HealthShares, Inc., et al.; Notice of Application, 42447-42449 [E7-15021]
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Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Notices
connection with the reorganization were
paid by applicant.
Filing Date: The application was filed
on July 2, 2007.
Applicant’s Address: 95 Wall St., New
York, NY 10005.
Value Line Hedged Opportunity Fund,
Inc.
[File No. 811–8607].
Huntington VA Funds
Value Line Smaller Companies Fund,
Inc.
[File No. 811–9481]
[File No. 811–21608].
Value Line Value Fund, Inc.
[File No. 811–21639].
Summary: Each applicant seeks an
order declaring that it has ceased to be
an investment company. Applicants
have never made a public offering of
their securities and do not propose to
make a public offering or engage in
business of any kind.
Filing Dates: The applications were
filed on May 30, 2007, and amended on
July 11, 2007.
Applicants’ Address: 220 East 42nd
St., New York, NY 10017.
Vestaur Securities Fund
[File No. 811–2320]
Summary: Applicant, a closed-end
investment company, seeks an order
declaring that it has ceased to be an
investment company. On May 23, 2005,
applicant transferred its assets to
Evergreen Fixed Income Trust, based on
net asset value. Expenses of $147,380
incurred in connection with the
reorganization were paid by applicant
and Evergreen Investment Management
Company, LLC, investment adviser to
both applicant and the acquiring fund.
Filing Dates: The application was
filed on October 12, 2006, and amended
on July 13, 2007.
Applicant’s Address: 200 Berkeley St.,
Boston, MA 02116.
mstockstill on PROD1PC66 with NOTICES
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–14913 Filed 8–1–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–27916; 812–13358]
HealthShares, Inc., et al.; Notice of
Application
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application to amend
a prior order under section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
2(a)(32), 5(a)(1), 22(d), and 24(d) of the
Act and rule 22c–1 under the Act, and
under sections 6(c) and 17(b) of the Act
for an exemption from sections 17(a)(1)
and (a)(2) of the Act.
AGENCY:
[File No. 811–3641]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On March 29,
2007, three series of 40|86 Series Trust,
Fixed Income Portfolio, Government
Securities Portfolio and Money Market
Portfolio, were liquidated and cash was
distributed to each series’ respective
shareholders pro rata based on share
ownership. On May 2, 2007, the shares
of the two remaining series of 40|86
Series Trust, Equity Portfolio and
Balanced Portfolio, were redeemed in
kind by the sole shareholder of each
series, which is unaffiliated with the
investment adviser of 40|86 Series Trust.
Expenses of approximately $ 177,500
17:42 Aug 01, 2007
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On June 23, 2006,
Applicant made a distribution of its
assets to its shareholders, based on net
asset value, in connection with the
merger of Applicant (a Massachusetts
business trust) into the Huntington
Funds (a Delaware statutory trust).
Expenses of $138,306.12 were incurred
in connection with the merger. These
expenses were shared pro-rata among all
portfolios of Applicant and the
Huntington Funds.
Filing Dates: The application was
filed on March 6, 2007, and amended on
June 28, 2007.
Applicant’s Address: Huntington VA
Funds, 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237–7010.
July 27, 2007.
4086 Series Trust
VerDate Aug<31>2005
incurred in connection with the
liquidation were paid by 40|86
Advisors, Inc., applicant’s investment
adviser.
Filing Dates: The application was
filed on June 13, 2007, and amended on
July 18, 2007 and July 20, 2007.
Applicant’s Address: 11825 N.
Pennsylvania Street, Carmel, IN 46032.
Jkt 211001
Summary of Application: Applicants
request an order to amend a prior order
that permits: (a) Open-end management
investment companies, whose series are
based on certain equity securities
indices created by an affiliate of the
investment adviser, to issue shares
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42447
redeemable only in large aggregations;
(b) secondary market transactions in the
shares of the series to occur at
negotiated prices; (c) dealers to sell
shares to purchasers in the secondary
market unaccompanied by a prospectus
when prospectus delivery is not
required by the Securities Act of 1933
(‘‘Securities Act’’); and (d) certain
affiliated persons of the series to deposit
securities into, and receive securities
from, the series in connection with the
purchase and redemption of
aggregations of the series’ shares (‘‘Prior
Order’’).1 Applicants seek to amend the
Prior Order in order to offer additional
series that would hold equity and fixed
income securities and to provide that
certain representations and
undertakings contained in the Prior
Order shall not apply to a series where
an entity that creates, compiles,
sponsors, or maintains an underlying
index is not an affiliated person, or an
affiliated person of an affiliated person,
of the series, its investment adviser,
distributor, promoter, or any sub-adviser
to the series. In addition, the order
would delete a condition related to
future relief in the Prior Order.
Applicants: HealthShares, Inc.,
XShares Advisors LLC (formerly, X–
Shares Advisors, LLC) (the ‘‘Advisor’’),
XShares Group LLC (formerly,
Ferghana-Wellspring LLC) and TDAX
Funds, Inc.
Filing Dates: The application was
filed on January 19, 2007 and amended
on June 4, 2007 and on July 20, 2007.
Applicants have agreed to file an
amendment during the notice period,
the substance of which is reflected in
this notice.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on August 17, 2007, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
1 HealthShares, Inc., et al., Investment Company
Act Release Nos. 27553 (November 16, 2006)
(notice) and 27594 (December 7, 2006) (order).
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42448
Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Notices
Street, NE., Washington, DC 20549–
1090. Applicants: Attn. Anthony F.
Dudzinski, Esq., 420 Lexington Avenue,
Suite 2550, New York, NY 10170; and
Michael R. Rosella, Esq., Paul, Hastings,
Janofsky & Walker LLP, Park Avenue
Tower, 75 East 55th Street, First Floor,
New York, NY 10022.
FOR FURTHER INFORMATION CONTACT:
Deepak T. Pai, Senior Counsel, at (202)
551–6876 or Mary Kay Frech, Branch
Chief, at (202) 551–6821 (Division of
Investment Management, Office of
Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Branch,
100 F. Street, NE., Washington, DC
20549–0102 (tel. 202–551–5850).
mstockstill on PROD1PC66 with NOTICES
Applicants’ Representations
1. HealthShares, Inc. is an open-end
management investment company
organized as a Maryland corporation
and is comprised of multiple series (the
‘‘Initial Funds’’). TDAX Funds, Inc. (the
‘‘Company’’) is an open-end
management investment company
organized as a Maryland corporation
that is comprised of five (5) series of
underlying ‘‘lifecycle’’ portfolios (each a
‘‘New Fund’’ and together, the ‘‘New
Funds’’). The Advisor, which is
registered as an investment adviser
under the Investment Advisers Act of
1940 (the ‘‘Advisers Act’’), serves as the
investment adviser to the Initial Funds
and will serve as investment adviser to
the New Funds. The Advisor expects to
enter into sub-advisory agreements with
Amerivest Investment Management,
LLC and BNY Investment Advisors
(collectively, ‘‘Sub-Advisors’’) to serve
as sub-advisers to the New Funds. Each
Sub-Advisor is registered as an
investment adviser under the Advisers
Act. Neither Sub-Advisor is an affiliated
person, or an affiliated person of an
affiliated person, of the Advisor or
Zacks Investment Research Inc.
(‘‘Zacks’’), the creator of the Underlying
Indexes (as defined below). ALPS
Distributors, Inc. (the ‘‘Distributor’’), a
broker-dealer registered under the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’), will serve as the
principal underwriter and distributor
for the New Funds.
2. The applicants are currently
permitted to offer the Initial Funds
based on equity securities indices
developed by an affiliated person of the
Advisor in reliance on the Prior Order.
Applicants seek to amend the Prior
Order to permit the offering of the New
Funds, as well as series that may be
VerDate Aug<31>2005
17:42 Aug 01, 2007
Jkt 211001
created in the future that are advised by
the Advisor or an entity controlled by or
under common control with the Advisor
and that comply with the terms and
conditions of the Prior Order, as
modified by the requested relief (the
‘‘Future Funds,’’ together with the
Initial Funds and the New Funds, the
‘‘Funds’’). The New Funds would
operate in a manner identical to the
Initial Funds that are subject to the Prior
Order, except as described in the
application.
3. The investment objective of each
New Fund is to track the performance,
before fees and expenses, of a particular
underlying index (‘‘Underlying Index’’)
by investing in a portfolio of securities
generally consisting of the component
securities (‘‘Component Securities’’) of
the Underlying Index.2 Each Underlying
Index is a ‘‘lifestyle’’ index that
rebalances allocations among asset
classes over time in an attempt to
maximize capital appreciation at a target
date. No entity that creates, compiles,
sponsors, or maintains an Underlying
Index is or will be an affiliated person,
as defined in section 2(a)(3) of the Act,
or an affiliated person of an affiliated
person, of the Company, the Advisor,
the Distributor, promoter, or any subadviser to a New Fund.
4. The applicants represent that the
Component Securities of each
Underlying Index include equity
securities of U.S. and international
companies (including common stocks
and real estate investment trusts),
American Depository Receipts based on
equity securities of international
companies, and fixed-income securities
(including bonds, treasury bills and
notes, mortgage real estate investment
trusts, U.S. government agency mortgage
pass-through securities, cash
equivalents or short-term money market
instruments). The fixed income
securities included in the Component
Securities will be investment grade
fixed income securities and will not
include corporate mortgage-backed
securities, asset-backed securities, high
yield bonds, or Rule 144A securities.3
2 The Underlying Indices for the New Funds are
the Zacks 2010 Lifecycle Index, Zacks 2020
Lifecycle Index, Zacks 2030 Lifecycle Index, Zacks
2040 Lifecycle Index, and Zacks In-Target Lifecycle
Index.
3 If an underlying index of a Future Fund
includes restricted securities eligible for resale
pursuant to rule 144A under the Securities Act
(‘‘Rule 144A securities’’), applicants acknowledge
that in accepting deposit securities (‘‘Deposit
Securities’’) and satisfying redemptions with
securities that are Rule 144A securities, the Future
Funds will comply with the conditions of rule
144A. The prospectus for a Future Fund would also
state that an authorized participant that is not a
‘‘Qualified Institutional Buyer,’’ as defined in rule
144A under the Securities Act, will not be able to
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Each New Fund will attempt to track its
Underlying Index by investing at least
90%, and typically substantially all, of
its assets in the securities that make up
the Underlying Index, holding each
security in approximately the same
proportion as its weighting in the
Underlying Index.4 Each New Fund also
may invest up to 10% of its assets in
futures contracts, options on futures
contracts, options, as well as swaps on
securities of companies in the
Underlying Index. Applicants expect
that the returns of each New Fund
should be highly correlated with the
returns of its Underlying Index,
expecting that the correlation coefficient
between each New Fund and its
Underlying Index will exceed 95% over
extended periods.
5. The Prior Order relates to Funds
that track indices created by an
affiliated person of the Advisor. Because
such Funds could introduce potential
conflicts of interest, the Prior Order
contains certain representations and
undertakings relating to the
transparency of the methodology for
those underlying indices, and the
establishment of certain policies and
procedures to limit communication
between index personnel and
employees of the Advisor and any subadviser. Applicants assert that these
conflicts of interest do not exist where
the index creator is not an affiliated
person, or an affiliated person of an
affiliated person, of an exchange-traded
fund or its investment adviser or any
sub-adviser, such as in the case of the
New Funds. Applicants therefore seek
to amend the Prior Order to provide that
the relevant representations and
undertakings shall not apply to a Fund
where an entity that creates, compiles,
sponsors, or maintains the underlying
index is not an affiliated person, as
defined in section 2(a)(3) of the Act, or
an affiliated person of an affiliated
person, of the Fund, the Advisor, the
Distributor, promoter or any sub-adviser
to a Fund.
receive, as part of a redemption, restricted securities
eligible for resale under rule 144A.
4 The New Funds may seek to track the
performance of any U.S. government agency
mortgage pass-through securities included in an
Underlying Index by investing in ‘‘to-be
announced’’ (‘‘TBA’’) transactions on such
securities. A TBA transaction is a method of trading
mortgage-backed securities where the buyer and
seller agree upon general trade parameters such as
agency, settlement date, par amount and price. The
actual pools delivered are determined two days
prior to settlement date. A New Fund may designate
the mortgage pass-through TBAs to be included in
the Deposit Securities and will accept ‘‘cash in
lieu’’ of delivery of the designated mortgage passthrough TBAs. The amount of substituted cash in
the case of TBA transactions will be equivalent to
the value of the TBA transaction listed as a Deposit
Security.
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mstockstill on PROD1PC66 with NOTICES
Federal Register / Vol. 72, No. 148 / Thursday, August 2, 2007 / Notices
6. Applicants state that the New
Funds will operate in a manner
identical to the operation of the Initial
Funds in the Prior Order, except as
specifically noted by applicants (and
summarized in this notice), and will
comply with all of the terms, provisions
and conditions of the Prior Order, as
amended by the present application.
Applicants believe that the requested
relief continues to meet the necessary
exemptive standards.
7. Applicants also seek to amend the
Prior Order to modify the terms under
which the applicants, in the future, may
offer Future Funds based on other
equity or fixed income indices. The
Prior Order is currently subject to a
condition that does not permit
applicants to register the shares of any
Future Fund by means of filing a posteffective amendment to a Fund’s
registration statement or by any other
means, unless applicants have requested
and received with respect to such
Future Fund, either exemptive relief
from the Commission or a no-action
letter from the Division of Investment
Management of the Commission, or if
the Future Fund could be listed on a
national securities exchange
(‘‘Exchange’’) without the need for a
filing pursuant to rule 19b–4 under the
Exchange Act.
8. The order would amend the Prior
Order to delete this condition. Any
Future Funds will (a) be advised by the
Advisor or an entity controlled by or
under common control with the
Advisor; and (b) comply with the terms
and conditions of the Prior Order, as
amended by any order issued in
connection with the present application.
9. Applicants believe that the
modification of the future relief
available under the Prior Order would
be consistent with sections 6(c) and
17(b) of the Act and that granting the
requested relief will facilitate the timely
creation of Future Funds and the
commencement of secondary market
trading of such Future Funds by
removing the need to seek additional
exemptive relief. Applicants submit that
the terms and conditions of the Prior
Order, as amended by the requested
order, are appropriate for the Funds and
would remain appropriate for Future
Funds. Applicants also submit that
tying exemptive relief under the Act to
the ability of a Future Fund to be listed
on an Exchange without the need for a
rule 19b–4 filing under the Exchange
Act is not necessary to meet the
standards under sections 6(c) and 17(b)
of the Act.
VerDate Aug<31>2005
17:42 Aug 01, 2007
Jkt 211001
Applicants’ Condition
Applicants agree that any amended
order granting the requested relief will
be subject to the same conditions as
those imposed by the Prior Order,
except for condition 1 to the Prior
Order, which will be deleted.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E7–15021 Filed 8–1–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–27915; 812–13394]
The BISYS Group, Inc., et al.;
Temporary Order
July 27, 2007.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Temporary order under section
9(c) of the Investment Company Act of
1940 (‘‘Act’’).
AGENCY:
SUMMARY: Applicants have received a
temporary order exempting them from
section 9(a) of the Act, with respect to
an injunction entered against The BISYS
Group, Inc. (‘‘BISYS’’) on or about July
27, 2007 by the United States District
Court for the Southern District of New
York (the ‘‘Injunction’’), until the
Commission takes final action on an
application for a permanent order or, if
earlier, September 24, 2007.
Applicants: BISYS, BISYS Fund
Services Limited Partnership, BNY
Hamilton Distributors, Inc., Funds
Distributor, Inc., Heartland Investor
Services, LLC, Mercantile Investment
Services, Inc., Performance Funds
Distributor, Inc., ProFunds Distributors,
Inc. and Victory Capital Advisers, Inc.
(collectively, other than BISYS, the
‘‘Underwriter Applicants’’, and, together
with BISYS, the ‘‘Applicants’’).1
Filing Date: The application was filed
on June 6, 2007.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090. Applicants, BISYS, 105
Eisenhower Parkway, Roseland, New
Jersey 07068, the Underwriter
Applicants, 100 Summer Street, 15th
Floor, Boston, Massachusetts 02110.
1 Applicants request that any relief granted
pursuant to the application also apply to any other
company of which BISYS is an affiliated person or
may become an affiliated person in the future
(together with the Applicants, the ‘‘Covered
Persons’’).
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42449
FOR FURTHER INFORMATION CONTACT:
Shannon Conaty, Senior Counsel, at
(202) 551–6827, or Janet M. Grossnickle,
Branch Chief, at (202) 551–6821,
(Division of Investment Management,
Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The
application may be obtained for a fee at
the Commission’s Public Reference
Desk, 100 F Street, NE., Washington, DC
20549–0102 (tel. 202–551–8090).
Applicants’ Representations
1. BISYS, a Delaware corporation,
directly and through wholly-owned
subsidiaries, provides products and
support services to financial
institutions, including insurance
companies, banks and mutual funds.
Each of the Underwriter Applicants is
an indirect, wholly-owned subsidiary of
BISYS and serves as principal
underwriter for one or more registered
management investment companies
(‘‘Funds’’). Each Underwriter Applicant
is registered with the Commission as a
broker-dealer under section 15 of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’).
2. On or about July 27, 2007, the
United States District Court for the
Southern District of New York entered
the Injunction against BISYS in a matter
brought by the Commission.2 The
Commission alleged in the complaint
(‘‘Complaint’’) that BISYS violated
sections 13(a) and 13(b)(2)(A) and (B) of
the Exchange Act and rules 12b–20,
13a–1, 13a–11 and 13a–13 thereunder
when it engaged in improper accounting
practices that resulted in an
overstatement of BISYS’s financial
results for fiscal years 2001 through
2003 by about $180 million. Without
admitting or denying the allegations in
the Complaint, except as to jurisdiction,
BISYS consented to the entry of the
Injunction and the payment of
disgorgement and prejudgment interest.
Applicants’ Legal Analysis
1. Section 9(a)(2) of the Act, in
relevant part, prohibits a person who
has been enjoined from engaging in or
continuing any conduct or practice in
connection with the purchase or sale of
a security from acting, among other
things, as an investment adviser or
depositor of any registered investment
company or a principal underwriter for
any registered open-end investment
company, registered unit investment
trust or registered face-amount
certificate company. Section 9(a)(3) of
2 United States Securities and Exchange
Commission v. The BISYS Group, Inc., 07–CIV–
4010 (KMK) (S.D.N.Y. May 23, 2007).
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]]>Agencies
[Federal Register Volume 72, Number 148 (Thursday, August 2, 2007)]
[Notices]
[Pages 42447-42449]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-15021]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-27916; 812-13358]
HealthShares, Inc., et al.; Notice of Application
July 27, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application to amend a prior order under section 6(c)
of the Investment Company Act of 1940 (``Act'') for an exemption from
sections 2(a)(32), 5(a)(1), 22(d), and 24(d) of the Act and rule 22c-1
under the Act, and under sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and (a)(2) of the Act.
-----------------------------------------------------------------------
Summary of Application: Applicants request an order to amend a
prior order that permits: (a) Open-end management investment companies,
whose series are based on certain equity securities indices created by
an affiliate of the investment adviser, to issue shares redeemable only
in large aggregations; (b) secondary market transactions in the shares
of the series to occur at negotiated prices; (c) dealers to sell shares
to purchasers in the secondary market unaccompanied by a prospectus
when prospectus delivery is not required by the Securities Act of 1933
(``Securities Act''); and (d) certain affiliated persons of the series
to deposit securities into, and receive securities from, the series in
connection with the purchase and redemption of aggregations of the
series' shares (``Prior Order'').\1\ Applicants seek to amend the Prior
Order in order to offer additional series that would hold equity and
fixed income securities and to provide that certain representations and
undertakings contained in the Prior Order shall not apply to a series
where an entity that creates, compiles, sponsors, or maintains an
underlying index is not an affiliated person, or an affiliated person
of an affiliated person, of the series, its investment adviser,
distributor, promoter, or any sub-adviser to the series. In addition,
the order would delete a condition related to future relief in the
Prior Order.
---------------------------------------------------------------------------
\1\ HealthShares, Inc., et al., Investment Company Act Release
Nos. 27553 (November 16, 2006) (notice) and 27594 (December 7, 2006)
(order).
---------------------------------------------------------------------------
Applicants: HealthShares, Inc., XShares Advisors LLC (formerly, X-
Shares Advisors, LLC) (the ``Advisor''), XShares Group LLC (formerly,
Ferghana-Wellspring LLC) and TDAX Funds, Inc.
Filing Dates: The application was filed on January 19, 2007 and
amended on June 4, 2007 and on July 20, 2007. Applicants have agreed to
file an amendment during the notice period, the substance of which is
reflected in this notice.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on August 17, 2007, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
[[Page 42448]]
Street, NE., Washington, DC 20549-1090. Applicants: Attn. Anthony F.
Dudzinski, Esq., 420 Lexington Avenue, Suite 2550, New York, NY 10170;
and Michael R. Rosella, Esq., Paul, Hastings, Janofsky & Walker LLP,
Park Avenue Tower, 75 East 55th Street, First Floor, New York, NY
10022.
FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at
(202) 551-6876 or Mary Kay Frech, Branch Chief, at (202) 551-6821
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
Commission's Public Reference Branch, 100 F. Street, NE., Washington,
DC 20549-0102 (tel. 202-551-5850).
Applicants' Representations
1. HealthShares, Inc. is an open-end management investment company
organized as a Maryland corporation and is comprised of multiple series
(the ``Initial Funds''). TDAX Funds, Inc. (the ``Company'') is an open-
end management investment company organized as a Maryland corporation
that is comprised of five (5) series of underlying ``lifecycle''
portfolios (each a ``New Fund'' and together, the ``New Funds''). The
Advisor, which is registered as an investment adviser under the
Investment Advisers Act of 1940 (the ``Advisers Act''), serves as the
investment adviser to the Initial Funds and will serve as investment
adviser to the New Funds. The Advisor expects to enter into sub-
advisory agreements with Amerivest Investment Management, LLC and BNY
Investment Advisors (collectively, ``Sub-Advisors'') to serve as sub-
advisers to the New Funds. Each Sub-Advisor is registered as an
investment adviser under the Advisers Act. Neither Sub-Advisor is an
affiliated person, or an affiliated person of an affiliated person, of
the Advisor or Zacks Investment Research Inc. (``Zacks''), the creator
of the Underlying Indexes (as defined below). ALPS Distributors, Inc.
(the ``Distributor''), a broker-dealer registered under the Securities
Exchange Act of 1934 (the ``Exchange Act''), will serve as the
principal underwriter and distributor for the New Funds.
2. The applicants are currently permitted to offer the Initial
Funds based on equity securities indices developed by an affiliated
person of the Advisor in reliance on the Prior Order. Applicants seek
to amend the Prior Order to permit the offering of the New Funds, as
well as series that may be created in the future that are advised by
the Advisor or an entity controlled by or under common control with the
Advisor and that comply with the terms and conditions of the Prior
Order, as modified by the requested relief (the ``Future Funds,''
together with the Initial Funds and the New Funds, the ``Funds''). The
New Funds would operate in a manner identical to the Initial Funds that
are subject to the Prior Order, except as described in the application.
3. The investment objective of each New Fund is to track the
performance, before fees and expenses, of a particular underlying index
(``Underlying Index'') by investing in a portfolio of securities
generally consisting of the component securities (``Component
Securities'') of the Underlying Index.\2\ Each Underlying Index is a
``lifestyle'' index that rebalances allocations among asset classes
over time in an attempt to maximize capital appreciation at a target
date. No entity that creates, compiles, sponsors, or maintains an
Underlying Index is or will be an affiliated person, as defined in
section 2(a)(3) of the Act, or an affiliated person of an affiliated
person, of the Company, the Advisor, the Distributor, promoter, or any
sub-adviser to a New Fund.
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\2\ The Underlying Indices for the New Funds are the Zacks 2010
Lifecycle Index, Zacks 2020 Lifecycle Index, Zacks 2030 Lifecycle
Index, Zacks 2040 Lifecycle Index, and Zacks In-Target Lifecycle
Index.
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4. The applicants represent that the Component Securities of each
Underlying Index include equity securities of U.S. and international
companies (including common stocks and real estate investment trusts),
American Depository Receipts based on equity securities of
international companies, and fixed-income securities (including bonds,
treasury bills and notes, mortgage real estate investment trusts, U.S.
government agency mortgage pass-through securities, cash equivalents or
short-term money market instruments). The fixed income securities
included in the Component Securities will be investment grade fixed
income securities and will not include corporate mortgage-backed
securities, asset-backed securities, high yield bonds, or Rule 144A
securities.\3\ Each New Fund will attempt to track its Underlying Index
by investing at least 90%, and typically substantially all, of its
assets in the securities that make up the Underlying Index, holding
each security in approximately the same proportion as its weighting in
the Underlying Index.\4\ Each New Fund also may invest up to 10% of its
assets in futures contracts, options on futures contracts, options, as
well as swaps on securities of companies in the Underlying Index.
Applicants expect that the returns of each New Fund should be highly
correlated with the returns of its Underlying Index, expecting that the
correlation coefficient between each New Fund and its Underlying Index
will exceed 95% over extended periods.
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\3\ If an underlying index of a Future Fund includes restricted
securities eligible for resale pursuant to rule 144A under the
Securities Act (``Rule 144A securities''), applicants acknowledge
that in accepting deposit securities (``Deposit Securities'') and
satisfying redemptions with securities that are Rule 144A
securities, the Future Funds will comply with the conditions of rule
144A. The prospectus for a Future Fund would also state that an
authorized participant that is not a ``Qualified Institutional
Buyer,'' as defined in rule 144A under the Securities Act, will not
be able to receive, as part of a redemption, restricted securities
eligible for resale under rule 144A.
\4\ The New Funds may seek to track the performance of any U.S.
government agency mortgage pass-through securities included in an
Underlying Index by investing in ``to-be announced'' (``TBA'')
transactions on such securities. A TBA transaction is a method of
trading mortgage-backed securities where the buyer and seller agree
upon general trade parameters such as agency, settlement date, par
amount and price. The actual pools delivered are determined two days
prior to settlement date. A New Fund may designate the mortgage
pass-through TBAs to be included in the Deposit Securities and will
accept ``cash in lieu'' of delivery of the designated mortgage pass-
through TBAs. The amount of substituted cash in the case of TBA
transactions will be equivalent to the value of the TBA transaction
listed as a Deposit Security.
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5. The Prior Order relates to Funds that track indices created by
an affiliated person of the Advisor. Because such Funds could introduce
potential conflicts of interest, the Prior Order contains certain
representations and undertakings relating to the transparency of the
methodology for those underlying indices, and the establishment of
certain policies and procedures to limit communication between index
personnel and employees of the Advisor and any sub-adviser. Applicants
assert that these conflicts of interest do not exist where the index
creator is not an affiliated person, or an affiliated person of an
affiliated person, of an exchange-traded fund or its investment adviser
or any sub-adviser, such as in the case of the New Funds. Applicants
therefore seek to amend the Prior Order to provide that the relevant
representations and undertakings shall not apply to a Fund where an
entity that creates, compiles, sponsors, or maintains the underlying
index is not an affiliated person, as defined in section 2(a)(3) of the
Act, or an affiliated person of an affiliated person, of the Fund, the
Advisor, the Distributor, promoter or any sub-adviser to a Fund.
[[Page 42449]]
6. Applicants state that the New Funds will operate in a manner
identical to the operation of the Initial Funds in the Prior Order,
except as specifically noted by applicants (and summarized in this
notice), and will comply with all of the terms, provisions and
conditions of the Prior Order, as amended by the present application.
Applicants believe that the requested relief continues to meet the
necessary exemptive standards.
7. Applicants also seek to amend the Prior Order to modify the
terms under which the applicants, in the future, may offer Future Funds
based on other equity or fixed income indices. The Prior Order is
currently subject to a condition that does not permit applicants to
register the shares of any Future Fund by means of filing a post-
effective amendment to a Fund's registration statement or by any other
means, unless applicants have requested and received with respect to
such Future Fund, either exemptive relief from the Commission or a no-
action letter from the Division of Investment Management of the
Commission, or if the Future Fund could be listed on a national
securities exchange (``Exchange'') without the need for a filing
pursuant to rule 19b-4 under the Exchange Act.
8. The order would amend the Prior Order to delete this condition.
Any Future Funds will (a) be advised by the Advisor or an entity
controlled by or under common control with the Advisor; and (b) comply
with the terms and conditions of the Prior Order, as amended by any
order issued in connection with the present application.
9. Applicants believe that the modification of the future relief
available under the Prior Order would be consistent with sections 6(c)
and 17(b) of the Act and that granting the requested relief will
facilitate the timely creation of Future Funds and the commencement of
secondary market trading of such Future Funds by removing the need to
seek additional exemptive relief. Applicants submit that the terms and
conditions of the Prior Order, as amended by the requested order, are
appropriate for the Funds and would remain appropriate for Future
Funds. Applicants also submit that tying exemptive relief under the Act
to the ability of a Future Fund to be listed on an Exchange without the
need for a rule 19b-4 filing under the Exchange Act is not necessary to
meet the standards under sections 6(c) and 17(b) of the Act.
Applicants' Condition
Applicants agree that any amended order granting the requested
relief will be subject to the same conditions as those imposed by the
Prior Order, except for condition 1 to the Prior Order, which will be
deleted.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E7-15021 Filed 8-1-07; 8:45 am]
BILLING CODE 8010-01-P
