Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the Dent Tactical ETF, 32678-32682 [E9-15995]

Download as PDF 32678 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices available publicly. All submissions should refer to File Number SR–Phlx– 2009–54 and should be submitted on or before July 29, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Elizabeth M. Murphy, Secretary. [FR Doc. E9–15997 Filed 7–7–09; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60195; File No. SR– NYSEArca–2009–55] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the Dent Tactical ETF June 30, 2009. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’)1 and Rule 19b–4 thereunder,2 notice is hereby given that, on June 18, 2009, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) 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. mstockstill on DSKH9S0YB1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to list and trade the following under NYSE Arca Equities Rule 8.600 (‘‘Managed Fund Shares’’): The Dent Tactical ETF. The text of the proposed rule change is available on the Exchange’s Web site at https://www.nyx.com, at the Exchange’s principal office, and at the Commission’s Public Reference Room.3 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 15 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 E-mail from Michael Cavalier, Chief Counsel, NYSE Euronext, to Edward Cho, Special Counsel, Division of Trading and Markets, Commission, dated June 30, 2009 (‘‘June 30 E-mail’’). 1 15 VerDate Nov<24>2008 17:23 Jul 07, 2009 Jkt 217001 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to list and trade the following Managed Fund Shares 4 (‘‘Shares’’) under NYSE Arca Equities Rule 8.600: The Dent Tactical ETF (‘‘Fund’’).5 The Shares will be offered by AdvisorShares Trust (‘‘Trust’’), a statutory trust organized under the laws of the State of Delaware and registered with the Commission as an open-end management investment company.6 According to the Registration Statement, the Fund is a ‘‘fund of funds,’’ which means that the Fund seeks to achieve its investment objective by investing primarily in other exchange-traded funds (‘‘ETFs’’) that are 4 A Managed Fund Share is a security that represents an interest in an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a) (‘‘1940 Act’’) organized as an open-end investment company or similar entity that invests in a portfolio of securities selected by its investment advisor consistent with its investment objectives and policies. In contrast, an open-end investment company that issues Investment Company Units, listed and traded on the Exchange under NYSE Arca Equities Rule 5.2(j)(3), seeks to provide investment results that correspond generally to the price and yield performance of a specific foreign or domestic stock index, fixed income securities index, or combination thereof. 5 The Commission previously approved listing and trading on the Exchange of the following actively managed funds under Rule 8.600. See Securities Exchange Act Release No. 57619 (April 4, 2008), 73 FR 19544 (April 10, 2008) (SR– NYSEArca–2008–25) (order approving Rule 8.600 and Exchange listing and trading of PowerShares Active AlphaQ Fund, PowerShares Active Alpha Multi-Cap Fund, PowerShares Active Mega-Cap Portfolio and PowerShares Active Low Duration Portfolio); Securities Exchange Act Release No. 57801 (May 8, 2008), 73 FR 27878 (May 14, 2008) (SR–NYSEArca–2008–31) (order approving Exchange listing and trading of twelve activelymanaged funds of the WisdomTree Trust); Securities Exchange Act Release No. 59826 (April 28, 2009), 74 FR 20512 (May 4, 2009) (SR– NYSEArca–2009–22) (order approving Exchange listing and trading of Grail American Beacon Large Cap Value ETF). 6 The Trust is registered under the 1940 Act. On June 9, 2009, the Trust filed with the Commission Form N–1A under the Securities Act of 1933 (15 U.S.C. 77a), and under the 1940 Act relating to the Fund (File Nos. 333–157876 and 811–22110) (‘‘Registration Statement’’). The Trust has also filed a Third Amended Application for an Order under Sections 6(c) and 17(b) of the Investment Company Act of 1940 (‘‘1940 Act’’) for an exemption from certain provisions of the 1940 Act and rules thereunder (File No. 812–13488). The description of the operation of the Trust and the Fund herein is based on the Registration Statement. PO 00000 Frm 00150 Fmt 4703 Sfmt 4703 registered under 1940 Act and also shares of certain exchange-traded products that are not registered as investment companies under the 1940 Act (collectively, the ‘‘Underlying ETPs’’).7 Unlike certain of the Underlying ETPs, which may be based on underlying indexes, the Fund will not track or replicate a specific index. The Fund charges its own expenses and also indirectly bears a proportionate share of the Underlying ETPs’ expenses. Underlying ETPs will be listed on a national securities exchange and such Underlying ETPs may hold non-U.S. issues. The investment advisor to the Fund is AdvisorShares Investments, LLC (the ‘‘Advisor’’). The day-to-day portfolio management of the Fund is provided by HS Dent Investment Management, LLC, the sub-advisor to the Fund (‘‘SubAdvisor’’). The Sub-Advisor selects a group of Underlying ETPs for the Fund in which to invest pursuant to an ‘‘active’’ management strategy for asset allocation, security selection and portfolio construction. The Fund will periodically change the composition of its portfolio to best meet its investment objective. Neither the Advisor nor the Sub-Advisor is affiliated with a brokerdealer.8 7 Underlying ETPs include Investment Company Units (as described in NYSE Arca Equities Rule 5.2(j)(3)); Index-Linked Securities (as described in NYSE Arca Equities Rule 5.2(j)(6)); Portfolio Depositary Receipts (as described in NYSE Arca Equities Rule 8.100); Trust Issued Receipts (as described in NYSE Arca Equities Rule 8.200); Commodity-Based Trust Shares (as described in NYSE Arca Equities Rule 8.201); Currency Trust Shares (as described in NYSE Arca Equities Rule 8.202); Commodity Index Trust Shares (as described in NYSE Arca Equities Rule 8.203); Trust Units (as described in NYSE Arca Equities Rule 8.500); and Managed Fund Shares (as described in NYSE Arca Equities Rule 8.600). 8 The Exchange represents that the Advisor, as the investment advisor of the Fund, and its related personnel, are subject to Investment Advisers Act Rule 204A–1. This Rule specifically requires the adoption of a code of ethics by an investment advisor to include, at a minimum: (i) Standards of business conduct that reflect the firm’s/personnel fiduciary obligations; (ii) provisions requiring supervised persons to comply with applicable Federal securities laws; (iii) provisions that require all access persons to report, and the firm to review, their personal securities transactions and holdings periodically as specifically set forth in Rule 204A– 1; (iv) provisions requiring supervised persons to report any violations of the code of ethics promptly to the chief compliance officer (‘‘CCO’’) or, provided the CCO also receives reports of all violations, to other persons designated in the code of ethics; and (v) provisions requiring the investment advisor to provide each of the supervised persons with a copy of the code of ethics with an acknowledgement by said supervised persons. In addition, Rule 206(4)–7 under the Advisers Act makes it unlawful for an investment advisor to provide investment advice to clients unless such investment advisor has (i) adopted and implemented written policies and procedures reasonably designed to prevent violation, by the E:\FR\FM\08JYN1.SGM 08JYN1 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices mstockstill on DSKH9S0YB1PROD with NOTICES Description of the Fund According to the Registration Statement, the Fund’s investment objective is long-term growth of capital. The Fund Sub-Advisor seeks to achieve the Fund’s investment objective by identifying, through proprietary economic and demographic analysis, the overall trend of the U.S. and global economies, and then implementing investment strategies in asset classes that the Sub-Advisor believes will benefit from these trends. The SubAdvisor believes its modeling can accurately forecast economic trends such as gross domestic product (‘‘GDP’’) growth and inflation based on its research concerning consumer spending, consumer debt, consumer savings and investment, and technological innovation. The SubAdvisor is of the opinion that maximizing investment returns depends on understanding the right balance of asset classes that are favored by different fundamental economic trends and accurately rebalancing the Fund’s investments as the trends emerge. According to the Registration Statement, the Sub-Advisor follows its model to determine how offensive or defensive the Fund portfolio will be, and then selects securities to buy or sell. Offensive holdings are those that the Sub-Advisor anticipates will appreciate in value. Defensive positions are those which the Sub-Advisor anticipates will maintain their value, regardless of market conditions or cycles. According to the Registration Statement, the model is objective and the Sub-Advisor applies little subjective judgment in security selection, retention, or sales decisions. The securities that comprise the Fund’s offensive strategy are selected using the following method: The SubAdvisor identifies sectors, styles and/or geographic regions it believes are demographically favored based on its research. Using a proprietary selection process, the Sub-Advisor creates a universe of Underlying ETPs 9 that correspond to the favored sectors, styles and/or geographic regions. On a monthly basis, using a proprietary ranking process and objective third party research, the selected Underlying ETPs are ranked by the Sub-Advisor investment advisor 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. 9 See June 30 e-mail, supra, note 3. VerDate Nov<24>2008 17:23 Jul 07, 2009 Jkt 217001 according to their relative strength. The relative strength is gauged by a third party research firm that measures price momentum and similar characteristics in order to determine relative strength. The Sub-Advisor then constructs the Fund portfolio using highly ranked Underlying ETPs that meet a minimum relative strength requirement. The Fund is managed as an allocated fund of funds made up of these highly ranked Underlying ETPs selected by the SubAdvisor. When there are not sufficient sectors and/or Underlying ETPs that meet the minimum relative strength requirement of the model, the balance of the Portfolio’s assets will be allocated to defensive investments such as high quality debt, money market instruments, or other investments as determined by the Sub-Advisor.10 While the model is applied monthly, the holdings of the Portfolio will be reallocated at the Sub-Advisor’s discretion over the course of the month. As a result, the Fund may have a high rate of portfolio turnover. The Fund and the Underlying ETPs may invest in equity securities. As described in the Registration Statement, equity securities represent ownership interests in a company or partnership and consist of common stocks, preferred stocks, warrants to acquire common stock, securities convertible into common stock, and investments in master limited partnerships. Except for Underlying ETPs that may hold non-US issues, the Fund will not otherwise invest in non-U.S. issues. The Fund may use futures contracts and related options for bona fide hedging; attempting to offset changes in the value of securities held or expected to be acquired or be disposed of; attempting to gain exposure to a particular market, index or instrument; or other risk management purposes. To the extent the Fund uses futures and/or options on futures, it will do so in accordance with Rule 4.511 under the Commodity Exchange Act.12 According to the Registration Statement, the Fund will reduce the risk that it will be unable to close out a futures contract by only entering into futures contracts that are traded on a national futures exchange regulated by the Commodities Futures Trading Commission. The Fund may purchase and write put and call options on indices and enter into related closing transactions; may trade put and call options on securities, relating to the Trust and the Shares referred to, but not defined, herein are defined in the Registration Statement. 11 17 CFR 4.5. 12 7 U.S.C. 1 et seq. PO 00000 10 Terms Frm 00151 Fmt 4703 Sfmt 4703 32679 securities indices and currencies, as the Investment Sub-Advisor determines is appropriate in seeking the Fund’s investment objective, and except as restricted by the Fund’s investment limitations (as described in the Registration Statement); may enter into repurchase agreements with financial institutions; may use reverse repurchase agreements as part of the Fund’s investment strategy; may enter into swap agreements, including, but not limited to, equity index swaps and interest rate swap agreements; and may make short-term investments in U.S. Government securities. In addition, the Fund may invest up to 15% of its net assets in illiquid securities. For this purpose, ‘‘illiquid securities’’ are securities that the Fund may not sell or dispose of within seven days in the ordinary course of business at approximately the amount at which the Fund has valued the securities. The Fund, from time to time, in the ordinary course of business, may purchase securities on a when-issued or delayed-delivery basis (i.e., delivery and payment can take place between a month and 120 days after the date of the transaction). The Fund may invest in U.S. Treasury zero-coupon bonds. As stated in the Registration Statement, it is a fundamental policy of the Fund that it may not, with respect to 75% of its total assets, (i) purchase securities of any issuer (except securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities) if, as a result, more than 5% of its total assets would be invested in the securities of such issuer; or (ii) acquire more than 10% of the outstanding voting securities of any one issuer.13 In addition, the Fund may not purchase any securities which would cause 25% or more of its total assets to be invested in the securities of one or more issuers conducting their principal business activities in the same industry or group of industries, provided that this limitation does not apply to investments in securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities, or shares of investment companies.14 According to the Registration Statement, the Fund will seek to qualify for treatment as a Regulated Investment 13 This diversification standard is contained in Section 5(b)(1) of the Investment Company Act of 1940 (15 U.S.C. 80a). 14 Such fundamental policies may not be changed without the vote of a majority of the outstanding voting securities of the Fund. E:\FR\FM\08JYN1.SGM 08JYN1 32680 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices mstockstill on DSKH9S0YB1PROD with NOTICES Company (‘‘RIC’’) under the Internal Revenue Code.15 To respond to adverse market, economic, political or other conditions, the Fund may invest 100% of its total assets, without limitation, in highquality debt securities and money market instruments. The Fund may be invested in these instruments for extended periods, depending on the Sub-Advisor’s assessment of market conditions. These debt securities and money market instruments include shares of other mutual funds, commercial paper, certificates of deposit, bankers’ acceptances, U.S. Government securities, repurchase agreements and bonds that are BBB or higher. Creations and redemptions of Shares occur in large specified blocks of Shares, referred to as ‘‘Creation Units.’’ According to the Registration Statement, the shares of the Fund are ‘‘created’’ at their net asset value (‘‘NAV’’) by market makers, large investors and institutions only in block-size Creation Units of 25,000 shares or more. A ‘‘creator’’ enters into an authorized participant agreement (a ‘‘Participant Agreement’’) with the Fund’s distributor (the ‘‘Distributor’’) or a DTC participant that has executed a Participant Agreement with the Distributor (an ‘‘Authorized Participant’’), and deposits into the Fund a portfolio of securities closely approximating the holdings of the Fund and a specified amount of cash, together totaling the NAV of the Creation Unit(s), in exchange for 25,000 shares of the Fund (or multiples thereof). Similarly, shares can only be redeemed in Creation Units, generally 25,000 shares or more, principally in-kind for a portfolio of 15 According to the Registration Statement, one of several requirements for RIC qualification is that a Fund must receive at least 90% of the Fund’s gross income each year from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, or other income derived with respect to the Fund’s investments in stock, securities, foreign currencies and net income from an interest in a qualified publicly traded partnership (the ‘‘90% Test’’). A second requirement for qualification as a RIC is that a Fund must diversify its holdings so that, at the end of each fiscal quarter of the Fund’s taxable year: (a) At least 50% of the market value of the Fund’s total assets is represented by cash and cash items, U.S. Government securities, securities of other RICs, and other securities, with these other securities limited, in respect to any one issuer, to an amount not greater than 5% of the value of the Fund’s total assets or 10% of the outstanding voting securities of such issuer; and (b) not more than 25% of the value of its total assets are invested in the securities (other than U.S. Government securities or securities of other RICs) of any one issuer or two or more issuers which the Fund controls and which are engaged in the same, similar, or related trades or businesses, or the securities of one or more qualified publicly traded partnership (the ‘‘Asset Test’’). VerDate Nov<24>2008 17:23 Jul 07, 2009 Jkt 217001 securities held by the Fund and a specified amount of cash together totaling the NAV of the Creation Unit(s). Shares are not redeemable from the Fund except when aggregated in Creation Units. The prices at which creations and redemptions occur are based on the next calculation of NAV after an order is received in a form prescribed in the Participant Agreement. The Shares will conform to the initial and continued listing criteria under NYSE Arca Equities Rule 8.600. The Exchange represents that, for initial and/or continued listing, the Fund will be in compliance with Rule 10A–3 16 under the Exchange Act, as provided by NYSE Arca Equities Rule 5.3. 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 net asset value and the Disclosed Portfolio will be made available to all market participants at the same time. Availability of Information The Fund’s Web site (https:// www.advisorshares.com), which will be publicly available prior to the public offering of Shares, will include a form of the Prospectus for the Fund that may be downloaded. The Fund’s Web site will include additional quantitative information updated on a daily basis, including, for the Fund, (1) daily trading volume, the prior business day’s reported closing price, NAV and midpoint of the bid/ask spread at the time of calculation of such NAV (the ‘‘Bid/ Ask Price’’),17 and a calculation of the premium and discount of the Bid/Ask Price against the NAV, and (2) 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. On each business day, before commencement of trading in Shares in the Core Trading Session on the Exchange, the Fund will disclose on its Web site the Disclosed Portfolio as defined in NYSE Arca Equities Rule 8.600(c)(2) that will form the basis for the Fund’s calculation of NAV at the end of the business day.18 CFR 240.10A–3. Bid/Ask Price of the Fund is 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 and its service providers. 18 Under accounting procedures followed by the Fund, trades made on the prior business day (‘‘T’’) will be booked and reflected in NAV on the current business day (‘‘T + 1’’). Accordingly, the Fund will be able to disclose at the beginning of the business PO 00000 16 17 17 The Frm 00152 Fmt 4703 Sfmt 4703 On a daily basis, the Advisor will disclose for each portfolio security or other financial instrument of the Fund the following information: Ticker symbol (if applicable), name of security or financial instrument, number of shares or dollar value of financial instruments held in the portfolio, and percentage weighting of the security or financial instrument in the portfolio.19 In addition, a basket composition file, which includes the security names and share quantities required to be delivered in exchange for Fund shares, together with estimates and actual cash components, will be publicly disseminated daily prior to the opening of the New York Stock Exchange (‘‘NYSE’’) via the National Securities Clearing Corporation. The basket represents one Creation Unit of the Fund. The Web site information will be publicly available at no charge. The NAV of the Fund will normally be determined as of the close of the regular trading session on the NYSE (ordinarily 4 p.m. Eastern Time) on each business day. Investors can also obtain the Trust’s Statement of Additional Information (‘‘SAI’’), the Fund’s Shareholder Reports, and its Form N–CSR and Form N–SAR, filed twice a year. The Trust’s SAI and Shareholder Reports are available free upon request from the Trust, and those documents and the Form N–CSR and Form N–SAR may be viewed on-screen or downloaded from the Commission’s Web site at https:// www.sec.gov. Information regarding market price and trading volume of the Shares is and will be continually available on a real-time basis throughout the day on brokers’ computer screens and other electronic services. Information regarding the previous day’s closing price and trading volume information will be published daily in the financial section of newspapers. Quotation and last sale information for the Shares will be available via the Consolidated Tape Association (‘‘CTA’’) high-speed line. In addition, the Portfolio Indicative Value, as defined in NYSE Arca Equities Rule 8.600(c)(3), will be disseminated by the Exchange at least every 15 seconds during the Core Trading Session through the facilities of CTA. The dissemination of the Portfolio Indicative Value, together with the Disclosed Portfolio, will allow investors to determine the value of the underlying portfolio of the Fund on a daily basis and to provide a close estimate of that value throughout the trading day. day the portfolio that will form the basis for the NAV calculation at the end of the business day. 19 See June 30 E-mail, supra, note 3. E:\FR\FM\08JYN1.SGM 08JYN1 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices Additional information regarding the Trust and the Shares, including investment strategies, risks, creation and redemption procedures, fees, portfolio holdings disclosure policies, distributions and taxes is included in the Registration Statement. 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 the Fund.20 Trading in Shares of the Fund will be halted if the circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been reached. Trading also 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 comprising the Disclosed Portfolio and/ or the financial instruments of the 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 will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which sets forth circumstances under which Shares of the Fund may be halted. mstockstill on DSKH9S0YB1PROD with NOTICES 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. Shares will trade on the NYSE Arca Marketplace from 4 a.m. to 8 p.m. Eastern Time in accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late Trading Sessions). The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. The minimum trading increment for Shares on the Exchange will be $0.01. Surveillance The Exchange intends to utilize its existing surveillance procedures applicable to derivative products (which include Managed Fund Shares) to monitor trading in the Shares. The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable Federal securities laws. The Exchange’s current trading surveillance focuses on detecting securities trading outside their normal 20 See NYSE Arca Equities Rule 7.12, Commentary .04. VerDate Nov<24>2008 17:23 Jul 07, 2009 Jkt 217001 patterns. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations. The Exchange may obtain information via the Intermarket Surveillance Group (‘‘ISG’’) from other exchanges that are members of ISG.21 In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees. Information Bulletin Prior to the commencement of trading, the Exchange will inform its Equity Trading Permit (‘‘ETP’’) Holders in an Information Bulletin (‘‘Bulletin’’) of the special characteristics and risks associated with trading the Shares. Specifically, the Bulletin will discuss the following: (1) The procedures for purchases and redemptions of Shares in Creation Unit aggregations (and that Shares are not individually redeemable); (2) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (3) the risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated Portfolio Indicative Value will not be calculated or publicly disseminated; (4) how information regarding the Portfolio Indicative Value is disseminated; (5) the requirement that ETP Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information. In addition, the Bulletin will reference that the Fund is subject to various fees and expenses described in the Registration Statement. The Bulletin will discuss any exemptive, no-action, and interpretive relief granted by the Commission from any rules under the Exchange Act. The Bulletin will also disclose that the NAV for the Shares will be calculated after 4 p.m. Eastern Time each trading day. 2. Statutory Basis The basis under the Exchange Act for this proposed rule change is the 21 For a list of the current members of ISG, see https://www.isgportal.org. The Exchange may obtain information from futures exchanges with which the Exchange has entered into a surveillance sharing agreement or that are ISG members. The Exchange notes that not all components of the Disclosed Portfolio for the Fund may trade on markets that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. PO 00000 Frm 00153 Fmt 4703 Sfmt 4703 32681 requirement under Section 6(b)(5) 22 that an exchange have rules that are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. The Exchange believes that the proposed rule change will facilitate the listing and trading of an additional type of activelymanaged exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. 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 purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 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 self-regulatory organization consents, the Commission will: (A) By order approve the 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 proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File 22 15 E:\FR\FM\08JYN1.SGM U.S.C. 78f(b)(5). 08JYN1 32682 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices Number SR–NYSEArca–2009–55 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. DEPARTMENT OF STATE [Public Notice 6691] Culturally Significant Objects Imported for Exhibition Determinations: ‘‘Watteau to Degas: French Drawings from the Frits Lugt Collection’’ SUMMARY: Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of All submissions should refer to File October 19, 1965 (79 Stat. 985; 22 U.S.C. Number SR–NYSEArca–2009–55. This 2459), Executive Order 12047 of March file number should be included on the subject line if e-mail is used. To help the 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. Commission process and review your 2681, et seq.; 22 U.S.C. 6501 note, et comments more efficiently, please use seq.), Delegation of Authority No. 234 of only one method. The Commission will October 1, 1999, Delegation of Authority post all comments on the Commission’s No. 236 of October 19, 1999, as Internet Web site (https://www.sec.gov/ amended, and Delegation of Authority rules/sro.shtml). Copies of the No. 257 of April 15, 2003 [68 FR 19875], submission, all subsequent I hereby determine that the objects to be amendments, all written statements included in the exhibition ‘‘Watteau to with respect to the proposed rule Degas: French Drawings from the Frits change that are filed with the Lugt Collection,’’ imported from abroad Commission, and all written for temporary exhibition within the communications relating to the United States, are of cultural proposed rule change between the significance. The objects are imported Commission and any person, other than pursuant to loan agreements with the those that may be withheld from the foreign owners or custodians. I also determine that the exhibition or display public in accordance with the of the exhibit objects at the Frick provisions of 5 U.S.C. 552, will be Collection, New York, NY, from on or available for inspection and copying in about October 6, 2009, until on or about the Commission’s Public Reference January 10, 2010, and at possible Room, 100 F Street, NE., Washington, additional exhibitions or venues yet to DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. be determined, is in the national Copies of the filing will also be available interest. Public Notice of these Determinations is ordered to be for inspection and copying at NYSE published in the Federal Register. Arca’s principal office and on its FOR FURTHER INFORMATION CONTACT: For Internet Web site at https:// further information, including a list of www.nyx.com. All comments received the exhibit objects, contact Carol B. will be posted without change; the Epstein, Attorney-Adviser, Office of the Commission does not edit personal Legal Adviser, U.S. Department of State identifying information from (telephone: 202/453–8048). The address submissions. You should submit only is U.S. Department of State, SA–44, 301 information that you wish to make 4th Street, SW., Room 700, Washington, available publicly. All submissions DC 20547–0001. should refer to File Number SR– Dated: June 29, 2009. NYSEArca–2009–55 and should be C. Miller Crouch, submitted on or before July 29, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Elizabeth M. Murphy, Secretary. [FR Doc. E9–15995 Filed 7–7–09; 8:45 am] mstockstill on DSKH9S0YB1PROD with NOTICES BILLING CODE 8010–01–P Acting Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. E9–16121 Filed 7–7–09; 8:45 am] BILLING CODE 4710–05–P DEPARTMENT OF STATE [Public Notice 6636] Notice of Closed Meeting of the Cultural Property Advisory Committee 23 17 In accordance with the provisions of the Convention on Cultural Property Implementation Act (19 U.S.C. 2601 et seq.) (the Act) there will be a meeting of the Cultural Property Advisory CFR 200.30–3(a)(12). VerDate Nov<24>2008 17:23 Jul 07, 2009 Jkt 217001 PO 00000 Frm 00154 Fmt 4703 Sfmt 4703 Committee on (Committee) Monday, July 27 and on Tuesday, July 28 at the U.S. Department of State. Pursuant to section 2605(h) of the Act and 5 U.S.C. 552b(c)(9)(B), the meeting shall be closed to the public. At this meeting, the Committee will carry out its interim review function with respect to the Memorandum of Understanding Between the Government of the United States of America and the Government of the Republic of Colombia Concerning the Imposition of Import Restrictions on Archaeological Material from the PreColumbian Cultures and Certain Ecclesiastical Material from the Colonial Period of Colombia concluded on March 15, 2006; and, the Memorandum of Understanding Between the Government of the United States of America and the Government of the Republic of Italy Concerning the Imposition of Import Restrictions on Archaeological Material Representing the Pre-Classical, Classical and Imperial Roman Periods of Italy, concluded on January 19, 2001, and extended in 2006. Pursuant to the Act, the Committee will conduct an interim review of the effectiveness of the MOUs and will focus its attention on Article II of each MOU. This is not a meeting to consider extension of the MOUs. Such a meeting will be scheduled and announced in the future and will include a public session. The Committee’s responsibilities are carried out in accordance with provisions of the Act. Related information may be found at https:// exchanges.state.gov/culprop. Dated: June 19, 2009. C. Miller Crouch, Acting Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. E9–16058 Filed 7–7–09; 8:45 am] BILLING CODE 4710–05–P OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE [Docket No. WTO/DS392/2] WTO Dispute Settlement Proceeding Regarding United States—Certain Measures Affecting Imports of Poultry From China AGENCY: Office of the United States Trade Representative. ACTION: Notice; request for comments. SUMMARY: The Office of the United States Trade Representative (‘‘USTR’’) is providing notice that on June 23, 2009, the People’s Republic of China (‘‘China’’) requested the establishment of a panel under the Marrakesh E:\FR\FM\08JYN1.SGM 08JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 74, Number 129 (Wednesday, July 8, 2009)]
[Notices]
[Pages 32678-32682]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-15995]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60195; File No. SR-NYSEArca-2009-55]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change To List and Trade Shares of the Dent Tactical 
ETF

June 30, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'')\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that, on June 18, 2009, NYSE Arca, Inc. (``NYSE Arca'' 
or ``Exchange'') 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 proposes to list and trade the following under NYSE 
Arca Equities Rule 8.600 (``Managed Fund Shares''): The Dent Tactical 
ETF. The text of the proposed rule change is available on the 
Exchange's Web site at https://www.nyx.com, at the Exchange's principal 
office, and at the Commission's Public Reference Room.\3\
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    \3\ E-mail from Michael Cavalier, Chief Counsel, NYSE Euronext, 
to Edward Cho, Special Counsel, Division of Trading and Markets, 
Commission, dated June 30, 2009 (``June 30 E-mail'').
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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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the following Managed Fund 
Shares \4\ (``Shares'') under NYSE Arca Equities Rule 8.600: The Dent 
Tactical ETF (``Fund'').\5\ The Shares will be offered by AdvisorShares 
Trust (``Trust''), a statutory trust organized under the laws of the 
State of Delaware and registered with the Commission as an open-end 
management investment company.\6\ According to the Registration 
Statement, the Fund is a ``fund of funds,'' which means that the Fund 
seeks to achieve its investment objective by investing primarily in 
other exchange-traded funds (``ETFs'') that are registered under 1940 
Act and also shares of certain exchange-traded products that are not 
registered as investment companies under the 1940 Act (collectively, 
the ``Underlying ETPs'').\7\ Unlike certain of the Underlying ETPs, 
which may be based on underlying indexes, the Fund will not track or 
replicate a specific index. The Fund charges its own expenses and also 
indirectly bears a proportionate share of the Underlying ETPs' 
expenses.
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    \4\ A Managed Fund Share is a security that represents an 
interest in an investment company registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a) (``1940 Act'') organized as an 
open-end investment company or similar entity that invests in a 
portfolio of securities selected by its investment advisor 
consistent with its investment objectives and policies. In contrast, 
an open-end investment company that issues Investment Company Units, 
listed and traded on the Exchange under NYSE Arca Equities Rule 
5.2(j)(3), seeks to provide investment results that correspond 
generally to the price and yield performance of a specific foreign 
or domestic stock index, fixed income securities index, or 
combination thereof.
    \5\ The Commission previously approved listing and trading on 
the Exchange of the following actively managed funds under Rule 
8.600. See Securities Exchange Act Release No. 57619 (April 4, 
2008), 73 FR 19544 (April 10, 2008) (SR-NYSEArca-2008-25) (order 
approving Rule 8.600 and Exchange listing and trading of PowerShares 
Active AlphaQ Fund, PowerShares Active Alpha Multi-Cap Fund, 
PowerShares Active Mega-Cap Portfolio and PowerShares Active Low 
Duration Portfolio); Securities Exchange Act Release No. 57801 (May 
8, 2008), 73 FR 27878 (May 14, 2008) (SR-NYSEArca-2008-31) (order 
approving Exchange listing and trading of twelve actively-managed 
funds of the WisdomTree Trust); Securities Exchange Act Release No. 
59826 (April 28, 2009), 74 FR 20512 (May 4, 2009) (SR-NYSEArca-2009-
22) (order approving Exchange listing and trading of Grail American 
Beacon Large Cap Value ETF).
    \6\ The Trust is registered under the 1940 Act. On June 9, 2009, 
the Trust filed with the Commission Form N-1A under the Securities 
Act of 1933 (15 U.S.C. 77a), and under the 1940 Act relating to the 
Fund (File Nos. 333-157876 and 811-22110) (``Registration 
Statement''). The Trust has also filed a Third Amended Application 
for an Order under Sections 6(c) and 17(b) of the Investment Company 
Act of 1940 (``1940 Act'') for an exemption from certain provisions 
of the 1940 Act and rules thereunder (File No. 812-13488). The 
description of the operation of the Trust and the Fund herein is 
based on the Registration Statement.
    \7\ Underlying ETPs include Investment Company Units (as 
described in NYSE Arca Equities Rule 5.2(j)(3)); Index-Linked 
Securities (as described in NYSE Arca Equities Rule 5.2(j)(6)); 
Portfolio Depositary Receipts (as described in NYSE Arca Equities 
Rule 8.100); Trust Issued Receipts (as described in NYSE Arca 
Equities Rule 8.200); Commodity-Based Trust Shares (as described in 
NYSE Arca Equities Rule 8.201); Currency Trust Shares (as described 
in NYSE Arca Equities Rule 8.202); Commodity Index Trust Shares (as 
described in NYSE Arca Equities Rule 8.203); Trust Units (as 
described in NYSE Arca Equities Rule 8.500); and Managed Fund Shares 
(as described in NYSE Arca Equities Rule 8.600).
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    Underlying ETPs will be listed on a national securities exchange 
and such Underlying ETPs may hold non-U.S. issues.
    The investment advisor to the Fund is AdvisorShares Investments, 
LLC (the ``Advisor''). The day-to-day portfolio management of the Fund 
is provided by HS Dent Investment Management, LLC, the sub-advisor to 
the Fund (``Sub-Advisor''). The Sub-Advisor selects a group of 
Underlying ETPs for the Fund in which to invest pursuant to an 
``active'' management strategy for asset allocation, security selection 
and portfolio construction. The Fund will periodically change the 
composition of its portfolio to best meet its investment objective. 
Neither the Advisor nor the Sub-Advisor is affiliated with a broker-
dealer.\8\
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    \8\ The Exchange represents that the Advisor, as the investment 
advisor of the Fund, and its related personnel, are subject to 
Investment Advisers Act Rule 204A-1. This Rule specifically requires 
the adoption of a code of ethics by an investment advisor to 
include, at a minimum: (i) Standards of business conduct that 
reflect the firm's/personnel fiduciary obligations; (ii) provisions 
requiring supervised persons to comply with applicable Federal 
securities laws; (iii) provisions that require all access persons to 
report, and the firm to review, their personal securities 
transactions and holdings periodically as specifically set forth in 
Rule 204A-1; (iv) provisions requiring supervised persons to report 
any violations of the code of ethics promptly to the chief 
compliance officer (``CCO'') or, provided the CCO also receives 
reports of all violations, to other persons designated in the code 
of ethics; and (v) provisions requiring the investment advisor to 
provide each of the supervised persons with a copy of the code of 
ethics with an acknowledgement by said supervised persons. In 
addition, Rule 206(4)-7 under the Advisers Act makes it unlawful for 
an investment advisor to provide investment advice to clients unless 
such investment advisor has (i) adopted and implemented written 
policies and procedures reasonably designed to prevent violation, by 
the investment advisor 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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[[Page 32679]]

Description of the Fund

    According to the Registration Statement, the Fund's investment 
objective is long-term growth of capital. The Fund Sub-Advisor seeks to 
achieve the Fund's investment objective by identifying, through 
proprietary economic and demographic analysis, the overall trend of the 
U.S. and global economies, and then implementing investment strategies 
in asset classes that the Sub-Advisor believes will benefit from these 
trends. The Sub-Advisor believes its modeling can accurately forecast 
economic trends such as gross domestic product (``GDP'') growth and 
inflation based on its research concerning consumer spending, consumer 
debt, consumer savings and investment, and technological innovation. 
The Sub-Advisor is of the opinion that maximizing investment returns 
depends on understanding the right balance of asset classes that are 
favored by different fundamental economic trends and accurately 
rebalancing the Fund's investments as the trends emerge.
    According to the Registration Statement, the Sub-Advisor follows 
its model to determine how offensive or defensive the Fund portfolio 
will be, and then selects securities to buy or sell. Offensive holdings 
are those that the Sub-Advisor anticipates will appreciate in value. 
Defensive positions are those which the Sub-Advisor anticipates will 
maintain their value, regardless of market conditions or cycles. 
According to the Registration Statement, the model is objective and the 
Sub-Advisor applies little subjective judgment in security selection, 
retention, or sales decisions.
    The securities that comprise the Fund's offensive strategy are 
selected using the following method: The Sub-Advisor identifies 
sectors, styles and/or geographic regions it believes are 
demographically favored based on its research. Using a proprietary 
selection process, the Sub-Advisor creates a universe of Underlying 
ETPs \9\ that correspond to the favored sectors, styles and/or 
geographic regions. On a monthly basis, using a proprietary ranking 
process and objective third party research, the selected Underlying 
ETPs are ranked by the Sub-Advisor according to their relative 
strength. The relative strength is gauged by a third party research 
firm that measures price momentum and similar characteristics in order 
to determine relative strength. The Sub-Advisor then constructs the 
Fund portfolio using highly ranked Underlying ETPs that meet a minimum 
relative strength requirement. The Fund is managed as an allocated fund 
of funds made up of these highly ranked Underlying ETPs selected by the 
Sub-Advisor. When there are not sufficient sectors and/or Underlying 
ETPs that meet the minimum relative strength requirement of the model, 
the balance of the Portfolio's assets will be allocated to defensive 
investments such as high quality debt, money market instruments, or 
other investments as determined by the Sub-Advisor.\10\
---------------------------------------------------------------------------

    \9\ See June 30 e-mail, supra, note 3.
    \10\ Terms relating to the Trust and the Shares referred to, but 
not defined, herein are defined in the Registration Statement.
---------------------------------------------------------------------------

    While the model is applied monthly, the holdings of the Portfolio 
will be reallocated at the Sub-Advisor's discretion over the course of 
the month. As a result, the Fund may have a high rate of portfolio 
turnover.
    The Fund and the Underlying ETPs may invest in equity securities. 
As described in the Registration Statement, equity securities represent 
ownership interests in a company or partnership and consist of common 
stocks, preferred stocks, warrants to acquire common stock, securities 
convertible into common stock, and investments in master limited 
partnerships. Except for Underlying ETPs that may hold non-US issues, 
the Fund will not otherwise invest in non-U.S. issues.
    The Fund may use futures contracts and related options for bona 
fide hedging; attempting to offset changes in the value of securities 
held or expected to be acquired or be disposed of; attempting to gain 
exposure to a particular market, index or instrument; or other risk 
management purposes. To the extent the Fund uses futures and/or options 
on futures, it will do so in accordance with Rule 4.5\11\ under the 
Commodity Exchange Act.\12\ According to the Registration Statement, 
the Fund will reduce the risk that it will be unable to close out a 
futures contract by only entering into futures contracts that are 
traded on a national futures exchange regulated by the Commodities 
Futures Trading Commission.
---------------------------------------------------------------------------

    \11\ 17 CFR 4.5.
    \12\ 7 U.S.C. 1 et seq.
---------------------------------------------------------------------------

    The Fund may purchase and write put and call options on indices and 
enter into related closing transactions; may trade put and call options 
on securities, securities indices and currencies, as the Investment 
Sub-Advisor determines is appropriate in seeking the Fund's investment 
objective, and except as restricted by the Fund's investment 
limitations (as described in the Registration Statement); may enter 
into repurchase agreements with financial institutions; may use reverse 
repurchase agreements as part of the Fund's investment strategy; may 
enter into swap agreements, including, but not limited to, equity index 
swaps and interest rate swap agreements; and may make short-term 
investments in U.S. Government securities. In addition, the Fund may 
invest up to 15% of its net assets in illiquid securities. For this 
purpose, ``illiquid securities'' are securities that the Fund may not 
sell or dispose of within seven days in the ordinary course of business 
at approximately the amount at which the Fund has valued the 
securities.
    The Fund, from time to time, in the ordinary course of business, 
may purchase securities on a when-issued or delayed-delivery basis 
(i.e., delivery and payment can take place between a month and 120 days 
after the date of the transaction). The Fund may invest in U.S. 
Treasury zero-coupon bonds.
    As stated in the Registration Statement, it is a fundamental policy 
of the Fund that it may not, with respect to 75% of its total assets, 
(i) purchase securities of any issuer (except securities issued or 
guaranteed by the U.S. Government, its agencies or instrumentalities) 
if, as a result, more than 5% of its total assets would be invested in 
the securities of such issuer; or (ii) acquire more than 10% of the 
outstanding voting securities of any one issuer.\13\ In addition, the 
Fund may not purchase any securities which would cause 25% or more of 
its total assets to be invested in the securities of one or more 
issuers conducting their principal business activities in the same 
industry or group of industries, provided that this limitation does not 
apply to investments in securities issued or guaranteed by the U.S. 
Government, its agencies or instrumentalities, or shares of investment 
companies.\14\
---------------------------------------------------------------------------

    \13\ This diversification standard is contained in Section 
5(b)(1) of the Investment Company Act of 1940 (15 U.S.C. 80a).
    \14\ Such fundamental policies may not be changed without the 
vote of a majority of the outstanding voting securities of the Fund.
---------------------------------------------------------------------------

    According to the Registration Statement, the Fund will seek to 
qualify for treatment as a Regulated Investment

[[Page 32680]]

Company (``RIC'') under the Internal Revenue Code.\15\
---------------------------------------------------------------------------

    \15\ According to the Registration Statement, one of several 
requirements for RIC qualification is that a Fund must receive at 
least 90% of the Fund's gross income each year from dividends, 
interest, payments with respect to securities loans, gains from the 
sale or other disposition of stock, securities or foreign 
currencies, or other income derived with respect to the Fund's 
investments in stock, securities, foreign currencies and net income 
from an interest in a qualified publicly traded partnership (the 
``90% Test''). A second requirement for qualification as a RIC is 
that a Fund must diversify its holdings so that, at the end of each 
fiscal quarter of the Fund's taxable year: (a) At least 50% of the 
market value of the Fund's total assets is represented by cash and 
cash items, U.S. Government securities, securities of other RICs, 
and other securities, with these other securities limited, in 
respect to any one issuer, to an amount not greater than 5% of the 
value of the Fund's total assets or 10% of the outstanding voting 
securities of such issuer; and (b) not more than 25% of the value of 
its total assets are invested in the securities (other than U.S. 
Government securities or securities of other RICs) of any one issuer 
or two or more issuers which the Fund controls and which are engaged 
in the same, similar, or related trades or businesses, or the 
securities of one or more qualified publicly traded partnership (the 
``Asset Test'').
---------------------------------------------------------------------------

    To respond to adverse market, economic, political or other 
conditions, the Fund may invest 100% of its total assets, without 
limitation, in high-quality debt securities and money market 
instruments. The Fund may be invested in these instruments for extended 
periods, depending on the Sub-Advisor's assessment of market 
conditions. These debt securities and money market instruments include 
shares of other mutual funds, commercial paper, certificates of 
deposit, bankers' acceptances, U.S. Government securities, repurchase 
agreements and bonds that are BBB or higher.
    Creations and redemptions of Shares occur in large specified blocks 
of Shares, referred to as ``Creation Units.'' According to the 
Registration Statement, the shares of the Fund are ``created'' at their 
net asset value (``NAV'') by market makers, large investors and 
institutions only in block-size Creation Units of 25,000 shares or 
more. A ``creator'' enters into an authorized participant agreement (a 
``Participant Agreement'') with the Fund's distributor (the 
``Distributor'') or a DTC participant that has executed a Participant 
Agreement with the Distributor (an ``Authorized Participant''), and 
deposits into the Fund a portfolio of securities closely approximating 
the holdings of the Fund and a specified amount of cash, together 
totaling the NAV of the Creation Unit(s), in exchange for 25,000 shares 
of the Fund (or multiples thereof). Similarly, shares can only be 
redeemed in Creation Units, generally 25,000 shares or more, 
principally in-kind for a portfolio of securities held by the Fund and 
a specified amount of cash together totaling the NAV of the Creation 
Unit(s). Shares are not redeemable from the Fund except when aggregated 
in Creation Units. The prices at which creations and redemptions occur 
are based on the next calculation of NAV after an order is received in 
a form prescribed in the Participant Agreement.
    The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.600. The Exchange represents 
that, for initial and/or continued listing, the Fund will be in 
compliance with Rule 10A-3 \16\ under the Exchange Act, as provided by 
NYSE Arca Equities Rule 5.3. 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 net asset value and the Disclosed Portfolio will be made 
available to all market participants at the same time.
---------------------------------------------------------------------------

    \16\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Availability of Information

    The Fund's Web site (https://www.advisorshares.com), which will be 
publicly available prior to the public offering of Shares, will include 
a form of the Prospectus for the Fund that may be downloaded. The 
Fund's Web site will include additional quantitative information 
updated on a daily basis, including, for the Fund, (1) daily trading 
volume, the prior business day's reported closing price, NAV and mid-
point of the bid/ask spread at the time of calculation of such NAV (the 
``Bid/Ask Price''),\17\ and a calculation of the premium and discount 
of the Bid/Ask Price against the NAV, and (2) 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. On each business day, 
before commencement of trading in Shares in the Core Trading Session on 
the Exchange, the Fund will disclose on its Web site the Disclosed 
Portfolio as defined in NYSE Arca Equities Rule 8.600(c)(2) that will 
form the basis for the Fund's calculation of NAV at the end of the 
business day.\18\
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    \17\ The Bid/Ask Price of the Fund is 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 and its service providers.
    \18\ Under accounting procedures followed by the Fund, trades 
made on the prior business day (``T'') will be booked and reflected 
in NAV on the current business day (``T + 1''). Accordingly, the 
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.
---------------------------------------------------------------------------

    On a daily basis, the Advisor will disclose for each portfolio 
security or other financial instrument of the Fund the following 
information: Ticker symbol (if applicable), name of security or 
financial instrument, number of shares or dollar value of financial 
instruments held in the portfolio, and percentage weighting of the 
security or financial instrument in the portfolio.\19\ In addition, a 
basket composition file, which includes the security names and share 
quantities required to be delivered in exchange for Fund shares, 
together with estimates and actual cash components, will be publicly 
disseminated daily prior to the opening of the New York Stock Exchange 
(``NYSE'') via the National Securities Clearing Corporation. The basket 
represents one Creation Unit of the Fund. The Web site information will 
be publicly available at no charge.
---------------------------------------------------------------------------

    \19\ See June 30 E-mail, supra, note 3.
---------------------------------------------------------------------------

    The NAV of the Fund will normally be determined as of the close of 
the regular trading session on the NYSE (ordinarily 4 p.m. Eastern 
Time) on each business day.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), the Fund's Shareholder Reports, and its Form N-
CSR and Form N-SAR, filed twice a year. The Trust's SAI and Shareholder 
Reports are available free upon request from the Trust, and those 
documents and the Form N-CSR and Form N-SAR may be viewed on-screen or 
downloaded from the Commission's Web site at https://www.sec.gov. 
Information regarding market price and trading volume of the Shares is 
and will be continually available on a real-time basis throughout the 
day on brokers' computer screens and other electronic services. 
Information regarding the previous day's closing price and trading 
volume information will be published daily in the financial section of 
newspapers. Quotation and last sale information for the Shares will be 
available via the Consolidated Tape Association (``CTA'') high-speed 
line. In addition, the Portfolio Indicative Value, as defined in NYSE 
Arca Equities Rule 8.600(c)(3), will be disseminated by the Exchange at 
least every 15 seconds during the Core Trading Session through the 
facilities of CTA. The dissemination of the Portfolio Indicative Value, 
together with the Disclosed Portfolio, will allow investors to 
determine the value of the underlying portfolio of the Fund on a daily 
basis and to provide a close estimate of that value throughout the 
trading day.

[[Page 32681]]

    Additional information regarding the Trust and the Shares, 
including investment strategies, risks, creation and redemption 
procedures, fees, portfolio holdings disclosure policies, distributions 
and taxes is included in the Registration Statement.

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 the Fund.\20\ Trading in Shares of the Fund 
will be halted if the circuit breaker parameters in NYSE Arca Equities 
Rule 7.12 have been reached. Trading also 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 comprising 
the Disclosed Portfolio and/or the financial instruments of the 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 will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), 
which sets forth circumstances under which Shares of the Fund may be 
halted.
---------------------------------------------------------------------------

    \20\ See NYSE Arca Equities Rule 7.12, Commentary .04.
---------------------------------------------------------------------------

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. Shares will trade on 
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. Eastern Time in 
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late 
Trading Sessions). The Exchange has appropriate rules to facilitate 
transactions in the Shares during all trading sessions. The minimum 
trading increment for Shares on the Exchange will be $0.01.

Surveillance

    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products (which include Managed 
Fund Shares) to monitor trading in the Shares. The Exchange represents 
that these procedures are adequate to properly monitor Exchange trading 
of the Shares in all trading sessions and to deter and detect 
violations of Exchange rules and applicable Federal securities laws.
    The Exchange's current trading surveillance focuses on detecting 
securities trading outside their normal patterns. When such situations 
are detected, surveillance analysis follows and investigations are 
opened, where appropriate, to review the behavior of all relevant 
parties for all relevant trading violations.
    The Exchange may obtain information via the Intermarket 
Surveillance Group (``ISG'') from other exchanges that are members of 
ISG.\21\ In addition, the Exchange also has a general policy 
prohibiting the distribution of material, non-public information by its 
employees.
---------------------------------------------------------------------------

    \21\ For a list of the current members of ISG, see https://www.isgportal.org. The Exchange may obtain information from futures 
exchanges with which the Exchange has entered into a surveillance 
sharing agreement or that are ISG members. The Exchange notes that 
not all components of the Disclosed Portfolio for the Fund may trade 
on markets that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

Information Bulletin

    Prior to the commencement of trading, the Exchange will inform its 
Equity Trading Permit (``ETP'') Holders in an Information Bulletin 
(``Bulletin'') of the special characteristics and risks associated with 
trading the Shares. Specifically, the Bulletin will discuss the 
following: (1) The procedures for purchases and redemptions of Shares 
in Creation Unit aggregations (and that Shares are not individually 
redeemable); (2) NYSE Arca Equities Rule 9.2(a), which imposes a duty 
of due diligence on its ETP Holders to learn the essential facts 
relating to every customer prior to trading the Shares; (3) the risks 
involved in trading the Shares during the Opening and Late Trading 
Sessions when an updated Portfolio Indicative Value will not be 
calculated or publicly disseminated; (4) how information regarding the 
Portfolio Indicative Value is disseminated; (5) the requirement that 
ETP Holders deliver a prospectus to investors purchasing newly issued 
Shares prior to or concurrently with the confirmation of a transaction; 
and (6) trading information.
    In addition, the Bulletin will reference that the Fund is subject 
to various fees and expenses described in the Registration Statement. 
The Bulletin will discuss any exemptive, no-action, and interpretive 
relief granted by the Commission from any rules under the Exchange Act. 
The Bulletin will also disclose that the NAV for the Shares will be 
calculated after 4 p.m. Eastern Time each trading day.
2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) \22\ that an exchange have rules 
that are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest. The 
Exchange believes that the proposed rule change will facilitate the 
listing and trading of an additional type of actively-managed exchange-
traded product that will enhance competition among market participants, 
to the benefit of investors and the marketplace.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78f(b)(5).
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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 purposes of the Act.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    Within 35 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 self-regulatory organization consents, the Commission will:
    (A) By order approve the 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 proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File

[[Page 32682]]

Number SR-NYSEArca-2009-55 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2009-55. This 
file number should be included on the subject line if e-mail 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 (https://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 change 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 inspection 
and copying in the Commission's Public Reference Room, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of the filing will also be available for 
inspection and copying at NYSE Arca's principal office and on its 
Internet Web site at https://www.nyx.com. 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 Number SR-NYSEArca-2009-55 and should be submitted 
on or before July 29, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-15995 Filed 7-7-09; 8:45 am]
BILLING CODE 8010-01-P

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