X Exchange-Traded Funds, Inc., et al.; Notice of Application, 28735-28737 [E9-14192]
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Federal Register / Vol. 74, No. 115 / Wednesday, June 17, 2009 / Notices
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
dwashington3 on PROD1PC60 with NOTICES
Extension:
Rules 17h–1T and 17h–2T, SEC File No.
270–359, OMB Control No. 3235–0410.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
requests for extension of the previously
approved collections of information
discussed below. The Code of Federal
Regulation citations to this collection of
information are the following rules: 17
CFR 240.17h–1T and 17 CFR 240.17h–
2T under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.) (the ‘‘Act’’).
Rule 17h–1T requires a broker-dealer
to maintain and preserve records and
other information concerning certain
entities that are associated with the
broker-dealer. This requirement extends
to the financial and securities activities
of the holding company, affiliates and
subsidiaries of the broker-dealer that are
reasonably likely to have a material
impact on the financial or operational
condition of the broker-dealer. Rule
17h–2T requires a broker-dealer to file
with the Commission quarterly reports
and a cumulative year-end report
concerning the information required to
be maintained and preserved under
Rule 17h–1T.
The collection of information required
by Rules 17h–1T and 17h–2T is
necessary to enable the Commission to
monitor the activities of a broker-dealer
affiliate whose business activities is
reasonably likely to have a material
impact on the financial and operational
condition of the broker-dealer. Without
this information, the Commission would
be unable to assess the potentially
damaging impact of the affiliate’s
activities on the broker-dealer.
There are currently 148 respondents
that must comply with Rules 17h–1T
and 17h–2T. Each of these 148
respondents require approximately 10
hours per year, or 2.5 hours per quarter,
to maintain the records required under
Rule 17h–1T, for an aggregate annual
burden of 1,480 hours (148 respondents
× 10 hours). In addition, each of these
148 respondents must make five annual
responses under Rule 17h–2T. These
five responses require approximately 14
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hours per respondent per year, or 3.5
hours per quarter, for an aggregate
annual burden of 2,072 hours (148
respondents × 14 hours). In addition,
there are approximately five new
respondents per year 1 that must draft an
organizational chart required under
Rule 17h–1T and establish a system for
complying with the Rules. The staff
estimates that drafting the required
organizational chart requires one hour
and establishing a system for complying
with the Rules requires three hours,
thus requiring an aggregate of 20 hours
(5 new respondents × 4 hours). Thus,
the total compliance burden per year is
approximately 3,572 burden hours
(1,480 + 2,072 + 20).
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Comments should be directed to
Charles Boucher, Director/Chief
Information Officer, Securities and
Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way,
Alexandria, Virginia 22312 or send an email to: PRA_Mailbox@sec.gov.
Dated: June 10, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–14176 Filed 6–16–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28766; File No. 812–13499]
X Exchange-Traded Funds, Inc., et al.;
Notice of Application
June 11, 2009.
AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application to amend
a prior order under section 6(c) of the
1 However, the staff further estimates that the
number of respondents decreases by at least that
many firms per year as a result of mergers and other
business factors.
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28735
Investment Company Act of 1940
(‘‘Act’’) granting 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 17(a)(2) of the Act.
SUMMARY OF APPLICATION: Applicants
request an order to amend a prior order
that permits: (a) Series of open-end
management investment companies to
issue shares (‘‘Shares’’) redeemable only
in large aggregations (‘‘Creation Units’’);
(b) secondary market transactions in the
Shares 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 Creation Units (‘‘Prior
Order’’).1 Applicants seek to amend the
Prior Order in order to provide that (a)
a series will invest at least 80%, rather
than 90%, of its total assets in the
component securities (‘‘Component
Securities’’) of its underlying index
(‘‘Underlying Index’’); (b) the
Underlying Index may be reconstituted
and rebalanced no more frequently than
on a monthly, rather than on a quarterly,
basis (‘‘Monthly Reconstitution’’); and
(c) the Indicative Optimized Portfolio
Value (as defined below) may be
calculated and disseminated by a
national securities exchange
(‘‘Exchange’’) or by a major market data
vendor. Applicants also seek to amend
the Prior Order to delete the relief
granted in the Prior Order from section
24(d) of the Act and revise the
applications on which the Prior Order
was issued (‘‘Prior Applications’’)
accordingly and to amend the terms and
conditions of the Prior Applications
with respect to certain disclosure
requirements.
APPLICANTS: X Exchange-Traded Funds,
Inc. (‘‘X Funds’’); XShares Advisors LLC
(formerly, X–Shares Advisors, LLC) (the
‘‘Advisor’’); XShares Group, Inc.
(formerly, Ferghana-Wellspring LLC);
and TDX Independence Funds, Inc.
(formerly, TDAX Funds, Inc.) (‘‘TDX
Funds’’).
FILING DATES: The application was filed
on November 9, 2007, and amended on
1 HealthShares, Inc., et al., Investment Company
Act Release Nos. 27553 (November 16, 2006)
(notice) and 27594 (December 7, 2006) (order), as
amended by HealthShares, Inc., et al., Investment
Company Act Release Nos. 27916 (July 27, 2007)
(notice) and 27930 (August 20, 2007) (order).
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28736
Federal Register / Vol. 74, No. 115 / Wednesday, June 17, 2009 / Notices
April 1, 2008, January 27, 2009 and
April 20, 2009.
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 July 6, 2009 and should
be accompanied by proof of service on
applicants, in the form of an affidavit or,
for lawyers, a certificate of service.
Hearing requests should state the nature
of the writer’s interest, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090. Applicants: Attn. David W. Jaffin,
420 Lexington Avenue, Suite 2550, New
York, NY 10170, and Domenick
Pugliese, Esq., Paul, Hastings, Janofsky
& Walker LLP, Park Avenue Tower, 75
East 55th Street, 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 via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
dwashington3 on PROD1PC60 with NOTICES
HEARING OR NOTIFICATION OF HEARING:
Applicants’ Representations
1. TDX Funds, organized as a
Maryland corporation, is registered
under the Act as an open-end
management investment company and
is comprised of five series. X Funds,
organized as a Maryland corporation, is
an open-end management investment
company and is comprised of two
series, including the Nations Large Cap
Enhanced Covered Call ETF (the
‘‘Nations Fund’’). The Advisor, a
Delaware limited liability company, is
registered as an investment adviser
under the Investment Advisers Act of
1940 and serves or will serve as
investment adviser to the Funds
(defined below). XShares Group, Inc., a
Delaware corporation, is the parent
company of the Advisor.
2. Applicants currently are permitted
to offer series that operate pursuant to
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the Prior Order, as well as series that
may be created in the future and 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 (‘‘Future Funds,’’ together with
the TDX Funds and X Funds, the
‘‘Funds’’). Applicants state that all
representations and conditions
contained in the Prior Applications
would apply to the Funds, except as
described in the current application, as
summarized in this notice.
3. Applicants state that the Nations
Fund requires the requested relief in
order to operate in accordance with its
intended investment strategy. The
Nations Fund employs a ‘‘passive
management’’ investment strategy
designed to track the performance,
before fees and expenses, of the
NationsShares Large Cap Enhanced
Covered Call Index (the ‘‘NationsShares
Index’’). The Prior Order provides that
each Fund would invest at least 90% of
its total assets in Component Securities
of its Underlying Index. Applicants
wish to amend the Prior Order to
provide that each Fund, including the
Nations Fund, must invest at least 80%
of its total assets in the Component
Securities and investments that have
economic characteristics that are
substantially identical to the economic
characteristics of the Component
Securities of its Underlying Index.
Under this approach, the Nations Fund
may invest up to 20% of its assets in
certain futures, options and swap
contracts, as well as cash and cash
equivalents. Applicants expect that the
returns of a Fund should continue to be
highly correlated with the returns of its
Underlying Index, expecting that the
correlation coefficient between a Fund
and its Underlying Index will at least be
95% over extended periods.
4. In the Prior Order, the specific
criteria for determining the Component
Securities in each Underlying Index (the
‘‘Index Composition Methodology’’)
provides that the Underlying Indexes
will be reconstituted no more frequently
than quarterly. The Nations Fund seeks
to replicate the NationsShares Index, an
index that is reconstituted monthly.
Applicants seek to amend the Prior
Order to permit the Funds to use an
Underlying Index that may be
reconstituted as frequently as monthly.
Applicants believe that the Monthly
Reconstitution will not have any impact
on the operation of the Funds or the
efficiency of the Funds’ arbitrage
mechanism. Because the Index
Composition Methodology is published
and transparent, and because any
changes to the Index Composition
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Methodology must be published 60 days
in advance of implementation,
information about the current
constituents of each Underlying Index,
and potential changes to the list of
current constituents as a result of any
reconstitution, will be readily
ascertainable by market participants.
5. The Prior Order currently
represents that the Indicative Optimized
Portfolio Value (‘‘IOPV’’) will be
calculated and disseminated widely
every 15 seconds by the Exchange.2
Applicants seek to amend the Prior
Order to permit the calculation and/or
dissemination of the IOPV either by the
Exchange or by a major market data
vendor. The IOPV will be calculated by
the Exchange or a major market data
vendor every 15 seconds during the
Exchange’s regular trading hours and
disseminated every 15 seconds by such
entity. Applicants contend that this will
provide the Fund with additional
flexibility to engage vendors with the
appropriate expertise and resources to
most accurately and efficiently calculate
and disseminate the Fund’s IOPV.
Applicants believe that the IOPV will
have visibility comparable to that which
would be obtained had it been
calculated by the Exchange. In either
case, the IOPV will continue to be
disseminated on the consolidated tape.
6. Applicants seek to amend the terms
and conditions of the Prior Applications
to provide that all representations and
conditions contained in the Prior
Applications that require a Fund to
disclose particular information in the
Fund’s prospectus (‘‘Prospectus’’) and/
or annual report shall be effective with
respect to the Fund until the time that
the Fund complies with the disclosure
requirements adopted by the
Commission in Investment Company
Act Release No. 28584 (Jan. 13, 2009)
(‘‘Summary Prospectus Rule’’).
Applicants state that such amendment
is warranted because the Commission’s
amendments to Form N–1A with regard
to exchange-traded funds as part of the
Summary Prospectus Rule reflect the
Commission’s view with respect to the
appropriate types of prospectus and
annual report disclosures for an
exchange-traded fund.
2 As described in the Prior Applications, the IOPV
represents the sum of the current value of the
Deposit Securities and the estimated Cash
Requirement, on a per Share basis. The ‘‘Deposit
Securities’’ are the securities that have been
selected by the Advisor or Sub-Advisor to
correspond generally to the performance of the
relevant Underlying Index. The ‘‘Cash
Requirement’’ is the cash payment needed to
equalize any differences between the market value
of the Deposit Securities per Creation Unit and the
net asset value (‘‘NAV’’) per Creation Unit.
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Federal Register / Vol. 74, No. 115 / Wednesday, June 17, 2009 / Notices
each of the four previous calendar
quarters.
Applicants’ Conditions
Applicants agree that any amended
order of the Commission granting the
requested relief will be subject to the
same conditions as those imposed by
the Prior Order, except for condition 7
to the Prior Order, which will be
deleted, and conditions 2 and 5, which
are revised as follows: 3
Condition 2. Each Fund’s Prospectus
will clearly disclose that, for the
purposes of the Act, Shares are issued
by the Funds and that the acquisition of
Shares by investment companies is
subject to the restrictions of section
12(d)(1) of the Act, except as permitted
by an exemptive order that permits
registered investment companies to
invest in a Fund beyond the limits of
section 12(d)(1), subject to certain terms
and conditions, including that a
registered investment company enter
into an agreement with the Fund
regarding the terms of the investment.
Condition 5. The Web site maintained
for the Corporation, which is and will
be publicly accessible at no charge, will
contain the following information, on a
per Share basis, for each Fund: (a) The
prior Business Day’s NAV and the Bid/
Ask Price and a calculation of the
premium or discount of the Bid/Ask
Price at the time of calculation of the
NAV against such NAV; and (b) data in
chart format displaying the frequency
distribution of discounts and premiums
of the daily Bid/Ask Price against the
NAV, within appropriate ranges, for
dwashington3 on PROD1PC60 with NOTICES
7. Applicants also seek to amend the
Prior Order to delete the relief granted
from section 24(d) of the Act.
Applicants state that the deletion of the
exemption from section 24(d) that was
granted in the Prior Order is warranted
because the adoption of the Summary
Prospectus Rule should supplant any
need by a Fund to use a product
description (‘‘Product Description’’).
The deletion of the relief granted with
respect to section 24(d) of the Act from
the Prior Order will also result in the
deletion of related discussions in the
Prior Applications, revision of the Prior
Applications to delete references to
Product Descriptions including in the
conditions, and the deletion of
condition 7 of the Prior Order.
June 15, 2009.
3 All representations and conditions contained in
the application and the Prior Applications that
require a Fund to disclose particular information in
the Fund’s Prospectus and/or annual report shall
remain effective with respect to the Fund until the
time that the Fund complies with the disclosure
requirements adopted by the Commission in
Investment Company Act Release No. 28584 (Jan.
13, 2009). Defined terms used in the following
conditions that are not otherwise defined in this
notice or the application have the same meanings
as in the Prior Applications.
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For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–14192 Filed 6–16–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1 ]
Hunt Gold Corporation, F/K/A Prime
Time Group, Inc.; Order of Suspension
of Trading
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Hunt Gold
Corporation, f/k/a Prime Time Group,
Inc. (‘‘Hunt Gold’’) because questions
have been raised about the accuracy and
adequacy of publicly disseminated
information concerning, among other
things, Hunt Gold’s gold mining
exploration business.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of Hunt Gold.
Therefore, it is ordered, pursuant to
Section 12(k) of the Securities Exchange
Act of 1934, that trading in Hunt Gold
securities is suspended for the period
from 9:30 a.m. EDT on June 15, 2009,
through 11:59 p.m. EDT on June 26,
2009.
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E9–14300 Filed 6–15–09; 4:15 pm]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60077; File No. SR–
NYSEAmex–2009–22]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Rule Change by NYSE Amex, Inc.
Implementing Schedule of Fees and
Charges for Exchange Services
June 9, 2009.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
1 15
U.S.C.78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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28737
notice is hereby given that, on June 1,
2009, NYSE Amex LLC. (‘‘NYSE Amex’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to its
Schedule of Fees and Charges for
Exchange Services (the ‘‘Schedule’’).
While the change to the Schedule
pursuant to this proposal will be
effective upon filing, the changes will
become operative June 1, 2009. The text
of the proposed rule change is attached
as Exhibit 5 to the 19b–4 form.4 A copy
of this filing is available on the
Exchange’s Web site at www.nyse.com,
at the Exchange’s principal office 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
self-regulatory organization 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 those 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 purpose of this proposed rule
change is to modify the list of strategies
presently included in the strategy
execution fee cap program (‘‘Strategy
Cap Program’’). NYSE Amex proposes to
add ‘‘Jelly Rolls’’ as an eligible strategy
execution for inclusion in Strategy Cap
Program.
A Jelly Roll is a long calendar call
spread combined with the same short
4 The Commission notes that while provided in
Exhibit 5 to the filing, the text of the proposed rule
change is not attached to this notice but is available
at the Commission’s Public Reference Room and at
www.nyse.com.
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]]>Agencies
[Federal Register Volume 74, Number 115 (Wednesday, June 17, 2009)]
[Notices]
[Pages 28735-28737]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-14192]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28766; File No. 812-13499]
X Exchange-Traded Funds, Inc., et al.; Notice of Application
June 11, 2009.
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'') granting 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 17(a)(2) of the Act.
-----------------------------------------------------------------------
Summary of Application: Applicants request an order to amend a prior
order that permits: (a) Series of open-end management investment
companies to issue shares (``Shares'') redeemable only in large
aggregations (``Creation Units''); (b) secondary market transactions in
the Shares 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 Creation Units (``Prior
Order'').\1\ Applicants seek to amend the Prior Order in order to
provide that (a) a series will invest at least 80%, rather than 90%, of
its total assets in the component securities (``Component Securities'')
of its underlying index (``Underlying Index''); (b) the Underlying
Index may be reconstituted and rebalanced no more frequently than on a
monthly, rather than on a quarterly, basis (``Monthly
Reconstitution''); and (c) the Indicative Optimized Portfolio Value (as
defined below) may be calculated and disseminated by a national
securities exchange (``Exchange'') or by a major market data vendor.
Applicants also seek to amend the Prior Order to delete the relief
granted in the Prior Order from section 24(d) of the Act and revise the
applications on which the Prior Order was issued (``Prior
Applications'') accordingly and to amend the terms and conditions of
the Prior Applications with respect to certain disclosure requirements.
---------------------------------------------------------------------------
\1\ HealthShares, Inc., et al., Investment Company Act Release
Nos. 27553 (November 16, 2006) (notice) and 27594 (December 7, 2006)
(order), as amended by HealthShares, Inc., et al., Investment
Company Act Release Nos. 27916 (July 27, 2007) (notice) and 27930
(August 20, 2007) (order).
Applicants: X Exchange-Traded Funds, Inc. (``X Funds''); XShares
Advisors LLC (formerly, X-Shares Advisors, LLC) (the ``Advisor'');
XShares Group, Inc. (formerly, Ferghana-Wellspring LLC); and TDX
---------------------------------------------------------------------------
Independence Funds, Inc. (formerly, TDAX Funds, Inc.) (``TDX Funds'').
Filing Dates: The application was filed on November 9, 2007, and
amended on
[[Page 28736]]
April 1, 2008, January 27, 2009 and April 20, 2009.
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 July 6, 2009 and should be accompanied by proof of service
on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090. Applicants: Attn. David W.
Jaffin, 420 Lexington Avenue, Suite 2550, New York, NY 10170, and
Domenick Pugliese, Esq., Paul, Hastings, Janofsky & Walker LLP, Park
Avenue Tower, 75 East 55th Street, 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 via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. TDX Funds, organized as a Maryland corporation, is registered
under the Act as an open-end management investment company and is
comprised of five series. X Funds, organized as a Maryland corporation,
is an open-end management investment company and is comprised of two
series, including the Nations Large Cap Enhanced Covered Call ETF (the
``Nations Fund''). The Advisor, a Delaware limited liability company,
is registered as an investment adviser under the Investment Advisers
Act of 1940 and serves or will serve as investment adviser to the Funds
(defined below). XShares Group, Inc., a Delaware corporation, is the
parent company of the Advisor.
2. Applicants currently are permitted to offer series that operate
pursuant to the Prior Order, as well as series that may be created in
the future and 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 (``Future Funds,'' together with the
TDX Funds and X Funds, the ``Funds''). Applicants state that all
representations and conditions contained in the Prior Applications
would apply to the Funds, except as described in the current
application, as summarized in this notice.
3. Applicants state that the Nations Fund requires the requested
relief in order to operate in accordance with its intended investment
strategy. The Nations Fund employs a ``passive management'' investment
strategy designed to track the performance, before fees and expenses,
of the NationsShares Large Cap Enhanced Covered Call Index (the
``NationsShares Index''). The Prior Order provides that each Fund would
invest at least 90% of its total assets in Component Securities of its
Underlying Index. Applicants wish to amend the Prior Order to provide
that each Fund, including the Nations Fund, must invest at least 80% of
its total assets in the Component Securities and investments that have
economic characteristics that are substantially identical to the
economic characteristics of the Component Securities of its Underlying
Index. Under this approach, the Nations Fund may invest up to 20% of
its assets in certain futures, options and swap contracts, as well as
cash and cash equivalents. Applicants expect that the returns of a Fund
should continue to be highly correlated with the returns of its
Underlying Index, expecting that the correlation coefficient between a
Fund and its Underlying Index will at least be 95% over extended
periods.
4. In the Prior Order, the specific criteria for determining the
Component Securities in each Underlying Index (the ``Index Composition
Methodology'') provides that the Underlying Indexes will be
reconstituted no more frequently than quarterly. The Nations Fund seeks
to replicate the NationsShares Index, an index that is reconstituted
monthly. Applicants seek to amend the Prior Order to permit the Funds
to use an Underlying Index that may be reconstituted as frequently as
monthly. Applicants believe that the Monthly Reconstitution will not
have any impact on the operation of the Funds or the efficiency of the
Funds' arbitrage mechanism. Because the Index Composition Methodology
is published and transparent, and because any changes to the Index
Composition Methodology must be published 60 days in advance of
implementation, information about the current constituents of each
Underlying Index, and potential changes to the list of current
constituents as a result of any reconstitution, will be readily
ascertainable by market participants.
5. The Prior Order currently represents that the Indicative
Optimized Portfolio Value (``IOPV'') will be calculated and
disseminated widely every 15 seconds by the Exchange.\2\ Applicants
seek to amend the Prior Order to permit the calculation and/or
dissemination of the IOPV either by the Exchange or by a major market
data vendor. The IOPV will be calculated by the Exchange or a major
market data vendor every 15 seconds during the Exchange's regular
trading hours and disseminated every 15 seconds by such entity.
Applicants contend that this will provide the Fund with additional
flexibility to engage vendors with the appropriate expertise and
resources to most accurately and efficiently calculate and disseminate
the Fund's IOPV. Applicants believe that the IOPV will have visibility
comparable to that which would be obtained had it been calculated by
the Exchange. In either case, the IOPV will continue to be disseminated
on the consolidated tape.
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\2\ As described in the Prior Applications, the IOPV represents
the sum of the current value of the Deposit Securities and the
estimated Cash Requirement, on a per Share basis. The ``Deposit
Securities'' are the securities that have been selected by the
Advisor or Sub-Advisor to correspond generally to the performance of
the relevant Underlying Index. The ``Cash Requirement'' is the cash
payment needed to equalize any differences between the market value
of the Deposit Securities per Creation Unit and the net asset value
(``NAV'') per Creation Unit.
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6. Applicants seek to amend the terms and conditions of the Prior
Applications to provide that all representations and conditions
contained in the Prior Applications that require a Fund to disclose
particular information in the Fund's prospectus (``Prospectus'') and/or
annual report shall be effective with respect to the Fund until the
time that the Fund complies with the disclosure requirements adopted by
the Commission in Investment Company Act Release No. 28584 (Jan. 13,
2009) (``Summary Prospectus Rule''). Applicants state that such
amendment is warranted because the Commission's amendments to Form N-1A
with regard to exchange-traded funds as part of the Summary Prospectus
Rule reflect the Commission's view with respect to the appropriate
types of prospectus and annual report disclosures for an exchange-
traded fund.
[[Page 28737]]
7. Applicants also seek to amend the Prior Order to delete the
relief granted from section 24(d) of the Act. Applicants state that the
deletion of the exemption from section 24(d) that was granted in the
Prior Order is warranted because the adoption of the Summary Prospectus
Rule should supplant any need by a Fund to use a product description
(``Product Description''). The deletion of the relief granted with
respect to section 24(d) of the Act from the Prior Order will also
result in the deletion of related discussions in the Prior
Applications, revision of the Prior Applications to delete references
to Product Descriptions including in the conditions, and the deletion
of condition 7 of the Prior Order.
Applicants' Conditions
Applicants agree that any amended order of the Commission granting
the requested relief will be subject to the same conditions as those
imposed by the Prior Order, except for condition 7 to the Prior Order,
which will be deleted, and conditions 2 and 5, which are revised as
follows: \3\
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\3\ All representations and conditions contained in the
application and the Prior Applications that require a Fund to
disclose particular information in the Fund's Prospectus and/or
annual report shall remain effective with respect to the Fund until
the time that the Fund complies with the disclosure requirements
adopted by the Commission in Investment Company Act Release No.
28584 (Jan. 13, 2009). Defined terms used in the following
conditions that are not otherwise defined in this notice or the
application have the same meanings as in the Prior Applications.
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Condition 2. Each Fund's Prospectus will clearly disclose that, for
the purposes of the Act, Shares are issued by the Funds and that the
acquisition of Shares by investment companies is subject to the
restrictions of section 12(d)(1) of the Act, except as permitted by an
exemptive order that permits registered investment companies to invest
in a Fund beyond the limits of section 12(d)(1), subject to certain
terms and conditions, including that a registered investment company
enter into an agreement with the Fund regarding the terms of the
investment.
Condition 5. The Web site maintained for the Corporation, which is
and will be publicly accessible at no charge, will contain the
following information, on a per Share basis, for each Fund: (a) The
prior Business Day's NAV and the Bid/Ask Price and a calculation of the
premium or discount of the Bid/Ask Price at the time of calculation of
the NAV against such NAV; and (b) data in chart format displaying the
frequency distribution of discounts and premiums of the daily Bid/Ask
Price against the NAV, within appropriate ranges, for each of the four
previous calendar quarters.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-14192 Filed 6-16-09; 8:45 am]
BILLING CODE 8010-01-P
