
[Federal Register: June 8, 2009 (Volume 74, Number 108)]
[Notices]               
[Page 27209-27211]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08jn09-112]                         

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28755; File No. 812-13650]

 
WisdomTree Investments, Inc., et al.; Notice of Application

June 1, 2009.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application to amend: (1) A prior order under section 
6(c) of the Investment Company Act of 1940 (``Act'') for an exemption 
from sections 2(a)(32), 5(a)(1), 22(d), 22(e), and 24(d) of the Act and 
rule 22c-1 under the Act, under sections 6(c) and 17(b) of the Act for 
an exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under 
section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and 
12(d)(1)(B) of the Act;\1\ and (2) a prior order under section 6(c) of 
the Act, for an exemption from sections 2(a)(32), 5(a)(1) and 22(d) of 
the Act and rule 22c-1 under the Act, under sections 6(c) and 17(b) of 
the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the 
Act, and under section 12(d)(1)(J) of the Act exempting certain 
transactions from sections 12(d)(1)(A) and 12(d)(1)(B) of the Act.\2\

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    \1\ WisdomTree Investments, Inc., et al., Investment Company Act 
Release Nos. 27324 (May 18, 2006) (notice) and 27391 (June 12, 2006) 
(order), as amended by Investment Company Act Release Nos. 27976 
(September 21, 2007) (notice) and 28015 (October 17, 2007) (order) 
(together, the ``Index Order'').
    \2\ WisdomTree Trust, et al., Investment Company Act Release 
Nos. 28147 (February 6, 2008) (notice) and 28174 (February 27, 2008) 
(order) (the ``Active Order'' and together with the Index Order, 
collectively ``Prior Orders''). The Prior Orders, among other 
things: (i) Permitted registered management investment companies and 
unit investment trusts that are not advised or sponsored by their 
investment adviser or an entity controlling, controlled by or under 
common control with their investment adviser, and not part of the 
same ``group of investment companies'' as defined in section 
12(d)(1)(G)(ii) of the Act as the Trust (``Acquiring Funds''), to 
acquire shares of the Funds (defined below) beyond the limits of 
section 12(d)(1)(A) of the Act; (ii) permitted each Fund and/or a 
broker to sell shares to an Acquiring Fund beyond the limits of 
section 12(d)(1)(B); and (iii) granted relief from sections 17(a)(1) 
and (2) to permit each Fund to sell its shares to, and redeem its 
shares from, an Acquiring Fund (``Prior 12(d)(1) Relief'').

Summary of Application:  Applicants request an order (``Order'') to 
amend the Prior Orders to modify a condition so that Acquiring Funds 
may rely on the Prior Orders to invest in the WisdomTree India Earnings 
Fund (``India Fund'') and additional series of the WisdomTree Trust 
(``Future Funds'') that invest all of their respective assets in 
wholly-owned subsidiaries as described in the application. Applicants 
also seek to amend the Index Order by deleting the relief granted from 
the requirements of section 24(d) of the Act and revising related terms 
and conditions of the applications for the Index Order (``Index 
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Applications'').

Applicants:  WisdomTree Investments, Inc. (``WTI''), WisdomTree Asset 
Management, Inc. (the ``Advisor''), and WisdomTree Trust (``Trust'').

Filing Dates:  The application was filed on April 3, 2009 and amended 
on April 22, 2009, and May 26, 2009.

Hearing or Notification of Hearing:  An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on June 26, 2009, and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090. Applicants: 48 Wall Street, 
Suite 1100, New York, NY 10005.

FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel, 
at

[[Page 27210]]

(202) 551-6990, or Michael W. Mundt, Assistant Director, at (202) 551-
6820 (Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicants' Representations

    1. The Trust, a Delaware statutory trust registered under the Act 
as an open-end management investment company, is organized as a series 
fund with multiple series (the ``Funds''). WTI, a Delaware corporation 
with its principal offices in New York City, is the sole shareholder of 
the Advisor. WTI develops and maintains the proprietary stock index 
that serves as the basis for the India Fund. The Advisor is a Delaware 
corporation that is registered as an investment adviser under the 
Investment Advisers Act of 1940, as amended (``Advisers Act''). The 
Advisor, or an entity controlled by or under common control with the 
Advisor, will advise any Future Funds. BNY Investment Advisors (the 
``Subadvisor'') is registered as an investment adviser under the 
Advisers Act and serves as the subadvisor to the India Fund and its 
wholly-owned subsidiary, the WisdomTree India Investment Portfolio 
(``India Portfolio''). Any subadvisor for a Future Fund will be 
registered as an investment adviser under the Advisers Act and will not 
otherwise be an affiliated person of the Trust, the Advisor, or WTI. 
ALPS Distributors, Inc., a broker-dealer registered under the 
Securities Exchange Act of 1934, acts as distributor and principal 
underwriter of the India Fund and may perform such services for any 
Future Funds.
    2. The investment objective of the India Fund is to provide 
investment results that correspond generally to the price and yield 
performance, before fees and expenses, of its underlying index, the 
WisdomTree India Earnings Index (``Underlying Index''). The Underlying 
Index measures the performance of companies incorporated, listed and 
traded in India that are eligible for foreign investment and that meet 
specified liquidity and other criteria developed by WTI. The India Fund 
operates through the India Portfolio, a wholly-owned subsidiary 
organized in the Republic of Mauritius, in order to take advantage of 
favorable tax treatment by the Indian government pursuant to a taxation 
treaty between India and Mauritius.\3\ In seeking to achieve its 
investment objective, the India Fund invests all or substantially all 
of its assets in the India Portfolio. The India Portfolio invests 
directly in equity securities listed and traded in India using a 
``representative sampling'' strategy with respect to its Underlying 
Index. Using this approach, the India Portfolio invests in a 
significant number of the component securities (``Component 
Securities'') of the Underlying Index, but usually not all the 
Component Securities.
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    \3\ The tax treaty between India and Mauritius exempts corporate 
residents of Mauritius from the Indian capital gains tax and enables 
them to pay a reduced dividend withholding tax.
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    3. The applicants state that at least 95% of the India Portfolio's 
total assets (exclusive of collateral held from securities lending) are 
invested in the Component Securities of its Underlying Index. The India 
Portfolio is treated by the Trust as a ``pass-through'' entity for 
financial reporting and tax purposes, which means that the portfolio 
investments of the India Portfolio are treated as investments of the 
India Fund for financial reporting and tax purposes. By treating the 
India Portfolio as a pass-through entity, the India Fund complies with 
(and any Future Fund will comply with) the representation in the 
applications for the Index Order to invest at least 80% of its total 
assets in Component Securities and investments that have economic 
characteristics that are substantially identical to the economic 
characteristics of the Component Securities of its Underlying Index.
    4. The Prior 12(d)(1) Relief is subject to a condition that 
effectively prevents an Acquiring Fund from investing in a Fund if the 
Fund invests in another investment company in excess of the limits of 
section 12(d)(1)(A) of the Act.\4\ The India Fund currently invests in 
a wholly-owned subsidiary, India Portfolio, in excess of the limits of 
section 12(d)(1)(A) in reliance on certain no-action positions of the 
staff.\5\ The applicants seek to amend Condition 18 of the Prior Orders 
so the Acquiring Funds may invest in the India Fund and in Future Funds 
that invest their respective assets in a wholly-owned subsidiary in a 
manner substantially similar to the India Fund.
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    \4\ Condition 18 of the Index Order and condition 12 of the 
Active Order (collectively, ``Condition 18'') state that: No Fund 
will acquire securities of any other investment company or company 
relying on Section 3(c)(1) or 3(c)(7) of the 1940 Act in excess of 
the limits contained in Section 12(d)(1)(A) of the Act.
    \5\ Applicants note that the Commission staff has permitted an 
open-end investment company to utilize a pass through investment 
vehicle in order to obtain favorable tax treatment without violating 
Section 12(d)(1) of the Act. See South Asia Portfolio, (1997 WL 
107157) (Pub. avail. Mar. 12, 1997). Applicants represent that the 
India Portfolio operates in a manner substantially similar to the 
pass through investment vehicle that is the subject of South Asia 
Portfolio no-action relief.
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    5. Applicants also seek to amend the Index Order to delete the 
relief previously granted from section 24(d) of the Act. In addition, 
applicants seek to amend the terms and conditions of the applications 
for the Prior Orders (``Prior Applications'') to provide that all 
representations and conditions contained in the Prior Applications and 
the current application that require a Fund to disclose particular 
information in the Fund's prospectus (``Prospectus'') and/or annual 
report shall be effective with respect to the Fund until the time that 
the Fund complies with the disclosure requirements adopted by the 
Commission in Investment Company Act Release No. 28584 (Jan. 13, 2009) 
(``Summary Prospectus Rule''). Applicants state that such amendment is 
warranted because the Commission's amendments to Form N-1A with regard 
to exchange-traded funds as part of the Summary Prospectus Rule reflect 
the Commission's view with respect to the appropriate types of 
prospectus and annual report disclosures for an exchange-traded fund.

Applicants' Legal Analysis

    1. Section 12(d)(1)(J) of the Act provides that the Commission may 
exempt any person, security, or transaction, or any class or classes of 
persons, securities or transactions, from any provision of section 
12(d)(1) of the Act if the exemption is consistent with the public 
interest and the protection of investors. Because the India Portfolio 
invests up to 100% of its assets in securities issued by Indian 
companies, applicants state that the India Portfolio could be viewed as 
an investment company as defined in section 3(a) of the Act.\6\ 
Therefore, the India Fund's investment in the India Portfolio could be 
viewed as causing the India Fund to

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fail to comply with Condition 18 of the Prior Orders.
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    \6\ Section 3(a)(1) defines an ``investment company'' as any 
issuer that is or holds itself out as being engaged primarily, or 
proposes to engage primarily, in the business of investing, 
reinvesting, or trading in securities. Section 3(a)(1)(C) includes 
in the definition of an ``investment company'' any issuer that is 
engaged or proposes to engage in the business of investing, 
reinvesting, owning, holding, or trading in securities, and owns or 
proposes to acquire investment securities having a value exceeding 
40% of the value of such issuer's total assets on an unconsolidated 
basis.
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    2. Applicants state that the concerns that sections 12(d)(1) was 
designed to prevent about undue influence, excessive layering of fees 
and overly complex structures, are not present in the India Portfolio 
and other pass-through investment vehicles used solely for purposes of 
achieving favorable tax treatment. Applicants represent that the India 
Fund is the sole legal and beneficial owner of the India Portfolio, 
thus eliminating any concerns regarding pyramiding of voting control; 
the Advisor and Subadvisor direct the portfolio management of both the 
India Fund and the India Portfolio, which is a pass-through investment 
vehicle, thus eliminating concerns over any undue influence of the 
Advisor or Subadvsior; and there is no layering of fees as a result of 
the India Fund operating through the India Portfolio. Applicants 
further represent that any Future Fund will operate through a wholly-
owned investment vehicle that qualifies for pass-through tax and 
accounting treatment in a manner similar to that of the India Fund. 
Applicants believe that given the absence of section 12(d)(1) concerns 
in this structure, it will not create any additional section 12(d)(1) 
concerns if Acquiring Funds are permitted to acquire shares of the 
India Fund and any Future Fund subject to the terms and conditions of 
the Prior 12(d)(1) Relief, as amended by this application.
    3. Applicants submit that the proposed amendment to Condition 18 of 
the Prior Orders addresses the concerns underlying the limits in 
section 12(d)(1) of the Act and that the requested exemption is 
consistent with the public interest and the protection of investors. 
Applicants state that all representations contained in the relevant 
Prior Applications relating to the operation of the India Fund will 
remain in effect and will apply to any Future Funds.
    Section 24(d) of the Act:
    4. Applicants seek to amend the Index Order to delete the relief 
granted from section 24(d) of the Act. Applicants state that the 
deletion of the exemption from section 24(d) that was granted in the 
Index Order is warranted because the adoption of the Summary Prospectus 
Rule should supplant any need by a Fund to use a product description. 
The deletion of the relief granted with respect to section 24(d) of the 
Act from the Index Order also will result in the deletion of related 
discussion in the Index Applications, revision of the Index 
Applications to delete references to product descriptions, including in 
the conditions, and the deletion of condition 6 to the Index Order.

Conditions

    Applicants agree that any Order of the Commission granting the 
requested relief will be subject to the same conditions as those 
imposed by the Prior Orders, except for Condition 18 to the Prior 
Orders, which will be amended as follows:

    No Fund will acquire securities of any investment company or 
company relying on Section 3(c)(1) or 3(c)(7) of the Act in excess 
of limits contained in Section 12(d)(1)(A) of the Act, other than 
the India Portfolio or any similar wholly-owned subsidiary.

    In addition, with respect to the Index Order, condition 6 will be 
deleted and conditions 4 and 7 will be amended as follows: \7\
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    \7\ All representations and conditions contained in this 
application and the Prior Applications that require a Fund to 
disclose particular information in the Fund's Prospectus and/or 
annual report shall remain effective with respect to the Fund until 
the time that the Fund complies with the disclosure requirements 
contained in the Summary Prospectus Rule.

    4. The Web site for each Fund, which 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 
reported closing price, and a calculation of the premium or discount 
of such price against such NAV; and (b) data in chart format 
displaying the frequency distribution of discounts and premiums of 
the daily closing price against the NAV, within appropriate ranges, 
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for each of the four previous calendar quarters.

    7. Each Fund's Prospectus will clearly disclose that, for purposes 
of the Act, Shares are issued by the Funds and that the acquisition of 
Shares by investment companies is subject to the restrictions of 
section 12(d)(1) of the Act, except as permitted by an exemptive order 
that permits registered investment companies to invest in a Fund beyond 
the limits of section 12(d)(1), subject to certain terms and 
conditions, including that the registered investment company enter into 
an agreement with the Fund regarding the terms of the investment.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-13204 Filed 6-5-09; 8:45 am]

BILLING CODE 8010-01-P
