SEC Division of Corporation Finance no-action letter: Invesco Funds — SEC — US

STRADLEY
RONON

Stradley Ronon Stevens & Young, LLP
2000 K Street, N.W.
Suite 700
Washington, DC 20006
Telephone 202.822.9611
Fax 202.822.0140 www.stradley.com

Office of Mergers and Acquisitions
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549

Re: Request for Exemptive Relief from Rule 14e-5 under the Securities Exchange Act of 1934

Dear Mr. Yu and Ms. Chalk:

We are writing on behalf of Invesco Actively Managed Exchange-Traded Commodity Fund Trust (the “Active Trust”) and Invesco Actively Managed Exchange-Traded Commodity Fund Trust (the “Commodity Trust” and together with the Active Trust, each a “Trust” and, collectively, the “Trusts”). Each Trust is a Delaware statutory trust registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). Each Trust requests exemptive relief from Rule 14e-5 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on behalf of itself, its series (including the Invesco US Large Cap Core ESG ETF, Invesco Real Assets ESG ETF, Invesco Focused Discovery Growth ETF and Invesco Select Growth ETF,¹ each a series of the Active Trust), and future series of the Trusts (each, a “Fund” and, collectively, the “Funds”), and persons or entities engaging in transactions in shares of the Funds (“Shares”), including Authorized Participants (as defined below). The Funds will operate as exchange-traded funds (“ETFs”), in reliance on exemptive relief from the Securities and Exchange Commission (“Commission”), and each Fund’s Shares will be listed on a national securities exchange, as defined in Section 2(a)(26) of the 1940 Act, such as NYSE Arca, Cboe BZX, or Nasdaq (an “Exchange”).

Each Fund will continuously issue and redeem Shares in specified aggregations (each aggregation of Shares is a “Creation Unit”).² Each Fund will issue and redeem Shares in Creation Units through a broker-dealer

¹ Each Fund’s name and strategy is subject to change prior to launch. The Funds will otherwise operate in the manner described herein.

² Redeemability of Creation Units is attributable to the fact that each Trust is an open-end management investment company. The term “open-end company” is defined in Section 5(a)(1) of the 1940 Act as a management company that is offering for sale or has outstanding any redeemable security of which it is the issuer. Section 2(a)(32) of the 1940 Act defines a “redeemable security” as any security, other than short-term paper, under the terms of which the holder, upon its presentation to the issuer, is entitled to receive approximately his proportionate share of the issuer’s current net assets, or the cash equivalent. Creation Units are redeemable at net asset value (“NAV”). Shares, however, are not

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registered under the Exchange Act (“Distributor”) acting on an agency basis and serving as the Funds’ “principal underwriter” as defined in Section 2(a)(29) of the 1940 Act. Consistent with other ETFs, transactions in Creation Units for the Funds will occur between the Trust and persons, referred to as “Authorized Participants,” who create and redeem Shares in Creation Units pursuant to contractual arrangements pertaining to the Trust and the Funds.³ Additionally, Authorized Participants may engage in secondary market transactions in Shares. The Funds described herein operate in a manner similar to other ETFs, except that the Funds will not disclose the identities and quantities of the securities and other assets held by a Fund that will form the basis for each Fund’s calculation of NAV at the end of each Business Day (as defined below).⁴

Authorized Participants are typically broker-dealers and, as discussed below, may act as dealer-managers of tender offers. Each Trust, on behalf of itself, the Funds and Authorized Participants that act as dealer-managers of tender offers, as applicable, requests that the Commission grant exemptive relief from Rule 14e-5 under the Exchange Act in connection with transactions that involve “subject securities” and “related securities” (as defined in Rule 14e-5(c)(6) and (7)) that are included in a “Creation Basket” or a “Redemption Basket.” Without such relief, in situations where an Authorized Participant is also a dealer-manager of a tender offer, and therefore a “covered person,” as defined in Rule 14e-5(c)(3)(ii), subject to the Rule, the Rule’s restrictions could impede the ability of a Fund to operate as intended and as disclosed in publicly filed documents, which could be detrimental to investors.⁵

On September 25, 2019, the Commission issued an exemptive order granting relief substantially similar to that requested herein to ETFs (including actively managed ETFs) eligible to rely on Rule 6c-11 under 1940 Act (“6c-11 ETFs”),⁶ subject to certain conditions (“Order”).⁷ The Commission has previously issued relief

individually redeemable. Each Trust, like certain other ETFs, will rely on exemptive relief obtained from the Commission permitting it, among other things, to register as an open-end management investment company notwithstanding that Shares are redeemable only in Creation Units. The relief addresses the possible question that arises as to whether the definitional requirements of a “redeemable security” or an “open-end company” under the 1940 Act have been met.

³ All orders to purchase Creation Units must be placed with the Distributor by or through an “Authorized Participant,” which is a member or participant of a clearing agency registered with the Commission and which has a written agreement with the Fund or one of its service providers that allows the Authorized Participant to place orders for the purchase and redemption of Creation Units (“AP Agreement”).

⁴ As described in greater detail below, the Funds will instead disclose other information that the Trust and the Adviser (as defined below) believe will be sufficient on its own to enable market participants’ intraday arbitrage in Shares, including hedging their positions in Shares.

⁵ Consistent with the applicable precedent (see notes 8, 9, and 10, infra), the Trusts are the parties that are requesting relief from the Commission. Although there is no guarantee of future results, the Trusts believe that the “in-kind” purchase and redemption features of ETFs help facilitate the close correspondence between an ETF’s NAV and market price to the benefit of the ETF and its shareholders. Each Trust and its series, the Funds, as applicable, therefore have a strong interest in, and are beneficiaries of, the requested relief as it helps ensure that market participants are able to effect creations and redemptions, thereby permitting a Fund to operate as intended. The Trusts further believe that the arbitrage activity described below is facilitated when more market participants are able to participate in the purchase and redemption of Creation Units. Additionally, each Trust is seeking relief on behalf of itself and the Funds in the event that a Trust and/or a Fund is deemed to be a “covered person” under Rule 14e-5(c)(3)(iv), as discussed in Part III below.

⁶ See Rule 6c-11 under the 1940 Act (effective December 23, 2019); Exchange-Traded Funds, SEC Rel. No. IC-33646 (September 25, 2019) (adopting rule 6c-11) (“Rule 6c-11 Adopting Release”).

⁷ See Order granting a conditional exemption from Exchange Act Section 11(d)(1) and Exchange Act Rules 10b-10, 15c1-5, 15c1-6, and 14e-5 for Certain Exchange-Traded Funds, SEC Rel. No. 34-87110 (September 25, 2019). For the

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substantially similar to that requested herein to actively-managed non-transparent ETFs and, to the adoption of Rule 6c-11 and issuance of the Order, both index-based ETFs (providing class relief) and actively managed ETFs that satisfy certain conditions.⁸ In addition, the Commission has issued similar relief to actively managed ETFs that do not disclose their portfolio holdings daily,⁹ as well as to certain exchange-traded managed funds.¹⁰

This letter is divided into four parts. Part I describes the Funds; Part II describes Fund operations; Part III contains the legal analysis under Rule 14e-5; and Part IV sets forth the request for exemptive relief.

I. The Funds

The investment adviser to the Funds will be Invesco Capital Management LLC (the “Adviser”). The Trusts intend to offer the following Funds that would be subject to the requested relief:¹¹

A. Invesco US Large Cap Core ESG ETF

The Fund seeks capital appreciation. The Fund seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its net assets (plus borrowings for investment purposes) in exchange-traded equity securities of U.S. large capitalization issuers. Additionally, the Fund seeks to achieve its investment objective by investing mainly in common stock of U.S. companies that meet high environmental, social and governance (“ESG”) standards, as determined by the Fund’s sub-adviser.

B. Invesco Real Assets ESG ETF

relief under the Order to be available, an ETF must be relying on Rule 6c-11, which requires daily disclosure of portfolio holdings. In addition, the Rule 14e-5 relief specifically requires compliance with certain conditions designed to ensure that parties relying on the relief do not engage in transactions for purposes of facilitating a tender offer. These conditions are described in greater detail in Part III.

⁸ See, e.g., Letter from Ted Yu, Chief, Office of Mergers and Acquisitions, to Cynthia Lo Bessette, Esq. regarding Fidelity Opportunistic ETF, Fidelity Growth ETF, and Fidelity Value ETF (December 18, 2019); Letter from Ted Yu, Chief, Office of Mergers and Acquisitions, to Jack P. Drogin, Esq. regarding WisdomTree U.S. Quality Shareholder Yield Fund (February 6, 2018); Letter from Ted Yu, Chief, Office of Mergers and Acquisitions, to Suzanne M. Russell, Esq. regarding First Trust Exchange-Traded Fund III (August 23, 2017); Letter from Ted Yu, Chief, Office of Mergers and Acquisitions, to Suzanne M. Russell, Esq. regarding First Trust Exchange-Traded Fund VIII (April 11, 2017); and Letter from Ted Yu, Chief, Office of Mergers and Acquisitions, to Suzanne M. Russell, Esq. regarding First Trust Exchange-Traded Fund III (September 6, 2016). Prior relief, like the Order, requires compliance with conditions designed to ensure that transactions are not effected for purposes of facilitating a tender offer.

⁹ See Letter from Ted Yu, Chief, Office of Mergers and Acquisitions, to W. John McGuire, Esq. regarding Precidian ETF Trust II (May 22, 2019) (“Precidian Relief”). The actively managed ETFs that are the subject of the Precidian Relief (the “Precidian ETFs”) use an alternative arbitrage mechanism based on a verified intraday indicative value (“VIIV”) calculated and disseminated every second throughout the trading day, together with the ability to create and redeem shares in exchange for a basket that is a pro rata slice of the ETF’s holdings through a confidential brokerage account (“Confidential Account”) with an unaffiliated broker-dealer acting on an agency basis (“AP Representative”). As discussed below, the Trusts and the Adviser are proposing a different alternative arbitrage mechanism for the Funds.

¹⁰ See, e.g., Letter from Ted Yu, Chief, Office of Mergers and Acquisitions, to Maureen A. Gemma regarding Eaton Vance NextShares Trust II (November 15, 2017); Letter from Ted Yu, Chief, Office of Mergers and Acquisitions, to Vadim Avdeychik, Esq. regarding Gabelli NextShares Trust (November 30, 2016); and Letter from Ted Yu, Chief, Office of Mergers and Acquisitions, to Philip A. Shipp, Esq. regarding Ivy NextShares (October 20, 2016).

¹¹ As explained in note 1, the Funds’ names and strategies are subject to change prior to launch, but the Funds will otherwise operate in the manner described herein. The Funds’ strategies are described in general terms in this section.

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The Fund seeks capital appreciation with a secondary objective of current income. The Fund seeks to achieve its investment objective by investing primarily in exchange-traded equity securities of “real assets” companies located in North America that meet high ESG standards, as determined by the Fund’s sub-adviser.

C. Invesco Focused Discovery Growth ETF

The Fund seeks capital appreciation. The Fund seeks to achieve its investment objective by investing primarily in exchange-traded common stocks of U.S. companies that the Fund’s sub-adviser expects to have above average growth rates.

D. Invesco Select Growth ETF

The Fund seeks long-term capital appreciation. The Fund seeks to achieve its investment objective by investing primarily in exchange-traded common stocks of U.S. companies that the Fund’s sub-adviser believes have potential for earnings or revenue growth driven by long-term secular trends and themes.

II. Fund Operations

A. Operational Differences Between the Funds and 6c-11 ETFs

The principal difference between the Funds and 6c-11 ETFs is that the Funds will not publicly disclose their complete portfolio holdings on a daily basis. Instead, on any day a Fund is open, including any day when the Fund satisfies redemption requests as required by Section 22(e) of the 1940 Act (“Business Day”), before commencement of trading of Shares, each Fund will publish on its website alternative information consistent with the terms of its exemptive relief (“Basket Arbitrage Information”),¹² including a basket of securities and cash that is designed to closely track the daily performance of the Fund (“Publicly Disclosed Basket”), intended to provide arbitrageurs with adequate information to estimate the value of and hedge positions in a Fund’s Shares, which will facilitate the arbitrage process that permits the shares of an ETF to trade at market prices that are at or close to NAV.¹³

B. Purchases and Redemptions of Shares

In order to keep costs low and permit each Fund to be as fully invested as possible, Shares will be purchased and redeemed in Creation Units and generally on an in-kind basis as set forth more fully in Trust’s publicly filed documents.¹⁴ Accordingly, except where the purchase or redemption will include cash, a purchasing

¹² Invesco Capital Management LLC, et al., Investment Company Act Rel. Nos. 34041 (October 1, 2020) (notice) and 34076 (October 27, 2020) (order); SEC Accession No. 0001683863-20-012783 (pending Invesco Capital Management LLC, et al., exemptive application filed August 25, 2020, as may be amended and restated).

¹³ As noted above, the Precidian ETFs similarly do not disclose their full portfolio holdings on a daily basis, but instead rely on disclosure of VIIV every second throughout the trading day. Market participants therefore receive information about the value of the ETF’s shares, but do not receive security-specific information that would allow market participants to estimate the value of shares on their own. This differs from the Funds’ approach, which involves disclosure of the components of a Substitute Tracking Basket that market participants can then use to estimate the value of Shares throughout the trading day on their own. See Rule 6c-11 Adopting Release (acknowledging that market makers and Authorized Participants “typically calculate their own intraday value of an ETF’s portfolio with proprietary algorithms that use an ETF’s daily portfolio disclosure and available pricing”).

¹⁴ Terms and provisions governing sales and redemptions of Shares by a Fund are set forth in: (i) the applicable prospectus

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Authorized Participant will be required to make an in-kind deposit of the instruments specified by the Fund for purchases (“Creation Basket”) and redeeming Authorized Participants will receive an in-kind transfer of the instruments specified by the Fund for redemptions (“Redemption Basket”).

C. Information Available to Investors

As described above, the principal difference between the Funds and 6c-11 ETFs is that the Funds will not publicly disclose their complete portfolio holdings on a daily basis. Instead, on each Business Day, before the commencement of trading of Shares, each Fund will disclose on its website its Basket Arbitrage Information.¹⁵

D. Pricing of Shares

The price of Shares will be based on a current bid/offer in the secondary market. The price of Shares of any Fund, like the price of all traded securities, is subject to factors such as supply and demand, and it is also subject to the current value of the portfolio holdings held by the Fund. Shares of a Fund, available for purchase or sale on an intraday basis, do not have a fixed relationship to the previous day’s NAV or the current day’s NAV. Therefore, prices on the Exchange may be below, at or above the most recently calculated NAV of such Shares. No secondary sales will be made to broker-dealers at a concession by the Distributor or a Fund. Transactions involving the purchase or sale of Shares on an Exchange will be subject to customary brokerage fees and charges, if applicable.

As set forth more fully in their exemptive relief, the Trusts and the Adviser believe that disclosure of the Basket Arbitrage Information will provide arbitrageurs with adequate information to estimate the value of and hedge positions in a Fund’s Shares, which will facilitate the arbitrage process that permits the shares of an ETF to trade at market prices that are at or close to NAV.¹⁶ In the view of the Trusts and the Adviser, an efficient ETF arbitrage mechanism is a result of arbitrageurs being able to execute low-risk arbitrage trades in an ETF’s shares. This view is based on the fact that, in their experience, as the risk of a trade increases, so must the profit potential for the trade to be undertaken by a trader or arbitrageur. In the ETF context, this means that, the profit potential needed for an arbitrageur to undertake an arbitrage trade in an ETF’s shares depends on the risk magnitude of the trade. The greater the risk, therefore, the wider the spread would need to be for the arbitrageurs to engage in a trade. Overall, reducing the risk of an arbitrage trade should encourage market activity that is designed to drive the market price of an ETF’s shares toward NAV and reduce any spread and premium/discount between such market price and NAV.

III. Legal Analysis Under Rule 14e-5

Rule 14e-5 was originally promulgated as Rule 10b-13 under the Exchange Act to safeguard the interests of persons who sell their securities in response to a tender offer.¹⁷ Rule 14e-5 prohibits a “covered person” from

and statement of additional information; (ii) the application for the 1940 Act exemptive relief; and (iii) each Trust’s Declaration of Trust, as amended and restated; as each of (i), (ii) and (iii) may be amended in the future.

¹⁵ See supra note 12.

¹⁶ See id.

¹⁷ Exchange Act Rel. No. 8712 (October 8, 1969) (the “1969 Adopting Release”). In this regard, the 1969 Adopting Release noted that “[w]hen securities are purchased for a consideration greater than that of the tender offer, this operates to the disadvantage of the security holders who have already deposited their securities and who are unable to withdraw them in order to obtain the advantage of possible resulting higher market prices.”

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directly or indirectly purchasing or arranging to purchase any equity securities that are the subject of a tender offer (“subject securities”) or any securities immediately convertible into, exchangeable for, or exercisable for subject securities (“related securities”) except as part of such tender offer. The term “covered person” includes, among others, a dealer-manager of a tender offer. The fact that most Authorized Participants are broker-dealers implicates Rule 14e-5 because the term “covered person” includes a dealer-manager of a tender offer. The term “covered person” also includes any person acting, directly or indirectly, in concert with other covered persons in connection with any purchase or arrangement to purchase any subject securities or any related securities. Therefore, each Trust also is seeking relief in the event it or a Fund may be deemed to be a “covered person” by virtue of the AP Agreements pertaining to the Trust and the Funds.

In light of the above, and consistent with the Order, each Trust seeks a conditional exemption from Rule 14e-5 for such Trust, the Funds, and Authorized Participants and any other persons who create and redeem Shares of the Funds in Creation Units pursuant to contractual arrangements pertaining to the Trust and the Funds, and who are covered persons with respect to a tender offer involving components of the Publicly Disclosed Basket. The conditional exemption will allow such persons (i) to redeem Fund Shares in Creation Units size for a Redemption Basket that may include a subject security or related security, (ii) to engage in secondary market transactions with respect to the Fund’s Shares after the first public announcement of the tender offer and during such tender offer given that such transactions could include, or be deemed to include, purchases of, or arrangements to purchase, subject securities or related securities, and (iii) to make purchases of, or arrangements to purchase, subject securities or related securities in the secondary market for the purpose of transferring such securities to purchase one or more Creation Units of Fund Shares.

Consistent with the Order, the relief would be subject to the following conditions:

(1) no purchases of subject securities or related securities made by broker-dealers acting as dealer-managers of a tender offer would be effected for the purpose of facilitating a tender offer;

(2) if there is a change in the composition of a Fund’s Publicly Disclosed Basket and a broker-dealer acting as a dealer-manager of a tender offer is unable to rely on the exception found in Rule 14e-5(b)(5) for basket transactions (the “Basket Exception”) because (i) the basket of subject securities or related securities contains fewer than 20 securities or (ii) the basket of subject securities and related securities make up more than 5% of the value of the Publicly Disclosed Basket, then any purchases of a Publicly Disclosed Basket component by such dealer-manager during a tender offer will be effected for the purpose of adjusting a basket of securities in the ordinary course of its business and not for the purpose of facilitating a tender offer; and

(3) except for the relief specifically granted in response to this request letter, any broker-dealer acting as a dealer-manager of a tender offer will comply with Rule 14e-5.

Although the Funds differ from the 6c-11 ETFs to which the Order relates in that the Funds will not disclose their complete portfolio holdings on a daily basis, the Trusts do not believe that this distinction is significant for purposes of the relief requested from Rule 14e-5. The Trusts note that the creation and redemption process for the Funds is effectively the same as that for 6c-11 ETFs, as the Funds will transact with Authorized Participants in Creation Unit aggregations in exchange for a basket of securities and/or cash in lieu of such securities.¹⁸ While the Creation Basket and Redemption Basket will not reflect a pro rata representation of Fund

¹⁸ Because creations and redemptions will not be effected through a Confidential Account with an AP Representative, Authorized Participants will have knowledge of the components of the Creation Basket and Redemption Basket (as is the case with respect to 6c-11 ETFs).

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holdings, this is consistent with 6c-11 ETFs, which are permitted to utilize “custom baskets” for creation and redemption transactions.¹⁹ In addition, as described above, the Trusts and the Adviser believe that disclosure of the Basket Arbitrage Information, including the Publicly Disclosed Basket, will provide arbitrageurs with adequate information to estimate the value of and hedge positions in a Fund’s Shares, which will facilitate the arbitrage process that permits the shares of an ETF to trade at market prices that are at or close to NAV. Accordingly, the Trusts do not believe that the relief requested raises any significant new regulatory issues.

With respect to redemptions, as in the case of 6c-11 ETFs, the Trusts note that the acquisition of individual securities held by a Fund by means of redemptions of Shares would be impractical and extremely inefficient in view of the relatively small number of shares of any one security included in a Redemption Basket and the requirement that a minimum number of Shares (i.e., a Creation Unit) be redeemed. Respondents of, and secondary market transactions in, Shares under the circumstances described would not appear to result in the abuses at which Rule 14e-5 is directed.

With respect to purchases, the Trusts acknowledge that the Basket Exception provides an exception to the Rule 14e-5 prohibition for purchases or arrangements to purchase a basket of securities containing a subject security or a related security if: (i) the purchase or arrangement is made in the ordinary course of business and not to facilitate the tender offer; (ii) the basket contains 20 or more securities; and (iii) covered securities and related securities do not comprise more than 5% of the value of the basket. As indicated by the Commission in the release replacing former Rule 10b-13 with Rule 14e-5,²⁰ transactions in baskets in accordance with the Basket Exception provide little opportunity for a covered person to facilitate an offer²¹ or for a security holder to exact a premium from the offeror. Given that the purchases and redemptions of Creation Units of the Funds typically involve baskets of securities, Authorized Participants acting as dealer-managers of tender offers for relevant securities may, in certain cases, be able to rely on the Basket Exception in purchasing Creation Units of Shares. From time to time, however, a change in the composition of the Publicly Disclosed Basket may result in a change in the basket that has been established for purposes of purchasing its Creation Units. As a consequence, the basket could contain less than 20 securities and/or covered securities and related securities could comprise more than 5% of the value of the basket. For example, a liquidation of the issuer of one of the securities or a merger involving the acquisition of the issuer of one of the securities could cause the number of securities in the basket to fall below 20 and/or could cause covered securities to comprise more than 5% of the value of the basket. Additionally, as a result of fluctuations in the market value of the securities held in the basket, covered securities and related securities could, at times, comprise more than 5% of the value of the basket. This composition would result in the unavailability of the Basket Exception for an Authorized Participant acting as a dealer-manager of a tender offer for the applicable securities and, in particular, may preclude an Authorized Participant from being able to rely on the Basket Exception. By extension this, could affect the Trust or a Fund in the event either could be deemed to be a “covered person.”

In order to address situations (including but not limited to the foregoing examples) where the basket contains less than 20 securities and/or covered securities and related securities comprise more than 5% of the

¹⁹ See Rule 6c-11 under the 1940 Act. In order to utilize custom baskets, a 6c-11 ETF must adopt certain policies and procedures. The 1940 Act exemptive relief on which the Funds rely similarly requires adoption of policies and procedures with respect to basket construction.

²⁰ See Exchange Act Rel. No. 42055 (October 22, 1999) (the “1999 Release”).

²¹ As discussed in the 1999 Release, “facilitation of an offer” includes purchases intended to bid up the market price of the covered or related security, and includes buying a basket to strip out the covered security in an effort to get the offeror the number of shares it is seeking. In this regard, the Trusts believe that it would be inefficient to facilitate a tender offer in a particular security by means of purchasing all of the securities in a Creation Basket.

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value of the basket, as noted above, the Trusts respectfully request that the Commission provide an exemption under Rule 14e-5 if an Authorized Participant acting as a dealer-manager of a tender offer purchases or arranges to purchase subject securities or related securities in the secondary market for the purpose of transferring such securities to purchase one or more Creation Units of Shares, if such purchases are not effected for the purpose of facilitating such tender offer and are made in the ordinary course of business. Relief would be necessary in order to permit such Authorized Participants to effect purchases of subject and related securities under such circumstances given that the Basket Exception would not be available. This extension of the Basket Exception would accommodate a potential factual circumstance associated with the operation of the Funds (similar to 6c-11 ETFs) and would be consistent with the rationale underlying the adoption of the Basket Exception. The Trusts note, in particular, that purchases would not be effected for the purpose of facilitating a tender offer.²²

For the reasons set forth above, the Trust believe that the requested relief will, like the relief granted to 6c-11 ETFs, “facilitate the ability of authorized participants and others to engage in creation or redemption transactions between the public announcement of a tender offer and its expiration, thereby permitting the ETF to operate as intended for the benefit of its holders and as disclosed in publicly filed documents.”²³ In addition, consistent with that relief, the conditions set forth herein will prevent those relying on the relief from effecting creation or redemption transactions for purposes of facilitating a tender offer.²⁴

IV. Request for Exemptive Relief

Based on the foregoing, each Trust, on behalf of itself, the Funds, and Authorized Participants that act as dealer-managers of tender offers,²⁵ respectfully requests that the Commission grant the exemptive relief from Rule 14e-5 under the Exchange Act requested herein in connection with purchases of, and arrangements to purchase, subject securities and related securities outside of a tender offer. As more fully discussed above, each Trust is requesting that the Commission grant exemptive relief from Rule 14e-5 to permit any Authorized Participant acting as a dealer-manager of a tender offer, under the circumstances described herein, (1) to execute transactions that include, or are deemed to include, purchases of, or arrangements to purchase, subject securities or related securities in connection with (a) redeeming Shares of a Fund in Creation Unit size aggregations and (b) engaging in secondary market transactions in Shares and (2) to purchase or arrange to purchase subject securities and related securities in the secondary market for the purpose of transferring such securities to purchase Creation Units. As a related matter, each Trust is requesting that, in light of the relevance of the activities contemplated by the AP Agreements described above to the Trust and the Funds, the Trust and the Funds be permitted to rely on any exemptive relief that is granted. The Trusts believe that granting the requested exemptions is consistent with precedent and will not result in the abuses that Rule 14e-5 was designed to address, and that it will facilitate the ability of Authorized Participants to engage in transactions in Creation Units, thereby permitting a Fund to operate as intended to the benefit of its shareholders.

²² See id.

²³ See Order.

²⁴ See id.

²⁵ As indicated above, each Trust also requests that the relief extend to any other persons who create and redeem Shares of the Funds in Creation Units pursuant to contractual arrangements pertaining to the Trust and the Funds.

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Thank you for your consideration of this request. Should you have any questions or require additional information, please call me at (202) 507-5154 or Mark Greer at (312) 964-3505.

Sincerely yours,

[Signature]

Eric S. Purple

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