume 79, Number 141 (Wednesday, July 23, 2014)]
[Notices]
[Pages 42852-42863]
[FR Doc No: 2014-17265]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72636; File No. SR-BATS-2014-026]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing of Proposed Rule Change To List and Trade Shares of Certain
Funds of the Alpha Architect ETF Trust

July 17, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 3, 2014, BATS Exchange, Inc. (``Exchange'' or ``BATS'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is proposing to list and trade shares of certain funds
(the ``Fund'' when discussed individually or, collectively, the
``Funds'') of the Alpha Architect ETF Trust (the ``Trust'') under BATS
Rule 14.11(i) (``Managed Fund Shares''). The shares of each Fund and
the shares of the Funds collectively, as applicable, are referred to
herein as the ``Shares.''
    The text of the proposed rule addition is available at the
Exchange's Web site at http://www.batstrading.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the Shares under BATS Rule
14.11(i), which governs the listing and trading of Managed Fund Shares
on the Exchange.\3\ The Funds will be actively managed funds. The
Exchange proposes to list and trade Shares of the following Funds: (i)
ValueShares U.S. Quantitative Value ETF; (ii) ValueShares International
Quantitative Value ETF; (iii) MomentumShares U.S. Quantitative Momentum
ETF; and (iv) MomentumShares International Quantitative Momentum ETF.
The Shares will be offered by the Trust, which was established as a
Delaware statutory trust on October 11, 2013. The Trust is registered
with the Commission as an open-end investment company and has filed a
registration statement on behalf of the Funds on Form N-1A
(``Registration Statement'') with the Commission.\4\
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    \3\ The Commission approved BATS Rule 14.11(i) in Securities
Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148
(September 6, 2011) (SR-BATS-2011-018).
    \4\ See Registration Statement on Form N-1A for the Trust, dated
April 25, 2014 (File Nos. 333-195493 and 811-22961). The
descriptions of the Fund and the Shares contained herein are based,
in part, on information in the Registration Statement. The
Commission has issued an order granting certain exemptive relief to
the Company under the Investment Company Act of 1940 (15 U.S.C. 80a-
1) (``1940 Act'') (the ``Exemptive Order''). See Investment Company
Act Release No. 31018 (April 16, 2014) (File No. 812-14245).
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Description of the Shares and the Funds
    Empowered Funds, LLC is the investment adviser (``Adviser'') to the
Funds.\5\ U.S. Bancorp Fund Services, LLC is the administrator and
transfer agent (``Administrator,'' and ``Transfer Agent,''
respectively) for the Trust. U.S. Bank National Association is the
Custodian (``Custodian'') for the Trust. Quasar Distributors, LLC
(``Distributor'') serves as the distributor for the Trust.
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    \5\ The Adviser is an indirect subsidiary of Empirical Finance,
LLC d/b/a Empiritrage, LLC.
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    BATS Rule 14.11(i)(7) provides that, if the investment adviser to
the investment company issuing Managed Fund Shares is affiliated with a
broker-dealer, such investment adviser shall erect a ``fire wall''
between the

investment adviser and the broker-dealer with respect to access to
information concerning the composition and/or changes to such
investment company portfolio.\6\ In addition, Rule 14.11(i)(7) further
requires that personnel who make decisions on the investment company's
portfolio composition must be subject to procedures designed to prevent
the use and dissemination of material nonpublic information regarding
the applicable investment company portfolio. Rule 14.11(i)(7) is
similar to BATS Rule 14.11(b)(5)(A)(i), however, Rule 14.11(i)(7) in
connection with the establishment of a ``fire wall'' between the
investment adviser and the broker-dealer reflects the applicable open-
end fund's portfolio, not an underlying benchmark index, as is the case
with index-based funds. The Adviser is not a registered broker-dealer
and is not affiliated with any broker-dealers. In the event that (a)
the Adviser becomes registered as a broker-dealer or 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
such broker-dealer affiliate, as applicable, regarding access to
information concerning the composition and/or changes to the portfolio,
and will be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding such
portfolio.
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    \6\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser and its 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 such 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.
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ValueShares U.S. Quantitative Value ETF
    According to the Registration Statement, the Fund will seek to
provide long-term capital appreciation. The Fund will invest, under
normal circumstances,\7\ at least 80% of its net assets, plus any
borrowings for investment purposes, in securities of U.S. companies. To
achieve its objective, the Fund will invest, under normal
circumstances, primarily in U.S. equity securities that the Adviser
believes, based on quantitative analysis, are undervalued at the time
of purchase and have the potential for capital appreciation. A security
is undervalued when it trades at a price below the price at which the
Adviser believes it would trade if the market reflected all factors
relating to the issuer's worth. In choosing investments that are
undervalued, the Adviser focuses on companies that it believes show
indications of quality and financial strength but have security prices
that are low relative to current operating earnings and/or are
currently viewed unfavorably by equity research analysts.
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    \7\ 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 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.
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    The Fund will invest primarily in the common stock of U.S.
companies. The Fund may invest in securities of companies in any
industry and of any market capitalization. Although the Fund generally
expects to invest in companies with larger market capitalizations, the
Fund may invest in small- and mid-capitalization companies. The Fund is
an actively managed exchanged-traded fund (``ETF'') and thus does not
seek to replicate the performance of a specific index. Rather, the
Adviser has discretion on a daily basis to actively manage the Fund's
portfolio in accordance with the Fund's investment objective.
    The Adviser utilizes a quantitative model to identify which
securities the Fund might purchase and sell as well as opportune times
for purchases and sales. While the Fund will invest in approximately
fifty U.S. equity securities as determined by its quantitative value
factors, the quantity of holdings in the Fund will be based on a number
of factors, including the asset size of the Fund and the number of
companies that satisfy the Adviser's quantitative measurements at any
one time. The Fund's portfolio will be rebalanced to the Adviser's
internal target allocations, developed pursuant to the Adviser's
strategy described above, at least semi-annually.
    In the absence of normal circumstances, the Fund may temporarily
depart from its normal investment process, provided that such departure
is, in the opinion of the Adviser, consistent with the Fund's
investment objective and in the best interest of the Fund. For example,
the Fund may invest up to 100% of its assets in a temporary defensive
manner by holding all or a substantial portion of its assets in cash,
cash equivalents, or other quality short-term investment in response to
adverse market, economic, or political or other conditions. Such
temporary defensive investments generally may include short-term U.S.
government securities, commercial paper, bank obligations, repurchase
agreements, money market fund shares, and other money market
instruments.
    The Fund will be classified as a ``non-diversified'' investment
company under the 1940 Act. A non-diversified fund is a fund that is
not limited by the 1940 Act with regard to the percentage of its assets
that may be invested in the securities of a single issuer.\8\ The Fund
will not, however, concentrate its investments in a particular industry
or group of industries, as that term is used in the 1940 Act.\9\
Securities of the U.S. government (including its agencies and
instrumentalities), tax-free securities of state or municipal
governments and their political subdivisions (and repurchase agreements
collateralized by government securities) and securities of other
investment companies, whether registered or excluded from registration
under Section 3(c) of the 1940 Act, are not considered to be issued by
members of any industry.
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    \8\ The diversification standard is set forth in Section 5(b)(1)
of the 1940 Act.
    \9\ See Form N-1A, Item 9. The Commission has taken the position
that a fund is concentrated if it invests in more than 25% of the
value of its total assets in any one industry. See, e.g., Investment
Company Act Release No. 9011 (October 30, 1975), 40 FR 54241
(November 21, 1975).
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    The Fund intends to qualify each year as a regulated investment
company (a ``RIC'') under Subchapter M of the Internal Revenue Code of
1986, as amended.\10\ The Fund will invest its assets, and otherwise
conduct its operations, in a manner that is intended to satisfy the
qualifying income, diversification and distribution requirements
necessary to establish and

maintain RIC qualification under Subchapter M.
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    \10\ 26 U.S.C. 851.
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Other Portfolio Holdings
    The Fund may hold 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 \11\
under the 1940 Act.\12\ The 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 the Fund's net assets are held 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.
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    \11\ In reaching liquidity decisions, the Adviser may consider
factors including: 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; the nature of the
security and the nature of the marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting offers,
and the mechanics of transfer); any legal or contractual
restrictions on the ability to transfer the security or asset;
significant developments involving the issuer or counterparty
specifically (e.g., default, bankruptcy, etc.) or the securities
markets generally; and settlement practices, registration
procedures, limitations on currency conversion or repatriation, and
transfer limitations (for foreign securities or other assets).
    \12\ The Commission has stated that long-standing Commission
guidelines have required open-end funds to hold no more than 15% of
their net assets in illiquid securities and other illiquid assets.
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR
14618 (March 18, 2008), footnote 34. See also, Investment Company
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31,
1970) (Statement Regarding ``Restricted Securities''); Investment
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio
security is illiquid if it cannot be disposed of in the ordinary
course of business within seven days at approximately the value
ascribed to it by the fund. See Investment Company Act Release No.
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990)
(adopting Rule 144A under the Securities Act of 1933).
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    The Fund may make secured loans of its portfolio securities;
however, securities loans will not be made if, as a result, the
aggregate amount of all outstanding securities loans by the Fund
exceeds 33\1/3\% of its total assets (including the market value of
collateral received). To the extent the Fund engages in securities
lending, securities loans will be made to broker-dealers that the
Adviser believes to be of relatively high credit standing pursuant to
agreements requiring that the loans continuously be collateralized by
cash, liquid securities, or shares of other investment companies with a
value at least equal to the market value of the loaned securities.
    The Fund may invest in preferred stocks. Preferred stocks include
convertible and non-convertible preferred and preference stocks that
are senior to common stock. Preferred stocks are equity securities that
are senior to common stock with respect to the right to receive
dividends and a fixed share of the proceeds resulting from the issuer's
liquidation. Some preferred stocks also entitle their holders to
receive additional liquidation proceeds on the same basis as holders of
the issuer's common stock, and thus represent an ownership interest in
the issuer.
    The Fund may enter into repurchase agreements with banks and
broker-dealers. A repurchase agreement is an agreement under which
securities are acquired by the Fund from a securities dealer or bank
subject to resale at an agreed upon price on a later date. The
acquiring Fund bears a risk of loss in the event that the other party
to a repurchase agreement defaults on its obligations and the Fund is
delayed or prevented from exercising its rights to dispose of the
collateral securities.
    The Fund may invest in debt securities, including obligations of
the U.S. government, its agencies and instrumentalities, corporate debt
securities, master-demand notes, bank certificates of deposit, time
deposits, bankers' acceptances, commercial paper and other notes,
inflation-indexed securities, and other debt securities. The Fund may
invest in debt securities that are investment grade.
    The Fund may invest in the securities of other investment companies
(including money market funds and ETFs) to the extent permitted under
the 1940 Act, Commission rules thereunder and exemptions thereto. Under
the 1940 Act, the Fund's investment in investment companies is limited
to, subject to certain exceptions: (i) 3% of the total outstanding
voting stock of any one investment company, (ii) 5% of the Fund's total
assets with respect to any one investment company and (iii) 10% of the
Fund's total assets of investment companies in the aggregate. The Fund
may also invest in private investment funds, vehicles or structures.
    The Fund will not invest in options, futures or swaps. The Fund's
investments will be consistent with its respective investment objective
and will not be used to enhance leverage.
ValueShares International Quantitative Value ETF
    According to the Registration Statement, the Fund will seek to
provide long-term capital appreciation. To achieve its objective, the
Fund will invest, under normal circumstances, primarily in equity
securities of international companies that the Adviser believes, based
on quantitative analysis, are undervalued at the time of purchase and
have the potential for capital appreciation. A security is undervalued
when it trades at a price below the price at which the Adviser believes
it would trade if the market reflected all factors relating to the
issuer's worth. In choosing investments that are undervalued, the
Adviser focuses on companies that it believes show indications of
quality and financial strength but have security prices that are low
relative to current operating earnings and/or are currently viewed
unfavorably by equity research analysts.
    The Fund will invest primarily in the common stock of international
companies and depositary receipts. The Fund may invest in securities of
companies in any industry and of any market capitalization. The Fund
may invest in foreign securities by purchasing depositary receipts,
including American Depositary Receipts (``ADRs''), Global Depositary
Receipts (``GDRs''), and European Depositary Receipts (``EDRs'') or
other securities convertible into securities of issuers based in
foreign countries (collectively, ``Depositary Receipts'').\13\ Although
the Fund generally expects to invest in companies with larger market
capitalizations, the Fund may invest in small- and mid-capitalization
companies. With respect to its investments in exchange-listed common
stocks and Depositary Receipts of non-U.S. issuers, the Fund will
invest at least 90% of its assets invested in such

securities in exchange-listed common stocks and Depositary Receipts
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.\14\
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    \13\ Depositary Receipts are receipts, typically issued by a
bank or trust issuer, which evidence ownership of underlying
securities issued by a non-U.S. issuer. For ADRs, the depository is
typically a U.S. financial institution and the underlying securities
are issued by a non-U.S. issuer. For other forms of Depositary
Receipts, the depository may be a non-U.S. or a U.S. entity, and the
underlying securities may be issued by a non-U.S. or a U.S. issuer.
Depositary Receipts are not necessarily denominated in the same
currency as their underlying securities. Generally, ADRs, issued in
registered form, are designed for use in the U.S. securities
markets, and EDRs, issued in bearer form, are designed for use in
European securities markets. GDRs are tradable both in the United
States and in Europe and are designed for use throughout the world.
    \14\ For a list of the current members and affiliate members of
ISG, see www.isgportal.com. The Exchange notes that not all
components of the Disclosed Portfolio for the Funds may trade on
markets that are members of ISG or with which the Exchange has in
place a comprehensive surveillance sharing agreement.
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    The Fund is an actively managed ETF and thus does not seek to
replicate the performance of a specific index. Rather, the Adviser has
discretion on a daily basis to actively manage the Fund's portfolio in
accordance with the Fund's investment objective.
    The Adviser utilizes a quantitative model to identify which
securities the Fund might purchase and sell as well as opportune times
for purchases and sales. While the Fund will invest in approximately
fifty international equity securities as determined by its quantitative
value factors, the quantity of holdings in the Fund will be based on a
number of factors, including the asset size of the Fund and the number
of companies that satisfy the Adviser's quantitative measurements at
any one time. The Fund's portfolio will be rebalanced to the Adviser's
internal target allocations, developed pursuant to the Adviser's
strategy described above, at least annually.
    In the absence of normal circumstances, the Fund may temporarily
depart from its normal investment process, provided that such departure
is, in the opinion of Adviser, consistent with the Fund's investment
objective and in the best interest of the Fund. For example, the Fund
may invest up to 100% of its assets in a temporary defensive manner by
holding all or a substantial portion of its assets in cash, cash
equivalents, or other quality short-term investment in response to
adverse market, economic, or political or other conditions. Such
temporary defensive investments generally may include short-term U.S.
government securities, commercial paper, bank obligations, repurchase
agreements, money market fund shares, and other money market
instruments.
    The Fund will be classified as a ``non-diversified'' investment
company under the 1940 Act. A non-diversified fund is a fund that is
not limited by the 1940 Act with regard to the percentage of its assets
that may be invested in the securities of a single issuer.\15\ The Fund
will not, however, concentrate its investments in a particular industry
or group of industries, as that term is used in the 1940 Act.\16\
Securities of the U.S. government (including its agencies and
instrumentalities), tax-free securities of state or municipal
governments and their political subdivisions (and repurchase agreements
collateralized by government securities) and securities of other
investment companies, whether registered or excluded from registration
under Section 3(c) of the 1940 Act, are not considered to be issued by
members of any industry.
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    \15\ The diversification standard is set forth in Section
5(b)(1) of the 1940 Act.
    \16\ See supra note 9.
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    The Fund intends to qualify each year as RIC under Subchapter M of
the Internal Revenue Code of 1986, as amended.\17\ The Fund will invest
its assets, and otherwise conduct its operations, in a manner that is
intended to satisfy the qualifying income, diversification and
distribution requirements necessary to establish and maintain RIC
qualification under Subchapter M.
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    \17\ See supra note 10.
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Other Portfolio Holdings
    The Fund may hold 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 \18\
under the 1940 Act.\19\ The 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 the Fund's net assets are held 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.
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    \18\ See supra note 11.
    \19\ See supra note 12.
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    The Fund may make secured loans of its portfolio securities;
however, securities loans will not be made if, as a result, the
aggregate amount of all outstanding securities loans by the Fund
exceeds 33\1/3\% of its total assets (including the market value of
collateral received). To the extent the Fund engages in securities
lending, securities loans will be made to broker-dealers that the
Adviser believes to be of relatively high credit standing pursuant to
agreements requiring that the loans continuously be collateralized by
cash, liquid securities, or shares of other investment companies with a
value at least equal to the market value of the loaned securities.
    The Fund may invest in preferred stocks. Preferred stocks include
convertible and nonconvertible preferred and preference stocks that are
senior to common stock. Preferred stocks are equity securities that are
senior to common stock with respect to the right to receive dividends
and a fixed share of the proceeds resulting from the issuer's
liquidation. Some preferred stocks also entitle their holders to
receive additional liquidation proceeds on the same basis as holders of
the issuer's common stock, and thus represent an ownership interest in
the issuer.
    The Fund may enter into repurchase agreements with banks and
broker-dealers. A repurchase agreement is an agreement under which
securities are acquired by the Fund from a securities dealer or bank
subject to resale at an agreed upon price on a later date. The
acquiring Fund bears a risk of loss in the event that the other party
to a repurchase agreement defaults on its obligations and the Fund is
delayed or prevented from exercising its rights to dispose of the
collateral securities.
    The Fund may invest in debt securities, including obligations of
the U.S. government, its agencies and instrumentalities, corporate debt
securities, master-demand notes, bank certificates of deposit, time
deposits, bankers' acceptances, commercial paper and other notes,
inflation-indexed securities, and other debt securities. The Fund may
invest in debt securities that are investment grade.
    The Fund may invest in the securities of other investment companies
(including money market funds and ETFs) to the extent permitted under
the 1940 Act, Commission rules thereunder and exemptions thereto. Under
the 1940 Act, the Fund's investment in investment companies is limited
to, subject to certain exceptions: (i) 3% of the total outstanding
voting stock of any one investment company, (ii) 5% of the Fund's total
assets with respect to any one investment company and (iii) 10% of the
Fund's total assets of investment companies in the aggregate. The Fund
may also invest in private investment funds, vehicles or structures.
    The Fund will not invest in options, futures or swaps. The Fund's
investments will be consistent with its respective investment objective
and will not be used to enhance leverage.

MomentumShares U.S. Quantitative Momentum ETF
    According to the Registration Statement, the Fund (together with
the ValueShares U.S. Quantitative Value ETF, the ``U.S. Funds'') will
seek to provide long-term capital appreciation. The Fund will invest,
under normal circumstances, at least 80% of its net assets, plus any
borrowings for investment purposes, in securities of U.S. companies. To
achieve its objective, the Fund will invest, under normal
circumstances, primarily in U.S. equity securities that the Adviser
believes, based on quantitative analysis, have positive momentum. The
Adviser considers a security to have positive momentum primarily if it
has a total return performance, expressed as the magnitude of
profitability for the security in percentage terms, over a certain
period (e.g., the prior twelve months) that ranks it at or near the top
of its relevant universe (i.e., U.S. equity securities that meet the
Fund's trading volume and market liquidity criteria) at the time of
purchase. In assessing positive momentum, the Adviser may also consider
additional factors, such as the security's return over intermediate
periods (e.g., the most recent quarter) or other time periods, as well
as the characteristics of the security's return path (such as
comparisons of the security's more recent individual monthly returns
against less recent individual monthly returns). The criteria the
Adviser uses for determining positive momentum may change from time to
time.
    The Fund will invest primarily in the common stock of U.S.
companies. The Fund may invest in securities of companies in any
industry and of any market capitalization. Although the Fund generally
expects to invest in companies with larger market capitalizations, the
Fund may invest in small- and mid-capitalization companies.
    The Adviser utilizes a quantitative model to identify which
securities the Fund might purchase and sell as well as opportune times
for purchases and sales. While the Fund will invest in approximately
fifty U.S. equity securities as determined by its quantitative value
factors, the quantity of holdings in the Fund will be based on a number
of factors, including the asset size of the Fund and the number of
companies that satisfy the Adviser's quantitative measurements at any
one time. The Fund's portfolio will be rebalanced to the Adviser's
internal target allocations, developed pursuant to the Adviser's
strategy described above, at least semi-annually.
    The Fund is an actively managed ETF and thus does not seek to
replicate the performance of a specific index. Rather, the Adviser has
discretion on a daily basis to actively manage the Fund's portfolio in
accordance with the Fund's investment objective.
    In the absence of normal circumstances, the Fund may temporarily
depart from its normal investment process, provided that such departure
is, in the opinion of the Adviser, consistent with the Fund's
investment objective and in the best interest of the Fund. For example,
the Fund may invest up to 100% of its assets in a temporary defensive
manner by holding all or a substantial portion of its assets in cash,
cash equivalents, or other quality short-term investment in response to
adverse market, economic, or political or other conditions. Such
temporary defensive investments generally may include short-term U.S.
government securities, commercial paper, bank obligations, repurchase
agreements, money market fund shares, and other money market
instruments.
    The Fund will be classified as a ``non-diversified'' investment
company under the 1940 Act. A non-diversified fund is a fund that is
not limited by the 1940 Act with regard to the percentage of its assets
that may be invested in the securities of a single issuer.\20\ The Fund
will not, however, concentrate its investments in a particular industry
or group of industries, as that term is used in the 1940 Act.\21\
Securities of the U.S. government (including its agencies and
instrumentalities), tax-free securities of state or municipal
governments and their political subdivisions (and repurchase agreements
collateralized by government securities) and securities of other
investment companies, whether registered or excluded from registration
under Section 3(c) of the 1940 Act, are not considered to be issued by
members of any industry.
---------------------------------------------------------------------------

    \20\ The diversification standard is set forth in Section
5(b)(1) of the 1940 Act.
    \21\ See supra note 9.
---------------------------------------------------------------------------

    The Fund intends to qualify each year as a RIC under Subchapter M
of the Internal Revenue Code of 1986, as amended.\22\ The Fund will
invest its assets, and otherwise conduct its operations, in a manner
that is intended to satisfy the qualifying income, diversification and
distribution requirements necessary to establish and maintain RIC
qualification under Subchapter M.
---------------------------------------------------------------------------

    \22\ See supra note 10.
---------------------------------------------------------------------------

Other Portfolio Holdings
    The Fund may hold 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 \23\
under the 1940 Act.\24\ The 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 the Fund's net assets are held 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.
---------------------------------------------------------------------------

    \23\ See supra note 11.
    \24\ See supra note 12.
---------------------------------------------------------------------------

    The Fund may make secured loans of its portfolio securities;
however, securities loans will not be made if, as a result, the
aggregate amount of all outstanding securities loans by the Fund
exceeds 33\1/3\% of its total assets (including the market value of
collateral received). To the extent the Fund engages in securities
lending, securities loans will be made to broker-dealers that the
Adviser believes to be of relatively high credit standing pursuant to
agreements requiring that the loans continuously be collateralized by
cash, liquid securities, or shares of other investment companies with a
value at least equal to the market value of the loaned securities.
    The Fund may invest in preferred stocks. Preferred stocks include
convertible and non-convertible preferred and preference stocks that
are senior to common stock. Preferred stocks are equity securities that
are senior to common stock with respect to the right to receive
dividends and a fixed share of the proceeds resulting from the issuer's
liquidation. Some preferred stocks also entitle their holders to
receive additional liquidation proceeds on the same basis as holders of
the issuer's common stock, and thus represent an ownership interest in
the issuer.
    The Fund may enter into repurchase agreements with banks and
broker-dealers. A repurchase agreement is an agreement under which
securities are acquired by the Fund from a securities dealer or bank
subject to resale at an agreed upon price on a later date. The
acquiring Fund bears a risk of loss in the

event that the other party to a repurchase agreement defaults on its
obligations and the Fund is delayed or prevented from exercising its
rights to dispose of the collateral securities.
    The Fund may invest in debt securities, including obligations of
the U.S. government, its agencies and instrumentalities, corporate debt
securities, master-demand notes, bank certificates of deposit, time
deposits, bankers' acceptances, commercial paper and other notes,
inflation-indexed securities, and other debt securities. The Fund may
invest in debt securities that are investment grade.
    The Fund may invest in the securities of other investment companies
(including money market funds and ETFs) to the extent permitted under
the 1940 Act, Commission rules thereunder and exemptions thereto. Under
the 1940 Act, the Fund's investment in investment companies is limited
to, subject to certain exceptions: (i) 3% of the total outstanding
voting stock of any one investment company, (ii) 5% of the Fund's total
assets with respect to any one investment company and (iii) 10% of the
Fund's total assets of investment companies in the aggregate. The Fund
may also invest in private investment funds, vehicles or structures.
    The Fund will not invest in options, futures or swaps. The Fund's
investments will be consistent with its respective investment objective
and will not be used to enhance leverage.
MomentumShares International Quantitative Momentum ETF
    According to the Registration Statement, the Fund (together with
the ValueShares International Quantitative Value ETF, the
``International Funds'') will seek to provide long-term capital
appreciation. To achieve its objective, the Fund will invest, under
normal circumstances, primarily in equity securities of international
companies that the Adviser believes, based on quantitative analysis,
have positive momentum. The Adviser considers a security to have
positive momentum primarily if it has a total return performance,
expressed as the magnitude of profitability for the security in
percentage terms, over a certain period (e.g., the prior twelve months)
that ranks it at or near the top of its relevant universe (i.e.,
international equity securities that meet the Fund's trading volume and
market liquidity criteria) at the time of purchase. In assessing
positive momentum, the Adviser may also consider additional factors,
such as the security's return over intermediate periods (e.g., the most
recent quarter) or other time periods, as well as the characteristics
of the security's return path (such as comparisons of the security's
more recent individual monthly returns against less recent individual
monthly returns). The criteria the Adviser uses for determining
positive momentum may change from time to time.
    The Fund will invest primarily in the common stock of international
companies and depositary receipts. The Fund may invest in securities of
companies in any industry and of any market capitalization. The Fund
may invest in foreign securities by purchasing depositary receipts,
including ADRs, GDRs, and EDRs or other securities convertible into
securities of issuers based in foreign countries. Although the Fund
generally expects to invest in companies with larger market
capitalizations, the Fund may invest in small- and mid-capitalization
companies. With respect to its investments in exchange-listed common
stocks and Depositary Receipts of non-U.S. issuers, the Fund will
invest at least 90% of its assets invested in such securities in
exchange-listed common stocks and Depositary Receipts that trade in
markets that are members of the ISG or are parties to a comprehensive
surveillance sharing agreement with the Exchange.
    The Fund is an actively managed ETF and thus does not seek to
replicate the performance of a specific index. Rather, the Adviser has
discretion on a daily basis to actively manage the Fund's portfolio in
accordance with the Fund's investment objective.
    The Adviser utilizes a quantitative model to identify which
securities the Fund might purchase and sell as well as opportune times
for purchases and sales. While the Fund will invest in approximately
fifty international equity securities as determined by its quantitative
value factors, the quantity of holdings in the Fund will be based on a
number of factors, including the asset size of the Fund and the number
of companies that satisfy the Adviser's quantitative measurements at
any one time. The Fund's portfolio will be rebalanced to the Adviser's
internal target allocations, developed pursuant to the Adviser's
strategy described above, at least annually.
    In the absence of normal circumstances, the Fund may temporarily
depart from its normal investment process, provided that such departure
is, in the opinion of the Adviser, consistent with the Fund's
investment objective and in the best interest of the Fund. For example,
the Fund may invest up to 100% of its assets in a temporary defensive
manner by holding all or a substantial portion of its assets in cash,
cash equivalents, or other quality short-term investment in response to
adverse market, economic, or political or other conditions. Such
temporary defensive investments generally may include short-term U.S.
government securities, commercial paper, bank obligations, repurchase
agreements, money market fund shares, and other money market
instruments.
    The Fund will be classified as a ``non-diversified'' investment
company under the 1940 Act. A non-diversified fund is a fund that is
not limited by the 1940 Act with regard to the percentage of its assets
that may be invested in the securities of a single issuer.\25\ The Fund
will not, however, concentrate its investments in a particular industry
or group of industries, as that term is used in the 1940 Act.\26\
Securities of the U.S. government (including its agencies and
instrumentalities), tax-free securities of state or municipal
governments and their political subdivisions (and repurchase agreements
collateralized by government securities) and securities of other
investment companies, whether registered or excluded from registration
under Section 3(c) of the 1940 Act, are not considered to be issued by
members of any industry.
---------------------------------------------------------------------------

    \25\ The diversification standard is set forth in Section
5(b)(1) of the 1940 Act.
    \26\ See supra note 9.
---------------------------------------------------------------------------

    The Fund intends to qualify each year as a RIC under Subchapter M
of the Internal Revenue Code of 1986, as amended.\27\ The Fund will
invest its assets, and otherwise conduct its operations, in a manner
that is intended to satisfy the qualifying income, diversification and
distribution requirements necessary to establish and maintain RIC
qualification under Subchapter M.
---------------------------------------------------------------------------

    \27\ See supra note 10.
---------------------------------------------------------------------------

Other Portfolio Holdings
    The Fund may hold 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\
under the 1940 Act.\29\ The 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 the Fund's net assets are held 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\ See supra note 11.
    \29\ See supra note 12.
---------------------------------------------------------------------------

    The Fund may make secured loans of its portfolio securities;
however, securities loans will not be made if, as a result, the
aggregate amount of all outstanding securities loans by the Fund
exceeds 33\1/3\% of its total assets (including the market value of
collateral received). To the extent the Fund engages in securities
lending, securities loans will be made to broker-dealers that the
Adviser believes to be of relatively high credit standing pursuant to
agreements requiring that the loans continuously be collateralized by
cash, liquid securities, or shares of other investment companies with a
value at least equal to the market value of the loaned securities.
    The Fund may invest in preferred stocks. Preferred stocks include
convertible and non-convertible preferred and preference stocks that
are senior to common stock. Preferred stocks are equity securities that
are senior to common stock with respect to the right to receive
dividends and a fixed share of the proceeds resulting from the issuer's
liquidation. Some preferred stocks also entitle their holders to
receive additional liquidation proceeds on the same basis as holders of
the issuer's common stock, and thus represent an ownership interest in
the issuer.
    The Fund may enter into repurchase agreements with banks and
broker-dealers. A repurchase agreement is an agreement under which
securities are acquired by the Fund from a securities dealer or bank
subject to resale at an agreed upon price on a later date. The
acquiring Fund bears a risk of loss in the event that the other party
to a repurchase agreement defaults on its obligations and the Fund is
delayed or prevented from exercising its rights to dispose of the
collateral securities.
    The Fund may invest in debt securities, including obligations of
the U.S. government, its agencies and instrumentalities, corporate debt
securities, master-demand notes, bank certificates of deposit, time
deposits, bankers' acceptances, commercial paper and other notes,
inflation-indexed securities, and other debt securities. The Fund may
invest in debt securities that are investment grade.
    The Fund may invest in the securities of other investment companies
(including money market funds and ETFs) to the extent permitted under
the 1940 Act, Commission rules thereunder and exemptions thereto. Under
the 1940 Act, the Fund's investment in investment companies is limited
to, subject to certain exceptions: (i) 3% of the total outstanding
voting stock of any one investment company, (ii) 5% of the Fund's total
assets with respect to any one investment company and (iii) 10% of the
Fund's total assets of investment companies in the aggregate. The Fund
may also invest in private investment funds, vehicles or structures.
    The Fund will not invest in options, futures or swaps. The Fund's
investments will be consistent with its respective investment objective
and will not be used to enhance leverage.
Net Asset Value
    According to the Registration Statement, the net asset value
(``NAV'') of each Fund will be calculated each business day as of the
close of regular trading on the New York Stock Exchange (``NYSE''),
generally 4:00 p.m. Eastern Time (the ``NAV Calculation Time''), on
each day that the NYSE is open for trading, based on prices at the NAV
Calculation Time. NAV per Share is calculated by dividing the Fund's
net assets by the number of Fund Shares outstanding. Each Fund's net
assets are valued primarily on the basis of market quotations.
    Each Fund calculates its NAV per Share by taking the current market
value of its total assets, subtracting any liabilities, and dividing
that amount by the total number of Shares owned by shareholders. When
calculating the NAV of a Fund's Shares, expenses are accrued and
applied daily and equity securities held by the Fund are valued at
their market value when reliable market quotations are readily
available. Equity securities are valued primarily on the basis of
market quotations reported on stock exchanges and other securities
markets around the world. If an equity security is listed on a national
exchange, the security is valued at the closing price or, if the
closing price is not readily available, the mean of the closing bid and
ask prices. Both market quotations and indicative bids are obtained
from outside pricing services approved and monitored pursuant to a
policy approved by the Board of Trustees of the Trust (the ``Board'').
    If a market price is not readily available or is deemed not to
reflect market value, a Fund will determine the price of the security
held by the Fund based on a determination of the security's fair value
pursuant to policies and procedures approved by the Board. In addition,
a Fund may use fair valuation to price securities that trade on a
foreign exchange, if any, when a significant event has occurred after
the foreign exchange closes but before the time at which the Fund's NAV
is calculated. Foreign exchanges typically close before the time at
which Fund Share prices are calculated, and may be closed altogether on
some days when a Fund is open. Such significant events affecting a
foreign security, in the event a Fund holds foreign securities, may
include, but are not limited to: Corporate actions, earnings
announcements, litigation or other events impacting a single issuer;
governmental action that affects securities in one sector or country;
natural disasters or armed conflicts affecting a country or region; or
significant domestic or foreign market fluctuations. If a Fund holds
foreign securities, it would use various criteria, including an
evaluation of U.S. market moves after the close of foreign markets, in
determining whether a foreign security's market price is readily
available and reflective of market value and, if not, the fair value of
the security.
    To the extent a Fund has holdings of foreign or other securities
that may trade infrequently, fair valuation may be used more frequently
than for other funds. Fair valuation may have the effect of reducing
stale pricing arbitrage opportunities presented by the pricing of Fund
Shares. However, when a Fund uses fair valuation to price securities,
it may value those securities higher or lower than another fund would
have priced the security. Also, the use of fair valuation may cause the
Shares' NAV performance to diverge from the Shares' market price and
from the performance of various benchmarks used to compare a Fund's
performance because benchmarks generally do not use fair valuation
techniques. Because of the judgment involved in fair valuation
decisions, there can be no assurance that the value ascribed to a
particular security is accurate.
    Repurchase agreements are generally valued at par. Other short-term
instruments will generally be valued at the last available bid price
received from independent pricing services. In determining the value of
a fixed income investment, pricing services may use certain information
with respect to transactions in such investments, quotations from
dealers, pricing matrixes, market transactions in comparable
investments, various relationships observed in the market between
investments, and calculated yield measures. In certain circumstances,
short-term instruments may be valued on the basis of amortized cost.

    For more information regarding the valuation of Fund investments in
calculating the Fund's NAV, see the Registration Statement.
The Shares
    According to the Registration Statement, the Fund will issue and
redeem Shares on a continuous basis at NAV in aggregations of 50,000
Shares (``Creation Units''). The consideration for a Creation Unit of a
Fund will be the ``Fund Deposit,'' which will consist of the basket of
securities to be deposited to purchase Creation Units of the Fund (the
``In-Kind Creation Basket''). The Fund Deposit will consist of the In-
Kind Creation Basket and an amount of cash consisting of a ``Balancing
Amount'' (as described below) and a transaction fee calculated in
connection with creations (together with the Balancing Amount, the
``Cash Component''), or a Cash Component that includes an all cash
payment (``Cash Value'').
    In addition to the In-Kind Creation Basket, a purchaser will
typically pay to the Fund a ``Balancing Amount'' reflecting the
difference, if any, between the NAV of a Creation Unit and the market
value of the securities in the In-Kind Creation Basket. If the NAV per
Creation Unit exceeds the market value of the securities in the In-Kind
Creation Basket, the purchaser will pay the Balancing Amount to the
Fund. By contrast, if the NAV per Creation Unit is less than the market
value of the securities in the In-Kind Creation Basket, the Fund will
pay the Balancing Amount to the purchaser. The Balancing Amount ensures
that the consideration paid by an investor for a Creation Unit is
exactly equal to the value of the Creation Unit.
    A portfolio composition file, to be sent via the National
Securities Clearing Corporation (``NSCC''), will be made available on
each business day, prior to the opening of business on the Exchange
(currently 9:30 a.m., Eastern time), a list of the names and the
required number of shares of each security in the In-Kind Creation
Basket to be included in the current Fund Deposit for the Fund (based
on information about the Fund's portfolio at the end of the previous
business day). In addition, on each business day, the estimated Cash
Component or Cash Value, effective through and including the previous
business day, will be made available through NSCC.
    The In-Kind Creation Basket is applicable for purchases of Creation
Units of the Fund until such time as the next-announced In-Kind
Creation Basket is made available. The Fund reserves the right to
accept a nonconforming (i.e., custom) Fund Deposit. In addition, the
composition of the In-Kind Creation Basket may change as, among other
things, corporate actions and investment decisions by the Adviser are
implemented for the Fund's portfolio.
    All purchase orders must be placed by or through an ``Authorized
Participant.'' An Authorized Participant must be either a broker-dealer
or other participant in the Continuous Net Settlement System
(``Clearing Process'') of the NSCC or a participant in The Depository
Trust Company (``DTC'') with access to the DTC system, and must execute
an agreement with the Distributor that governs transactions in the
Fund's Creation Units. In-kind portions of purchase orders will be
processed through the Clearing Process when it is available.
    Fund Shares may be redeemed only in Creation Units at their NAV
next determined after receipt of a redemption request in proper form by
the Fund through the Distributor and only on a business day. The
redemption proceeds for a Creation Unit will consist of the basket of
securities a shareholder will receive upon redemption of a Creation
unit (the ``In-Kind Redemption Basket'') and an amount of cash
consisting of a Balancing Amount and a transaction fee (the ``Cash
Redemption Amount''), or, in certain circumstances, the Cash Value, in
all instances equal to the value of a Creation Unit. In addition,
investors may incur brokerage and other costs in connection with
assembling a Creation Unit.
    The redemption proceeds for a Creation Unit generally consist of
the In-Kind Redemption Basket and a Cash Redemption Amount (``Fund
Redemption''), which consists of a Balancing Amount and a Transaction
Fee. In lieu of the In- Kind Redemption Basket and Balancing Amount,
Creation Units may be redeemed consisting solely of cash in an amount
equal to the NAV of a Creation Unit (the ``Cash Value''). In such
instances, information about the Cash Value of a Creation Unit also
will be published. The Fund reserves the right to accept a
nonconforming (i.e., custom) Fund Redemption.\30\
---------------------------------------------------------------------------

    \30\ As stated in the Exemptive Application, the Fund may, in
certain circumstances, allow cash creations or partial cash
creations but not redemptions (or vice versa) if: (a) There is a
Balancing Amount; (b) the Fund announces before the open of trading
that all purchases, all redemptions or all purchases and redemptions
on that day will be made entirely in cash; (c) upon receiving a
purchase or redemption order from an Authorized Participant the Fund
determines to require the purchase or redemption to be made entirely
in cash because, among other things, it would benefit the Fund and
its investors; (d) the Fund requires all Authorized Participants
purchasing or redeeming Shares on that day to deposit or receive (as
applicable) cash in lieu of some or all of the In-Kind Creation
Basket or In-Kind Redemption Basket, respectively, solely because
(i) certain instruments therein are not eligible for transfer
through either the NSCC Process or DTC Process (as described in the
Exemptive Application) or (ii) such instruments are not eligible for
trading due to local (foreign) trading or transfer restrictions or
the like; or (e) the Fund permits an Authorized Participant to
deposit or receive (as applicable) cash in lieu of some or all of
the In-Kind Creation Basket or In-Kind Redemption Basket,
respectively, solely because (i) certain instruments therein are, in
the case of the purchase of a Creation Unit, not available in
sufficient quantity, (ii) such instruments are not eligible for
trading by an Authorized Participant or the investor on whose behalf
the Authorized Participant is acting, or (iii) an investor would be
subject to unfavorable income tax treatment based on receipt of
redemption proceeds in kind. According to the Registration
Statement, an additional variable charge for cash or partial cash
creations, and cash or partial cash redemptions, may also be imposed
to compensate the Fund for the costs associated with buying the
applicable securities.
---------------------------------------------------------------------------

    The right of redemption may be suspended or the date of payment
postponed: (i) for any period during which the NYSE is closed (other
than customary weekend and holiday closings); (ii) for any period
during which trading on the NYSE is suspended or restricted; (iii) for
any period during which an emergency exists as a result of which
disposal of the Shares or determination of the Fund's NAV is not
reasonably practicable; or (iv) in such other circumstances as
permitted by the Commission.
    For an order involving a Creation Unit to be effectuated at the
Fund's NAV on a particular day, it must be received by the Distributor
by or before the deadline for such order (``Order Cut-Off Time''). The
Order Cut-Off Time for creation and redemption orders for the Fund is
generally expected to be 4:00 p.m. Eastern time for In-Kind Creation
and Redemption Baskets, and earlier in the day for Cash Value
transactions. On days when the Exchange or the bond markets close
earlier than normal, the Fund may require orders to create or to redeem
Creation Units be placed earlier in the day. In-Kind Creation and
Redemption Baskets are expected to be accepted until the close of
regular trading on the Exchange on each business day, which is usually
4:00 p.m. Eastern time. A standard redemption transaction fee will be
imposed to offset transfer and other transaction costs that may be
incurred by the Fund.
    Additional information regarding the Shares and the Funds,
including investment strategies, risks, creation and redemption
procedures, fees and expenses, portfolio holdings disclosure

policies, distributions, taxes and reports to be distributed to
beneficial owners of the Shares can be found in the Registration
Statement, on the Web site for the ValueShares U.S. Quantitative Value
ETF and ValueShares International Quantitative Value ETF at
www.valueshares.com or on the Web site for the MomentumShares U.S.
Quantitative Momentum ETF and MomentumShares International Quantitative
Momentum ETF at www.momentumshares.com, as applicable.
Availability of Information
    The Funds' Web sites, which will be publicly available prior to the
public offering of Shares, will include a form of the prospectus for
each applicable Fund that may be downloaded. The Web sites will include
additional quantitative information updated on a daily basis,
including, for each applicable Fund: (1) the prior business day's NAV
and the market closing price or mid-point of the bid/ask spread at the
time of calculation of such NAV (the ``Bid/Ask Price''),\31\ and a
calculation of the premium or discount of the market closing price or
Bid/Ask Price against the NAV; and (2) a table showing the number of
days the Market Price (as defined by the Commission in Form N-1A) \32\
of the Fund Shares was greater than the Fund's NAV and the number of
days it was less than the Fund's NAV (i.e., premium or discount) for
the most recently completed calendar year, and the most recently
completed calendar quarters since that year (or of the life of the
Fund, if shorter). Daily trading volume information will be available
in the financial section of newspapers, through subscription services
such as Bloomberg, Thomson Reuters, and International Data Corporation,
which can be accessed by authorized participants and other investors,
as well as through other electronic services, including major public
Web sites. On each business day, before commencement of trading in
Shares during Regular Trading Hours on the Exchange, the Fund will
disclose on its Web site the identities and quantities of the portfolio
of securities and other assets (the ``Disclosed Portfolio'') held by
the Fund that will form the basis for the Fund's calculation of NAV at
the end of the business day.\33\ The Disclosed Portfolio will include,
as applicable, the names, quantity, percentage weighting and market
value of securities and other assets held by the Fund and the
characteristics of such assets. The Web site and information will be
publicly available at no charge.
---------------------------------------------------------------------------

    \31\ The Bid/Ask Price of the Fund will be determined using the
highest bid and the lowest offer on the Exchange as of the time of
calculation of the Fund's NAV. The records relating to Bid/Ask
Prices will be retained by the Fund or its service providers.
    \32\ The Commission has defined ``Market Price'' in Form N-1A as
the ``last reported sale price at which Exchange-Traded Fund shares
trade on the principal U.S. market on which the Fund's Shares are
traded during a regular trading session or, if it more accurately
reflects the current market value of the Fund's Shares at the time
the Fund uses to calculate its net asset value, a price within the
range of the highest bid and lowest offer on the principal U.S.
market on which the Fund's Shares are traded during a regular
trading session.''
    \33\ Under accounting procedures to be followed by each Fund,
trades made on the prior business day (``T'') will be booked and
reflected in NAV on the current business day (``T+1''). Accordingly,
each Fund will be able to disclose at the beginning of the business
day the portfolio that will form the basis for the NAV calculation
at the end of the business day.
---------------------------------------------------------------------------

    In addition, for each Fund, an estimated value, defined in BATS
Rule 14.11(i)(3)(C) as the ``Intraday Indicative Value,'' that reflects
an estimated intraday value of the Fund's portfolio, will be
disseminated. Moreover, the Intraday Indicative Value will be based
upon the current value for the components of the Disclosed Portfolio
and will be updated and widely disseminated by one or more major market
data vendors at least every 15 seconds during the Exchange's Regular
Trading Hours.\34\ In addition, the quotations of certain of each
Fund's holdings may not be updated during U.S. trading hours if such
holdings do not trade in the United States or if updated prices cannot
be ascertained.
---------------------------------------------------------------------------

    \34\ Currently, it is the Exchange's understanding that several
major market data vendors display and/or make widely available
Intraday Indicative Values published via the Consolidated Tape
Association (``CTA'') or other data feeds.
---------------------------------------------------------------------------

    The dissemination of the Intraday Indicative Value, together with
the Disclosed Portfolio, will allow investors to determine the value of
the underlying portfolio of each Fund on a daily basis and provide a
close estimate of that value throughout the trading day.
    Intraday, executable price quotations on U.S. and non-U.S.
securities as well as other assets are available from major broker-
dealer firms and for exchange-traded assets, including exchange-listed
common stock, Depositary Receipts, and investment companies, such
intraday information is available directly from the applicable listing
exchange. All such intraday price information is available through
subscription services, such as Bloomberg, Thomson Reuters and
International Data Corporation, which can be accessed by authorized
participants and other investors.
    Information regarding market price and volume of the Shares will be
continually available on a real-time basis throughout the day on
brokers' computer screens and other electronic services. The previous
day's closing price and trading volume information for the Shares will
be published daily in the financial section of newspapers. Quotation
and last sale information for the Shares will be available on the
facilities of the CTA.
Initial and Continued Listing
    The Shares will be subject to BATS Rule 14.11(i), which sets forth
the initial and continued listing criteria applicable to Managed Fund
Shares. The Exchange represents that, for initial and/or continued
listing, each Fund must be in compliance with Rule 10A-3 under the
Act.\35\ A minimum of 100,000 Shares will be outstanding at the
commencement of trading on the Exchange. 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.
---------------------------------------------------------------------------

    \35\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Trading Halts
    With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of a Fund. The Exchange will halt trading in the
Shares under the conditions specified in BATS Rule 11.18. Trading may
be halted because of market conditions or for reasons that, in the view
of the Exchange, make trading in the Shares inadvisable. These may
include: (1) the extent to which trading is not occurring in the
securities and/or the financial instruments composing the Disclosed
Portfolio of a Fund; or (2) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present. Trading in the Shares also will be subject to Rule
14.11(i)(4)(B)(iv), which sets forth circumstances under which Shares
of a Fund may be halted.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. BATS will allow
trading in the Shares from 8:00 a.m. until 5:00 p.m. Eastern Time. The
Exchange has appropriate rules to facilitate transactions in the Shares
during all trading sessions. As provided in BATS Rule 11.11(a), the
minimum

price variation for quoting and entry of orders in Managed Fund Shares
traded on the Exchange is $0.01, with the exception of securities that
are priced less than $1.00, for which the minimum price variation for
order entry is $0.0001.
Surveillance
    The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of the Shares on the Exchange during
all trading sessions and to deter and detect violations of Exchange
rules and the applicable federal securities laws. Trading of the Shares
through the Exchange will be subject to the Exchange's surveillance
procedures for derivative products, including Managed Fund Shares. The
Exchange may obtain information regarding trading in the Shares and the
underlying shares in equity securities via the ISG, from other
exchanges that are members or affiliates of the ISG, or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement. Additionally, not more than 10% of the net assets of each
Fund, in the aggregate, will be invested in (1) unlisted or unsponsored
Depositary Receipts; (2) Depositary Receipts not listed on an exchange
that is a member of ISG or a party to a comprehensive surveillance
sharing agreement with the Exchange; or (3) unlisted common stocks or
common stocks not listed on an exchange that is a member of the ISG or
a party to a comprehensive surveillance sharing agreement with the
Exchange. The Exchange prohibits the distribution of material non-
public information by its employees.
Information Circular
    Prior to the commencement of trading, the Exchange will inform its
members in an Information Circular of the special characteristics and
risks associated with trading the Shares. Specifically, the Information
Circular will discuss the following: (1) The procedures for purchases
and redemptions of Shares in Creation Units (and that Shares are not
individually redeemable); (2) BATS Rule 3.7, which imposes suitability
obligations on Exchange members with respect to recommending
transactions in the Shares to customers; (3) how information regarding
the Intraday Indicative Value is disseminated; (4) the risks involved
in trading the Shares during the Pre-Opening \36\ and After Hours
Trading Sessions \37\ when an updated Intraday Indicative Value will
not be calculated or publicly disseminated; (5) the requirement that
members deliver a prospectus to investors purchasing newly issued
Shares prior to or concurrently with the confirmation of a transaction;
and (6) trading information.
---------------------------------------------------------------------------

    \36\ The Pre-Opening Session is from 8 a.m. to 9:30 a.m. Eastern
Time.
    \37\ The After Hours Trading Session is from 4 p.m. to 5 p.m.
Eastern Time.
---------------------------------------------------------------------------

    In addition, the Information Circular will advise members, prior to
the commencement of trading, of the prospectus delivery requirements
applicable to the Fund. Members purchasing Shares from a Fund for
resale to investors will deliver a prospectus to such investors. The
Information Circular will also discuss any exemptive, no-action, and
interpretive relief granted by the Commission from any rules under the
Act.
    In addition, the Information Circular will reference that the Fund
is subject to various fees and expenses described in the Registration
Statement. The Information Circular will also disclose the trading
hours of the Shares of a Fund and the applicable NAV Calculation Time
for those Shares. The Information Circular will disclose that
information about the Shares of a Fund will be publicly available on
the Fund's Web site. In addition, the Information Circular will
reference that the Trust is subject to various fees and expenses
described in the Fund's Registration Statement.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section
6(b) of the Act \38\ in general and Section 6(b)(5) of the Act \39\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, 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.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78f.
    \39\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in BATS Rule 14.11(i). The
Exchange believes that its surveillance procedures are adequate to
properly monitor the trading of the Shares on the Exchange during all
trading sessions and to deter and detect violations of Exchange rules
and the applicable federal securities laws. If the investment adviser
to the investment company issuing Managed Fund Shares is affiliated
with a broker-dealer, such investment adviser to the investment adviser
shall erect a ``fire wall'' between the investment adviser and the
broker-dealer with respect to access to information concerning the
composition and/or changes to such investment company portfolio. The
Adviser is not a registered broker-dealer and is not affiliated with
any broker-dealers. The Exchange may obtain information regarding
trading in the Shares and the underlying shares in exchange-listed
common stocks, Depositary Receipts, and investment companies via the
ISG, from other exchanges that are members or affiliates of the ISG, or
with which the Exchange has entered into a comprehensive surveillance
sharing agreement, to the extent that the securities are listed on such
exchanges, as further discussed below.\40\
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    \40\ See supra note 14.
---------------------------------------------------------------------------

    According to the Registration Statement, the U.S. Funds expect that
they will have at least 80% of their assets invested in securities of
U.S. companies. Similarly, the International Funds expect that they
will have at least 90% of their assets invested in securities listed on
exchanges that are members or affiliates of the ISG. The Funds will not
concentrate their investments in a particular industry or group of
industries, as that term is defined in the 1940 Act.\41\ The Funds'
investments will be consistent with their respective investment
objective and will not be used to enhance leverage. Each Fund also may
invest its net assets in money market instruments at the discretion of
the Adviser. The U.S. Funds will not invest in non-U.S. equity
securities.
---------------------------------------------------------------------------

    \41\ See supra note 9.
---------------------------------------------------------------------------

    Additionally, each Fund may hold up to an aggregate amount of 15%
of its net assets in illiquid securities (calculated at the time of
investment), including Rule 144A securities. 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 that Fund's net assets are
held 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.
    The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that 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. In addition, a large amount of
information is publicly available regarding the Funds and the Shares,
thereby promoting market transparency. Moreover, the Intraday
Indicative Value will be disseminated by one or more major market data
vendors at least every 15 seconds during Regular Trading Hours. On each
business day, before commencement of trading in Shares during Regular
Trading Hours, the Funds will disclose on its Web site the Disclosed
Portfolio that will form the basis for each Fund's calculation of NAV
at the end of the business day. Pricing information will be available
on each Fund's Web site including: (1) The prior business day's NAV and
the market closing price or the Bid/Ask Price,\42\ and a calculation of
the premium or discount of the market closing price or Bid/Ask Price
against the NAV; and (2) a table showing the number of days the Market
Price (as defined by the Commission in Form N-1A) \43\ of the Fund
Shares was greater than the Fund's NAV and the number of days it was
less than the Fund's NAV (i.e., premium or discount) for the most
recently completed calendar year, and the most recently completed
calendar quarters since that year (or of the life of the Fund, if
shorter). Additionally, information regarding market price and trading
of the Shares will be continually available on a real-time basis
throughout the day on brokers' computer screens and other electronic
services, and quotation and last sale information for the Shares will
be available on the facilities of the CTA. The Web site for a Fund will
include a form of the prospectus for the Fund and additional data
relating to NAV and other applicable quantitative information. Trading
in Shares of a Fund will be halted under the conditions specified in
BATS Rule 11.18. Trading may also be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. Finally, trading in the Shares will
be subject to BATS Rule 14.11(i)(4)(B)(iv), which sets forth
circumstances under which Shares of the Funds may be halted. In
addition, as noted above, investors will have ready access to
information regarding each Fund's holdings, the Intraday Indicative
Value, the Disclosed Portfolio, and quotation and last sale information
for the Shares.
---------------------------------------------------------------------------

    \42\ See supra note 31.
    \43\ See supra note 32.
---------------------------------------------------------------------------

    Intraday, executable price quotations on the assets held by the
Funds are available from major broker-dealer firms and for exchange-
traded assets, including exchange-listed common stock, Depositary
Receipts, and investment companies, such intraday information is
available directly from the applicable listing exchange. Such intraday
price information is available through subscription services, such as
Bloomberg, Thomson Reuters and International Data Corporation, which
can be accessed by authorized participants and other investors.
    The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
additional types of actively-managed exchange-traded products that will
enhance competition among market participants, to the benefit of
investors and the marketplace. As noted above, the Exchange has in
place surveillance procedures relating to trading in the Shares and may
obtain information via ISG from other exchanges that are members of ISG
or with which the Exchange has entered into a comprehensive
surveillance sharing agreement. In addition, as noted above, investors
will have ready access to information regarding each Fund's holdings,
the Intraday Indicative Value, the Disclosed Portfolio, and quotation
and last sale information for the Shares.
    For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change will facilitate the listing and trading of
additional actively-managed exchange-traded products that will enhance
competition among market participants, to the benefit of investors and
the marketplace.

(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will: (a) by order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposal is
consistent with the Act. Comments may be submitted by any of the
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File No. SR-BATS-2014-026 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File No. SR-BATS-2014-026. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule changes between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be

available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street NE., Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
such filing will also be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File No. SR-BATS-2014-026 and should be submitted on or before August
13, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\44\
---------------------------------------------------------------------------

    \44\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-17265 Filed 7-22-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 132 (Tuesday, July 10, 2018)]
[Rules and Regulations]
[Pages 31853-31854]
[FR Doc No: 2018-14664]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2018-0128; Airspace Docket No. 18-AEA-3]
RIN 2120-AA66

Amendment of Class D Airspace and Class E Airspace; Aberdeen, MD

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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SUMMARY: This amends Class D airspace, Class E airspace designated as
an extension to a Class D surface area, and Class E airspace area
extending upward from 700 feet or more above the surface at Phillips
Army Air Field (AAF), Aberdeen, MD. This action accommodates airspace
reconfiguration due to the decommissioning of Aberdeen non-directional
radio beacon (NDB), and cancellation of the NDB approaches. Controlled
airspace is necessary for the safety and management of instrument
flight rules (IFR) operations at this airport. This action also updates
the geographic coordinates of the airport, and replaces the outdated
term Airport/Facility Directory with the term Chart Supplement in the
legal descriptions of associated Class D and E airspace.

DATES: Effective 0901 UTC, September 13, 2018. The Director of the
Federal Register approves this incorporation by reference action under
title 1, Code of Federal Regulations, part 51, subject to the annual
revision of FAA Order 7400.11 and publication of conforming amendments.

ADDRESSES: FAA Order 7400.11B, Airspace Designations and Reporting
Points, and subsequent amendments can be viewed online at http://www.faa.gov/air_traffic/publications/. For further information, you can
contact the Airspace Policy Group, Federal Aviation Administration, 800
Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-
8783. The Order is also available for inspection at the National
Archives and Records Administration (NARA). For information on the
availability of FAA Order 7400.11B at NARA, call<PHONE_NUMBER>, or go
to https://www.archives.gov/federal-register/cfr/ibr-locations.html.
    FAA Order 7400.11, Airspace Designations and Reporting Points, is
published yearly and effective on September 15.

FOR FURTHER INFORMATION, CONTACT: John Fornito, Operations Support
Group, Eastern Service Center, Federal Aviation Administration, 1701
Columbia Ave., College Park, GA 30337; telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Authority for This Rulemaking

    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the United States Code. Subtitle I, Section 106
describes the authority of the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more detail the scope of the agency's
authority. This rulemaking is promulgated under the authority described
in Subtitle VII, Part A, Subpart I, Section 40103. Under that section,
the FAA is charged with prescribing regulations to assign the use of
airspace necessary to ensure the safety of aircraft and the efficient
use of airspace. This regulation is within the scope of that authority
as it amends Class D and Class E airspace at Phillips AAF, Aberdeen,
MD, to support IFR operations at the airport.

History

    The FAA published a notice of proposed rulemaking in the Federal
Register (83 FR 16259, April 16, 2018) for Docket No. FAA-2018-0128 to
amend Class D airspace, Class E airspace designated as an extension to
a Class D surface area, and Class E airspace area extending upward from
700 feet or more above the surface at Phillips Army Air Field,
Aberdeen, MD.
    Interested parties were invited to participate in this rulemaking
effort by submitting written comments on the proposal to the FAA. No
comments were received.
    Subsequent to publication, the FAA found the geographic coordinates
for Phillips AAF were incorrect. This action corrects that error.
    Class D and E airspace designations are published in paragraph
5000, 6004, and 6005, respectively, of FAA Order 7400.11B dated August
3, 2017, and effective September 15, 2017, which is incorporated by
reference in 14 CFR part 71.1. The Class D and E airspace designations
listed in this document will be published subsequently in the Order.

Availability and Summary of Documents for Incorporation by Reference

    This document amends FAA Order 7400.11B, Airspace Designations and
Reporting Points, dated August 3, 2017, and effective September 15,
2017. FAA Order 7400.11B is publicly available as listed in the
ADDRESSES section of this document. FAA Order 7400.11B lists Class A,
B, C, D, and E airspace areas, air traffic service routes, and
reporting points.

The Rule

    This amendment to Title 14, Code of Federal Regulations (14 CFR)
amends part 71 by:
    Amending Class D airspace at Phillips AAF, Aberdeen, MD, by
updating the geographic coordinates of the airfield; and
    Amending Class E airspace designated as an extension to a Class D
surface area to within a 4.4-mile radius of Phillips AAF, and within 2
miles each side of the 028[deg] bearing from Phillips AAF, extending
from the 4.4-mile radius to 9 miles northeast of the airport. The
northeast extension from the Aberdeen NDB is removed due to the

decommissioning of the navigation aid and cancelation of the NDB
approach.
    The geographic coordinates of Phillips AAF are adjusted in the
associated airspace areas to be in concert with the FAA's aeronautical
database. These changes enhance the safety and management of IFR
operations at the airport.
    An editorial change is made removing the city from the airport name
to comply with a change to FAA Order 7400.2L, Procedures for Handling
Airspace Matters, in the Class E airspace areas.
    Also, an editorial change is made replacing the outdated term
Airport/Facility Directory with the term Chart Supplement in the
associated Class D and E airspace legal descriptions.

Regulatory Notices and Analyses

    The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore: (1) Is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. Since this is a routine matter that
only affects air traffic procedures and air navigation, it is certified
that this rule, when promulgated, does not have a significant economic
impact on a substantial number of small entities under the criteria of
the Regulatory Flexibility Act.

Environmental Review

    The FAA has determined that this action qualifies for categorical
exclusion under the National Environmental Policy Act in accordance
with FAA Order 1050.1F, ``Environmental Impacts: Policies and
Procedures,'' paragraph 5-6.5a. This airspace action is not expected to
cause any potentially significant environmental impacts, and no
extraordinary circumstances exist that warrant preparation of an
environmental assessment.

Lists of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

Adoption of the Amendment

    In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND REPORTING POINTS

0
1. The authority citation for part 71 continues to read as follows:

    Authority: 49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O.
10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  71.1   [Amended]

0
2. The incorporation by reference in 14 CFR 71.1 of Federal Aviation
Administration Order 7400.11B, Airspace Designations and Reporting
Points, dated August 3, 2017, and effective September 15, 2017, is
amended as follows:

Paragraph 5000 Class D Airspace.

* * * * *

AEA MD D Aberdeen, MD [Amended]

Phillips AAF, MD
    (Lat. 39[deg]27'56'' N, long. 76[deg]10'06'' W)

    That airspace extending upward from the surface to and including
2,600 feet MSL within a 4.4-mile radius of Phillips AAF; excluding
that airspace in Restricted Area R-4001A when it is in effect. This
Class D airspace area is effective during the specific dates and
times established in advance by a Notice to Airmen. The specific
date and time will thereafter be continuously published in the Chart
Supplement.

Paragraph 6004 Class E Airspace Designated as an Extension to a
Class D Surface Area.

* * * * *

AEA MD E4 Aberdeen, MD [Amended]

Phillips AAF, MD
    (Lat. 39[deg]27'56'' N, long. 76[deg]10'06'' W)

    That airspace extending upward from the surface within 2 miles
each side of the 028[deg] bearing from Phillips AAF, extending from
the 4.4-mile radius of the airport to 9 miles northeast of the
airport; excluding that airspace in Restricted Area R-4001A when it
is in effect. This Class E airspace area is effective during the
specific dates and times established in advance by a Notice to
Airmen. The specific date and time will thereafter be continuously
published in the Chart Supplement.

Paragraph 6005 Class E Airspace Areas Extending Upward From 700
Feet or More Above the Surface of the Earth.

* * * * *

AEA MD E5 Aberdeen, MD

Phillips AAF, MD
    (Lat. 39[deg]27'56'' N, long. 76[deg]10'06'' W)

    That airspace extending upward from 700 feet above the surface
within a 6.7-mile radius of Phillips AAF and within an 8.3-mile
radius of Phillips AAF extending clockwise from the 260[deg] bearing
to the 030[deg] bearing from the airport, excluding the airspace in
Restricted Areas R-4001A and R-4001B when they are in effect.

    Issued in College Park, Georgia, on July 2, 2018.
Ryan W. Almasy,
Manager, Operations Support Group, Eastern Service Center, Air Traffic
Organization.
[FR Doc. 2018-14664 Filed 7-9-18; 8:45 am]
 BILLING CODE 4910-13-P