Form 40-APP Amendment No. 2

Second Amended and Restated Application For an Order Under Section 6(c) of the Investment Company Act of 1940 (the “Act”) Granting an Exemption From Sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and Rule 22c-1 under the Act, Under Sections 6(c) and 17(b) of the Act Granting an Exemption From Sections 17(a)(1) and (a)(2) of the Act.

iShares Trust (the “Trust”), iShares, Inc. (the “Corporation”) (the Trust and the Corporation, together, the “Companies” and each, a “Company”), BlackRock Fund Advisors (“BFA” or the “Adviser”)¹ and SEI Investments Distribution Co. (“SEI” or the “Distributor,” and together with the Trust, the Corporation and BFA, the “Applicants”) submit this application (the “Application”) to the Securities and Exchange Commission (the “Commission”) requesting an order under Section 6(c) of the Investment Company Act of 1940 (the “1940 Act”), for an exemption from Sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the 1940 Act and Rule 22c-1 thereunder, under Sections 6(c) and 17(b) of the 1940 Act for an exemption from Sections 17(a)(1) and (a)(2) of the 1940 Act.²

Applicants are seeking an order for an exemption from Sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the 1940 Act and Rule 22c-l under the 1940 Act to permit the Companies to create and operate actively managed investment portfolios, which will offer exchange-traded shares (the “Shares”) with limited redeemability (the “Initial Funds”). Applicants request that the order requested herein apply to any future series of a Company or of other open-end management companies advised by BFA or a BFA Affiliate (as defined below) that may utilize active management investment strategies, subject to the terms and conditions hereof

(collectively, the “Future Funds”). The Initial Funds and the Future Funds may invest in equity securities (the “Equity Funds”) or fixed income securities (the “Fixed Income Funds”) traded in the U.S. or non-U.S. markets, or a combination of equity and fixed income securities (the “Balanced Funds”), as well as shares of other exchange-traded funds (“ETFs”) and shares of money market mutual funds or other investment companies that invest primarily in short-term fixed-income securities, all in accordance with their investment objectives. Certain of the Initial Funds and the Future Funds may invest in equity securities or fixed income securities traded in international markets (the “International Funds”). Certain Initial Funds and the Future Funds may invest in ETFs advised by BFA or a BFA Affiliate (the “Funds of Funds”). The Initial Funds and the Future Funds may also invest in a combination of equity, fixed-income and U.S. money market securities and/or non-U.S. money market securities. Any Future Fund will (a) be advised by BFA or an entity controlling, controlled by, or under common control with BFA (“BFA Affiliate”), and (b) comply with the terms and conditions of the order granted hereunder. The Initial Funds and Future Funds together are referred to herein as the “Funds.” Each Fund will operate as an actively managed ETF.

Shares of each Fund will be purchased from the respective Fund only in large aggregations of a specified number referred to as a “Creation Unit.” Creation Units will be separable upon issue into individual Shares, which will be listed and traded at negotiated prices on a “national securities exchange” as defined in Section 2(a)(26) of the 1940 Act (an “Exchange”). The Shares themselves will not be redeemable from the Fund unless combined into a Creation Unit.

All entities that currently intend to rely on the order are named as applicants. Any other entity that relies on the order in the future will comply with the terms and conditions of the application.

The requested relief is substantially similar to relief recently granted by the Commission to other open-end management investment companies, including the Applicants, with respect to the operation of actively managed ETFs (the “Actively Managed ETF Orders”).³ Unlike the orders granted in the past to permit the operation of index-based ETFs (the “Index-Based ETF Orders”),⁴ the Actively Managed ETF Orders have involved ETFs with portfolio

securities selected not to correspond to the price and yield performance of a particular securities index, but rather to be actively managed portfolios. In contrast to index-based ETFs, including other series of each Company, the relief requested herein would permit a Fund to hold equity securities, fixed-income securities, shares of other ETFs and other securities selected by the Adviser, and the performance of a Fund may be unrelated to the performance of any securities index. Nonetheless, as with other ETFs that are the subject of prior Commission orders, including the Actively Managed ETF Orders, the Funds described herein will invest primarily in liquid securities, will disclose their portfolio holdings on a daily basis and will be equally as transparent as existing index-based ETFs. Because the investment objectives of the Funds will not be based on the performance of an underlying index, this Application addresses not only the customary issues raised by an index-based ETF, but also the additional issues the Commission has raised with respect to an actively managed ETF.⁵ Certain requested relief also is consistent with the Commission’s recent proposal that would permit index-based and transparent actively managed ETFs (such as the Funds) to operate without the need to obtain an exemptive order from the Commission (the “Proposed ETF Rule”).⁶

No form having been specifically prescribed for this Application, the Applicants proceed under Rule 0-2 of the General Rules and Regulations of the Commission.

The Trust is a Delaware statutory trust registered with the Commission as an open-end management investment company. The Corporation is a Maryland corporation registered with the Commission as an open-end management investment company. Each of the Trust and the Corporation is organized as a series fund with multiple series and currently offers and sells certain funds pursuant to registration statements on Form N-1A, as amended (each, a “Registration Statement”). Each Fund will have a distinct investment objective and will attempt to achieve such objective by utilizing an “active” management strategy based entirely upon various quantitative strategies or other proprietary approaches for asset allocation, security selection and portfolio construction. Each Fund will consist of portfolio securities and other instruments selected by the Adviser to achieve the Fund’s specific investment objective.⁷

The Trust is overseen by a board of trustees (the “Trust Board”) and the Corporation is overseen by a board of directors (the “Corporation Board” and together with the Trust Board, the “Board,” the members of which are referred to as “Directors”), each of which will adhere to the composition requirements of Section 10 of the 1940 Act. Each Fund will adopt fundamental policies consistent with the 1940 Act and be classified as “diversified” or “non-diversified” under the 1940 Act. Each Fund intends to maintain the required level of diversification, and otherwise conduct its operations, so as to meet the regulated investment company (“RIC”) diversification requirements of the Internal Revenue Code of 1986, as amended (the “Code”).

The applicable Company intends to file for each Fund a post-effective amendment to its respective Registration Statement for the purpose of registering Shares of the Funds under the 1940 Act and the Securities Act of 1933 (the “Securities Act”). As stated above, the Funds will not seek to achieve performance that corresponds generally to the price and yield performance of a specified index.

Each Company has appointed an administrator (the “Administrator”), custodian (the “Custodian”), fund accountant (the “Fund Accountant”), transfer agent (the “Transfer Agent”) and dividend disbursing agent (the “Dividend Disbursing Agent”). The identity of the Administrator, Custodian, Fund Accountant, Transfer Agent and Dividend Disbursing Agent will be disclosed in the Prospectus (as defined below) and/or SAI (as defined below) for the Funds.⁸ The performance of their duties and obligations will be conducted within the provisions of the 1940 Act and the rules thereunder.

BFA will be the investment adviser to the Funds.⁹ BFA is a California corporation with its principal office located in San Francisco, California. It is registered under Section 203 of the Investment Advisers Act of 1940 (the “Advisers Act”). BFA serves as the investment adviser to the other series of the Trust and Corporation, all of which currently operate

as index-based ETFs.¹⁰ BFA is a wholly-owned subsidiary of BlackRock Institutional Trust Company, N.A. (formerly known as Barclays Global Investors, N.A.) (“BTC”). BTC is a national bank, which is, in turn an indirect subsidiary of BlackRock, Inc. (“BlackRock”).

If the Board determines that it is advisable for the Funds to lend securities, it is currently anticipated that BTC will be appointed securities lending agent (the “Securities Lending Agent”) for each Fund. If securities loans are made, the Trust, Corporation and Securities Lending Agent will comply with the Commission staff’s guidelines regarding the lending of portfolio securities of an open-end investment company, as well as the terms and conditions of Commission exemptive order applicable to BTC’s activities as securities lending agent for funds advised by BFA.¹¹

SEI, a Pennsylvania corporation, will serve as the principal underwriter and distributor for each of the Creation Units of Shares. SEI is a broker-dealer registered under the Securities Exchange Act of 1934 (the “Exchange Act”) and a member in good standing of the Financial Industry Regulatory Authority (“FINRA”). None of the Trust, the Corporation, the Adviser or SEI is an affiliate of an Exchange. The Distributor is not affiliated with the Adviser.

A Company may create the two separate series identified as Initial Funds below. Each Company may also create Future Funds. The Funds will operate as ETFs in a manner substantially similar to that of the ETFs that have received relief pursuant to the Actively Managed ETF Orders and the Index-Based ETF Orders. A Fund will not seek to replicate the performance of a securities index, but will pursue an investment objective through active management, including, in the case of the Funds of Funds, by investing in shares of other ETFs. As with existing index-based ETFs and recently approved actively managed ETFs, each Fund will periodically change the composition of its portfolio and will provide market participants information regarding any such change in portfolio composition the following day (“T+1”), the first day that such change would be reflected in the Fund’s net asset value (“NAV”).¹²

On each day the Exchange is open for business, before the commencement of trading on the Exchange (currently 9:30 a.m. Eastern Time), the Adviser will disclose on the Company’s website the identities and quantities of the securities and other assets held by each Fund that will form the basis of its calculation of NAV as of the close of regular trading on the Exchange (usually 4:00 p.m. Eastern Time) each Business Day.¹³ The Company’s website and information therein will be publicly available free of charge. Each Business Day, the Adviser also will make available through the National Securities Clearing Corporation (“NSCC”) before the commencement of shares trading on the Exchange (currently 9:30 a.m. Eastern Time), the current portfolio deposit (based on information at the end of the previous Business Day) for each Fund.

As with existing index-based ETFs and recently approved actively managed ETFs, because the portfolio holdings of each Fund and any changes to such holdings will be published and transparent, each Fund’s portfolio holdings will be readily ascertainable by market participants. Applicants believe that the transparency of each Fund will be at least equal to that of existing index-based ETFs and recently approved actively managed ETFs. In an effort to preserve transparency, the Funds will provide market participants information regarding any such change in portfolio composition on T+1, the first day that such security would be reflected in the Fund’s NAV.

As stated above, each Fund will attempt to achieve a specified investment objective utilizing an active management strategy. It is currently anticipated that one of the Initial Funds will operate similar to “fund of funds” mutual funds by investing in index-based ETFs (“Underlying ETFs”), and other exchange traded products that are not registered under the 1940 Act. It is anticipated that the Underlying ETFs will be advised by the Adviser or one of its affiliates. Each Underlying ETF will trade on an Exchange and will calculate its NAV each day, typically at the close of trading on the Exchange. In addition to investing in the Underlying ETFs, such Funds of Funds may also invest in: (i) government securities; (ii) short-term paper;¹⁴ (iii) cash and cash equivalents, including money market funds and mutual funds which may be managed by the Adviser or its affiliates; and (iv) other securities permitted by Rule 12d1-2.¹⁵

Each Fund’s investment objective will not be fundamental and may be changed without a vote of its shareholders. Each Fund’s investment objectives, policies and investment strategies will be fully disclosed in its prospectus (“Prospectus”) and statement of additional information (“SAI”).

Creation Units generally may only be purchased or redeemed by Authorized Participants, which are large institutional broker-dealers that have signed a contract with the ETF relating to settlement of transactions. Other market participants may purchase or redeem Creation Units only by using an Authorized Participant as an agent. Applicants expect that purchasers of Creation Units will include institutional investors and arbitrageurs (which could include institutional investors). Applicants expect that secondary market purchasers of Shares will include both institutional investors and retail investors. Applicants expect that the price at which the Shares trade will be disciplined by so-called “arbitrage opportunities” created in part 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.

The investment objective of the iShares Active Fixed Income Fund (the “Initial Fixed Income Fund”), an Initial Fund, will be to seek to provide a combination of income and capital growth.

The Initial Fixed Income Fund will invest its assets pursuant to a systematic method that relies on proprietary quantitative models to allocate assets among various bond sectors by evaluating each sector’s relative value and risk-adjusted return. BFA’s models also allocate assets among different maturities based on yield characteristics and expectations. The Initial Fixed Income Fund will invest, under normal circumstances, at least 80% of its assets in ETFs advised by BFA that in turn invest primarily in fixed income markets. The Initial Fixed

Income Fund may invest the remainder of its assets in exchange traded securities, bonds, cash and high-quality securities, liquid short term instruments, including shares of money market funds affiliated with BFA, and other securities deemed appropriate by BFA.

Although the Initial Fixed Income Fund will normally invest primarily in investment grade securities, it may also invest up to 30% of its assets in securities rated below investment grade. Investment grade securities are those rated at least Baa by Moody’s Investors Service, Inc. (“Moody’s”), or BBB by Standard & Poor’s Corporation (“S&P”) or Fitch Investors Service, Inc. (“Fitch”) or, if unrated, deemed to be of comparable quality by BFA.

The Initial Fixed Income Fund may also invest in, among other types of securities, credit-linked notes, indexed and inverse floating rate securities, convertible securities, common and preferred stocks, private placements and other restricted securities, and shares of other investment companies, including exchange-traded funds and money market funds advised by BFA. The Initial Fixed Income Fund may also lend portfolio securities. In addition, the Initial Fixed Income Fund may use short sales to enhance returns as part of an overall investment strategy or to offset a potential decline in the value of other holdings (commonly referred to as a “hedge”), although the Initial Fixed Income Fund is not required to hedge and may not choose to do so.

The investment objective of the iShares Active Equity Fund (the “Initial Equity Fund”), an Initial Fund, will be to seek to provide long-term capital appreciation.

The Initial Equity Fund will invest in domestic large capitalization stocks based on BFA’s assessment of the relative return potential of the securities. BFA will seek to weight the securities in a transparent quantitative manner. The weighting of the securities will be consistent with research suggesting that equal weighted approaches to stock selection may provide superior risk adjusted returns.

BFA will select securities from a universe of approximately the 1,000 largest equity securities traded on U.S. exchanges. BFA will utilize a portfolio construction and optimization process to select stocks in the Initial Equity Fund which incorporates proprietary investment insights.

The Initial Equity Fund generally will invest at least 80% of its net assets in domestic large capitalization stocks. The Initial Equity Fund may invest up to 20% of its assets in other types of securities and investments to achieve its objective. The Initial Equity Fund may invest in, among other types of securities, credit-linked notes, indexed and inverse floating rate securities, convertible securities, common and preferred stocks, private placements and other restricted securities, and shares of other investment companies, including exchange-traded funds and money market funds advised by BFA. The Initial Equity Fund may also lend portfolio securities. In addition, the Initial Equity Fund may use short sales to enhance returns as part of an overall investment strategy or to offset a potential decline in the value of other holdings (commonly referred to as a “hedge”), although the Initial Equity Fund is not required to hedge and may not choose to do so.

The Applicants anticipate that certain Funds, including the International Funds, will invest a portion of their assets in depositary receipts representing foreign securities in which they seek to invest (“Depositary Receipts”). Depositary Receipts are typically issued by a financial institution (a “depositary”) and evidence ownership in a security or pool of securities

that have been deposited with the depositary.¹⁶ A Fund will not invest in any Depositary Receipts that the Adviser deems to be illiquid or for which pricing information is not readily available.

While the Adviser will manage each Fund, the Board will have overall responsibility for the Funds’ operations. The composition of the Board is in compliance with the requirements of Section 10 of the 1940 Act.

Each Company intends to submit an application to list the Shares of its Funds on an Exchange. As long as a Fund operates in reliance on the requested order, Shares will be listed on an Exchange. The Exchange will not be affiliated with a Company, the Funds, the Adviser, any subadviser or the Distributor. Shares may also be cross-listed on one or more foreign securities exchanges. The Distributor will not maintain a secondary market in the Shares, but one or more specialists (each, a “Specialist”) or market makers (each, a “Market Maker”), as the case may be, acting in their unique role to provide a fair and orderly secondary market for Shares, also may purchase Creation Units for use in their own market making activities. ¹⁷

Shareholders of a Fund will have one vote per Share with respect to matters regarding the Company or Fund for which a shareholder vote is required consistent with the requirements of the 1940 Act, the rules promulgated thereunder and state laws applicable to Delaware statutory trusts or Maryland corporations.

Shares will be registered in book-entry form only and the Funds will not issue Share certificates. The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York (“DTC”), or its nominee, will be the record registered owner of all outstanding Shares. Beneficial ownership of Shares will be shown on the records of DTC or DTC participants (“DTC and DTC Participants”). Shareholders will exercise their rights in such securities indirectly through the DTC and DTC Participants. The references herein to owners or holders of such Shares shall reflect the rights of persons holding an interest in such securities as they may indirectly exercise such rights through the DTC and DTC Participants, except as otherwise specified. No shareholder shall have the right to receive a certificate representing Shares. Delivery of all notices, statements, shareholder reports and other communications will be at the Funds’ expense through the customary practices and facilities of the DTC and DTC Participants.

Each Fund will sell Shares to investors only in Creation Units through the Distributor on a continuous basis at the NAV per share next determined after an order in proper form is received. In order to keep costs at a low level and permit each Fund to be as fully invested as possible, Shares generally will be purchased in Creation Units in exchange for the in-kind

deposit, by the purchaser, of a particular portfolio of securities designated by the Adviser (“Deposit Securities”), together with the deposit or refund of a specified cash payment as the case may be (“Cash Component,” and collectively with the Deposit Securities, a “Fund Deposit”). Each Fund will issue and sell Shares on any Business Day. The NAV of each Fund will normally be determined as of the close of the regular trading session on the NYSE (ordinarily 4:00 p.m. Eastern time) on each Business Day.¹⁸ The NAV of certain Fixed-Income Funds, Balanced Funds and non-U.S. Equity Funds may be determined prior to 4:00 p.m. Eastern Time on each Business Day.

For Funds utilizing an in-kind process, the Applicants expect that the Deposit Securities will consist of a pro rata basket of the Funds’ portfolio.¹⁹ The Cash Component will be equal to the difference, if any, between the NAV per Creation Unit and the market value per Creation Unit of the Deposit Securities.

The Funds may substitute a cash-in-lieu amount to replace any Deposit Security or Redemption Security of a Fund that is a “to-be-announced transaction” or “TBA Transaction.” A TBA Transaction is a method of trading mortgage-backed securities. In a TBA Transaction, the buyer and seller agree upon general trade parameters such as agency, settlement date, par amount and price. The actual pools delivered generally are determined two days prior to the

settlement date. The amount of substituted cash in the case of TBA Transactions will be equivalent to the value of the TBA Transaction listed as a Deposit Security or Redemption Security.²⁰

The Funds’ “in-kind” policy will minimize portfolio turnover and brokerage expenses. However, over time, a Company may conclude that operating on an exclusively “in-kind” basis for one or more Funds may present operational problems for such Funds. Those circumstances may include situations when a Deposit Security may not be available in sufficient quantity for delivery or may not be eligible for transfer through the Shares Clearing Process (as defined below), or may not be eligible for trading by an Authorized Participant or the investor for which it is acting. Therefore, each Fund may permit, under certain circumstances, an in-kind purchaser to substitute cash in lieu of depositing some or all of the Deposit Securities.

In order for a Company to preserve maximum efficiency and flexibility, each Company reserves the right to determine in the future that Shares of one or more of the Funds may be purchased in Creation Units on a cash-only basis. The decision to permit cash-only purchases of Creation Units, to the extent made at all in the future, would be made if a Company and the Adviser believed such method would substantially minimize the Company’s transactional costs or would enhance the Company’s operational efficiencies. For example, on days when a rebalancing of a Fund’s portfolio is required, the Adviser might prefer to receive cash rather than in-kind securities so that it has the liquid resources at hand for the Company to make the necessary purchases. If a Fund were to receive in-kind securities on such a day, it would have to sell many of such securities and acquire new securities, thus incurring transaction costs which could have been avoided (or at least minimized) if the Fund had received payment for the Creation Units in cash.

In order to defray the transaction expenses, including brokerage costs, that will be incurred by a Fund when investors purchase or redeem Creation Units, each Fund will impose purchase or redemption transaction fees (“Transaction Fees”) to be borne only by such purchasers or redeemers. Where a Fund permits an in-kind purchaser to substitute cash-in-lieu of depositing a portion of the Deposit Securities, the purchaser may be assessed a higher Transaction Fee to cover the cost of purchasing those securities. The exact amounts of such Transaction Fees will be determined separately for each Fund. The Transaction Fee is designed to protect the continuing shareholders of a Fund against the dilutive costs associated with the transfer or purchase of Deposit Securities in connection with the purchase of Creation Units and with the transfer or sale of Redemption Securities in connection with the redemption of Creation Units. The method of calculating the Transaction Fees will be fully disclosed in the SAI of such Fund. Transaction Fees will be limited to amounts that have been determined by the Adviser to be appropriate and will take into account transaction costs associated with the relevant Deposit Securities and Redemption Securities of the Funds. In all cases, such Transaction Fees will be limited in accordance with requirements of the Commission applicable to management investment companies offering redeemable securities. ²¹

Creation Units generally will be aggregations of at least 50,000 Shares. Applicants recognize that each Share is issued by an investment company and, accordingly, the acquisition of any Shares by an investment company, whether acquired from the Fund or in the secondary market, shall be subject to the restrictions of Section 12(d)(l) of the 1940 Act except as permitted by the Prior Section 12(d) Order or another exemptive order that permits investment companies to invest in a Fund beyond those limitations.

The Funds’ Custodian or other agent, in consultation with the Adviser and/or subadviser (if any), will make available on each Business Day, immediately prior to the opening of trading on the listing Exchange, the list of names and the required number of shares of each Deposit Security included in the current Fund Deposit (based on information at the end of the previous Business Day) for the relevant Fund. A Fund Deposit will be applicable, subject to any adjustments as described below, in order to effect purchases of Creation Units of a given Fund until such time as the next-announced Fund Deposit composition is made available. In the same manner, the Custodian or other agent also will make available the previous day’s Cash Component as well as the estimated Cash Component for the current day.

Creation Units may be purchased through orders placed by the Distributor through an “Authorized Participant,” which is either (1) a “Participating Party,” i.e., a broker-dealer or other participant in the Shares Clearing Process through the Continuous Net Settlement System (the “CNS System”) of the NSCC, or (2) a DTC Participant, which in either case has executed an agreement with the Company, the Distributor and the Transfer Agent, with respect

to creations and redemptions of Creation Units (“AP Agreement”). An investor does not have to be an Authorized Participant, but must place an order through, and make appropriate arrangements with, an Authorized Participant. The Distributor will be responsible for transmitting orders to the Funds. In the case of the Funds of Funds and Equity Funds, Authorized Participants making payment for Creation Units placed through the Distributor must either (1) initiate instructions through the CNS System of the NSCC as such processes have been enhanced to effect purchases and redemptions of Creation Units (the “Shares Clearing Process”) or (2) deposit the Fund Deposit with the Company “outside” the Shares Clearing Process through the facilities of DTC as described in the SAI. In the case of Fixed Income Funds, Authorized Participants must follow the creation procedures specified in Section E.2. herein under “Settlement and Clearing of Fixed Income Funds.”²²

All orders to create a Creation Unit must be received by the Distributor no later than the order cut-off time for the Fund²³ (typically, the close of the regular trading session on the NYSE, which is ordinarily 4:00 p.m. Eastern time) (the “Closing Time”) on the date such order is placed, as described in the AP Agreement, in order for creation of Creation Units to be effected based on the NAV of Shares as next determined on such date. The Distributor may reject any order to purchase Shares that is not submitted in proper form. In addition, a Fund may reject a purchase order transmitted to it by the Distributor if (1) the purchaser or group of

purchasers, upon obtaining the Shares ordered, would own 80% or more of the outstanding Shares of such Fund; (2) the required Fund Deposit is not delivered; (3) the acceptance of the Fund Deposit would have certain adverse tax consequences, such as causing the Fund to no longer meet the requirements of a RIC under the Code; (4) the acceptance of the Fund Deposit would, in the opinion of the Company, be unlawful, as in the case of a purchaser who was banned from trading in securities; (5) the acceptance of the Fund Deposit would otherwise, in the discretion of the Company or the Distributor, have an adverse effect on the Company or the Fund or the rights of beneficial owners; or (6) there exist circumstances outside the control of the Fund that make it impossible to process purchases of Shares for all practical purposes. Examples of such circumstances include: acts of God or public service or utility problems such as fires, floods, extreme weather conditions and power outages resulting in telephone, telecopy and computer failures; market conditions or activities causing trading halts; systems failures involving computer or other information systems affecting the Fund, the Adviser, the Distributor, the Custodian, NSCC or any other participant in the purchase process, and similar extraordinary events.

The Distributor will issue or cause the issuance of confirmations of acceptance, and will be responsible for delivering a Prospectus to those persons purchasing Creation Units and for maintaining records of both the orders placed with it and the confirmations of acceptance furnished by it.

An entity purchasing Creation Units may use the Shares Clearing Process which has been designed to provide trade instructions and the transfer of the requisite Fund Deposit to the Company, along with the appropriate Transaction Fee. Upon the deposit of such Fund Deposit in payment for such Creation Units placed through the Distributor such Shares will be delivered to the purchaser thereof.

An entity purchasing Creation Units “outside” the Shares Clearing Process will be using a manual line-by-line position movement of each Deposit Security and hence will be required to pay a higher Transaction Fee than would have been charged had the creation been effected through the Shares Clearing Process. The higher Transaction Fee will be calculated in the manner disclosed in the SAI. Upon the deposit of the requisite Fund Deposits in payment for Creation Units placed through the Distributor such Creation Units will be delivered to the purchasers thereof.

Subject to the conditions that (i) a properly completed irrevocable purchase order has been submitted by the Authorized Participant (either on its own or another investor’s behalf) not later than the Closing Time on the date such request is submitted, and (ii) arrangements satisfactory to the Company are in place for payment of the Cash Component and any other cash amounts which may be due, the Company will accept the order, on behalf of the Fund, subject to its right (and the right of the Adviser) to reject any order not submitted in proper form.

Once the Company has accepted an order on behalf of the Fund, upon the next determination of the NAV per Share of the Fund, the Company will confirm the issuance, against receipt of payment, of a Creation Unit at such NAV per Share. The Distributor will then transmit a confirmation of acceptance to the Authorized Participant that placed the order.

Upon the deposit of a Fund Deposit in payment for a Creation Unit, Shares in a Creation Unit will be delivered to the purchaser.²⁴ When the Custodian has confirmed that the

required securities included in the Fund Deposit (or the cash value thereof) have been delivered to the Custodian, the Custodian shall notify the Distributor, and the Fund will issue and cause delivery of the Creation Unit of a Fund.

See Section E.2. herein entitled “Settlement and Clearing of Fixed Income Funds” for the creation procedures applicable to Fixed Income Funds.

For International Funds, the purchase of a Creation Unit will operate as follows. Once a purchase order has been placed with the Distributor, the Distributor will inform the Adviser and the Custodian. The Custodian will then inform the appropriate sub-custodians. The Authorized Participant will deliver to the appropriate sub-custodians, on behalf of itself or the beneficial owner, the relevant Deposit Securities or a cash-only payment, as applicable (or the cash value of all or part of such securities, in the case of a permitted or required cash purchase or “cash-in-lieu” amount), with appropriate adjustments as determined by the International Fund. Deposit Securities or a cash-only payment as applicable, must be delivered to the accounts maintained at the applicable sub-custodians. The sub-custodians will confirm that the required securities or cash have been delivered and the Custodian will notify the Adviser and the Distributor. Creation units will not be issued until Deposit Securities or a cash-only payment as applicable, have been delivered to the accounts maintained at the applicable sub-custodians.

The price of Shares trading on the Exchange will be based on a current bid/offer market. No secondary sales will be made to brokers registered under the Exchange Act (“Brokers”) at a concession by the Adviser, the Distributor or by a Fund. Transactions involving the sale of Shares on the Exchange will be subject to customary brokerage commissions and charges. The initial price of Shares on the Exchange is expected to be in the range of $25 to $100 per Share. The price of a Creation Unit is expected to range from $1,250,000 (assuming the minimum number of 50,000 Shares at the lowest price of $25) to $5,000,000 (assuming 50,000 Shares at the highest price of $100).

Beneficial owners of Shares may sell their Shares in the secondary market, but must accumulate enough Shares to constitute a Creation Unit in order to redeem through a Fund. Creation Units will be redeemable at the NAV next determined after receipt of a request for redemption by a Fund. Shares generally will be redeemed in Creation Units in exchange for a particular portfolio of securities (“Redemption Securities”).²⁵ Redemption orders must be placed by or through an Authorized Participant. Each Company will redeem Shares of a Fund on any Business Day. Consistent with the provisions of Section 22(e) of the 1940 Act and Rule 22e-2 under the 1940 Act, the right to redeem will not be suspended, nor payment upon redemption delayed, except as provided by Section 22(e) of the 1940 Act and pursuant to the requested relief with respect to the International Funds discussed below. Redemption requests must be received

by the cut-off time for the Fund (typically 4:00 p.m. Eastern Time) to be redeemed that day. In the case of custom redemptions²⁶ the order must be received by the Distributor no later than one hour earlier than the standard cut-off time.

Each Fund will have the right to make redemption payments in cash, in-kind or a combination of each, provided the value of its redemption payments equals the NAV per Share. At the discretion of the Fund, a beneficial owner might also receive the cash equivalent of a Redemption Security upon request because, for instance, it was restrained by regulation or policy from transacting in the securities perhaps because of another transaction with or for the issuer of those securities. A specific example might be the presence of the securities on an investment banking firm’s restricted list. The Applicants currently contemplate that, unless cash redemptions are available or specified for a Fund, the redemption proceeds for a Creation Unit generally will consist of Redemption Securities plus or minus a “Cash Redemption Amount” as the case may be (collectively a “Fund Redemption”). The Cash Redemption Amount is cash in an amount equal to the difference between the NAV per Creation Unit of the Shares being redeemed and the market value of the Redemption Securities. A redeeming investor will pay a Transaction Fee calculated in the same manner as a Transaction Fee payable in connection with the purchase of a Creation Unit. To the extent that any amounts payable to a Fund by the redeeming investor exceed the amount of the Cash Redemption Amount, the investor will be required to deliver payment to the Fund.

Creation Units may be redeemed through the Shares Clearing Process. Procedures for such redemptions are analogous (in reverse) to those for purchases through the Shares Clearing Process. Creation Units may also be redeemed outside the Shares Clearing Process; however, a higher Transaction Fee will be charged.²⁷ As discussed above, a redeemer will pay a Transaction Fee to offset the Fund’s trading costs, operation processing costs, brokerage commissions and other similar costs incurred in transferring the Redemption Securities from its account to the account of the redeeming investor. An entity redeeming Shares “outside” the Shares Clearing Process may be required to pay a higher Transaction Fee than would have been charged had the redemption been effected through the Shares Clearing Process. A redeemer receiving cash in lieu of one or more Redemption Securities may also be assessed a higher Transaction Fee on the cash in lieu portion to cover the costs of selling such securities, including all the costs listed above plus all or part of the spread between the expected bid and offer side of the market relating to such Redemption Securities. This higher Transaction Fee will be assessed in the same manner as the Transaction Fee incurred in purchasing Creation Units using a cash in lieu portion as described above and will be calculated in the manner as disclosed in the Fund’s SAI.

A redemption request outside the Shares Clearing Process will be considered to be in proper form if (i) a duly completed request form is received by the Transfer Agent from the Authorized Participant on behalf of itself or another redeeming investor at a time specified by the Company, (ii) arrangements satisfactory to the Company are in place for the Authorized Participant to transfer or cause to be transferred to the Company the Creation Unit being redeemed through the book-entry system of the DTC on or before contractual settlement of the redemption request; and (iii) it complies with the terms of the AP Agreement. As discussed above, in certain circumstances, a Fund in its discretion may require or permit cash to be substituted for a Redemption Security.

Because each Fund will typically redeem Creation Units in-kind, a Fund will not have to maintain significant cash reserves for redemptions. This will allow the assets of a Fund, under normal circumstances, to be as fully invested as possible. Accordingly, each Fund will be able to be more fully invested than certain other investment products that must allocate a greater portion of their assets for cash redemptions.

The Deposit Securities and Redemption Securities of each Fixed Income Fund will settle via free delivery through the Federal Reserve System for U.S. government securities and cash; and through DTC for U.S. corporate and non-corporate (other than U.S. government) fixed income securities. Settlement and clearing of foreign securities presently cannot be made using the DTC Process. This is true for current ETFs which hold foreign securities. For Funds utilizing the in-kind process, the Custodian will monitor the development of the Deposit Securities and will instruct the movement of the Shares only upon validation that the Deposit Securities have settled correctly.

DTC or its nominee will be the record or registered owner of all outstanding Shares. Beneficial ownership of Shares will be shown on the records of DTC or DTC participants. Shares will be registered in book entry form only, which records will be kept by DTC.

As with the settlement of Fund of Funds and Equity Fund transactions outside of the CNS System, (i) Shares of the Fixed Income Funds and U.S. corporate and non-corporate bonds (other than U.S. government securities) will clear and settle through DTC, (ii) U.S. government securities and cash will clear and settle through the Federal Reserve System, and (iii) non-U.S. fixed income securities and money market securities will clear and settle through the appropriate sub-custodian and the standard clearance and settlement mechanism of the applicable non-U.S. jurisdiction. More specifically, creation transactions will settle as follows: on settlement date (generally T + 3) an Authorized Participant will transfer Deposit Securities that are U.S. corporate and non-corporate bonds (other than U.S. government securities) through DTC to a DTC account maintained by the Funds’ Custodian, and Deposit Securities that are U.S. government securities, together with any Cash Component, to the Custodian through the Federal Reserve System. For non-U.S. fixed income securities, once a purchase order has been placed with the Distributor, the Distributor will inform the Adviser and the Funds’ Custodian. The Custodian will then inform the appropriate subcustodians. The Authorized Participant will deliver to the appropriate sub-custodians, on behalf of itself or the beneficial owner, the relevant Deposit Securities and/or the cash value of all or a part of such securities, in the case of a permitted or required “cash in lieu” amount, with any appropriate adjustments as determined by the Fund. Once the Custodian has verified the receipt of all the Deposit Securities (or in the case of failed delivery of one or more bonds, collateral in the amount of 105% or more of the missing

Deposit Securities, which will be marked to market each day the failed delivery remains undelivered) and the receipt of any Cash Component, the Custodian will notify the Distributor and the Adviser. The Fund will issue Creation Units of Shares and the Custodian will deliver the Shares to the Authorized Participants through DTC. DTC will then credit the Authorized Participant’s DTC account. The clearance and settlement of redemption transaction essentially reverses the process described above. After a Fund has received a redemption request in proper form and the Authorized Participant transfers Creation Units to the Custodian through DTC, the Fund will cause the Custodian to initiate procedures to transfer the requisite Redemption Securities and any Cash Redemption Amount. On T + 3, assuming the Custodian has verified receipt of the Creation Units, the Custodian will transfer Redemption Securities that are corporate and non-corporate bonds (other than U.S. government securities) to the Authorized Participant through DTC and Redemption Securities that are U.S. government securities, together with any Cash Redemption Amount through the Federal Reserve System. Non-U.S. fixed income securities will clear and settle through the appropriate sub-custodian as described above.

Shares of each Fixed Income Fund will be debited or credited by the Custodian directly to the DTC accounts of the Authorized Participants. Since creation/redemption transaction for Shares of the Fixed Income Funds will not clear and settle through the CNS System, the failed delivery of one or more Deposit Securities (on a creation) or one or more Redemption Securities (on a redemption) will not be facilitated by the CNS System. Therefore, Authorized Participants will be required to provide collateral to cover the failed delivery of Deposit Securities in connection with an “in-kind” creation of Shares. In case of a failed delivery of one or more Deposit Securities, the Fixed Income Funds will hold the collateral until

the delivery of such Deposit Security. The Funds will be protected from failure to receive the Deposit Securities because the Custodian will not effect the Fixed Income Fund’s side of the transaction (the issuance of Shares) until the Custodian has received confirmation of receipt of the Authorized Participant’s incoming Deposit Securities (or collateral for failed Deposit Securities) and Cash Component. In the case of redemption transactions, the Fixed Income Funds will be protected from failure to receive Creation Units because the Custodian will not effect the Fixed Income Fund’s side of the transaction (the delivery of Redemption Securities and the Cash Redemption Amount) until the Fixed Income Fund’s Transfer Agent, has received confirmation of receipt of the Authorized Participant’s incoming Creation Units. In order to simplify the transfer agency process and align the settlement of Shares with the settlement of the Deposit Securities and Redemption Securities, the Funds plan to settle transaction in U.S. government securities, corporate bonds and non-corporate bonds (other than U.S. government securities) and Shares on the same T + 3 settlement cycle.

Applicants do not believe that the clearing and settlement process will affect the arbitrage of Shares of the Fixed Income Funds.²⁸

When redeeming a Creation Unit of an International Fund and taking delivery of Redemption Securities in connection with such redemption into a securities account of the

Authorized Participant or investor on whose behalf the Authorized Participant is acting, the owner of the account must maintain appropriate security arrangements with a broker-dealer, bank or other custody provider in each jurisdiction in which any of the Redemption Securities are customarily traded. If neither the Authorized Participant nor the redeeming investor has appropriate arrangements in place and is not able to make such arrangements, or if it is otherwise not possible or practicable to deliver Redemption Securities in-kind in certain jurisdictions, the Fund may redeem Creation Units of Shares, in whole or in part, for cash; in such an instance, the redeeming shareholder will be required to accept cash redemption in an amount equal to the appropriate portion of the aggregate NAV of the Creation Unit(s) redeemed minus the applicable Transaction Fee, which may be higher to cover costs incidental to converting Redemption Securities to cash.

Dividends from net investment income will be declared and paid at least annually by each Fund in the same manner as by other open-end investment companies. Certain of the Funds may pay dividends, if any, on a quarterly or more frequent basis. Dividends will be paid to beneficial owners of record in the manner described below. Distributions of realized capital gains, if any, generally will be declared and paid once a year but each Fund may make distributions on a more frequent basis to comply with the distribution requirements of the Code, in all events in a manner consistent with the provisions of the 1940 Act. Dividends and other distributions on Shares of each Fund will be distributed on a pro rata basis to beneficial owners of Shares. Dividend payments will be made through DTC and the DTC Participants to beneficial owners of record with amounts received from each Fund.

Each Fund will make additional distributions to the extent necessary (i) to distribute the annual investment company taxable income of the Fund, plus any net capital gains,

and (ii) to avoid imposition of the excise tax imposed by Section 4982 of the Code. The Board will reserve the right to declare special dividends if, in its reasonable discretion, such action is necessary or advisable to preserve the status of each Fund as a RIC or to avoid imposition of income or excise taxes on undistributed income.

No sales charges for purchases of Shares of any Fund will be imposed. Each Fund will charge a Transaction Fee, calculated and imposed as described above, in connection with the purchase and redemption of Creation Units of its Shares. From time to time and for such periods as the Adviser in its sole discretion may determine, the Transaction Fees for purchase or redemption of Shares of any Fund may be increased, decreased or otherwise modified, not to exceed amounts approved by the Board.

All other expenses incurred in the operation of the Company will be borne by the Company and allocated among the various Funds, except to the extent specifically assumed by the Adviser or some other party. Operational fees and expenses incurred by the Company that are directly attributable to a specific Fund will be allocated and charged to that Fund. Such expenses may include, but will not be limited to, the following: investment advisory fees, custody fees, brokerage commissions, registration fees of the Commission, licensing fees, Exchange listing fees, fees associated with securities lending, and other costs properly payable by each Fund. Common expenses of the Company and expenses which are not readily attributable to a specific Fund will be allocated on a pro rata basis or in such other manner as deemed equitable, taking into consideration the nature and type of expense and the relative sizes of each Fund. Such expenses may include, but will not be limited to, the following: fees and expenses of the Directors who are not “interested persons” (as defined in the 1940 Act) of the Company; legal and audit fees; certain licensing fees; administration and accounting fees; costs

of preparing, printing and mailing Prospectuses and SAIs; costs of preparing, printing and mailing semi-annual and annual reports (together, “Shareholder Reports”); costs of preparing, printing and mailing proxy statement and other documents required for regulatory purposes and for their distribution to existing shareholders; Transfer Agent fees; and insurance premiums. All operational fees and expenses incurred by the Company will be accrued and allocated to each Fund on a daily basis, except to the extent expenses are specifically assumed by the Adviser or some other party.

The Funds will not make the DTC book entry Dividend Reinvestment Service available for use by beneficial owners for reinvestment of their cash proceeds. Brokers may, however, offer a dividend reinvestment service which uses dividends to purchase Shares on the secondary market at market value in which case brokerage commissions, if any, incurred in purchasing such Shares will be an expense borne by the individual beneficial owners participating in such a service.

The Applicants believe that a great deal of information will be available to prospective investors about the Funds.

The Funds’ website, which will be publicly available prior to the public offering of Shares, will include, or will include links to, the current Summary Prospectus,²⁹ Prospectus, SAI, and most recent annual and semi-annual reports to shareholders, if required. The website will include additional quantitative information updated on a daily basis, including, for each 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”),³⁰ 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 on the Exchange, the Fund will disclose on its website the identities and quantities of the portfolio securities and other assets held by the Fund that will form the basis for the Fund’s calculation of NAV at the end of the Business Day. The website and information will be publicly available at no charge.

Investors interested in a particular Fund can also obtain the Fund’s SAI, each Fund’s Shareholder Reports and its Form N-CSR and Form N-SAR, filed twice a year. The Company’s SAI and Shareholder Reports are available free upon request from the Company, and those documents and the Form N-CSR and Form N-SAR may be viewed on-screen or downloaded from the Commission’s website at: www.sec.gov.

In addition, because the Shares are listed on an Exchange, prospective investors have access to information about the product over and above what is normally available about a security of an open-end investment company. Information regarding market price and volume is and 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 trading volume information will be published daily in the financial section of newspapers. The Exchange will disseminate every 15 seconds throughout the trading day through 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. The Funds are not involved in, or responsible for, the calculation or dissemination of any such amount and make no warranty as to its accuracy.

The Applicants will take appropriate steps as may be necessary to avoid confusion in the public’s mind between a Fund and a conventional “open-end investment company” or “mutual fund.” Although the Company will be classified and registered under the 1940 Act as an open-end management investment company, neither the Company nor any Fund will be marketed or otherwise held out as a “mutual fund,” in light of the features, described in this Application, that make each Fund significantly different from what the investing public associates with a conventional mutual fund. Instead, each Fund will be marketed as an “actively managed exchange-traded fund.” No Fund marketing materials (other than as required in the Prospectus) will reference an “open-end fund” or “mutual fund,” except to compare and contrast a Fund with conventional mutual funds. Further, in all marketing materials where the features or method of obtaining, buying or selling Shares traded on the Exchange are described, there will be an appropriate statement or statements to the effect that Shares are not individually redeemable.

Neither the Company nor any of the Funds will be advertised or marketed as open-end investment companies, i.e., as mutual funds, which offer individually redeemable securities. Any advertising material where features of obtaining, buying or selling Creation Units are described or where there is reference to redeemability will prominently disclose that Shares are not individually redeemable and that owners of Shares may acquire Shares from a Fund and tender those Shares for redemption to a Fund in Creation Units only.

Creation Units will be offered continuously to the public. Because new Shares may be created and issued on an ongoing basis, at any point during the life of a Fund, a “distribution,” as such term is used in the Securities Act, may be occurring.

For example, a Broker and/or its client may be deemed a statutory underwriter if it takes Creation Units after placing an order with the Distributor, breaks them down into the constituent Shares and sells the Shares directly to 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.

The Prospectus will also state that dealers who are not “underwriters” but are participating in a distribution (as contrasted to ordinary secondary 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 rely on the prospectus-delivery exemption provided by Section 4(3) of the Securities Act. Firms that do incur a prospectus-delivery obligation with respect to Shares will be reminded that under Securities Act Rule 153 a prospectus-delivery obligation under Section 5(b)(2) of the Securities Act owed to a member of the Exchange in connection with a sale on the Exchange is satisfied by the fact that the Fund’s Prospectus is available at the Exchange upon request. The Prospectus also will note that the prospectus delivery mechanism provided in Rule 153 is only available with respect to transactions on an Exchange. Applicants also note that Section 24(d) of the 1940 Act provides that the exemption provided by Section 4(3) of the Securities Act shall not apply to any transaction in a redeemable security issued by an open-end management investment company.

Applicants seek an order from the Commission permitting: (a) the Funds to issue shares redeemable in Creation Units only that can be traded on an exchange at market prices; (b) International Funds to pay redemption proceeds more than seven (7) calendar days after Shares are tendered for redemption; and (c) affiliated persons of the Funds to buy from and sell securities to the Funds in connection with the in-kind purchase and redemption of Shares.

The exemptive relief specified below is requested pursuant to Section 6(c) of the 1940 Act, which provides that the Commission may exempt any person, security or transaction from any provision of the 1940 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 1940 Act].

The Applicants believe that Shares of each Fund afford significant benefits in the public interest. Among other benefits, availability of Shares would: provide increased investment opportunities, which should encourage diversified investment; provide in the case of individual tradable Shares, a low-cost security for small and middle-sized accounts of individuals and institutions that would be available at intra-day prices reflecting minute-by-minute market conditions rather than only closing prices; provide a security that should be freely available in response to market demand; provide competition for comparable products available in U.S. markets; facilitate the implementation of diversified investment management techniques; and provide a more tax-efficient investment vehicle than most traditional mutual funds.³¹

The Commission has indicated that Section 6(c) permits it to exempt “particular vehicles and particular interests” from provisions of the 1940 Act that would inhibit “competitive

development of new products and new markets offered and sold in or from the United States.”³² The Shares proposed to be offered would provide a new ETF available to both retail and institutional investors. As such, the Applicants believe the Shares of the Funds are appropriate for exemptive relief under Section 6(c).

With respect to the exemptive relief specified below regarding Sections 17(a)(1) and 17(a)(2), relief is requested pursuant to Section 17(b), which provides that the Commission may approve the sale of securities to an investment company and the purchase of securities from an investment company, in both cases by an affiliated person of such company, if the Commission finds that:

“the terms of the proposed transaction… are reasonable and fair and do not involve any overreaching on the part of any person concerned, the proposed transaction is consistent with the policy of each registered investment company concerned… and the proposed transaction is consistent with the general purposes of [the 1940 Act].”

The Applicants believe the planned operation of the Funds meets the criteria for exemption set forth in Section 17(b). The sale and redemption of Creation Units of the Funds will be on the same terms for all investors and, in all cases, Creation Units will be sold and redeemed by the Funds at NAV. The Fund Deposit and Redemption Securities for each Fund will be determined using procedures applicable to all investors, and affiliated persons of the Funds will not have any advantages over other shareholders. Absent the unusual circumstances described earlier, the Fund Deposit and Redemption Securities will be the same.

The sale and redemption of Creation Units of each Fund is on the same terms for all investors, whether or not such investor is an affiliate. In each case, Creation Units are sold

and redeemed by a Fund at their NAV. The Fund Deposit and Redemption Securities for a Fund is based on a standard applicable to all and valued in the same manner in all cases. Such transactions do not involve “overreaching” by an affiliated person. Accordingly, Applicants believe the proposed transactions described herein meet the Section 17(b) standards for relief because the terms of such proposed transactions, including the consideration to be paid or received for the Creation Units, are reasonable and fair and do not involve overreaching on the part of any person concerned; the proposed transactions will be consistent with the Company’s policy and that of the Fund as described herein; and are consistent with the general purposes of the 1940 Act.

The Applicants believe that Shares of the Funds would provide significant benefits to investors and that a grant of relief would be consistent with Section 6(c) of the 1940 Act. The Applicants believe the operation of the Funds, among other things, would provide investors the same benefits of traditional index-based ETFs while providing them with the opportunity to invest in an actively managed ETF that has a specific investment objective and investment strategy that suits investors’ individual investment goals. The Applicants believe that the operation of the Funds also would provide investors with the same benefits available from the actively managed ETFs that recently received Commission orders. The Applicants note that in the Proposing Release, the Commission stated that “we believe that permitting fully transparent, actively managed ETFs would provide additional investment choices for investors.”³³

As with other similar products for which the Commission has granted exemptive relief, the price at which Shares trade should be disciplined by arbitrage opportunities created by the option to purchase or redeem Shares in Creation Unit aggregations. This should help ensure that Shares will not trade at a material discount or premium in relation to their NAV.

The Applicants believe that the exemptions requested are necessary and appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the 1940 Act. The exemptions and order requested are substantially similar to those granted by the Actively Managed ETF Orders and the Index-Based ETF Orders and are similar to the exemption described in the Proposed ETF Rule. Based on the foregoing, the Applicants request the exemptive relief as set forth below.

The Applicants request a Commission order under Section 6(c) of the 1940 Act, for an exemption from Sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the 1940 Act and Rule 22c-1 under the 1940 Act, under Sections 6(c) and 17(b) of the 1940 Act for an exemption from Sections 17(a)(1) and (a)(2) of the 1940 Act.

Section 5(a)(1) of the 1940 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 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. Because Shares will not be individually redeemable, a possible question arises as to whether the definitional requirements of a “redeemable security” or an “open-end company” under the 1940 Act would be met if such Shares are viewed as non-redeemable

securities. In light of this possible analysis, the Applicants request an order under Section 6(c) granting an exemption from Sections 5(a)(l) and 2(a)(32) that would permit the Company (or any Fund, if applicable) to register as an open-end management investment company and redeem Shares in Creation Units only.

Investors may purchase Shares in Creation Units from each Fund. Creation Units are always redeemable in accordance with the provisions of the 1940 Act. Owners of Shares may purchase the requisite number of Shares and tender the resulting Creation Unit for redemption. Moreover, listing on the Exchange will afford all holders of Shares the ability to buy and sell Shares throughout the day in the secondary market. Because the market price of Creation Units 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.

Applicants believe that the Funds will not present any new issues with respect to the exemptions granted by the Commission that allow index-based ETFs and, more recently, actively managed ETFs to redeem their shares only in Creation Units. While Applicants recognize that the potential for more significant deviations between a security’s Bid/Ask Price and NAV could exist with actively managed ETFs, that is not the case here since each Fund’s portfolio holdings will be fully transparent. As noted above, each Fund intends to disclose daily on its website on each Business Day, before commencement of trading of Shares on the Exchange, the identities and quantities of the portfolio securities and other assets held by the Fund that will form the basis for the Fund’s calculation of NAV at the end of the Business Day. Since market participants will be aware, at all times, of each Fund’s portfolio securities and other assets which form the basis for its NAV calculation, the risk of significant deviations between NAV and market price is similar to that which exists in the case of index-based ETFs and other

actively managed ETFs. Further, as mentioned herein, Applicants believe that the current disclosure requirements are sufficient to safeguard against investor confusion. Thus, the Applicants believe that a Fund issuing Shares as proposed is appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act.

Section 22(d) of the 1940 Act, among other things, prohibits a dealer from selling a redeemable security that is being currently offered to the public by or through an underwriter, except at a current public offering price described in the prospectus. Rule 22c-1 under the 1940 Act generally requires that a dealer selling, redeeming, or repurchasing a redeemable security do so only at a price based on the NAV next computed after receipt of a tender of such security for redemption or of an order to purchase or sell such security.

Secondary market trading in Shares will take place at negotiated prices, not at a current offering price, and not at a price based on NAV. Shares of each Fund will be listed on the Exchange. The Shares will trade on and away from the Exchange³⁴ at all times on the basis of current Bid/Ask prices. Thus, purchases and sales of Shares in the secondary market will not comply with Section 22(d) and Rule 22c-1. The Applicants request an exemption under Section 6(c) from Section 22(d) and Rule 22c-1 to permit the Shares to trade at negotiated prices.

The concerns sought to be addressed by Section 22(d) and Rule 22c-1 with respect to pricing are equally satisfied by the proposed method of pricing Shares. While there is limited legislative history regarding Section 22(d), its provisions, as well as those of Rule 22c-l, appear to have been designed to (i) prevent dilution caused by certain riskless-trading schemes

by principal underwriters and contract dealers, (ii) prevent unjust discrimination or preferential treatment among buyers resulting from sales at different prices, and (iii) assure an orderly distribution of investment company shares by eliminating price competition from Brokers offering Shares at less than the published sales price and repurchasing Shares at more than the published redemption price.³⁵

The Applicants believe that none of these purposes will be thwarted by permitting Shares to trade in the secondary market at negotiated prices. Secondary market trading in Shares does not involve the Funds as parties and cannot result in dilution of an investment in Shares. 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, not as a result of unjust or discriminatory manipulation. In light of these constraints, Applicants do not believe that the portfolios could be managed or manipulated to produce benefits for one group of purchasers or sellers to the detriment of others. Accordingly, the Applicants believe that secondary market transactions in Shares will not lead to discrimination or preferential treatment among purchasers. The Applicants contend that the proposed distribution system also will be orderly. Anyone may sell or acquire Shares by purchasing them on an Exchange or by creating or redeeming a Creation Unit. Therefore, no Broker should have an advantage over another Broker in the sale of Shares. In addition, as described above, Applicants believe that in light of the fact that the Funds will be fully transparent, arbitrage activity should ensure that differences between NAV and market prices remain low.

Furthermore, the Applicants believe that the ability to execute a transaction in Shares at an intraday trading price will be a highly attractive feature to many investors and offers

a key advantage to investors over the once-daily pricing mechanisms of conventional mutual funds. This feature would be fully disclosed to investors, and the investors would trade in Shares in reliance on the efficiency of the market.

Applicants also believe that the Funds will not present any new issues with respect to the exemptions which allow ETF shares to trade at negotiated prices. With proper disclosure to all parties, the Funds do not create any new potential for discrimination or preferential treatment among investors purchasing and selling Shares in the secondary market and those purchasing and redeeming Creation Units. The Applicants, therefore, believe that buying and selling Shares at negotiated prices is appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act.

The Applicants seek an order from the Commission under Section 6(c) of the 1940 Act granting an exemption from Section 22(e) of the 1940 Act. Applicants acknowledge that no relief obtained from the requirements of Section 22(e) will affect any obligations Applicants may otherwise have under Rule 15c6-1 under the Exchange Act requiring that most securities transactions be settled within three business days of the trade date.

“No registered company shall suspend the right of redemption, or postpone the date of payment or satisfaction upon redemption of any redeemable security in accordance with its terms for more than seven days after the tender of such security to the company or its agent designated for that purpose for redemption, except –

(1) for any period (A) during which the New York Stock Exchange is closed other than customary weekend and holiday closings or (B) during which trading on the New York Stock Exchange is restricted;

(2) for any period during which an emergency exists as a result of which (A) disposal by the company of securities owned by it is not reasonably practical or (B) it is not reasonably practicable for such company fairly to determine the value of its net assets; or

(3) for such other periods as the Commission may by order permit for the protection of security holders of the company.”

Settlement of redemptions for International Funds will be contingent not only on the securities settlement cycle of the U.S. market, but also on the delivery cycles in local markets for the underlying foreign securities held by the International Funds. Applicants have been advised that the delivery cycles currently practicable for transferring Redemption Securities to redeeming investors, coupled with local market holiday schedules, will require a delivery process longer than seven (7) calendar days for International Funds, in certain circumstances, during the calendar year. Accordingly, with respect to International Funds that deliver Redemption Securities in kind, Applicants hereby request relief from the requirement imposed by Section 22(e) to provide payment or satisfaction of redemptions within seven (7) calendar days following the tender of a Creation Unit of such International Funds. Applicants request that relief be granted such that each of the International Funds holding Redemption Securities that require a delivery process in excess of seven calendar days may provide payment or satisfaction of redemptions within not more than the number of calendar days known to Applicants as being the maximum number of calendar days required for such payment or satisfaction in the principal local foreign market(s) where transactions in the portfolio securities of each such International Fund customarily clear and settle. With respect to Future Funds that will be International Funds, Applicants seek the same relief from Section 22(e) only to the extent that circumstances exist similar to those described herein.

Based on information available to Applicants, although certain holidays may occur on different dates in subsequent years, the number of days required to deliver redemption proceeds in any given year is not expected to exceed fourteen (14) calendar days for any of the Funds requiring exemptive relief from the provisions of Section 22(e). Of course, it is possible that the proclamation of new or special holidays,³⁶ the treatment by market participants of certain days as “informal holidays” (e.g., days on which no or limited securities transactions occur, as a result of substantially shortened trading hours³⁷), the elimination of existing holidays or changes in local securities delivery practices,³⁸ could affect the information set forth herein at some time in the future. Under these circumstances, the Applicants would notify shareholders as soon as reasonably practicable.

The SAI will disclose those local holidays (over the period of at least one year following the date thereof), if any, that are expected to prevent the delivery of redemption proceeds in seven calendar days and the maximum number of days needed to deliver the redemption proceeds for each International Fund. Except as set forth herein or as disclosed in the SAI for any International Fund for analogous dates in subsequent years, deliveries of redemption proceeds by the International Fund relating to those countries or regions are expected to be made within seven days.

Applicants believe that Congress adopted Section 22(e) to prevent unreasonable, undisclosed or unforeseen delays in the actual payment of redemption proceeds. Applicants propose that allowing redemption payments for Creation Units of an International Fund to be made within the number of days indicated above would not be inconsistent with the spirit and intent of Section 22(e). The Applicants suggest that a redemption payment occurring within such number of calendar days following a redemption request would adequately afford investor protection.

Applicants desire to incorporate the creation and redemption mechanism for Creation Units as much as possible into the processing cycles for securities deliveries currently practicable in the principal market(s) for the portfolio securities of a given International Fund. Currently, it is believed that no significant additional system or operational procedures will be needed to purchase or redeem Creation Units beyond those already generally in place in the relevant jurisdiction. Applicants believe that this approach may make creations and redemptions of Creation Units less costly to administer, enhance the appeal of the product to investors, and thereby promote the liquidity of the Shares in the secondary market with benefits to all holders thereof. As noted above, Applicants intend to utilize in-kind redemptions to the maximum extent possible principally as a method of assuring the fullest investment of Fund assets in portfolio securities (although cash redemptions, subject to a somewhat higher redemption Transaction Fee, are expected to be available or required in respect of certain Funds). Applicants are not seeking relief from Section 22(e) with respect to International Funds that do not effect creations and redemptions of Creation Units in-kind.

If the requested relief is granted, Applicants intend to disclose in each International Fund’s SAI and all relevant sales literature that redemption payments will be effected within the specified number of calendar days, up to 14 calendar days, following the date on which a request for redemption in proper form is made. Given the rationale for what amounts to a delay typically of a few days in the redemption process on certain occasions and given the facts as recited above, the Applicants believe that the redemption mechanism described above will not lead to unreasonable, undisclosed or unforeseen delays in the redemption process. Applicants assert that the request for relief from the strict seven-day rule imposed by Section 22(e) is not inconsistent with the standards articulated in Section 6(c). Given the facts as recited above, Applicants believe that the granting of the requested relief is consistent with the protection of investors and the purposes fairly intended by the policies and provisions of the 1940 Act. Applicants note that exemptive relief from Section 22(e) is virtually identical to the relief sought by previous applicants.

On the basis of the foregoing, Applicants believe (i) that the protections intended to be afforded by Section 22(e) are adequately addressed by the proposed method and securities delivery cycles for redeeming Creation Units and (ii) that the relief requested is appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act. Accordingly, Applicants hereby respectfully request that an order of exemption be granted under Section 6(c) in respect of Section 22(e).

Applicants seek an exemption under Sections 6(c) and 17(b) of the 1940 Act from Section 17(a) of the 1940 Act in order to permit in-kind purchases and redemptions of Creation Units from the Funds by persons that are affiliated persons or second-tier affiliates of the Funds solely by virtue of one or more of the following: (i) holding 5% or more, or more than 25%, of all of the Shares of the respective Company or one or more Funds; (ii) an affiliation with a person with an ownership interested described in (i); or (iii) holding 5% or more, or more than 25% of the shares of one or more Affiliated Funds.

“unlawful for any affiliated person or promoter of or principal underwriter for a registered investment company … or any affiliated person of such a person, promoter or principal underwriter, acting as principal (1) knowingly to sell any security or other property to such registered investment company … unless such sale involves solely (A) securities of which the buyer is the issuer, (B) securities of which the seller is the issuer and which are part of a general offering to the holders of a class of its securities or (C) securities deposited with a trustee of a unit investment trust… by the depositor thereof; (2) knowingly to purchase from such registered company or from any company controlled by such registered company any security or other property (except securities of which the seller is the issuer).…”

unless the Commission upon application pursuant to Section 17(b) of the 1940 Act grants an exemption from the provisions of Section 17(a). Section 17(b) provides that the Commission will grant such an exemption if evidence establishes that the terms of the proposed 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; that the proposed transaction is consistent with the policy of each registered investment company concerned; and that the proposed transaction is consistent with the general purposes of the 1940 Act.

Because Section 17(b) could be interpreted to exempt only a single transaction from Section 17(a) and, as discussed below, there may be a number of transactions by persons who may be deemed to be affiliates, the Applicants are also requesting an exemption from Section 17(a) under Section 6(c). Thee Commission, under Section 6(c) of the 1940 Act, has exempted a series of transactions that otherwise would be prohibited by Section 17(a).³⁹

“(A) any person directly or indirectly owning, controlling, or holding with power to vote, 5 percentum or more of the outstanding voting securities of such other person; (B) any person 5 percentum or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote, by such other person; (C) any person directly or indirectly controlling, controlled by, or under common control with, such other person; (D) any officer, director, partner, copartner or employee of such other person; (E) … any investment adviser for an investment company] or member of an advisory board thereof; and (F) … (the depositor of any] unincorporated investment company not having a board of directors.…”

Section 2(a)(9) of the 1940 Act provides that “any person who owns beneficially, either directly or through one or more controlled companies, more than 25 per centum of the voting securities of a company shall be presumed to control such company.…”

If Creation Units of all of the Funds or one or more particular Funds are held by few investors, including a Specialist or Market Maker, some or all of such investors could be 5% owners of the Company or such Funds, and one or more investors may hold in excess of 25% of the Company or such Funds, as the case may be, and therefore would be deemed to be affiliated persons of the Company or such Funds either under Section 2(a)(3)(A) or Section 2(a)(3)(C) of the 1940 Act. Section 17(a)(1) could be read to prohibit these investors from depositing the Deposit Securities with a Fund in return for Creation Units, and likewise, Section 17(a)(2) could be read to prohibit such persons from receiving the Redemption Securities. Furthermore, one or more investors, or the Specialist or Market Maker in connection with such person’s market making activities, might each accumulate 5% or more of a Fund’s Shares. Additionally, one or more holders of Shares, or a Specialist or Market Maker, might from time to time, accumulate in excess of 25% of Shares of one or more Funds, and such persons could therefore be deemed to be affiliated persons of the Company or such Funds under Section 2(a)(3)(C) of the 1940 Act. In

addition, there exists a possibility that, with respect to one or more other registered investment companies (or series thereof) advised by the Adviser, a large institutional investor could own 5% or more of such other registered investment companies (or series thereof), making that investor a second-tier affiliate of a Fund. Applicants request an exemption from Section 17(a) of the 1940 Act pursuant to Section 6(c) in addition to an exemption pursuant to Section 17(b) of the 1940 Act to permit any persons that are affiliated persons of the Funds solely by virtue of owning 5% or more, or in excess of 25% of the outstanding Shares of the Company or one or more Funds (or affiliated persons of such persons so long as they are not otherwise affiliated persons of the Company or the Funds) or holders of 5% or more of one or more other registered investment companies (or series thereof) advised by the Adviser, or in excess of 25% of the outstanding shares of such investment company (or series thereof), to effectuate purchases and redemptions through in-kind transactions.

Applicants assert that no useful purpose would be served by prohibiting such affiliated persons from making in-kind purchases or in-kind redemptions of Shares of a Fund in Creation Units. Both the deposit procedures for in-kind purchases of Creation Units and the redemption procedures for in-kind redemptions will be effected in exactly the same manner for all purchases and redemptions, regardless of size or number. It is immaterial to the Company whether 15 or 1,500 Creation Units exist for a given Fund. All will be issued and redeemed in the same manner. There will be no discrimination between purchasers or redeemers. Deposit Securities will be valued in the same manner as those Redemption Securities currently held by the relevant Funds and the valuation of the Deposit Securities and Redemption Securities will be made in an identical manner regardless of the identity of the purchaser or redeemer. Absent the unusual circumstances described earlier, the Fund Deposit and Redemption Securities will be the same.

Applicants also note that the ability to take deposits and make redemptions in-kind could help each Fund reduce expenses and therefore aid in achieving the Fund’s objectives. Applicants do not believe that in-kind purchases and redemptions will result in abusive self-dealing or overreaching, but rather assert that such procedures will be implemented consistently with the Funds’ objectives and with the general purposes of the 1940 Act. Applicants believe that in-kind purchases and redemptions will be made on terms reasonable to the Applicants and any affiliated persons because they will be valued pursuant to verifiable objective standards. The method of valuing portfolio securities held by a Fund is the same as that used for calculating in-kind purchase or redemption values and therefore creates no opportunity for affiliated persons or the Applicants to effect a transaction detrimental to the other holders of Shares of that Fund. Similarly, the Applicants submit that, by using the same standards for valuing portfolio securities held by a Fund as are used for calculating in-kind redemptions or purchases, the Fund will ensure that its NAV will not be adversely affected by such securities transactions.

Accordingly, the Applicants respectfully request that the Commission grant relief under Sections 6(c) and 17(b) of the 1940 Act from Section 17(a) of the 1940 Act to the extent necessary to permit all persons that may be deemed affiliated persons by virtue of a 5% ownership or an ownership in excess of 25% (and affiliated persons of such affiliated persons, so long as they are not otherwise affiliated persons of the Company or the Funds) to purchase and redeem Creation Units in-kind.

For the reasons set forth above, the Applicants believe that (i) with respect to the relief requested pursuant to Section 17(b), the proposed transactions are reasonable and fair and

do not involve overreaching on the part of any person concerned, the proposed transactions are consistent with the policy of each Fund, and that the proposed transactions are consistent with the general purposes of the 1940 Act, and (ii) with respect to the relief requested pursuant to Section 6(c), the requested exemption for the proposed transactions is appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act.

The Applicants’ requested relief with respect to Sections 2(a)(32) and 5(a)(1) is virtually identical to the exemptive relief obtained by previous applicants.⁴⁰ The Applicants’ requested relief with respect to Section 22(d) and Rule 22c-1 thereunder (relating to the exchange trading of Shares at prices determined by market forces) is virtually identical to the exemptive relief obtained by previous applicants.⁴¹ The Applicants’ requested relief with respect to Section 22(e) is virtually identical to the exemptive relief obtained by previous applicants.⁴²

The Applicants’ requested relief with respect to Sections 17(a) and 17(b) is virtually identical to the exemptive relief obtained by prior applicants with respect to the actively managed ETF relief.⁴³

The “active” management of the Funds is the only substantive difference with regard to the prior relief granted by the Commission to index-based ETFs; however, the relief is substantially similar to the recent relief granted by the Actively Managed ETF Orders.⁴⁴ Applicants do not believe that the Funds raise any significant new regulatory issues. As discussed above, the portfolios of the Funds will be fully transparent, thereby permitting arbitrage activity to the same extent as existing index-based ETFs and recently approved actively managed ETFs.

In view of the foregoing, Applicants believe that the basis upon which the Commission has previously granted exemptive relief, virtually identical to that requested herein, to index-based and actively managed ETFs, is equally applicable to the Funds.

The Applicants agree that any order of the Commission granting the requested relief will be subject to the following conditions:

1. Pursuant to Rule 0-2(f) under the 1940 Act, the Applicants state that their addresses are as indicated on the cover page of this Application and further state that all communications or questions concerning this Application should be directed to:

2. The Applicants request that the Commission issue the requested orders pursuant to Rule 0-5 under the 1940 Act without conducting a hearing. The Applicants have attached as exhibits to the Application the required verifications.

Pursuant to Rule 0-2(c) under the 1940 Act, the Applicants state that all actions necessary to authorize the execution and filing of this Application have been taken, and the persons signing and filing this document are authorized to do so on behalf of the Applicants.

Ira P. Shapiro is authorized to sign and file this document on behalf of BLACKROCK FUND ADVISORS, as Adviser to iShares Trust and iShares, Inc. pursuant to the general authorize vested in him as Managing Director


BLACKROCK FUND ADVISORS

By:		/S/ IRA P. SHAPIRO
Name:		Ira P. Shapiro
Title:		Managing Director

Dated:		June 14, 2010

Ira P. Shapiro, Vice President of iSHARES TRUST, is authorized to sign and file this document on behalf of iSHARES TRUST pursuant to the following resolutions adopted by the Board of Trustees of iSHARES TRUST on September 24, 2008:

RESOLVED, that the proper officers of iShares Trust (the “Trust”) be, and they hereby are, authorized to prepare and execute on behalf of the Trust, and to file with the Securities and Exchange Commission (“SEC”) an application, and any amendments thereto, requesting an order under Section 6(c) of the Investment Company Act of 1940 (the “1940 Act”) granting an exemption from Sections 2(a)(32), 5(a)(1) and 22(d) of the 1940 Act and Rule 22c-1 under the 1940 Act, under Sections 6(c) and 17(b) of the 1940 Act granting an exemption from Sections 17(a)(1) and (a)(2) of the 1940 Act, under Section 12(d)(1)(J) of the 1940 Act granting an exemption from Sections 12(d)(1)(A) and (B) of the 1940 Act and under Section 6(c) of the 1940 Act granting an exemption from Rule 12d1-2(a).

FURTHER RESOLVED, that the person above authorized is also authorized to prepare and to file any and all amendments to said applications as may be necessary or appropriate; that said applications shall be executed by or on behalf of the Trust by one or more of its officers, and that the person above authorized is authorized to take any and all such further actions including filing related applications or regulations and to pay such fees and costs as may be necessary or appropriate to effectuate the foregoing.


iSHARES TRUST

By:		/S/ IRA P. SHAPIRO
Name:		Ira P. Shapiro
Title:		Vice President

Dated:		June 14, 2010

Ira P. Shapiro, Vice President of iSHARES, INC., is authorized to sign and file this document on behalf of iSHARES, INC. pursuant to the following resolutions adopted by the Board of Directors of iSHARES, INC. on September 24, 2008:

RESOLVED, that the proper officers of iShares, Inc. (the “Corporation”) be, and they hereby are, authorized to prepare and execute on behalf of the Trust, and to file with the Securities and Exchange Commission (“SEC”) an application, and any amendments thereto, requesting an order under Section 6(c) of the Investment Company Act of 1940 (the “1940 Act”) granting an exemption from Sections 2(a)(32), 5(a)(1) and 22(d) of the 1940 Act and Rule 22c-1 under the 1940 Act, under Sections 6(c) and 17(b) of the 1940 Act granting an exemption from Sections 17(a)(1) and (a)(2) of the 1940 Act, under Section 12(d)(1)(J) of the 1940 Act granting an exemption from Sections 12(d)(1)(A) and (B) of the 1940 Act and under Section 6(c) of the 1940 Act granting an exemption from Rule 12d1-2(a).

FURTHER RESOLVED, that the person above authorized is also authorized to prepare and to file any and all amendments to said applications as may be necessary or appropriate; that said applications shall be executed by or on behalf of the Corporation by one or more of its officers, and that the person above authorized is authorized to take any and all such further actions including filing related applications or regulations and to pay such fees and costs as may be necessary or appropriate to effectuate the foregoing.


iSHARES, INC.

By:		/S/ IRA P. SHAPIRO
Name:		Ira P. Shapiro
Title:		Vice President

Dated:		June 14, 2010

John Munch is authorized to sign and file this document on behalf of SEI INVESTMENTS DISTRIBUTION CO., as Distributor for iShares Trust and iShares, Inc., pursuant to the general authority vested in him as Secretary.


SEI INVESTMENTS DISTRIBUTION CO.

By:		/S/ JOHN MUNCH
Name:		John Munch
Title:		Secretary

Dated:		June 14, 2010

In accordance with Rule 0-2(d) under the 1940 Act, the undersigned, being duly sworn, deposes and says that he has duly executed the attached Application for an order for and on behalf of BLACKROCK FUND ADVISORS; that he is a Managing Director of such company; and that all actions taken by the directors and other persons necessary to authorize deponent to execute and file such instrument have been taken. Deponent further says that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.


By:		/S/ IRA P. SHAPIRO
Name:		Ira. P. Shapiro

In accordance with Rule 0-2(d) under the 1940 Act, the undersigned, being duly sworn, deposes and says that he has duly executed the attached Application for an order for and on behalf of iSHARES TRUST that he is a Vice President of such company; and that all actions taken by the trustees and other persons necessary to authorize deponent to execute and file such instrument have been taken. Deponent further says that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.


By:		/S/ IRA P. SHAPIRO
Name:		Ira. P. Shapiro

In accordance with Rule 0-2(d) under the 1940 Act, the undersigned, being duly sworn, deposes and says that he has duly executed the attached Application for an order for and on behalf of iSHARES, INC. that he is a Vice President of such company; and that all actions taken by the trustees and other persons necessary to authorize deponent to execute and file such instrument have been taken. Deponent further says that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.


By :		/S/ IRA P. SHAPIRO
Name:		Ira. P. Shapiro

In accordance with Rule 0-2(d) under the 1940 Act, the undersigned, being duly sworn, deposes and says that he has duly executed the attached Application for an order for and on behalf of SEI INVESTMENTS DISTRIBUTION CO.; that he is a Secretary of such company; and that all actions taken by the directors and other persons necessary to authorize deponent to execute and file such instrument have been taken. Deponent further says that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.


By:		/S/ JOHN MUNCH
Name:		John Munch


			Page

I.	INTRODUCTION		4

	A.	Summary of Requested Relief	4

	B.	Comparability to Prior Commission Orders	6

II.	THE APPLICANTS		8

	A.	The Trust and the Corporation	8

	B.	The Adviser	9

	C.	The Distributor	10

III.	APPLICANT’S PROPOSAL: OPERATION OF ACTIVELY MANAGED ETFS		11

	A.	Overview Of The Funds	11

	B.	Capital Structure and Voting Rights: Book Entry	17

	C.	Sales of Shares	17

	D.	Pricing	26

	E.	Redemption	26

	F.	Dividends, Distributions and Taxes	33

	G.	Shareholder Transaction and Operational Fees and Expenses	34

	H.	Dividend Reinvestment Service	35

	I.	Availability of Information	35

	J.	Sales and Marketing Materials; Prospectus Disclosure	37

	K.	Third-Party Broker-Dealer Issues	38

IV.	IN SUPPORT OF THE APPLICATION		39

	A.	Standards For Requested Relief	39

	B.	Benefits of the Proposal	41

V.	REQUEST FOR EXEMPTIVE RELIEF AND LEGAL ANALYSIS		42

	A.	Sections 2(a)(32) and 5(a)(l) of the 1940 Act	42

	B.	Section 22(d) of the 1940 Act and Rule 22c-l Under the 1940 Act	44

	C.	Section 22(e) of the 1940 Act	46

	D.	Sections 17(a)(1) and (a)(2) of the 1940 Act	50

	E.	Discussion of Precedent	55


VI.	CONDITIONS		56

	A.	Actively Managed Exchange-Traded Fund Relief	56

VII.	PROCEDURAL MATTERS		57

VIII.	AUTHORIZATION AND SIGNATURES		58

	A.	BLACKROCK FUND ADVISORS	58

	B.	iSHARES TRUST	59

	C.	iSHARES, INC.	60

	D.	SEI INVESTMENTS DISTRIBUTION CO.	61

	APPENDIX A - Verification of Application and Statement of Fact		62