[Federal Register Volume 68, Number 47 (Tuesday, March 11, 2003)]
[Notices]
[Pages 11598-11601]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-5665]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25961; 812-12911]


PowerShares Exchange-Traded Fund Trust, et al.; Notice Of 
Application

March 4, 2003.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 6(c) of the 
Investment Company Act of 1940 (the ``Act'') for an exemption from 
sections 2(a)(32), 5(a)(1), 22(d), and 24(d) of the Act and rule 22c-1 
under the Act, and under sections 6(c) and 17(b) of the Act for an 
exemption from sections 17(a)(1) and (a)(2) of the Act.

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Summary of Application: Applicants request an order that would permit 
(a) series of an open-end management investment company, whose 
portfolios will consist of the component securities of certain domestic 
equity securities indexes, to issue shares of limited redeemability; 
(b) secondary market transactions in the shares of the series to occur 
at negotiated prices on the American Stock Exchange LLC (``AMEX'') or 
other national securities exchange; (c) dealers to sell shares of the 
series of the Trust to purchasers in the secondary market unaccompanied 
by a prospectus, when prospectus delivery is not required by the 
Securities Act of 1933 (the ``Securities Act''); and (d) affiliated 
persons of the series to deposit securities into, and receive 
securities from, the series in connection with the purchase and 
redemption of aggregations of the series' shares.

Applicants: PowerShares Exchange-Traded Fund Trust; (the ``Trust''), 
PowerShares Capital Management LLC (the ``Adviser''), and ALPS 
Distributors, Inc. (the ``Distributor'').

Filing Dates: The application was filed on December 16, 2002, and 
amended on January 24, 2003. Applicants have agreed to file an 
amendment during the notice period, the substance of which is reflected 
in this notice.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on March 27, 2003, and should be accompanied by proof of service 
on applicants, in the form of an affidavit, or for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street NW., Washington, DC 
20549-0609. Applicants: Trust and Adviser, 855 West Prairie Avenue, 
Wheaton, IL 60187; Distributor, 1625 Broadway, Suite 2200, Denver, CO 
80202.

FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at 
(202) 942-0634, or Michael W. Mundt, Senior Special Counsel, at (202) 
942-0564 (Division of Investment Management, Office of Investment 
Company Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, DC 20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. The Trust is an open-end management investment company 
registered under the Act and organized as a Massachusetts business 
trust. The Trust intends to offer two series (each a ``Fund,'' which 
term includes ``Future Funds'' as defined below). The Adviser is 
registered as an investment adviser under the Investment Advisers Act 
of 1940 and will serve as the investment adviser to each Fund. The 
Distributor, a broker-dealer registered under the Securities Exchange 
Act of 1934 (the ``Exchange Act''), will serve as the principal 
underwriter for each Index Fund. The Adviser may in the future retain 
one or more sub-advisers for managing one or more of the Funds for 
which it will act as the investment adviser.
    2. Each Fund will invest in a portfolio of equity securities 
(``Portfolio Securities'') generally consisting of the component 
securities of a specified domestic equity securities index (the 
``Underlying Indexes'').\1\ In the future, applicants may offer 
additional Funds based on other Underlying Indexes (``Future Funds''). 
Any Future Fund will (a) be advised by the Adviser or an entity 
controlled by or under common control with the Adviser and (b) comply 
with the terms and conditions of the order. No entity that creates, 
compiles, sponsors or maintains an Underlying Index is or will be an 
affiliated person, as defined in section 2(a)(3) of the Act, or an 
affiliated person of an affiliated person, of the Trust, the Adviser, 
any sub-adviser to a Fund, the Distributor, or a promoter of a Fund.
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    \1\ Dynamic Market Portfolio Intellidex and Dynamic OTC 
Portfolio Intellidex are the Underlying Indexes for the initial 
Funds.
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    3. The investment objective of each Fund will be to provide 
investment results that generally correspond, before fees and expenses, 
to the total return of the relevant Underlying Index.\2\ Intra-day 
values of each Underlying Index will be disseminated every 15 seconds 
throughout the trading day. Each Fund will utilize as an investment 
approach either a replication strategy or a representative sampling 
strategy. An Index Fund using a replication strategy generally will 
hold most of the component securities of the Underlying Index in the 
same approximate proportions as the Underlying Index, but may not hold 
all of the securities that comprise the Underlying Index in certain 
instances. This may be the case when, for example, a potential 
component security is illiquid or when there are practical difficulties 
or substantial costs involved in holding every security in an 
Underlying Index. An Index Fund using a representative sampling 
strategy seeks to hold a representative sample of the component 
securities of the Underlying Index and will invest in some but not all 
of the component securities of its Underlying Index.\3\ Applicants 
anticipate that a

[[Page 11599]]

Fund that utilizes a representative sampling strategy will not track 
its Underlying Index with the same degree of accuracy as an investment 
vehicle that invested in every component security of the Underlying 
Index with the same weighting as the Underlying Index. Applicants 
expect that each Fund will have a tracking error relative to the 
performance of its respective Underlying Index of less than 5 percent.
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    \2\ A Fund will invest at least 90% of its assets in the 
component securities of its Underlying Index. A Fund may invest up 
to 10% of its assets in securities, options and futures not included 
in the Underlying Index but which the Adviser believes will help the 
Fund track the Underlying Index.
    \3\ The stocks selected for inclusion in an Index Fund by the 
Advisor will have aggregate investment characteristics (based on 
market capitalization and industry weightings), fundamental 
characteristics (such as return variability, earnings valuation and 
yield) and liquidity measures similar to those of the relevant 
Underlying Index taken in its entirety.
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    4. Shares of the initial Index Funds (``Shares'') will be sold in 
aggregations of 50,000 Shares, and Shares of Future Index Funds will be 
sold in aggregations of either 25,000 or 50,000 Shares (such 
aggregations, ``Creation Units''), as specified in the relevant 
prospectus. The price of a Creation Unit will range from $1,000,000 to 
$12,500,000. Creation Units may be purchased only by or through a party 
that has entered into an agreement with the Distributor regarding 
creations and redemptions of Creation Units (an ``Authorized 
Participant''). An Authorized Participant must be either (a) a broker-
dealer or other participant in the continuous net settlement system of 
the National Securities Clearing Corporation, a clearing agency that is 
registered with the Commission, or (b) a participant in the Depository 
Trust Company (``DTC'') system. Creation Units generally will be issued 
in exchange for an in-kind deposit of securities and cash. A Fund also 
may sell Creation Units on a cash-only basis in limited circumstances. 
An investor wishing to purchase a Creation Unit from a Fund will have 
to transfer to the Fund a ``Fund Deposit'' consisting of: (a) A 
portfolio of securities that has been selected by the Adviser to 
correspond to the returns on the relevant Underlying Index (``Deposit 
Securities''), and (b) a cash payment to equalize any differences 
between the market value per Creation Unit of the Deposit Securities 
and the net asset value (``NAV'') per Creation Unit (``Cash 
Component'').\4\ An investor purchasing a Creation Unit from a Fund 
will be charged a fee (``Transaction Fee'') to prevent the dilution of 
the interests of the remaining shareholders resulting from the Fund 
incurring costs in connection with the purchase of the Creation 
Units.\5\ Each Fund will disclose the Transaction Fees charged by the 
Fund in its prospectus and the method of calculating the Transaction 
Fees in its prospectus or statement of additional information 
(``SAI'').
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    \4\ On each business day, prior to the opening of trading on the 
AMEX, the Adviser or Sub-Adviser will make available a list of the 
names and the required number of shares of each Deposit Security 
required for the Fund Deposit for each Fund. That Fund Deposit will 
apply to all purchases of Creation Units until a new Fund Deposit 
for a Fund is announced. Each Fund reserves the right to permit or 
require the substitution of an amount of cash in lieu of depositing 
some or all of the Deposit Securities in certain circumstances. The 
AMEX or other Stock Exchange (as defined below) will disseminate 
every 15 seconds throughout the trading day via the facilities of 
the Consolidated Tape Association an amount representing on a per 
share basis the sum of the current value of the Deposit Securities 
and the estimated Cash Component.
    \5\ When a Fund permits a purchaser to substitute cash for 
Deposit Securities, the purchaser may be assessed an additional fee 
to offset the brokerage and other transaction costs associated with 
using cash to purchase the requisite Deposit Securities.
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    5. Orders to purchase Creation Units of a Fund will be placed with 
the Distributor who will be responsible for transmitting each order to 
each Fund. The Distributor will issue, and maintain records of, 
confirmations of acceptance to purchasers of Creation Units and 
delivery instructions to the Trust (to implement the delivery of 
Creation Units). The Distributor will also be responsible for 
delivering prospectuses to purchasers of Creation Units.
    6. Persons purchasing Creation Units from a Fund may hold the 
Shares or sell some or all of them in the secondary market. Shares of 
the Funds will be listed on the AMEX or other U.S. national securities 
exchange, as defined in section 2(a)(26) of the Act (each, including 
AMEX, a ``Stock Exchange'') and traded in the secondary market in the 
same manner as other equity securities. A Stock Exchange specialist 
(``Specialist'') will be assigned to make a market in Shares. The price 
of Shares traded on a Stock Exchange will be based on a current bid/
offer market. Each Share is currently expected to have a market value 
of between $40 and $250. Transactions involving the sale of Shares in 
the secondary market will be subject to customary brokerage commissions 
and charges.
    7. Applicants expect that purchasers of Creation Units will include 
institutional investors and arbitrageurs (which could include 
institutional investors). The Specialist, in providing for a fair and 
orderly secondary market for Shares, also may purchase Creation Units 
for use in its market-making activities. Applicants expect that 
secondary market purchasers of Shares will include both institutional 
and retail investors.\6\ Applicants expect that the price at which the 
Shares trade will be disciplined by arbitrage opportunities created by 
the ability to continually purchase or redeem Creation Units at their 
NAV, which should ensure that the Shares will not trade at a material 
discount or premium in relation to their NAV.
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    \6\ Shares will be registered in book-entry form only. DTC or 
its nominee will be the registered owner of all outstanding Shares. 
DTC or its participants will maintain records reflecting the 
beneficial owners of Shares.
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    8. Shares will not be individually redeemable. Shares will only be 
redeemable in Creation Units through a Fund. To redeem, an investor 
will have to accumulate enough Shares to constitute a Creation Unit. An 
investor redeeming a Creation Unit generally will receive (a) the 
Portfolio Securities designated to be delivered for Creation Unit 
redemptions on the date the request for redemption is made 
(``Redemption Securities''), which may not be identical to the Deposit 
Securities applicable to the purchase of Creation Units, and (b) a 
``Cash Redemption Payment,'' consisting of an amount calculated in the 
same manner as the Cash Component, although the actual amount of the 
Cash Redemption Payment may differ from the Cash Component if the 
Redemption Securities are not identical to the Deposit Securities on a 
given day. An investor may receive the cash equivalent of a Redemption 
Security upon its request if, for example, the investor were 
constrained from effecting transactions in the Redemption Security by 
regulation or policy.
    9. A redeeming investor will pay a Transaction Fee to offset 
transaction costs, whether the redemption proceeds are in kind or cash. 
When an investor redeems for cash rather than in kind, the investor may 
pay a higher Transaction Fee. Such Transaction Fee will be calculated 
in the same manner as a Transaction Fee payable in connection with the 
purchase of a Creation Unit.
    10. Applicants state that neither the Trust nor any Fund will be 
marketed or otherwise held out as a ``mutual fund.'' Rather, applicants 
state that each Fund will be marketed as an ``exchange-traded fund.'' 
No Fund marketing materials (other than as required in the prospectus) 
will refer to a Fund as an ``open-end'' or ``mutual fund,'' except to 
contrast a Fund with a conventional open-end management investment 
company. In all marketing materials where the method of obtaining, 
buying, or selling Shares is described, applicants will include a 
statement to the effect that Shares are not redeemable through a Fund 
except in Creation Units. The same type of disclosure will be provided 
in each Fund's prospectus, SAI, advertising materials, and all reports 
to shareholders. The Funds will provide copies of their annual and 
semi-

[[Page 11600]]

annual shareholder reports to DTC participants for distribution to 
beneficial holders of Shares.

Applicants' Legal Analysis

    1. Applicants request an order under section 6(c) of the Act 
granting an exemption from sections 2(a)(32), 5(a)(1), 22(d), and 24(d) 
of the Act and rule 22c-1 under the Act; and under sections 6(c) and 
17(b) of the Act granting an exemption from sections 17(a)(1) and 
(a)(2) of the Act.
    2. Section 6(c) of the Act provides that the Commission may exempt 
any person, security or transaction, or any class of persons, 
securities or transactions, from any provision of the Act, if and to 
the extent that such exemption is necessary or appropriate in the 
public interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act.

Sections 5(a)(1) and 2(a)(32) of the Act

    3. Section 5(a)(1) of the Act defines an ``open-end company'' as a 
management investment company that is offering for sale or has 
outstanding any redeemable security of which it is the issuer. Section 
2(a)(32) of the 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. Because Shares will not be individually redeemable, 
applicants request an order that would permit the Trust to register as 
an open-end management investment company and issue Shares that are 
redeemable in Creation Units only. Applicants state that investors may 
purchase Shares in Creation Units from each Fund and redeem Creation 
Units. Applicants further state that because the market price of Shares 
will be disciplined by arbitrage opportunities, investors should be 
able to sell Shares in the secondary market at prices that do not vary 
substantially from their NAV.

Section 22(d) of the Act and Rule 22c-1 Under the Act

    4. Section 22(d) of the Act, among other things, prohibits a dealer 
from selling a redeemable security, which is currently being offered to 
the public by or through a principal underwriter, except at a current 
public offering price described in the prospectus. Rule 22c-1 under the 
Act generally requires that a dealer selling, redeeming, or 
repurchasing a redeemable security do so only at a price based on its 
NAV. Applicants state that secondary market trading in Shares will take 
place at negotiated prices, not at a current offering price described 
in the prospectus, and not at a price based on NAV. Thus, purchases and 
sales of Shares in the secondary market will not comply with section 
22(d) of the Act and rule 22c-1 under the Act. Applicants request an 
exemption under section 6(c) from these provisions.
    5. Applicants assert that the concerns sought to be addressed by 
section 22(d) of the Act and rule 22c-1 under the Act with respect to 
pricing are equally satisfied by the proposed method of pricing Shares. 
Applicants maintain that while there is little legislative history 
regarding section 22(d), its provisions, as well as those of rule 22c-
1, appear to have been designed to (a) prevent dilution caused by 
certain riskless-trading schemes by principal underwriters and contract 
dealers, (b) prevent unjust discrimination or preferential treatment 
among buyers resulting from sales at different prices, and (c) assure 
an orderly distribution of investment company shares by eliminating 
price competition from dealers offering shares at less than the 
published sales price and repurchasing shares at more than the 
published redemption price.
    6. Applicants believe that none of these purposes will be thwarted 
by permitting Shares to trade in the secondary market at negotiated 
prices. Applicants state that (a) secondary market trading in Shares 
does not involve the Funds as parties and cannot result in dilution of 
an investment in Shares, and (b) to the extent different prices exist 
during a given trading day, or from day to day, such variances occur as 
a result of third-party market forces, such as supply and demand. 
Therefore, applicants assert that secondary market transactions in 
Shares will not lead to discrimination or preferential treatment among 
purchasers. Finally, applicants contend that the proposed distribution 
system will be orderly because arbitrage activity will ensure that the 
difference between the market price of Shares and their NAV remains 
narrow.

Section 24(d) of the Act

    7. Section 24(d) of the Act provides, in relevant part, that the 
prospectus delivery exemption provided to dealer transactions by 
section 4(3) of the Securities Act does not apply to any transaction in 
a redeemable security issued by an open-end investment company. 
Applicants request an exemption from section 24(d) to permit dealers 
selling Shares to rely on the prospectus delivery exemption provided by 
section 4(3) of the Securities Act.\7\
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    \7\ Applicants do not seek relief from the prospectus delivery 
requirement for non-secondary market transactions, including 
purchases of Creation Units or those involving an underwriter. 
Applicants state that persons purchasing Creation Units will be 
cautioned in a Fund's prospectus that some activities on their part 
may, depending on the circumstances, result in their being deemed 
statutory underwriters and subject them to the prospectus delivery 
and liability provisions of the Securities Act. For example, a 
broker-dealer firm and/or its client may be deemed a statutory 
underwriter if it takes Creation Units after placing an order with 
the Adviser, breaks them down into the constituent Shares, and sells 
Shares directly to its customers, or if it chooses to couple the 
purchase of a supply of new Shares with an active selling effort 
involving solicitation of secondary market demand for Shares. A 
Fund's prospectus will state that whether a person is an underwriter 
depends upon all the facts and circumstances pertaining to that 
person's activities. A Fund's prospectus also will state that 
dealers who are not ``underwriters'' but are participating in a 
distribution (as contrasted to ordinary secondary market trading 
transactions), and thus dealing with Shares that are part of an 
``unsold allotment'' within the meaning of section 4(3)(C) of the 
Securities Act, would be unable to take advantage of the prospectus 
delivery exemption provided by section 4(3) of the Securities Act.
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    8. Applicants state that Shares will be listed on a Stock Exchange 
and will be traded in a manner similar to other equity securities, 
including the shares of closed-end investment companies. Applicants 
note that dealers selling shares of closed-end investment companies in 
the secondary market generally are not required to deliver a prospectus 
to the purchaser. Applicants contend that Shares, as a listed security, 
merit a reduction in the compliance costs and regulatory burdens 
resulting from the imposition of prospectus delivery obligations in the 
secondary market. Because Shares will be exchange-listed, prospective 
investors will have access to several types of market information about 
Shares. Applicants state that information regarding market price and 
volume will be continually available on a real-time basis throughout 
the day on brokers' computer screens and other electronic services. The 
previous day's closing price and volume information for Shares also 
will be published daily in the financial section of newspapers. The 
website maintained for the Trust will include, for each Fund, the prior 
business day's NAV, the mid-point of the bid-ask spread at the time of 
calculation of NAV (``Bid-Ask Price'') and calculation of the premium 
or discount of the Bid-Ask Price at the time of calculation of the NAV 
against such NAV, and data in chart format displaying the frequency 
distribution of discounts and premiums of the Bid/Ask Price against the 
NAV, within

[[Page 11601]]

appropriate ranges, for each of the four previous calendar quarters.\8\
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    \8\ The Bid/Ask Price per Share of a Fund is determined using 
the highest bid and the lowest offer on the Stock Exchange at the 
time of calculation of such Fund's NAV.
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    9. Investors also will receive a product description (``Product 
Description'') describing a Fund and its Shares. Applicants state that, 
while not intended as a substitute for a Prospectus, the Product 
Description will contain information about Shares that is tailored to 
meet the needs of investors purchasing Shares in the secondary market.

Sections 17(a)(1) and (2) of the Act

    10. Section 17(a) of the Act generally prohibits an affiliated 
person of a registered investment company, or an affiliated person of 
such a person, from selling any security to or purchasing any security 
from the company. Section 2(a)(3) of the Act defines ``affiliated 
person'' to include any person directly or indirectly owning, 
controlling, or holding with power to vote 5% or more of the 
outstanding voting securities of the other person and any person 
directly or indirectly controlling, controlled by, or under common 
control with, the other person. Section 2(a)(9) of the Act provides 
that a control relationship will be presumed where one person owns more 
than 25% of another person's voting securities. Applicants state that 
because the definition of ``affiliated person'' includes any person 
owning 5% or more of an issuer's outstanding voting securities, every 
purchaser of a Creation Unit will be affiliated with the Fund so long 
as fewer than twenty Creation Units are in existence, and any purchaser 
that owns more than 25% more of a Fund's outstanding Shares will be 
affiliated with a Fund. Applicants request an exemption from section 
17(a) under sections 6(c) and 17(b), to permit persons that are 
affiliated persons of the Funds solely by virtue of a 5% or more or 
more than 25% ownership interest (or affiliated persons of such 
affiliated persons that are not otherwise affiliated with the Funds) to 
purchase and redeem Creation Units through ``in-kind'' transactions.
    11. Section 17(b) of the Act authorizes the Commission to exempt a 
proposed transaction from section 17(a) of the Act if evidence 
establishes that the terms of the transaction, including the 
consideration to be paid or received, are reasonable and fair and do 
not involve overreaching on the part of any person concerned, and the 
proposed transaction is consistent with the policies of the registered 
investment company and the general provisions of the Act. Applicants 
contend that no useful purpose would be served by prohibiting the 
affiliated persons of a Fund described above from purchasing or 
redeeming Creation Units through ``in-kind'' transactions. The deposit 
procedure for in-kind purchases and the redemption procedure for in-
kind redemptions will be the same for all purchases and redemptions. 
Deposit Securities and Redemption Securities will be valued under the 
same objective standards applied to valuing Portfolio Securities. 
Therefore, applicants state that in-kind purchases and redemptions will 
afford no opportunity for the affiliated persons, and the affiliated 
persons of the affiliated persons, described above, of a Fund to effect 
a transaction detrimental to the other holders of Shares. Applicants 
also believe that in-kind purchases and redemptions will not result in 
abusive self-dealing or overreaching by these persons of the Index 
Fund.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Applicants will not register a Future Fund by means of filing a 
post-effective amendment to the Trust's registration statement or by 
any other means, unless (a) applicants have requested and received with 
respect to such Future Fund, either exemptive relief from the 
Commission or a no-action letter from the Division of Investment 
Management of the Commission; or (b) the Future Fund will be listed on 
a Stock Exchange without the need for a filing pursuant to rule 19b-4 
under the Exchange Act.
    2. Each Fund's prospectus and Product Description will clearly 
disclose that, for purposes of the Act, Shares are issued by the Fund 
and that the acquisition of Shares by investment companies is subject 
to the restrictions of section 12(d)(1) of the Act.
    3. As long as the Trust operates in reliance on the requested 
order, the Shares will be listed on a Stock Exchange.
    4. Neither the Trust nor any Fund will be advertised or marketed as 
an open-end fund or a mutual fund. Each Fund's prospectus will 
prominently disclose that the Shares are not individually redeemable 
shares and will disclose that the owners of the Shares may acquire 
those Shares from the Fund and tender those Shares for redemption to 
the Fund in Creation Units only. Any advertising material that 
describes the purchase or sale of Creation Units or refers to 
redeemability will prominently disclose that the Shares are not 
individually redeemable and that owners of the Shares may acquire those 
Shares from the Fund and tender those Shares for redemption to the Fund 
in Creation Units only.
    5. The website for the Trust, which is and will be publicly 
accessible at no charge, will contain the following information, on a 
per Share basis, for each Fund: (a) The prior business day's NAV and 
the Bid/Ask Price, and a calculation of the premium or discount of the 
Bid/Ask Price at the time of calculation of NAV against such NAV; and 
(b) data in chart format displaying the frequency distribution of 
discounts and premiums of the daily Bid/Ask Price against the NAV, 
within appropriate ranges, for each of the four previous calendar 
quarters. In addition, the Product Description for each Fund will state 
that the website for the Fund has information about the premiums and 
discounts at which the Fund's Shares have traded.
    6. The prospectus and annual report for each Fund will also 
include: (a) The information listed in condition 5(b), (i) in the case 
of the prospectus, for the most recently completed year (and the most 
recently completed quarter or quarters, as applicable) and (ii) in the 
case of the annual report, for the immediately preceding five years, as 
applicable; and (b) the following data, calculated on a per Share basis 
for one, five and ten year periods (or life of the Funds), (i) the 
cumulative total return and the average annual total return based on 
NAV and Bid/Ask Price, and (ii) the cumulative total return of the 
relevant Underlying Index.
    7. Before a Fund may rely on the order, the Commission will have 
approved, pursuant to rule 19b-4 under the Exchange Act, a Stock 
Exchange rule requiring Stock Exchange members and member organizations 
effecting transactions in Shares to deliver a Product Description to 
purchasers of Shares.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-5665 Filed 3-10-03; 8:45 am]
BILLING CODE 8010-01-P