SECURITIES AND EXCHANGE COMMISSION

..

-.-:-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,

D.C.

20549

"

.

) DIVISION OF

:. .iRKET REGULATION

January 22, 2007

Domenick Pugliese, Esq.

Paul, Hastings, Janofsky and Walker LLP

75 E. 55th Street

New York, NY 10022

Re:

Hea,[thShare.s Emerging Cancer Exchange.,.Traded Fund and HealthShares

Cardlo Devices Exchange-Traded Fund

FileNo. TP 07-31

Dear Mr. Pugliese:

In your lett.er dated January 17, 20071, as supplemented by conversations with the staff of

the Division of Market Regulation ("Staff'), HealthShares, Inc. (the "Company") on behalf of

itself, the HealthShares Emerging Cancer Exchange-Traded Fund and HealthShares Cardio

Devices Exchange-Traded Fund ("the Funds"), the New York Stock Exchange, and any other

. Exchange on which the HealthShares may subsequently trade, and persons or entities engaging

intransaetiorui in the HealthShares,requests exemptive,.interpretive, or no-action advice

regarding Rules lOa-I, 10b-17, 14e-5 under the Exchange Act, Rules 101 and lOiofRegulatio!1 .

M,and Rule 200(g) of Regulation SHO, in connection with secondary market transactions in

HealthShares on the New York Stock Exchange or on any other Exchange on which the

HealthShares may subsequently trade, and the creation and redemption of Creation Units of the

Funds.

HealthShares, Inc. is an open-end managerrient investment cOnipany that was organized

.

as a Maryland corporation on February 8, 2006. HealthShares, Inc. has filed aregistration

statement for the .Foods with the Commission, which was declared effective by the Commission

2

011 January 12,2007. Each Fund will invest at least 90% of its assets ill the common stocks of

companies in the Underlying Index· (orin American Depositary Receipts or Global Depositary

Receipts based on securities of intematiomil companies in the Underlying Index). Each Fund

will attempt to replicate the Underlying Index by matching the weighting of securities in its

portfolio with such securities' weightings in the Underlying Index. The investrnentobjective of

We have enclosed a photocopy of your letter. Each defined term in this letter has the same meaning as .

defmed in your letter, unless we note otherwise.

2

File Nos. 333-131842 and 811-21855.

Domenick Pugliese, Esq.

Paul, Hastings, Janofsky and Walker LLP

January 22, 2007

Page 2 of6

)

each Fund is to provide investment results that, before expenses, correspond generally to the total

return of the relevant Index. 3

Response:

Rule 10a-1

Rule 200 of Regulation SHO defines "short sale" and Rule 10a-1 under the Exchange Act

governs short sales generally. Paragraph (a) of Rule 10a-1 covers transactions in any security

registered on a national securities exchange, if trades in such security are reported in the

consolidated transaction reporting system, and prohibits short sales with respect to these

securities unless such sales occur on a "plus tick," (that is, a price above the price at which the

immediately preceding sale was effected), or "zero-plus tick," (that is, at the last sale price if it

was higher than the last different price). Rule 1Oa-1 is designed to prevent the market price of a

stock or other "reported security," as defmed in Rule 11Aa3-1(a)(4) under the Exchange Act,

from being manipulated downward by unrestricted short selling.

On the basis of your representations and the facts presented, in particular the composite

and derivative nature of HealthShares, it would not appear that trading in HealthShares would be

susceptible to the practices that Rule 10a-1 is designed to prevent. In particular, :the Company

anticipates that the market value of HealthShares will rise or fall based on changes in the net

asset value of the component securities of the Underlying Indices and supply and demand.

Accordingly, the Commission hereby grants an exemption from Rule 10a-1 to permit sales of

HealthShares without regard to the "tick" requirements ofRule lOa-I.

We note that the exemption from Rule 1Oa-1 would not apply to secondary market

portfolio sales ofcomponent securities made in connection with the redemption ofthe

HealthShares. In addition, this exemption is contingent upon the Funds maintaining at least 20

component stocks.

Rule 200(g) of Regulation SHO

Rule 200(g) ofRegulation SHO provides that a broker-dealer must mark all sell orders of

any equity security as "long," "short," or "short exempt." Rule 200(g)(2) requires that a ,short

. sale order must be marked "short exempt" if the seller is relying on an exception from the tick

test of Rule 10a-1 ofthe Exchange Act or any short sale price test of any exchange or national

securities association.

Accordingly, in conjunction with the exemption granted above to permit sales of

HealthShares without regard to the "tick" requirements of Rule lOa-I, on the basis of your

representations and the facts presented, and without necessarily concurring in your analysis, the

3

The HealthShares™ Emerging Cancer Exchange-Traded Fund tracks the performance of the

HealthShares™ Emerging Cancer Index and the HealthShares™ Cardio Devices Exchange-Traded Fund tracks the

performance of the HealthShares™ Cardio Devices Index.

Domenick Pugliese, Esq.

Paul,. Hastings, Janofsky and Walker LLP

January 22, 2007

Page 3 of6

Staff will not recommend to the Commission enforcement action under Rule 200(g) of

Regulation SHO if a broker-dealer marks. "short," rather than "short exempt," a short sale that is

effected in HealthShares, subject to the following conditions:

1.

11.

111..

IV..

For each exempt short sale, the various. market centers that execute such sales have.

instituted procedures to "mask". the short sale character of the transaction so that they are

executed as. short exempt~

Such market centers monitor on a regular basis to confirm that any such product or

transaction continues to meet the conditions for the exemptive relief and re-institute the

price test for any product or transaction that fails to satisfy such conditions;

A broker-dealer executing exempt short sales will mark such sales as. "short,". and in no

event will such sales be marked "long;".and

The market centers will maintain an audit trail of all such trade executions,. which is

capable ofbeing produced and subject to review upon request by the Commission and

other appropriate. regulatory authorities.

Regulation M

Redeemable securities issued by an open-end management investment company are

excepted from the.provisionsofRule 101 and 102. ofRegulation M .. The Commission granted

.the Company exemptions from certain provisions of the Investment Company Act of 1940 in

order to permit the Company to register as. an open-end investment company and to issue shares

that are redeemable only in CreationUnit size aggregations ofHealthShares.

Rule 101 ofRegulation M

Generally, Rule 101 of RegulationM is an anti-manipulation regulation that, subject to

'certain exemptions, prohibits any "distribution participant". and its "affiliated purchasers" from

bidding for, purchasing, or attempting to induce any person to bid for or purchase any security

which is the. subject of a distribution until after the. applicable restricted period except as

specifically permitted in the. Regulation. 4 . The provisions ofRule 101 of Regulation M apply to

'underwriters,. prospective. underwriters,. brokers,. dealers,. or other persons who have agreed to

participate or are. participating in a distribution of securities..

On the. basis of your representations and the. facts presented, particularly that the

Company is a registered open-end management investment company that will continuously

redeem at net asset value Creation Unit size aggregations of HealthShares; and the secondary

market price of the HealthShares. should not vary substantially from the net asset value of such

HealthShares, which is based on the value of the component securities in the underlying Index

and will be computed on a daily basis, the Staffhereby confirms that the Company is. excepted

under paragraph (c)(4) of Rule 101 ofRegulationM,. thus. permitting persons who may be

4

17 CFR 242.101.

Domenick Pugliese, Esq.

Paul, Hastings, Janofsky and Walker LLP

January 22, 2007

Page 4 of6

"I

deemed to be participating in a distribution of HealthShares to bid for or purchase HealthShares

during their participation in such distribution. 5

The Staff also confirms. the interpretation of Rule 101 of Regulation M that a redemption

of Creation Unit size aggregations of HealthShares and the. receipt of component securities in

exchange therefor by a participant in a distribution of HealthShares would not constitute. an

"attempt to induce any person to bid for or purchase a covered security, during the applicable

restricted period" within the meaning of Regulation M, and therefore would not violate

Regulation M.

Rule. 102 of Regulation M

Rule 102 of Regulation M prohibits issuers, selling security holders, or any affiliated

purchaser of such person from bidding for, purchasing, or attempting to induce any person to bid

for or purchase a covered security during the applicable restricted period in connection with a

distribution of securities effected by or on behalf of an issuer or selling security holder. Rule. 100

ofRegulation M defines. "distribution" to mean any offering of securities that is distinguished

from ordinary trading transactions by the magnitude ofthe offering and the presence ofspecial

selling efforts and selling methods.

On the basis. of your representations and the facts presented, particularly that the

Company is a registered. open"':end management investment company that will redeem at net asset

value. Creation Units of HealthShares, the Staffhereby confirms that the Company is excepted

under paragraph (d)(4) ofRule. 102 ofRegulationM, thus permitting the Funds to redeem .

HealthShares during the continuous offering of HealthShares.

Rule.14e-5

Rule 14e-5under the Exchange Act, among other things, prohibits a person making a

tender offer or exchange offer for any equity security from directly or indirectly, purchasing or

arranging to purchase any subject orrelated securities except as part ofthe offer, from the time.

the offer is publicly announced. until its expiration.

5

We note that Regulation M does not prohibit a distribution participant and its affiliated purchasers from

bidding for and purchasing component stocks in accordance with the exceptions contained in paragraphs (b)(6) and

(c)(l) of Rule 101. Rule 101(b)(6)(i) excepts basket transactions in which bids or purchases are made in the

ordinary course ofbusiness in connection with a basket of 20 or more securities in which a covered security does not

comprise more that 5% of the value of the basket purchased. Rule 101(b)(6)(ii) excepts adjustments to such a basket

made in the ordinary course of business as a result of a change in the composition of a standardized index. Also,

Rule 101 (c)(l) excepts transactions in actively-traded securities, that is, securities that have an average daily trading

volume value of at least $ 1 million and are issued by an issuer whose common equity securities have a public float

value of at least $150 million; provided however, that such securities are not issued by the distribution participant or

an affiliate of the distribution participant.

Domenick Pugliese~ Esq.

Paul, Hastings~ Janofsky and Walker LLP .

January 22, 2007

Page 5 of6

Rule 14e-5 explicitly includes dealer-managers within the rule's definition of "covered

person." Accordingly~ while acting as dealer-manager of a tender offer for a component stock, a

dealer-manager is prohibited from purchasing or arranging to purchase that component stock

until the expiration of the. offer.

On the basis of your representations and the facts presented~ particularly that purchases or

redemptions of HealthShares would not appear to result in the abuses at which Rule 14e-5 is

directed, and that any bids. or purchases by dealer-managers would not be effected for the.

purpose of facilitating a tender offer, the Commission hereby grants an exemption from Rule

14e-5 to permit any person acting as dealer-manager ofa tender offer for a component stock to:

(I) redeem HealthShares. in Creation Unit size aggregations to the. Company for component

stocks that may include. a security subject to the tender offer; and (2) purchase HealthShares

.

during such offer. 6

Rule lOb-I?

Rule I Ob-17, with certain exceptions, requires an issuer of a class of publicly traded .

securities to give notice of certain specified actions (for example~ a dividend distribution, stock

split,orrights offering) rehlting to such class of securities. in accordance with Rule I Ob-17(b).

On the basis of your representations and the. facts presented~ particularly that the

:Commission has determined togrant an exemption from the InvestmentCompany Actor 1940 to

register the Trust as an open-end management investment company notwithstanding the fact that

. it issues HealthShares with limited redeemability, the Commission hereby grants an exemption

.from the requirements of Rule lOb-I? to the Trust with respect to transactions in HealthShares. 7

The foregoing exemptions from Rules I Oa-l, 1Ob-17, 14e-5 under the Exchange Act,

interpretations of RulesTO1 and 102 of Regulation M, and no-action positions taken under

Regulation SHO are based solely on your representations and the facts presented to Staff, and are

strictly limited to the application of those rules to transactions involving the HealthShares under

the. circumstances described above. and in your letter.. Such transactions. should be discontinued,

pending presentationofthe facts for our consideration, in the event that any material change

occurs. with respect to: any of those facts or representations. Moreover, the. foregoing exemptions

from Rules. lOa-I, I Ob-17, and 14e-5 under the Exchange Act,. interpretations Rules 101 and 102

ofRegulationM and no-action positionS taken under Regulation SHO are subject to the.

6

The. Staff also confirms its no-action position under Rule 14e-5 when a broker-dealer (including a member

or member organization of the. AmEx or other national securities exchange), acting as a dealer-manager of a tender

.offer for a component stock, purchases such component stock in the secondary market for the. purpose of tendering

them to purchase a Creation Unit size aggregation of Shares,. if such transactions are effected as adjustments to such

a basket in the ordinary course. of business as a result of a change in the composition of the. relevant index.

7

We also note that compliance with Rule. IOb-17 would be impractical in light of the. nature of the Funds.

This is because it is not possible. for the Trust to accurately project ten days in advance what dividend, if any, would

be. paid on a particular record date.

Domenick Pugliese, Esq..

Paul, Hastings, Janofsky and Walker LLP

January 22, 2007

Page 6.of6

condition that such transactions in HealthShares, any component security, or any related

securities are not made for the purpose. of creating actual, or apparent, active trading in or raising

or otherWise affecting the price of such securities..

These exemptions, interpretations, and no-action positions are subject to modification or

revocation if at any time the Commission or Staff determin~s that such action is necessary or

appropriate in furtherance ofthe. purposes. ofthe Exchange Act. In addition, persons relying on

these exemptions, interpretations,. and no-action positions are directed to the anti-fraud and antimanipulation provisions of the Exchange Act, particularly Sections 9(a), 1O(b), and Rule 10b-5

thereunder. Responsibility for compliance with these and other provisions of the federal or state

securities laws must rest with persons. relying on these exemptions, interpretations, and no-action

positions.. The Staff expresses no view with respect to other questions that the proposed

transactions may raise, including, but not limited to, the adequacy of disclosure concerning, and

the. applicability of other federal and state. laws to, the proposed transactions.

For the Commission, by the Division of Market

Regulation, pursuant to delegated authority,

~~

~es A.. Brigagliano

Associate Director

rauJ,/iaStlli!iS,JanofsJ(y&W;alke( ~

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S.~P/'TQ'~oSt{;)pkP:ric~ Int1e.~. C"T.()P:t$:") Index Fund; ({ij"Wt. JqhnMcOuire, dated

i\qgust15, 2001J Ei1eNo.'fPOl-160~ !ottheiSliates MSCI EAFEJndexEul1d;

(2)\il/, Joho;McGuire,datedJwy 10,200.1 "File No, 'rP01..161, 'for theiShares 'Goldman

. (can't,;)

M1,"; Jahle$ A.]3trgagJiauo

Jariua.ry17, 20~7

Page 4

@n(:)~t9per24~2QQ~, .ipJlletteriss\leclJqP(.)w~$lla,f~§E~~n,g~'-1:rllded. Fll1ldl)llst5

(the'cpo,w:erShatesLetter"');the C0mmissiangranted xeliefwith respect to the aforementioned E~£~t1'ge J\~tl?r()Y~i()11!3a,11.I:We§.• Qt~e9nti~r. *!srelief sl.1pe1:(:f~g~~.1:e1iefth~t

had been l'reviouslygranted totheAmericaflStockExchang~,LLC("AMEX"),ETFs

lj~eda,l1dtti~de<i.qt1an p."g}jal1ge 1p,aY'1:cJyuPPt1 tPe ,re1i!f£g1:;lQ.~~ti if).. t4e:PoWelZSha,1:~s~t­

ter\vltholtt.the,csublnission.of a 1934Actexe~ptiveln()-acti~n tequesti£stlchETFs meet

c;ertllin· OPllQitiol1s'b1cl~~!?;thefQU()~!?;: .~~)·atle~st7~%()ttheETFllll.1.st~e,com­

prised .ofc?mpOnenfstoc:'kS thathaveamittifuum'.average dai1:yltil.difigV'dlUfueC(.ADW'~l

ofat feast $1 tllill10h durin:~eachdfthe'p!~yi()l.ts'two··mo1)thsoftt;ldin~priorto:'t0fiW,"

tionofthe1'¢levant l?;TF ana,.atleast 70% oftheETFmusthe. compcisedofcompoiieht

Stgcksth~thllvea n::»nimtl111pul1l1cflQat vahteo'f at least $lSOm.illic)t1;p:rovideu, however,

ifthe ETFhas 200Qf~OreC()l11,~~!l.enfs~()cks~. then5(J07o;()fth¢cofup()rientst()cksdnus't

meet.the$ltnillioll ADW anCl..$151JiiJ.i1fio:n ptlblic flQat tb..t:esho1ds.7 Altht)QghtheE1.li1ds

\vill J)~1ist~d~i:lthe N}rS:E, t1leE~c1~ • ~9i:l9friJ.eetthe #..qtm~i1lehts()fth~·Fd'Y~t~h~~¢s

Lettet setfotthaboye,·a~:·theFut1qs\",iUli()t1U¢et .theaxeragedai!Y .tta<lin.gvdlW!leM~

P\lbJiq'f1()a1;cd,tetia}lTh~refQte'. theFllfl-.~cannoptely()11tl1et¢liefpr()vldedip tlieP(jy.r--

S~chs!echtl(}lQgyIild~stty~l1.iltiti1¢~aNetworking,.GQtdmanSac~sTechn()lQgyJ~~g~ttY

Semiconductot.'GoldtnanSachsIT'ecnnolQgy Industry'S6ftware, R'ussellMidcal'. R.ussell .

l\1i.d~~p Gn)Yl1;l1..>ao1l.Q R.;Q$$tll &!idplp Value Illdex Funds.; (13)LizaM, Ray. dated Matc:h

13.;200'1, FileJNo;TP01-106,;,f()ttheiShate§Goldh1an·SachsTedIhOlQgy·IndexFtin~;

(J4)ja111es'J:'. McIia1e,<igt,ed FeptIJl411, ?OOl,·FUe.NQ; 1'POI--GO, fQ+theiS4~:t:es,CQhel'l.~

SteefsR6tlfyMnjOrs aridthe·NasdaqBiotecln'iOIQgy.Il1dexFunds;/p&) MafyJOlfl1 HOene.

elated S¢ptemb¢r S, 2(10.Q; Ejl~\NQ .. TPQQ-135~nd l)ece1l1per 1,2QQO. EjleNp; TJ?{}1-16~

respectively for theiShates S&tl? tOOand~&PG10ball0p Index Funds; and (16) ]<''lfb1een

FlMQri:~ty.}(latedM~y" 16,. 2()(Je),FileDJ.o. TPOO..,3Q fot3'5iShatellFund$.

5·.~e~J~~eJr·ft~~~~~ii\.•.~g¥aQ.q; . £\s~i~~~~~1reet9!.··pf~~ltetJ}egWafJpq; • t()$~t

M.Sttauss~ E§q.~iaated()ctobet24, 20f)o.

6Lettettto1i1J~trres.~,~~~gli~l1Q, Assi:>tlllltDir~t~1:;.Divisl0n ot~bltketR¢~~tipn, . t(r

(mute Pi McGrath,VicePtesidentarid;SpecL-tlGounsel, k\iIEX,:dated AugllSf17,'2001

(the«j\1\rE¥tett;¢1:~').

.

7meC;drl11tiisSiollpas>gt~ntedclasSfeliefWit4J:espe~t to $el;~on.11 •. (d}(1) an(lRUles1()btQ; IhU i2.1.5.<.:1-$ ai1~115,cl·;() of the E~chill1geA¢tt()cel't~in~~Ql.1aiirymg;.EJ'F$;\$'ee,

letterfi:qmqatnerille Nfc(dWre,ChiefGoull se1,I)iV!slon· ofMar}(efRe~tioll)to the SeqlritiesJ1:ldu$tryAssot;:iatlQp-.daJ,e<l N<>Y.e1)1het.21, 2(J05~ The Ftli14s trreetthe reqllite,ment.~.Q.f"Q.I}~1ifyin,gE'rFs)J l.1t1der this lettel'm)da:rethere£oretelyipg on this lette.rWith

te$pecttdth.e$eptovislons.

II

E.xcept f'orthemhllmUnI average daily tradingvolUhie and public float criteria ofthe

/ , .,..).

,toUt,

:Mr. Jahies A. Brigagliano

J~nua:ry 17; 2001

PageS

¢J:Shar,e$t¢ttet'With):¢s'P¢¢t:t~Rules/l0a'71,.10b-17,Md 14e..5.Qftlie.If,k¢1i~geA¢t'.Md

.• ~ll~es JQl~pd .lQ29fR~gWationMMdRule40q,(g)qf~egW~tionSI-1Qp1:omWgatedull­

d¢rithe Exohil1ge.ActandtheCoropany,oilhehalfofthe<Funds,nerehyteqtleats,·telief

Pr9l:1:lthe ·aJfotel:l:le1l.ti9ll.e4il$~~allgeActUlles.

'TheConipanyuotes the~ieationaridlssuatiG~h¥'anfuvesttnent cornj>at1yofshateso!

~t~;tllatin<livid~a11~tra~eonal1:Exch#~ge,b~tthatil1.13Ige:~ggregations:pan•.Pe .pur~

chasea.ftom:itndretleel'i1ed \v1ththeissuing.hivestrnent:company,isno>longer novel. ''The;

C()mWs$ionha$.£o~l110j;ethllnll.·qCGtd¢c9nsiqe.(edllnq.llpp(()VecllJllltly:sw:p.proposals.

S6fuc.b£1:hese·exchinge-tfadedprcidiicts••.navedJeen.•.ftitdirig.puhlicly-f6tyeirs,;aridthe

Compa:nyisnotwwareofanya.buses associated' with them. Tndeec,l,sevcl:iLof theprod~ ,

uctsl'l.a'\r';heefisoembiaceal)yih'V'est6ts.th~t theyroutIDely are'among,the highestvohi11lC

sepMti¢ll/QIlthe E'$.c,h@~~$QIl\Yhi,¢h theytt!lde.

A.

The Funds

E~~hE*Ild·se,d~s t.P O:flckth.epet{On:l:la.nce; heto~efees ~de~peIl$es,ofa. pat:t1cwar

be1IchfuitkiildexP The Fiirids' each inte1idtb qualify as a '''tegumtedmvestmerifeoni..

pa.p,y" £'Pt: plltppsesof thelnt¢1'l1a.lRevenue' Coell:).

Each Fund will invest atIeast900Jc, of its 'ass,ets in the common stocks of companies in the

Underlying Index, or in Amei"ican Depositary Receipts ("ADRsf') or Glohal Depbsitaty'

Receipts ("GDRs") based on, secutities ofintetna~orial companies in the Underlying In~

clex. Becatis.e each Underlying Index is comprised o111y of stocks asindita:ted by its, name

1111: 'c<

•

.'", ' .

•

d" "th H'

''I'M n,~

"

(C..g')9¥e1l1:ergmKcaIlcerc;ompa1il,e~,a,re cQ~~em. e, ,e

es'

Utll~gtng

Catitet Index Furid) this means tllateaeh Fund will fuvest at leas: .' 0 dtits ass'(~ts1nsticli

cpglp~es; Ellch FtmdmilY aJs.ofuvest.qp,to~n%'of;i~sas~e~~in £PtuJ:es(!po;~-ac;ts,op:..

PowerSl1ates Letter setf6rth'.a:bove;t:he FunttsrneetaJl6fuetconQ1UPflS·.·bfthe,pp,\vet,$haJ:e~,tett~,Wit1l:respecttP. t4e-~~~,"etag~daily q;~tiiJ,)gV?l~tt a,n4 puqlif.:,.:tlpa.t

tests;the.Cardio DeyicesExchan~e-l'radedFunds.atisfies1:hiStestwithl'esl?ecttdin()te

!;ha~ 6g%~flts POJ:tfQA()~~~;t1w.lEnWfgingCM~Exc4ang~1'r'<l,d~4F.\lnd§a:tis£i~stWs;

testwithres~cttomQt{;lth~63%ofitsportfo.Iio. As noted in. Note 4ahovJ; the relief

.requested hexeiqis subscruua1ly si1:riua,J:tO the reIie£.gt~ntea>tQother ETFs~

~. The HealthShiresTtWEmetging @aricerExtharige~l'fadeg>Fllridthtcks1:hepetforinance.

Qhhe He~1tl:IShilteS'fN1Emerging Gilllce+ lnlile~;a.p:d t}teH{laJthSha:te§'l'~ CiltdioP'cviees,

Exchatige;;Traded Fuiid tl:ackstheperfo:fuliariceof theHealthShaiesW€atmo DeVices

11'l,dex(ea;chind,ex,a.Il· «trngetIYiI1girlqe'$.*~.

!vIr.. Ja~nes A,]3-rig~g1iado

.Jmluaty 17, 2007

Pllge6:

tidnsolt.fllfuteScollttatts,opt10nS,s\Vaps:dtlsecuntiesofco1:n1'a.niesin· the lJnderlying

In4ex,~$wen.'.t$p:lsh.a~dcash.eq,uivalents'.~~cl1asll1()neYll1~k~tin!itr\Ul'lents{Sppjectto:

the applical)ldihiitatldhs' of the. 1940 Act)... Eacl1.Ful1d,·Willattemptt(.yreplicate.theU~­

detlyinglnde~ by matehingthe·weigl)ting otsec.tu:ities in its pQttfoliQwiths.uch~eemrities'·

\y¢i151fti#g~1nthe UnderlyiAg)!nde.~. •Each Fundfuaya!sosample,. tatnettnanreplitMe,

the·Under1ym~Ind~~inlje!1l1sQfker• ('h~~GteJ:is~q;,s~~h.~SFC.e/e~gsr~ti?rear11ings

gt8vlthj~n4tliyigendyie14·· .·Itw Fund J?w1suesasampliilgstfategy,asjristdescnbedfit

wiUc.ontinl.letQinYest~tleast 900,;0 ;q£'it$}lssetsin the..pQmtIlpnstqc.1%A.PRsqr(3DRsor

:..1:-

•

.

• • .• ~t •... rr' cJ·l:··T"-'d···

l,J;lecohlpa1lt(~s ltl\J.,le QJ:ilwler+Y1Qg~~ eX"

1.

li1·

.

'.

.

lJrtdeilym~thtlex:De$ctiptidfisand:.Meth6dologies.

Each .p£t1le J..JD,4etlrm&Ind~~~s ~~eksto;;111~aSlp:l:1 and..1l'lOo1tO.r•. tl~e:J?¢:tfQt1D;a119~ofp\lh­

li~1y-listed ltealtheat:i,life. sci611cesltndibiotecMolow ,companies, EachFl.1lldfocusesotl a

~ffere~t~e$t&care,~tesde~ces·.,~~·~iot~chl:Qlq~ . in4e~. XSh:u=es•.• Gr~uPLLC (ilie<"Iu--

de;x@r~atQe'l; .thel'nret1boftheEunds?itwestinent.aaViser~XShatesAaviSQiS

LLC,·is·the

(;te~t0roreach Tjmledy~ JD,~~~"an4~ascI;~a1ea e~ch Qnde:tlring1Acl~ ~~ganip.ye~t'"

111entapJ?roa6h knowuas· "vertical" .investiIl~'.''Vertic~I''1nvesHng seeks .to.categ~»jze

co1l1pames Within•• a particulathe~th¢are,li£esciellcesorbi9t~chD,q!o~ .• indexpy{qp,lsfug

ol1e~chcQni.pany with re~rd totheili~gnosisofdiseases;thedci\1;eIQpinehtsofdiUg's.

tte~t:bJent~, therap1eSlllld d¢livery SY-$t~J,1J.s,apd thed~velqpJl1ept; (if et1:i\pliIlg!res,earch

t(}pls llhd,tecb1101Qgies fOtlJscirt tMhealthcare, lifesdel1ceso.tbio'techtiologysectdis,

TIre 111dexCreat6:r" based on its ():Wn.1?.t6pci.¢tal-y.futenecmaI.mq4el,ha~lestaP»$hed~p¢,.·

cifi<;,·. obi~ctiveinclusi()n!exclusiq,ncriter1,'l(1:he "Index COm-positiog M(lthogology")tlt~t

an issuerm\istmeetinordettoheindudedin a'nUilderlyin~Index. Each UndeJ:lyip.~In"

~efti\ViU bea,~nist~.t~4i1:lJ~Qtl1~t:4<$:J?~o,r's,(~e"X1l,d~~tr~~t:t~tQr"),.Wlrl¢i1 will

employllies~cJ:iferi«. t()detetin.Ui~thecQmp'osi.ti()fiOfeacli Undet1yin~Index .• 'The Advi.8m: b~~:~nga,g~Q..:I3;~· :WY'e~~~~;A:4yisq..tS •.~. ~9P't4.t\:.9yjsp..ttq1?ete~PP4~iP;J~J<.).~the

tlay~tO.·day<tnanttgefuetitof.each.Funcfs • P (jf ....••.. ', •.\vhith ihv61ves.princ1l'al1ytecQn~g,

:the. pgrtfoijo9t ¢<:l(;h F~'d,~iB~f'l:g~t~t:ly,;;.JQl1~t)<;;.c:t''lQy,re,,011figW;atioil:Pi:t1i~1Jhqer':·

ly~gIndexbythe·lndexAdmit1istiat6.1:.

Whendetenninjng the GOn)P~sitiQfiOf¢a:hDnderlying.Tncle){,theInde~ j\Qtnjms.~ator

;r~lies.()n1nan)r,so~rl:es()¥fufqr.tnatiQll,inCl\l@.tginfoJiJ!na:tion()btainedfrom. 'the BioCen,.

@:y and. M¢4T.taqltJ:la.t~paseS. Tl:te B1oCe1i,tW:yJlfi.4 MedTr~~ltqa.ta1:><asesar¢,m4ep¢l1gcm~

ge.J;.terallY av~aple· d~taPa$es thatprov1de~va~tafuount.df d~ta forhealilicare,life'sCi,.

~Hastifj9S

"NkJ~m~$:'A,.~iig~glfuIl9

j'aiiuiuy 17,2007

Page r

F'orea<;h Underl)'i~g If'lQe~, thelridexAdnili1isiratbr\Vill s<;reen. cdmpahies t6eIiliiiriite:

thOsetnatfaIloutsdeofthe m.'t!ketcaJ:iitaiizationran~esal',pll¢ablet~th~~Inde}{; .'1'h.~

Inde~A~~j:rator will tlieq. eiIlplqy·~e tem~de! bfthe]il.tle~q6itipositi(jn Method..

olQgy'fo£e~th Undefb~ing,Ind¢xto:,identitY'thec.ompatii¢~.iihM$~~~~·th~$e<;Pteri~.

''ryplp.lIUy, t4el~ges.t.o-tme~:esqmHaril~~:(c:iete!mif'lecl1>yinatket.ca,pif3liZ~tiol1):l~eiri-

.:~~~e~:'::1~~!:~~~~~~~;;~~~~:::;~:~~;~a~e:~ea:~~~~~~n~ethereafter \velghte-dbas-edupon die''iridiVidti;al¢O-nipai;1Y~li''m.ifket'v~oo tela,tjyeJQ:-th~'-

\vrnchever is less;-widitli~ teqtiitedinc!emetit takenequ@ly'frorli all ther~maifijfigt6m-.

P;o'~~lt-seCqpti¢,l!;u tq;(qW1ilti~n,'~lJ.pu,t e.a,ph. IJ-ng¢rJ,ymg]nQ:ex,'itlc:1wqingtbeFP-mp-<m,ept

seCt!~ties lqca.eh 1:Jt1cl¢tlyih,g Ihdex-;and the ,va1li~Ofthe secunnesm eachUntle.tlying,Ini;lfcXfis.p.o:s-~ed th:tt,fu,.gbo'Pttl1e ®~ d~y i~Y:~ 15,'$¢c,()j'19S~md.- is ;flYAAl~pJ~tW:o\lgh

R.euters.

.

.

.

g¢ii:et!i-Uyin¢lu:d¢tho:~~ wit!) $,On!l¢.:J~v~1~ft~e~qe.s",9P t1i9l!~"p~J11ey~!,g~p:'frC\IeAu~s

wi~ ~tgtl;ifioaiit qqt J~~ed t~ear<:h-anddevelbpmeritprograms.

.

=:~:~~:e:::_::~,~~~~~;~e~::~~::::;;~~~:~~;f~~~:~~:::~~~~~

11 The itiinitnum

\ve;ghtiilg for a,seCurity may falLbelow 2:5ii/oifitheeventa.teb~cing

wO\;llg .t~qJjir?t4eETF'.te1ymgQn &ushln(1e:l' tq m~lteOlitl gs,qtl:derS¢diqlll9'(gYQftl,'l.~

Exchange Act.

.

)

,./

~astings

. -.'

")

.

1'hiJap:1e~ A. B'xigagliqgq,

January'17,20'o'r

P~ge;B

·ageflQat-aqj':o~~~(ltl1*r1:f;¢tcl~pit1t~jitiQnwas'.approX:imately$.O;39'J7 billion;· nUftehlat~st

cotistituefttS tepre~ented~ppro~lit¢ly60;420/0,~fthe ind~~'Weight.Theijve¥gl1est .

w~ig}1ted:~~cuiities' ·tep~e§ellt~q 3'6i'93ro'9f~~i#lC1e*\veighf.

.'.

.FIeitlthSltafi{s'i~IEijU!ygb#gCa't¢lJ.r!nde:x:,(I,~.ojt>e(;emllerJ~,,2;()1l~:'

rn~e~: Ci;>ml19:$itiQll

Gdncenthitfon

SilebfCortiparues P19At"~qjt1stCq'

$B@<;>l1;~

-'totil.l~~~·i$~e.;(1Elq~t~4j~st~q :ejJl:i.9P~)

$'Smi

Number dfCotripbnents

'ReJ;¢cllt it! T~l1,.ta1'g(3,!Jt qC)1n,p(!)nen~;

Market Cap. - Medlait

'.

$ ();4435 ','

Matlt~rt;~p., """' @t1-Jmeij;9;4y~age

Market C~p. - Siliall€sbSt-ockHeld

$ (};~99.7

$ O~2266

Matli~t:CJlp:. :. L!J1:g~~StrQ~ka¢td.

M:uket'Cap; -$ ';Wei&~ted,A-vet~ge,

$ 1;:r6'66

P6rtfpliQP1E

N}:A

"'~2:

60;;f~%

$ t1:aQ4$

Ind¢x

(]harac~ti¥ti~s;

P(5ttf6).j;qp/E EX91\l~N~~riyee~+nings

~~~:l:i/~~~~:~i:~~()~~~~~:S

POrtf6lioPrice;!BQok'

Divide'nd YIeld.'

'

.....

N~QJ.ej IllC!exWeight

prqgemc.sPhami'ateutl.dils: Inc,

n~nQ;~:qI;l'G.m:p

::;~:;i!:~alht'

;(Seri'tillic

I<~~,j3~qp~~celltiea.l~'

Erizgri rri~

.rsjsPl~ul'l+l,l:~~uq<r.lls·

Gp.c':,Bi6techAg'-SpohSoie:d.. A dt

~~m Pl1a:t:Ql!l tnc::'

Hiil* 'Bioscicri'ceslhe,

,C¢lJ G~'nesys Tile

Adve,ii:ttXPh~trtiaceuticrls' Irk 'Com

Atlad Pha®~~e\lti2~§ Inc

)

/

G~r6n CPtp

CQleyPh~fti'11~cetit:icalGroup

A¥tetnaZen~tis It1.<:

Lg(~A];_US~I!#7(J8'61520·1,O

tN/A

NIX

N/A

MIA

Index ConstituehtS

Bioctyst,~h.~~J11aC~lltic~.llnc

Nl:t\

7;58%

6J2°1~'

504%

a{S6o/:

0z

399

~'19,.

5c;11~/h

ik96%

4A6o/d

7·'P7f/o.·

'5;7-2%

):;?l~(l!

3.69%

~S~~(l

2:89°/6

5;5:1%

4.18%

.3.:0.9%

3;30%

P~t,~~~ ~6,ap.;ml~~llijc~ll> lo;c

2S~%

Mif§'Bail Ed,vardifTnc

3.22%

~In.¢'·

6;1:0%

2.$~O)o

C:ytoklherlcstht

~~OGd~:'¢fi:~:~j~~t;1~~:~~~~~~'~~:~:;f:~~=::;:~~l::~f'~:!:n;g:eS:;:~

~e t19a~7:l,4jUsted'm,.~~<:t capi'tili~~tiqi1 wllS~ppr()~~te1y Sl.$595:billion. The ten' largest

c:dhstil:Uents"tepies:ent¢dii;ppi6~ite~y 55~5S%'()Nlteahde,x \V,eight Th(djy~JJig4~~t

weigQt~d:s:e(;J,Uitie~J:~pres~nt~9-ql..5:1%oftheind~

-Weight,

,

Healt1iShaTesT~ardio Detii''l!s,[-iUlex,ds' OfDei:wber 3I,20,06;~

Ind¢""{:C'Oitiposition

OQncellttaiibi.'l

To~l Ind¢~$iZe(FlQa,t-Agj:tJ$tetl~iUiQtl$)

Nttniber,o£COl11pofleilts

~et:¢,e:n:tiri,:r¢:n'.J;:;~g~~t '(:~mp~tl~l1t$

Iridex"

,c.g~a.qt:et:i$ti~,s

$i~jiE

NlA

MIA

N!A,

N/1\,

N'IA

NIt

)

tyIr. ]am(:$: A, 13'rigagliano,c

jailuaty 11;.2007

Page'10

Index'CollstlnIents,

l~M1ie,,'Ih\ie*\Velg&t

ABiomed Inc

·4.2545%

;\:qgi.p4y~mk:$ rIlc

5.2648%

"if '0'Q

4...S15Z'

.5.6'077%

$.g~66°)()

2;6652%

Attio1l'Gotp,.·,CQrn

B,llt(:I(<:;;.:Ri;)··.·.I~t;

Cryolife;! lric.

(CaJ;w~c::~S,qc;ns;e:c:Ptl?·

Dinasc:qpe;

Eadd)ogixJn.c

EV'3'

.

B~,va[~~,Litescil,':J1Ce$'Cq:lll;

3,0442%

3;8692-0/0

4.123~/'d,

F0x>Hdllo\v/"Iechrtolqg1es"Inc

4;9421%

4.{S8:S0tk

i~;~g'i~:~b

::Ki~~~'

Nh1tMeaTiic~tt>fu .

4A;385,jtO'

NI¢tit'iyl~dic~t$Y$l~tnsIn..c:;;

p®sis,M¢diqfl1 Jn~.,

S.iiecti~heti~s;Cotp··

s.tJpa,e,~fedical

Steh~dtaxi$nk

1'hQr~t~GCqtp'

Vlt$¢l;iliu:'S6hidbils In6

VQl¢a:jj~ CQtp

fi9"f

Ol

,/2/0;

5,:\r'

.···',';i~/

3.8'$:6'2%,

6.2810:0/0

· A:e·8AOJ .

3··.lIU}t1O,

3.7470.%

$.~Q~q%

3,218'1%)

5~5,27:2%

It.T:heAdtdsot

'cbrn,pariYi XShafE!S'iGioup .LEG.is:,the .treatof:oftheDnderlymg;lndexes.

C.

·.TheSub,;,Ad'\dsor

EN)! 'lnv~stp:l~nt.Adv.i$-()fs~a;sepatat~ idel1tifiable·divisiop- bf ilie,-BllnkofNe\v York,

setves:as investmeht sUb~ad\risettotl1e Filpds (thei·Stl:h..Ad"lsof~). PurSltMt toasuh.;;

)

."

a4visgryagt:ee1l1e!lthetweell t&eAd~iis(;'lta,t1d the'Spb-AqYi~ot~~heStl:b-Adviso.t\Villhe'

PaulllQstings

'A~

..

NIt. ]atnle$ A.l)rigagliaoJJ

]al1uat;r 17.. 2007

Bage: ll

l:e~P9n:>~bleJq1:tllet:lay-"t9",daYh)al1~g<ei1t¢t1tof

the Ftlrlds~sutiject td tliesupeftiiSioIi oEtIte

Advlsofa'hdithe BQatd.

D.TheDistributor

J:\L~S·DiSt1ibut6ts.Inc... servesaS'fhe ·d1sttibllfof6fGteatidri 1.Jrot. A.ggre~tiOriSfot.each

:RtrnglQn.. an~e!l!:yJim$is(theJ':Oisttib!1tQ~")' .. 11le•• Pi~~b\ltorh~:>,j~~ter~dirltO!~11,~g~e~ ..

l}1~l1twlth.~eGotnpanyputsuant to \Vhichit.willdistriput<~'H'ealthSharesl'Moft1reFU11d&.

'J:'JUsa~¢e1lle~t\ym qQ~tittue'£~j;tW'o1eal:sft~1l1its effe~tiv~4ategnaml1b~re~ah~e'

aWll.la1fythe~ea.ftet. B:(\a!dl$hares]"M will be contllmouslyo££eredfo1: sale bythe Distribu.,

t<Jt~fl1ylt1Creati()nUtU.[;Aggregllth)ns'~S'id~s~J:ip.edil1 theCompa,ntspJiQ§peC:1'Ys'."rh¢

IJistribllt()l: will deliver dleC:()mpanY's,ptosp~.ctus,an~•. ~pontequest,.the.5tatementof

~delitional"infortnatiQrL0'SaI")'to. personspul:qh~~it18Crelt~QU UnkAggregatio~s:~!lqWill

in~41tain.feC()rd:>~f.pothQt:ders .• phtc:ed.with.it~11d<:oiJ.f1tl1latighs'ofacceptatlce . futrrished

b)''it. 1'lie·Distributotrsa br~ker~dealer'r¢~stetedwlqerdreExcltauge.Act~clame(nbe~

Q£tlie N*S1D,.lgc:; .' T11e.ni~ttib~t()thas'nq·r()1~ihcl¢t~~gtlteinyestment p()lic:ies}()f

tl1eFufidsor\vlUeh$ecUfities fu:e;tobepurcha$'edo~$'old by the Futtds.

E.

Iv!anagement -Indexing: Approach

TheColnpany'sB:oatd hasresporisibility fottheovetall matiage111cntoftheFunds.1'he

~dyisor, ,subjeyttP the. s~Pel.Xj~i()fliqt theB()aJtd, wiUbe'J!~$p()1.1sible fort1te<iuves nnent

lIl~~g@1lent()feacl! Fund. TheSub-Advisorwillberespo~siblefor dleday::to.,day man~g¢tnent o£the Fv.nds,supject to the.s\1pet'Vi~i()n of:tlte J\:~yis.()rA.Q.(;lthe~Q.al:q. 4sdesctib¢din tll~ Cofupany~sp'r<;>speCtus, the FtU1dsare<notactively1nanag~dal1d the. actions

oftheAdYisQf'and'Sub-t\dvisQfWmt1Qtt.¢s\lltint1)eaCtlye m anag<@.¢ntofthe.E@Q:>·

I~~t~~d,t1l~~gxi~~l:o~§~~ .• ~ pas§tve, ()till4~~~t~~p~~~!hjg.r#~~gingJhe FUlldstotrJ,tck

th~~tilirQrman¢efJDe£()te.f~~anae~pel1$¢$',Qtthel.Jildtt!~~IndeX¢~~.?Jnl~em@y~u-.

liJ.l31lf9~q~,;th~· F'gJ:la.s\~~qt§~e}{ t99tl,l:p~tfo~~p.yp~tlPl1~w~~~~.§~g17il:~tt.·Willt1Pt

assUtriete1iipotarydet~nsiv¢.pQsitibns·\\ihen:ltUttket$·•. ae9Ift1e••.QJ:apl'eat••·PY'¢walu¢d.

~ltel:eyt~rpl:~c;tic;aBl~,. each.F'-U1tf\\7lllteplic~te .itsJJnd~r~Yin~ltl.dex'.'.1l1earui1g.thatit will

hold.the satnesecurities·as'thdse··illtlieUl1detlyio.g<.Inde~anu·inapPtoxhnat¢ltthe same

br•.

P1:()PQ~1i(>-nsIthel)ec\1titie§.9W1J.e4

eaC4FllAda7el~e+e~fter.r~fetredto. as "Pun.dSec;utities"), Each.Fun:dmaya1so,sample.itsUllde~yin~,lridexbYhoidirigseCuritiesthat,;'inthe

'~ggre~~e, ~e·,·intellded"Joap:pr~x!mateth~.JJtl,(:I~yixl& Ind~~U1 t~p11~og.~ey.chatacteJ,"il)-.

Ucsrsttch asprice/eatningstatioj€atriirtgsgtowth1and dividend }>ield Typically, ·aFund

wiU1lse as~plin~s!Lrat~if J;e~atQ~-yconsttai.nt9ioto1:het c;Qn.s~getatiqgspteyent it

Itom feplitatirigifsUnde1':lying Index.

Paull-lastin§s

.!lTI'OIlI@'

Mr. Ja1n~s1\. Btig~li'ano

Januaty'17,2007

l'age 12

11.

Proposal

A.

Reason fbr'ThkRequest

It•.•i$•• Cttrr~n:t1y·~~pec;t~4.th~t~1~.Fl.lll~wi1lissJle . .~1)dted~~I::Iealtl1SblU:~$JMq*+yit1.~g~

~regatimls"of lQO~;OOOHealtljShare$TM ormUltiplestheteof(':'CteatiOll Urrit·:A:gg1:¢gn~

• ti~~~)),·~Jt~:'tha.fp.\l+AAa~~q£q~p~tigg PIlit ~~~~RJ:l§,~h~.,able.·t? sepata,te.;~e

Cte~tidllUnit.i\ggtegatiortsofth¢ FU11dSinto'100,OOQit1dividualH¢altliShares~rM~ .

'I'he

'o11lllbetqf' Ii.e,~tJ,tSI1aJ:e~'J.?i1~a-Cr~}:ttil;}plJ1litA;ggte~rion.will·pot (;~~geX~(;eptil1the

eyentofastock split ots1tl1llMrevalwition),.

.

The COlnpapy\viUlistiI-lealtl1$~'U:estM~£the Flln<.i$q~tl1eN¥S~ .. ~t~l1.~~e0P~Cted.t.1l~t

'the l)istriputqt or.a.ny oilier entity will maint.'\i.4 asecondaty matket ininwviduall-Ie.a1th"

Snares™ .. OneiprlnOl:ei~$~tnemberfirmswiIl~ct~$,de$igp,ate4spec4U1~t$.~n4.ma-iw­

taiila matketf()rtlieH~lth8ij~res~1tha,tttitdeoi;1 the NYSE. HealthSh~n:e.strvt. oillie

Funds \Vil1 ttaac\Qrtit'heN¥SE'in/atrla}jll¢t:sifnihtt1;o'the w~yqtbeJ:ErFti¢Utt,¢~t1ytt~u:le

Oll.the NYS£·atiq·0t:h¢i:ExSl1a.ntses.

"

A:sstateclearlier, tlieComp~l1Y l1a:s.tegIsteted tl1e>Furtds \ViththeCotfu:.llissionptttsua.I1tto

a'1:e~str~tion;s,tatemeflt9~~oX111.IN~t.t\ . toper~tt:he/C()1npat1Yio • 9ffetat1(.lseA.rte~th~

Shaies™ofthe Ftiilds12 tinderthe 1940 Actatfd the$ecurities1\ct. 'I'lievatiousdisdoslJ+I'htlqSll.111ep:ts~drp:~ttet:ingm'<l.tetiaI.swiIl··<lescribe·t1lesjgpifiqmtf(~atutes ofI-:Iealili~

Shares™.

Health$hatesTM(U:eregi~teted in bOQk-enn:y {O!Pl Qn1y;tije}:(llllds w~ npt isslleindiyidu~l

sh~e cettifidtt~s fo:tFI~lthShatesTM.. 'fheIDepositqi"y'ftustCofripany("DFe~J),ot

its.

n~nililee'wi1lbe .iliel;~qq:td .• ~~,r~~steretl.,.~w!~~r'·o(}tUQ)Jts~~cIm~.FIe~thS11~res1M ....~ene­

ti~1.q\YpeJ;~~p·~fI'1~t1l~4~¢s'r-f.~ . p~S~g\~ •. oitth~.rec()td$o£D2FC···o};;aDtdker ..

de~~t.th'«ti$;a;·p~:tticitm~1;·'ln • L)tr(:(~";o]C . P~tti¢iJl~el).~

n¢1l~fipi~9W~er~?t>fFle~th$haf~§~M('~el),~£,i~!~Qwl1ets~J~will

t¢¢eiv~ • ilJlpfthe.s~t~mehtSj .•not1ces~andt¢p'i)ttSi;eqJlfred .•unde!the.1940··1\"ct.andorhetappH~~ble" htWs 1:'l1ey

,yillI~c;#ve).fo.rie~~mpl~ . 'lllfl1l~·,··~q,q.~~~~aI:lnuw . reP9rts.~"tittel,l $~t~mellf~ a~~o.mp~f~'

ihgdividend pa}rnie11t~} Pfo~!Statementsl. annuaL1l6tificatlonsdetaiHngtlie' taxstams.of

dis1:tib1ltio.tl~, .• ~S~r~~1~Q9-IJIMs,etc; .. lleqfl1ls~tl1~p9m.l?at~i~feq<:)1:q~"j:e£le<:towner~

slUp of HealthSharesT~bXIXI'C oIl1y,theCompany,VUlfutnish ap,plicablestatemertts,

llo.tices,.an4IePfJttsJo.'tb-ePTC: J?atti6ipallts''Ylt9~jn:tl1rll' wU1.he,·respoJ:lSihleJot.·dis1:tib\lt~

ingthem to;:he B:eneficialOwners, 'This arrangeti1ellt.lsidentical totha:to£the oilier

PaulHastings

ATTOllN€VS

lvir.J1l1T.t¢sA.~t.ig~gJ1wo

nl1Ual"y 17,2007

Page 13

JEtfs.. a1{~c:lyU~t~~qll.l1.xl;hap?~§,ap.<.t.i$~~artqt~atll§edby E'fFs 'whg~e$futreSate

owned t.litbugh~riiuttfuLfUnds sripennatketinterniediaries.

B.

PutchasulgHealtl1Shares"fM

TIle ~Ul1dsWilli$sueHealUi$~~resThl·?rilyiriCt!¢ationU.i1itAggtegat:i6risandgenet~y,

ori1¥in . excha~g¢fQ~~tl . m-kitiddepQsit·.Q'f·$eCt1rities 1:>y.·~e.:pW;¢ha~er.t9~e~el:·.!:itha'ge-'

p(}sitQf.,~.sp~91fiedc~~hpa~1llelltq~§ctibed1ll9re fully .helo~ .•. Theill-kiriadeposit WiJl

CbiislslQfa bask¢tQ£;se¢\Uid¢§i(the··"<.DepositS,ecprities?~)sele¢ted.by

.tb,~·:i'\~~Q1Ct9tepli,.

c~.te (or"§~ple)the·s.ecurit.ie~itlth~. r.Jndftrlyit)gInde;e$•. (~§descri1:>edabovein ,·PattI.E).·

The identiticsaud-ai'P.ounts:·.Qfth:e Pepos.itS~!1rici¢s ,v.iU.. l:>eaet~.edhy-tb.e,;Advisor

a~t1'll1adepllblic1Y aY~lJle 011 the-N~tiollaIS~qllritiesCle~g.Gorporiti~n

r'NSeC'~)

bulletitl.hom.•. By tequirillg tliatl'Utchase~ndted¢mptiQll'ttansactiQnsinYQl~g

fl~~t1J~Jrate~TN1 hie.. ·i.n-,kiqp,.·.~~t1J~11.· .• t1l~J,1i:t;t"·c"l~4,.~e. tEohlpanY···8~f:i·.winitrijze.p()ttf()lio

hilihover,br6kerage expense's,•• and·oth¢rtianslJ.ctiOll<;bstS.

'Il~H~Fl.ln~~\"illqff<Pr~1,1ds~1-1~ltli~haresrtirinCre~tionUniti\ggre~cipnsithl:()lJghth~,

,··Distributot.·on'a' .C(}ritinuous·.hasis~ -without a smesload,·.. attheNA;X;l'per-sn.'tr¢neAt.. deterl)rine¢l~fter t~ceipt()fanorder in pr9P~rform .. Th~F1J11ds\vi11nqtissuefta~tionalGrea­

ti6nl.Jtriti\~regations..•TheNAV ofHealthShares™ will hedetetniinedasoftlteldose

ofreguL'l1: tradh1g 011 theNY'SEou, t:ac1J.Q2:yth}l.tth~ NY~Ej~Qp,ell{a ''BJ1SmeS-S

I,)a.tl

li}diyidll~LHe~lthShare§TM9ftpe Funqs will he listed' on theNYSEanPtt;a4edin. the secondarymatltetin th¢isatil¢fuann¢r asotherse~uriti¢$. TIle pti¢eQfl-le~lth$h~t;~sTMt:tad,­

U1g.0i1. the lXJYSEwill§ehasedol1 • ~ .• cuJ;rent.. bid/~ffermat}{etal1d may v~.frotnl\JAV.

NO,soconda.i:.y salesiwiUpe. :tnadeJo.Qt0k~(s,.o1"dea1el'Sat·4t;9nq~li~jQh.Qy·,th~.Pis.tribp:t()r

orky~~Fun9s,; .·.':I'r~!lt'1l~()ps,jpv()lvif:ig •. t1le:sWet?fI-le;llth$har~s'l"~:onthe~~J1:~WW¢h

•. \vill.beJaenve'en .•pw:ehas(!Ji$)a1iusellets'and-\viU\uptinv;Qlve·the Ep:ndsi.. Will.g.¢'~uqjeJtl.to

9~st.g~·b;g.t:~tag~"c~s~pgS()tmarj{ ..~P,s ~p,;(.t''''4tQ:g(;\~·;

'fh&priCirt~()fHeiltBg1iares~·' • 6f·the•• Fuil&..,·b1-irleans<(}fbids~d·Offets.bnthe . ·mSE.iri

the ·secol1d~ltlatketishot.l1~~~eI. ~slloted' aJ:>(jY:i'?th~t E':CFs._areliliteda~d . !~~ed9n

t1l.elXYSEalfdotflet Exchanges as well•. This is thel11ethodby:\vh1dltne,'shates of

dose~-et1d'inv~stment<;p~J?~nie.sa~eptice~an~s()ld~ft~riniti~issJl~9~·

.1\PEIi(:.~nts

~Yebe~llinfo~edWa~otherETFsllilve. traded at;. or vetydoseto~ tlieitrespecthre

Ni\Vs§ince.tl1¢irtiadmgic0lJW'1en,ce.? . ~~t4osepr~duc~s,,*eRric:ea!\yllic1lI-Iealtb,­

SharesTMoftlieFundsttadeon theNYSEwillbe discipJfuedbyarbitrageopporronlties,

created .bY. thwabilityt~pll!c~~seorredeep.l' C:r~a~Qn Unit.t\.~regati()nl)at ~A'V •. \Yhic:h

should ensureilintH¢aldiShatesT¥sinillarly donor trndeatamateriill.p.termmnot dis,-

¢outttmf¢lation tbNAV.

)

~Hqst;ngs

Mr.Jb:m~~A-arlgaglillno

January 17~:20()7

Pa,ge 14

.

GPta-cement .of@taets·lo·PilithaseGteationUnit··Aggregations

Al1'·ordeis.·.t(jp)lt¢bifseC~eat1Qn Uriit.Aggte~p()j}$O~I-Ie~ltb$ha:re!iTM()ftheE411d$.ft1~st

beplacecl'vith'the OistriputorpY9rthr()'u,gh~"Partkipatit1g0rgao1zati()nrA'Patti~pat­

ihgQtgarlization;mustbeeitbeta.(~P,atti~ipating.Patty·?~;~.,.a

. bt()ker-dealer·.ptbd!etgar,.

tiSi~llllt . inthe~le~n?pJ:()ces~ . ~ough~.eContin~ous Net.Seill~ment S)f~teniof'the

N$CGjiadeating'agencyte~stetedWith. theCotntnission•. puiisuanttQ . E~cbang~Act·.·Sec,.

tiQ~17A"o.r Jt])TCJiarti8P~nF,flmli1Ieacllc'clse, rnv.steIlter~to.a.p;1+tiqipll11t~ejtnent

with'the.G()111p~yot.its.D1stiibtitor; T'lleFuiias\villteto.up tlie.¢Qst$o·t'lss;wngaCreacc

·tiol1.• lJpit·}\~~~ti()tl..hy ·~1'9smg.a ("l);ansaqti()l1 . F~e" .• .onit1vest(}tll'P\lf<:h,asing·.Ot.re.deemihgGreatioi1Unit1\~r~gations .. Tbe putpose'of·tfieTransaccionFeetistoimpos.e

lhe CQstsass!)q~ted·,yith. tbe4~l;lJ:Fh.;r~e;a11~rtlcl~plptio1J.J)f Cre~tiol1 Unit}\ggr~g~t:i.(,;)l);S qn

th'ose.piitcnasmg-ahdiedeemiri.g;13.

..i\11 9t~et$· • topUt.chilse ·CteaUou..Pnit.A~te~tlt}1~s . .ti'lust··berecei,"e(f·by.. the .JJistdbtlt~r;

priq!tQt1ie close of tegular. #ilc.lii1g()~fh¢NYSEeGl()singTin1e"). dn theaateth~ order

·isplaced(the.• <'Ttan$rl1itmlf).~t¢'?J,~~~~llQth~t·.PJlQc¢~w:e~ ..s¢tfQPlhin···the.a~~eme.~t

W!Ul~e Participating G>r~~acti()1111l\1st be followea,.in0tcleE for tbe purchasert()re~

cehie·the NAVdetei:ltii'ned,onthe 'I'r.'lnsmittalDate; The DistcibutorwillmIDntllina recordofCteatipo UfutJ\ggtegationp1,11!chases.

The Distl'ibufot WllltmnsmitaIlptitchase ordetsfothe Funds; Auyoraet that/isllotin

~l;()p~ fpPJ:twilll->erel~tea.."Aftel:the JtUtls4; bav:ea:~epte9acP1ltcpas~Qrclerand te- .'

ceivetldelivety ofthe neposit•. Seeuritiesandanyaccompanyingcashpaymen~DTCwill

instr\ictit to ini~'lte "de~vety"ofe1le ~ppr()ptiaten~bef(}fCteati()n Ullit~ggr~gatiol1s

ofHealthShatestM to tbebaok'tclli:t}caccouiltspecified by the purchaser. The Distributor

,\Yiltftt~b apr~sp:~«;~aIlqa~oJ:).fu;roa#gl1to,tho~epl~c:i11gpp.r~pa§eOfc:1:~r~.

Rayment fot Ct.eatibfi UWt Ag~egatibris,.

Persons purCihasibg Cf:eatibn unit Aggtegiti'onsfrbro the FMds gen:.enill.Y'fil.$tinake~n

in~kind deposit ofDeposit Sccuritiest<Jgecller with an amount of cash specified by the

,AdVisot (the('Ba'Ia'ncing>Atn6ulie~)arid ~the Transaction Fee (together with the~:Ba1ant.tll$'

Ii '1'hePtospettliS;ahdSA.I [oithe Funds

'\vID pxoyidecomplete cllsclostiteabbuttl1e

'ftansactl?nftee.....j\llaQ9it1()l1alclt~gtrofll,~ to•• fiye>(5J·titn¢s.. ·thefixedTfM1s~ttiq~1.Fee

(exptesse'dasa percentage ofthe value of the DepositSecuridcs) maybe impbs~afol'(i)

c~eatiqllse~fe(!ted'OJ.lt~ide theCle~g~J:()ges~;and <it) 91~h cteatiOl1S (tQ offs.~tt1le{:()1l'!­

pany's brokerage ana other transaction costs associated withustngcash to purthasetbe

l:eqw§i~eDep()s.it.Sec~es): . Illyest()J:s;a;er~~m~il->le fbrtl~tCqsts qftr~sf~rritlg the

secutities constituting the DepositSecuritiesto the accountof the Company.

LEGAL..JJS...iZ # 708~7570·lIl

tJt

PaulHastin.•.':p-.

ATTORNElJ; ...•.

. .

~(t. James it Br$gagli'c1:Q:Q

J~fiu.aty17, 2007

}Jage 1$

1\tn;Q9Q:.t,th(l'~S~~hG<?p:1potl~t1t··). . the L)el'q~it§~CU1:iti~san4.theC~~h(;~1l11>()tlefitC()1­

lectively areiefetreClto ilsthe "Fund.I>eposit.)1 .As fi6ted.aOov-e, th7Pel1'o$it;~eeurities

re,pUca~· • (9r.. satnple).th~Ft1n~;gelZtlritie.s;q£·lli.eI+~llds ..,•. '1b~ Ba1ancingi:\.l:nQ~t • ~~.•.acash

paymenulesigIled to<etisurethatthe NAV ofaFulld:r:>eposit (notincludin~the'JJJ:ansa~>tj<?Q:Fe~)jsiaen~<;~ltp ~eN~¥:qf W+eC1:eat.ionlJnitj~isus~4 t9.plll:cOOse. JJthe-aat"'

ancing.Amoun:tjs~~dsitive nuttfber (i.e.,theNA.V per Creation Unit exceeds. the market

v~l~e Qf.th(fOepo~it.§e~t;j~~),thentb~t~Qp,t1tWil1Jyep~~lbY···~~·.l?:~Pl1ll.§~J:t~t4e

F~tlGljn. cash. If the H flcing Am?tmtis a negative numbet(f,e.,the.NAVperCreatioti

a1a

1.J:.niti$le$s.. tQ~n·th¢tnarl\.~J;:ya1ge

Qf:·the PepoSitS.ectu;itic$), th~t1thatan'l,oun:t wil11?·e.pllid

l:>yllie Fundtothepurchaset ineasch.

.

The..AdY:i$olWill.tnak¢:jlV~bl¢th.tQJ;lg}jNSC.CQl1 ~a:chlru$ine$$JJ.~Yi' P#9+ t(}th~QP~nt

ilig,oftp\djng~ntheNYSE(a1i~f(jfthefiaines ~h~.theieqtiliedriti111berdftihifs.oftea<:h

·DepositSe¢Wiityt()beip.cl\lded.in~~~'Qnd Dep(jsit,14 . .• l'Lt¢.AdVi~oJ:~$(}"'in • 1,Mk.~.~WM. a1:>1¢,o~ad~ilyba$is.theinfol:11lati?!lab()utJhe • f>revi()l.ls.c1ay~$,Bala1ilcihg:AtnQunt; .]0 aclelitiQnltlie·£ono'\Vinginforttm;tiQn'will.be~senrin~t¢a:. (i)•• qqntinJ.lQ1J$lY•• thtdugh:p,\1t,the··.l;l;a~

ilt~d~Xtl1l;~l!gh.tl1ef.aCilitie,s.'.Qfthe,FQIl.§Qlia~ted ~1?e,i.tlie,·ttJ+lrketpriceofaHealth~

Share™} arid(i1j everY't5secondS tl1.tQu~ho!lt1:hettadio.£; &aYias cakubitedh~r

BloQ11lbeJ:~.the est.i!:ngtedNAVQf a He,althS.l1~eT~f(\vlUph estiinat~ isexpestedt(}l~ea.c­

cfuiate to\vithma'fe\vbasispomts).Cbmparihgthese t'\Vofigutes allo\Vs:an investortQ

a¢t~(FwI1l1ther.·a!lq tQ Wha.texte,nt, He~th$haresnl.()fth~ Funqsate selling at a premittihof·ll.cllscdlin:tto··N.AV,

In <~dditioll,.the ,CQtl1P~nyre$el'Yes the l1.ght.tQ pennit·or· reqpirethe,SJ.lbsti.tuti~<ofan

~tn0unt.ofc;\sh--.i.e.~~ :<Cashinlieu"amtiunt-tobeadded tbthe€a§hiCofil!?b

t to

t1en

repl~ce~ny De.positSec:ut:ityth~t11¥lynot'he aV~~1Jl~jn .sufficient (lu~~ty,foxd.elivery,

~Yl1;ot.·1J¢,.~gi~le·f~tt~11~fe1t·.thfOl.lgp.'tlteCl¢ati11,g.Pr()cess15,'ot.'fuay.ria1;'heeiigiOie,.fbr·

ttadfugp,~/:~ar!ct~allnr'~f~t1.izati.~n.·~ttA¢'·i!l~¢stQr~()r.·\V1'1i¢1r;ap:atti~J?l.l~g'Qr~a.­

f-i~11.j~;~~~. It1 • ~~J>:MSirc~f~*ce~.,~e·¥g~ilmny'us~tl11$«f;rtshifu.lieU".afubWtto~c""

<;jllite.the D¢pQsit$ec~tiest1lat COWan()t'~eii¢liYeredbytheJ?wr~~ase,t~~,the~~a,

l?'1:()~erag~ .cQnt1~§~iQp.~inc~ed 1J¥theF'¥l91tl~9nn~tiOtlw.:it:hi~£qttisi~Q~'bf$uchD~~

J?QsitSecmiti¢G,ro:e. e4l'¢ctedto QeimnIat¢riw~dWillb¢}1tle}>,p~tlse,.?t"tJ1eF~1d., !;iQ\\,ever.the.i;\.d~~is9r~.!)t1bj~ttQthe.approYaJqfthe BQll1:clQ£r:>ire.¢t01:~ffuayadjustthe

'I'tansattionFee (des.cribed below) toprotect·e~tin~sh'cl:relidlder$fto.1lltbis ..exp,ense.

l.fThe .ideritityatido.:Uilibet of.urtits ··ofthe]J)eposit seciltities,tequ.i:tedf()r.~FUfidnep(jsit·,

may.cha~g¢i •. t9refle9t~~p}tlancing~4jJ.l~tmet1ts and. <:9tpqra.t~acfi<m:>hyaFt1Q:(.i,.or .in te'sponse toaajustfuentstbllieweightirtg.oi:.tOriipositionof the cdmpol1entstocks'oftb:e

IJi1d¢t1yinghl(1¢;."{,

15

It IS rate· that'asecili:ity likdyl0 'be a Deposlt Security isiheligible for transfer.

F'auIHast;h::1'n$

..~

rY[r;JamesA. Brigagl.iano

Jat1tl~ 17,2007

Ija.get6

Ju~t as•• HealthShates™ • cllttbceJ;llfchdsedffofu.·.the;Furic1s 6nlyihCieit1on Unitsizea~te~

.~tio11s,stlGbshares ot\Ulit$. sjm1lafl)'tnarh~ tf?a't'ctJJe40tl1yift~m<;leredjrrCj;eatiog ?nit

size aggr~g:t1io11s'(ex:c~pt in. the-eventdle,Fundsate liquidated); Aste€Juitedbylaw~te.,

del11ption tequestsh1~?odotd¢rwillreceive~e.NA-Vllextdetermine4aftet:tll~J:eq\Jest

iS~c1e' .Ex:c~pt •. inufi9S~1¢irctJnlstancesiHealthShMes'l"r.lwillgeneta1ly.beredeefi1tidih.,

k1nQ,t9'geth,cr~vith a·$111all cas1'l;payment,as Q.~sC1.~p¢d .l11pr e·:tUllyPelow.

1-1e~lmSharellTM41Cr~'\~?nlJt+itAggt:~~ti()ns

<?f tlle .F\lU3s ,",ill be tedeelA*1;>leott any

tlayo'nwhich .the NYSEdsopenroe>;change. ft:lt abask¢tofsecw:ities(~'Red¢lt)pti9n.Se'­

9urj~e§;').andaca.sh_paY1l1ent.•;l1le..•.~e.denlption.Securities;.1:e<:~veq 1.ly···a.retleemip.g•. ipvestot wifibe those Fund Securities .avai1~ble. on the NS€C bulleting,bQardopthe,Bpsi.nes$.

DaY't4at.~~:eql.l~$tf()r~4e{npti9I1is'J:ec.~ive&infitla]

.fqt1tl.[)ep~~4i11g,()n,yhet1).~We.

NAVofu@reati?uUriliA.ggregationisl1igliet otlowct· than the;tnarketv-allle,oftlle'Re+

9~ptipnSe9U~~~~ •.• tb.,~.fytle~met:qf~'91:e~ij~n . . tJni~ !\ggJ:egatiqp,.w1jl~itltetrec~v¢ • 'fr£lni

orpa}' to HIe FundS a cash amount equal to 'the Balaticing..Amoutit.

TheFtl1rdsJl1aymake}:edefi1?'ti()l1S~artlyincashin.Ueu()ftransferrH1g9neor~o=eRe",

demption,Secw:iries toaredeenUng111vesror if the Funds'detci.;l11ine,•in· theirdiscfctk>n,

thatsuch·~lt~xnatiyeis:warra11ted, rQJ,'(Anl11plc, thi~ c()1.dd happen ifthered,eemWginvestor is unable,byll1\vot.policy, too\vh:tpatttctilai Redempt16rtSec1.1.nty.

Aswithptii¢hase~; t¢de1nptiOtis.ofHeatthShat'f~$.TMihCtea:ti()h

lJttitAggtegati<:>IJ,$will

iJrgJuclt:a'fj:.;tflsaction•• Fee.

E.

DiVidendReinvesttnciif Setvice

1'~'¢ • G~~lilPly'\v~nQtlllake'·~¢.Dtt .• bt)Q.k~~~~~Ili\'ia~ngR'ei.nv,e.~~~nv~~~.~ijx~.

"S~~i5~;~) av~ble fd"1l~e15.yBei1¢fi¢ial0wnetsfor\reinvestfi1eiit O£the1t,c~~fttJ~aceeaSj

bP7¢¢rt~Qt7()k¢~~~~"~1,1'1~ttnalte th.¢.;S¢H~¢~'\*~il~hl¢ tQtb~ircliellt!l,. 'l'li,~q~~,.

PMy~s'dis¢losure. doc9Ule~t$'Yillitrf(jrinfu~esto/1::softhi&fact.and dihidiriferested.ihvestQ1:S,tocPtjtilcts.:QchinY¢$torfs.htQkeJ:to:ascettain·th~ay~i1abiiit:Y~d"a 4¢~ctip.t.ion ()£th~

$e1:Vice·thro~g~,&\+c~blokct, . TheColA~a1fY~$·discl0sUted()ctlm~tit$\villalsO.dhlti()nili­

te£estedJ3:eneficialOwnetsthatther$l1()uldnot¢that~hht()ke1:mayxeq\lit:·fuve~to£s. .to

ad4~r~t()I;peqfJcpr()cedptes~n3rimqtables

(}1;deJ:t(}Pw:ticip~tein the 8erviceand stich

i1iY'estorssh6uld.~s'certnin.fJ:OIDtll¢itbrok¢t.S~Chihecess~:t;y.detajls, HealJ1lSh~e$J'Ma~"

in

q~qd:Pt1!liua!'lfto ~eiSetvicewil1be heldbyt1'leBelle~<#l~vners itlth¢~atn~maniier,

ands\lpjecttQthesftme. t~s,and(;oilditidn$,a$for origirla1. ownetship()£~ealth",

Shaxes"rM. N,QBa1a!'l9iI1g~~0'Jlltwi119cteqWredin/~Qnnection.,yithacquiri1)gthese

H~alth$hatesTM because such acquisitionisasecondaty 1il:irketttansaction,and nptactea"

t,1.<>.n· offlea.lihShal!~$TJ:\1.atc.:utl!ent NAV. 13r(jkerage,cotn.11iissiorl.s,i£ @y? inqUj;red in pm-

Nrt.JlltnesA. Jlrig~gliano

Jantlaty ·17;>2001

Page 17

ch~sihg~~~lth~lw,e$,TM with ·thecash fl:~1'Il.the9iSPllPuti6ns'wilLhean,expense,bdt11eby

fue:Seneucial.• Ownets partici.patingirr:remvest11ient'tl:IroJIgl} the'S¢1C\~ce.

<3-.

DisdosuteDocuments

Tlieptitchase()fHealtliShate's:r~LihCteatihnUmtAggregafioiisotiri·.sec0riaatym.a.t~et

tr~l$a~ti()PsW'Ulbr¢.f(!:co1:Ppal,ti¢d·Pt• ·p.J1eceg~,d:bY'·~"$ta.~tP:1."}~·.p+,q.spe<:ttls;of·PJ;P:<luct:ge'. '.' . 16

SCtlPtlQu.·

. . .

"fhe·blsttiButOtwill cOQrdin~tet:heptQductiQJ1~lld~$ttihutiQnotprosJ?e.ctU,ses.fl1ld

pr9d1;1ct<:lescr~ptiQhs tob!Qket-dea]ers,~p",illl:>e tli~'.lfespousibility·.oft:hebtbk¢l:,.deru.ets

to.. ensurethitaEl:bspectUsQr ~roduct QesQtiprioll{i£the~ppli¢ation. is~a1l.te<1)is, ptQ'-

vicl.ed eoe~clt·$,e<:olld~.~etPlll:chaser 9£ Hea.lthS1),~(j'~rl\l..

FL

.

.

Cofuparisorl'df.the·.COinpatiy·,·to ilie:..oiliet:'FunUsThatI-I{\ve•. Sought'.Sitnilit

.C6tnlrUssion Action

·.1'll.eteliefrequ~ste4jn.thisletterisideritic~10t

subsfalltiallysihiilarto·the.teli.efpteviously

gtantedl:>yth.eCQ11:utlis$j()tl'totheotherEl'F$tlo't: tel~tedto theCpn1pallYP'

III.

Requestsfb!ReLief

A.

Rulel0ilA

.

Rule 1()a-l(~)(1)(i) ptovides··dlat.a$ho!t.saleot"auExchange--ti;adeds€:curitYtn.'lynothe

effecteCibelow the l~streguhlr.\Vay sale price.. 'or .atsuchptice, unlcss:suchpriteisabove

lliElle~tPtececling.tJri¢€:at'\~hi~h.a!)!d.ew~ste~otted'1'heC01URally.. pe~~Ye$t~3.tte#~f

gr<l~, •.tli.~ ·.~~pli~at1~o . ()f:R).1lelO~--l.t?.·.s~~ond~".·matketttansactions inI-IealtliShm:esT~ 6£

tJie'J:Uttd~!j$;~~,ptopt41t~:~§0fat:JJ$.El~ltb.Sh~~$'rM:~J:e ~¢li~~ti.Ye~~~l;lciti~;J?~~~~··.()~Jl

•

stO<5~i9t:lE~: •.A.ppl1~ati()p.·of1tule 1Q*.~t()~ri~a~tions"Qf.the'Fub.as'Hea1tl1$hares;r~

wouldoot. further thel;ule~sp~ose${atld ¢xe$pti11g$uchtt~sactioP$ WQU};dn.;otb~,m;COtlsis~ert}witllsuchtule;c

.

.'

1§l'heGotnpany ··nnsobtaihedanekempt1Qt1 frontSecbbii24(cljQfthe1940A¢tipthe

Order(asde~crilJ~daboyein. Part 1).. ThS>S~~Pt10n isconditiQne?9nanunde~1lting

thatmv'estotsputchasmg HealthSbaresTMfto.t1lott1ltoughc1ealets in th:e's,ec(mdf.lty)1:i:\.~­

ketWill1:epeive•• llshort·"p.ro<iuctP~sq:iIJli9Il".qt . othel:sitpi]~.dissloslltedoc\l11l.¢hti1llieu

of.t:he.lengthier. staffit0iyprospectus, .mhe Ptod-octDesctiptiou ,v'illprovide'.ap1aitlepg.11s1), cles<::tiptiotl oftlieY'4nds l!J:l<itheJ-Iealtll~.haresrMth.eY is.sue.

17 See fbotnote4,SlljJta..

~::;:f~:~~:t~~~~i;~~~1W:-;~~~ie.~~~~,:ep1€~sstdfG~~r:S~~:~::~.,

··.qftl1¢..F~nd:.5·WilJ'fl1.lc9;l~feip.ac~Gl:4allC~ wit4c~g~s.dnN1\V 'a:dd s1.lJ,2ply"atiddeh1,ail:d .

orfthe NYSE. Price diffetentestriily be due; fulatg~patt, to the'fact tl'iat$pgplyaild de'-

,.11i~,ai<>,~p¢§~t\ygl:~··.~·.'.tP.~.!$~c.glldatrt:ra9fu.g"Jn~1\~tf9f·E-~~th~1l<¢~§~ •. wil1·b~.q19~<¥Y·'

telatedto~;bllt.notidentiCalto~;thesaine. f()rces.inf.luenciqgthe'prices'orthecompone~t

. s¢~tie$~q,f(hePnd~dyjng,,~~~s"~4m~il1diviclU,ally q~':.ip:/~~~,.~ggre~te,.at"~llY ·P9fut,~

tiintk Any te1n!?orat:y displltitiesinitiatket.vaIue,between,Health.Sha::res'(Man:d'theteievant

·!:;!\)Jnp'()n¢P;:ts,e(:l:f#tj~.~'W"qq1<il tel1at~: pe co,r~e~tc;a..~e,tW!.te~y~y arQitr~~aFti:Y'i~, ·~<>,te.,.

ov:er; Ii-C;a.lthSh'afes:t:¥ffiCteacidn unit Aggtega,tiQns~X)tfuultiple$"thereof.may;,b:e::te~

deemed, on,::al);yausii.less'D~y; Unde~ tlws~n;irq.tm~~n~es~it wowel appear,to'beeco-:- ,

~r!;~;:~r=i~=:iE=~~~r>re!M

;:rat~!:.~~~=~~~~~~1i!l!~ .

rliPlllatiY~1nt~nt Jl1u$E,~pen.d,a~J~st$4 foteve~$1 o,f~et ~p~ct. The:ecQnohlkifu-,

'ptacti~aiity'of sucl1astmlegy is·iipp-arent.MoJ¢'ovet,;atatiba:s f:lYd~tl>le,tQ;th¢ •. p()"@1,tjai:

m~l1!pulat()l: as4;1:wR~1~<l,.'e~ist0nly.#l tl');ccaS~9:f~xti:e~e,ly la~ge, i~suets. .It iSl.l~e1Y

tlHlt?€\ttirt'unresttlckd:;s,h'oft-smes\Vd:tildhavcsignifitant:ilmrkethnpact-O'flith¢stqck:Qf

~lltl} iss)lets,.

'

\~et1iliol!e.theti1axitnutli·we~htihg,f6±:anysecuritym,.an.,IJnderlyingIlldexisrypicaIlY

lqO,/o,.a;nawhen{(c()tnpa1J:Y's'w~lghtin~"~~ceed& 150/0ofth.e9Yer.aUTlld~xportfoli(), tli~

~e:=E~~~:~~~~~~

,

The rtia-diiig:lfiaiked'ot'Hea1fu:Shat-es'tMt>f theEcUnds'wQ~a be'aay¢ts~I¥~~itegt¢drf

RWe.,t~.:~. ·qpefated;"tQP;ft~v~l)Jaea~t;r~'o~ t:4e;~R~Sl~Ii~tJt()m malc,ingsli()ff§:W~~ <if

S;;i;;iEii~;~i~:::~r~~:!i;~

~ffici¢flt:S~curi.tic:tsD,l~tj{el~i

'

"

TheCotPpai)..r n6te'stl'I-adt tsrtQt,reqtiesting:r.elieffrom Rtue,lOa.,:l" fbt'seCQJ1Qaty m~ket

pottfoiip':§iies:'thattJ.1~fhe'tn~cl~ btthePupdsin.·c.onnecdon'\Yi~h:tedemptions;o:fGtea-,

tidii tJriit AggreglitrdfiStlfHealtHSila'I'6HM df.otherwISe. The ghott sale,fule\vill:a;pply (or

.,', ,., "

tlbr~pply! to,sl.l.chtrltq$~cti()nS' . ltst() anyothc~pottfoli(J\trade;

Mr. J~~~s A.~ri~gliano

Jan:ua~y 17~2Od7

Pag¢ t9

B..

.

lhile200:(g1 6:fRe~afi6riSHQ

.R41¢.~(m(g).·cifR.~~t1~.tr'$J1~'<fi~ql~,.~OQ~".t!r~ytcl¢~ . ·tb.~~·.'~".P~gk~J:7q~a!~~tt~t'l1l~~.

all~elloiders:ofany equitYsecWi~is«lortgt:'~shott".ot'~sliott.ex:empt.'~ Rule200(g)(2)

teq4it¢~·th~ta $h.gJ:ts~e 6t9~~U~~·h¢:m,aflteq.~f$J;~{,wt;(~.~pt~fft4eSe11eri,sfrelyitlgfPil

~H etc¢ptiotiJrofuthg.uptickreqpii:ements ofRule 1&-1 o£the ExchangeAcbotiny

.

i~hprr$~¢;pt1tete$t~£~lly:(})(¢h~·~g¢~t,~~riQtI~lJ~;¢@t;i¢$.:a:!!~Q.,g~ti.9P.·

J&$·9£Jgp,9.~~,

2905,) '~QderRegtil:iiiqllSH0" br()k~i:;~ealers,.arelgeneially teq~ed t6illatk(Cshoitex.,.

:etnpe~all$hQtt.~al¢~;~tfected'in.;~ny,tlM$:'Qtp.t(rduots>.p.t~dutWg\¢~:n~ ~,eqi.fi~d:l~~rig(.{s.

~~e~~~:~:tr~~~~jjC:~than~:~~;~:'~~j;:!::s~:~~~~s~~~~~&~s~~~ b*

'~:():o~eilldt~~~~:i::~k:~~:~~::tk'~~:;~~~:~~~~h::~;~:t:r:~~~~:;:t~

.~~:;~::t::~~ritt=J~~~,~:~.~r~e~{!:t:~~p.·m·ETF~·th{it nia.b'eengramett'ari.

Jft\l~GOIJm1jss!ongrap.t~ theteqUfst.~(treljef'v1tlI.re~pecr 'tQ J.\uie lQa':!, tb~GpmpatJ.Y

her.ebyteqiicsts.iliai:1:he:St~ffilotiecotfuriehd tf.mFthe Co1'.ll.iriission ~ke¢f1'f()tde1llentac,..

tip.~ gn~~rR111e 2Q(J~QfRe~tion$H() j.f~b+Qker~deale.r~~ll;ks."shO,rt:'r:t4erthan

'~shottekem.p~/"a;shor.tsa1ethat.is.-effeCted in the' funds inthe'sa:ii1¢mabnetas those

E'{F$ .li~t¢dirll\ppentlix Aqft4~·;;$lA. Lettet':tll,kth}tt ~e-J;~~g.gtail~$d.to~l,lCll :B~Fs,m

the SIA Letter be exteIide,ho cb:verttfiiisatttons:inthe HealthSharesiM. .'The requestea,

f¢lfeU$ ~u'b)~c:t;t9:.t:J1ef()UQ\~g qqpPitiqnsl

".

----

----

--

-.

.

'safe§:ha~1nsti~~~~;~~~:~tt~~~~Z!::~:~~:~;~eC~~:~f:=:::~:~~:h .

'th~t·:th~y;~tc;·¢~c~~~.li·:#S.~hQit,~xerq.p:ti.

r:~~:l;;:~~~i::i;~i:~~!.s~

~l.ii}

h, kir:9k(}J"Q:eal~!e~~)l~g ~x~P:t.$.gP!t'~#~$~f11 ~'tt~ sJ,lchs;t!es;:a s

«shott~" :ahd-in no evenc;':Wi11si.1chSiles beina±ked"longtand

l~ S:~~fo~t!1(),t~4;s!tpr(l)Xet.ter £tQm, Ir,aaatl1111~rtrl~n; to) ~es A.;~~gag1i'UlQ.;,Dl~siQn()f.

Market R~lation~datedJantiat}1 3,.2005;

Mt;;JamesA.BrigagliitllQ

l?n,:qa:ry ,17~,2007 '

Pl\~21J:

CRule 101 ofReguIati0rilvI

.Gen¢tauy~ •. :R.illel0t·Q£R.eg1JlatfQ~Mis;al1 ~nti"m.'\nip~6Pl1 .• t¢gqi}),tipff·t:lia~ •• SQ1:li¢l:ttQ'

l:eJ;t~in~){empt!oPslpJ;()mbits.,a~y<l4j~tripution •. parti¢ipatlt'·,.•. ~nd #~"aft1Ii~teg.p~l:11.a5~fs·'

~~~~~g~1g~{~!i~a~

W~·un4etst~m4tliatwhilebrplwr"4e.a.lersth~h

(ilt¢I:ld:er nepp~itSecuiitiestluo\lghlhe

EL~r~i5~~a~¥~e:'C

!;>tpk¢t"q¢!Uetsc6.p}doe.deetn:¢dto;be, "undit.'Wtlt't1ts·' br"ldiStributioriljarttdpaiits~\,aS

dlose term,s :Q:e d¢'fi1l,e,d in Rule tOQ(b),

,

..,'

The.Col~p~~yrespectfuUy .teq\le.1jt~,tha~ .tl1r;." C91l1ll1iss.i()11.grap.t ~ll .• e~~tnption ftojI}.

Rule to'l",:asdiscussedbe1Q"v,t'b/p¢rmitpets<mspatticipat!i1gin,.a distj:1P9t:lon,ofHeall$."

$h~~~$Tr.tqfrp.e Ftl

tablet t()r;9~,puF~h~e.J:e.d<t~111Qrertgage itl other s(l(!otld~~aJ:-'

kettta.tlsac,t10nS in si!i.chHe~thShatesTMQutiP.g their.partii:ipatic)rt:in such disJtibutiop.

tl9s

r:~~:~,:;;:j~P::~~:=~~ ~~~:;:~~:~::~~~~::;t=~c:~:;':il~~~~~:~

agernentin-,resttn,e1itcomp:ahy ~tid '1lnltin:Y~@ent@~t $~c;pt,ities'a;t~e~empt¢d.llPd~r:

Pllragraph ,(C)(4J.With~tsuch:ahexerriptioi1,theyc6uld n6t()perateJasmt~ndea. In

'viewof:the fo:t~gQi.ngrth¢CQlnpan}':tequ,¢.st$thatth~'Cpmtpj,s~iQngopfift\1.1'ha.ta,Sji ;1,esWt

oh~gistrati()n gfthe C()mpallyas'~ri()peh-efldrrulnage1llentirives+,111ehfc6tl1.pahy'aridthe

LE<tALlulU~.#!iJi36752:o.1Q

Par.Jll-lastings

~'I:r~

!vIr. ]aines A.Btigitglii'ltlti

J~n\]a.:ry f7,2Q07

Pa.ge21

red¢¢hiable.r,atuie.q£the He~lthS~~reJ;TMin Of~ad~t1; UIlitA,g~~g~ti()tls;tntn$at:ti9n$fu

the HealthShares™of the Funds woulclbe exempfedJrom Rule-tOl on theha~is ofthe

exceptioncontain'ed in (c'C4)ofs'l.u;h;rule.

ThepW:PP$e qfRule 1(lli$tQpreyent per~pns,frQlncQnditionit:lgthemarket to fac:ilitate'a

distribution., Creat16nUtlit Aggt~gatiotisofHealthShares1'M may beeteated~and Health..

S])~eSr~fin.,Grel1ti,ont.JtlitAfW~gftci911!l,.tl'l.1Y pete4t;emedin~kilidatN1\!Vi,qn~yBusi;'

nessIDay. f-loldersof.HealthSharesl'M also have the benefit of.futra~da;y secondaryma:tket

liql.1i4ityby'rirWe(}~:the~cl1an..gy'Ukti:Qg. ThllS, tl1e,s~9)nqarytn,.'\tlietptice,()fBealth­

Sbares'J:Mshauld,not vary substan.tia:llyfrorirtheiI' NAV.Bec"lUse of the ,.redeemability of"

HealthSllarest~l.in' C:re!J.~on 'Unit Aggregatipns,anysigni£i.cant disparity ,between, themar'ketprtceOfHealthShates:rM aridN:A.V·'s1±6l.ll:cl.be.·eliriiiilated.byatbitta,ge;actiVity; Beta.use

the:NAV ,q£Healtli$h}tt:esTtyl i~hac~ed on th~1llc'l'tketva1tle 91 the"Funds' PQItfQIio; trans,action.sirivol'Vii\'g Health8haresJ'M:€ct61tlon.s' ff'om:iridtedefnptions,v1ththe·Ptiilcl.s,.pUtchasesan4 ,s~eS'"in ,the,secondatYlmuket) will nat aftecfNi\:Y,.. $IDJi1arly,;suc:htransac"

tions sneuldtlothavc,a. sigt'li£icariteffect:on.:t1ie market valUe QfH.ea]lliS:I1aresTM~

'TheCom!?.anywsotespectfullyrequestst:¢lie£fton1' theproWslon.$ q£ 1l.w~ lQlto the.ej{':'

tent necess~l];to pe.t:lnitp~rSqns or entitiesthat1T)aybedeeme(,"l to be participating in the

dis.ti:ibut1oh 6fsh~res:hf FUJ.'ldSepudties:@) to putcha;se!"uAdSectlriu¢$ forthepu~pse

Qfpurchasin~CrMtion UrritAggregations of HealthShares™,and (ti) to tCl1der HealthSha1tesTN.i fot tedemptioufu Creation. Unit",t\.ggtegatiQIl,s;an,dt(;i re¢elv¢F:I;1Ild$ec.u.riti¢sll$

Part ofilie redemption proceeqs.

The C:0111.pal1Y tequests that the. GOrnnUssion datify that ,the teIlder,ofHealthShates'tM to

the Funds (or 'rerlempti;C:)fi a,rrdthe rcceipt'of Fund Securittesuponredelllptiondoes-llqt

constitute ,abid'£df.ot p1ll:chasecifmycifsuth$eturities~,oi:~~(atte1Upttofuduceiaajt

}1ersp~,.•t()bid,.•tbr.pr'p!1t.c.lt~s.e··~qoVertid.~:e~;tt}\thl'dlJ,~.,:fttc;appli~1:>le.t~tti5te(1periq~'

fot tlle~ptiifi:dse'SofRU1l}>;101;". Redeii1ptfonentausilu,sepatate:bid foranyb'filie'Ftind

S'ecurities.• Absent q~US\lalnir~\1tUs~es,thti F;l.111d:;WllLt1Qtpw:~h~e F~d$e~ties.l.ri

'the seeOl1~1.)tmatket to friIfill ~ tedeml'tio!1 request. Tlierefoie,redelnpnonsof Hemrlt·

Shar¢$TM f:;aPtlQt ge¢),,-pec'ted to~£f~<:fth¢ lllaJ:ketppce qftlw ,Fu.q4 $eGutitie.s"..'\sindi,"

9ted;above~theDisttibjjtot' will 60r erigage;1il any'seciorldary m..1:tket·ttaritlabt1oris in

Health$hatesTM,eithertoritS own- atCoXul,t; 01' Eorimt estors:-In,a4ditio11. t:1::l.¢"Comp~l1Y

helieves thatthe;pU1!ch~seo£Fili1d$ccurities,whileeJ.'lg~dii1 a distiibtiticiinvithtesped

toSucn stocK, £ot the.~'W.'PQsebf:~(:quiring~Crel!,ti¢nIJ11itAggJ:e~tiQn QfJ'Iealftt.;

ShatesTM,shQu1dbeexempted fromRule 1m. TheputposedfRuIe,101 is topteventper-

sons froincondition.ingthe1natket to fncilitatca distti1:)l;j'jiOIl,. Application of Rwe' 101 in

thi~ context would not'fu,rthertheatiti~111a,nipu1ative purposes underlying thertile;

In vle\vofilielackofanyspedaifinal1C1aUncentive to Cteate Creation UmtAggtegations

of .f-IealfhSha.resTM~c01:nbine4with a predictable la:ck ofanymeaningfgl potential fox the

issuance and the secoIidatymarket ttadirig ot HeaithSharestM to affectsigcl£'icantly

tEGi\L:..mLE # 7()8(;1S20.1O

rvu. JamesA. Brtgagliano

J2tlt1~ty17 .20Q7

Page 22

HealtJiShatest'Mpr1<::ing, appJiqatJ;oflotR.wel01to,libto}¢t;;d¢a1erQr QfhetperSQn,who

1llaybe par~cipatiqgina~sttih~ttiol1ofHealtl1~h~e$~!>I ,o.tFl1Jj4SeClJfities istiflt1ecess~~

andmapptoptiate:,and CQulctutulel:e$sarlIy hinder .btoker~dealersQrothetper$orts,in;theit

c~e,;ttion' al1d5edelllIJcg(>na9~vities>,jlltheiigay-to-dayordin.~tybusil1essofb~yittga:nd

sellitig se¢urities;a:nd:H~lthShares,TM"andthU:Suiidetn1ine thepQtehtia:l' hene:fidal"marke:t

e£fe~fofHe::d!pS,hates'f~ tradWg.

D.

'

Rule 102ofRegpla:tion 1\1:

TheCornpany also tequeststhatdle COlmrUssion confirm that,:as, a Ieswtq£ ,registration

of the Company as an qpeii-endmanagemenfirivestment company and theteikemable

nature of Hea:lthShares™ in Creatioil Unit Aggre&1tibils"JQnhe reasons pxeviPus!y staU~d '

under the t'eq~e.$t with resped:to relieruhder RuJi101 (F)(4).,transadiollsiil Health..

Shates'rM Qfthe FJ:lildnvewd be exetlipted fro-tn, Rule1Q2ou, the ba~i~ of the e~ceptiort

contained inpatagtaph (d)(4) of such rule. Application of Rule 102 in thisconte:rtwotdd

'tiotfutth:etthe ailti..inanipulathi e pl.1fPQses underlyitlg: the tule~

Th~~qrp9seBtJlqle1q2~stq ,pj;'7r~ntp~1:sQ~S .(rom.,W~piJ?1JI~.tipg,the,ptice<~fllsR~ty

dUt111gadistributionalid to protect the integntyoftheoffeoog process by p.t:0liibitiiIg

~ctiyiti9'$ tl!l~tc:otd4flrtifi.<;ially.m£J.t1el1l:~tl1e 1.1l~rk~t,f()rtl1at p~tdc:td~r'sefu:rit:y. 'f;he(;JOtll'"

pany respectfully reqqests tI1attI1e Lofuntissiofl,gtantatLexetnptidrt underpitagral'h(~).<of

ltlf1e lQ~ lqaU9wtlw, FUtlqs to'.re4~etll H~~th$1l~~;r~:ip.Oreat;i9+lUIlitA:ggte:ga,ti9.n.S!

duiingthecontiriuousof£eriilgofHeaIthSliares™., The Companyrespecttally subtnits

th~tdle redc:mptions <'Q¢S9ribedin. tbis,'lett;erdo n9t,.constitute 'a;tn.aIlipull1..t:iye·o;rdec:eptiye

ptaeticewithin.tliepUWOgeofRu1ecl02aridateeligibleJ6tallexemption £tom thepiov1sj(>:tl'sofRul¢ 1021:0al).o'\V tJle Fund.s to redeem Healtl:lShares™ in Creation Un,it:i\:ggtegat19tl~e;J*ri#:gtli~q()ritjh;\t9ti$()£f~gofH~-mthShm;es'ft.f.

' ,

Fbf,;the;;'teaspQ.s d¢s;cifbetl ib,cQnnectiQn::\vitiitl1e.t'e'iue$t~a,au1(f"tQ1;:t¢ne£;,t({d¢m.t1t'iQQ.

tlanS~q~01Js.an~ • s~CqntL'ltY'.;1n~et'fj:a~s~ctiQtl~1ti·tlleJFtW.?$r.HealtbSha,t~s.I~'are*Ptvi­

ablem.eansto'manil?ulliteth:~fl'rice Qfa FundS'e¢utitYaul.'in~Jfd1$tributi'dn,()f:sJic'h,sec:U7

,.t1~. 'rheC9gtp,~l1ywmJ:~d¢~tptheG~ea,~rq1JJXWf+¥ggteg~t,i(msqfJ-Iealt4ShatesT~afthe

NAY ofthe HealthShates1M .l\lthttiugh BealthShat~s"fMatettaded'Qn·the secondary mat~~>f1~~1!p$4are$IM,maY only b~, te4eemedm Sreati(:wpnit4ggregatiq~.T4tJs,the

Uori1.pa:hyDelieves,thatthe"redemption'dfHealthSharesTM,at NAV m.consfdetat1:o11prith

clpallyr()tF:UI]l~Sc;':curiti<::sdoesll(lt iflYolve.tP-e,a:bgs<;§,fullJ B:we "102\Vas:int~nderl tpPlie-

'Vent

E.

Ru:le:14e..5

Rule,'14e-5'prohibits'a,((cov¢£edpersori" fto11ldirecdy oiinditecdypurchasihgo£iliiiangitigt()'pu:rchl\s¢~:t:1Y 'subject $¢cutiti.egpf ~ teil(1et .Qtfer (otatelat¢tIs~~tttitY), ¢'x<!;¢pt~s

pitt qfsuch tenderqffet. Tile dealet-triatjaget ofate:t:1cl~t offetis a «Coveted per$on~~atld

1,3('AiJUILE#70ll67520,10

~Hastings

Mr. James A Brlgagliano

]anuary 17> 2001

P\lge 23

therefbtestibjecf to theRule.'"I'het:bfupanyrespectfully re<iueststhat the .Colllfuission

;g~'.\llt~n ~~emp~9P . ·£~Qm··.~lltwT4e"~ • •~Q. p~t.at1y • per~Pl1{in9tud.inga .•111e~~e~o.r.tJ;1el11'"

bei:0tgahizatibnofanExCha~g~)actingasadealer-:tnan~ger?fatend&offerfor·aFund

'.Se.p..·u.n.'.tY.'.;.• ·. C

..1.).Jor.e.d.'..eem. J;.l ~l..t1..l:Sh

. •. . . )I.r..e.~. T.M. in.. Ql;!e. Q.rm..•. 0.re GIeat1.·o.••. n. Um."t. A.'.gg...rega.•.. tiop~··. t€l. .th

• . : e·

C()mpany forFu~dSedttities'thatfua,yinc1ude~ secur1ti}r sublettt6suth tendet()ffet~and

Cq:)topur~haseI-l~lthShAJ;7~~~dutingsllchtender()££er'wbichfI1ayirl<;lu~~.thedeliverr

ofsecurities ,subject'to suCh. tender offer". The 'acqUisition ofiiidividual EUll~Sectirititsby

m~~ns of'rede1!lI>tl?l1$ .tQthe C()lnp~p.y"voWaRe impraEt1~~~p.<:lt:xttemelyineJficie~til1 .

vie"v·of'the·l"eC}uttement.thatalniitimum.·of lOOiIDDOHealthShateSTM .b~.redee1ned; ·Also?

.,as.·•. di~cllssed,itT~e.l:~li~f re~lle~te?~nder .~egW~~onM,apglic:ati()n·Q~t1l~ R.ul~'~.prqP1bi.

tiQl1"voW<:liiIlpedeth.evalid~tiduseftilmarket and. atbitt~~eactivity:wliich\Voilldassist

.s,e¢onda+y·Jl'1llrk~tttaeUng;aIl4imptoYeI-J.eal.th.ShateT.M prJeiIlg..¢{(i.dency. Innqqase

W014lai.ted~t:ript:iQfl.s.of·Heal.thSh~esJMor.secotl<:larymgrket b!an$act1olls ·by.CotrerechPef·sQ11S•. beef£eqtedfoJ:th.eptU5gQseofta~ta~ga;tendei:~ffeJ; .• .AC:(:Qr~lY"l?mcl1a$es~d

redemptiQilS()ffIe~tliShare$T.Min the'citcumstanc¢sde.s!=±ib¢4W9tlldliotappcilito :result

m·t!ieab\,Is($:J.t'wlit¢it-RUl¢ 14¢~S.i$·di.tected .

In.. ~g4iti9n",.~~~.,·Gottlpap.~reqlle~t~tl1at . the§taff.ta~e· .•~~.().-tl~tJ.()l;!iPQsiti?n··tl,t14eJ!ltulet4e;.

5ifabtdket:..dealet (mcll1ditigatriemberofmemberoftlieN'YSEOtother E:J{chang~}act·

ing.asade~er~11,ll\9Mer?f:atender <1fferfof~ F~p.(l$~c:lltitygl11:cbasessw;hse~ti~s.m

the secondatymarket fot thepurpQse oftend¢tin~suc:h seCllrities tQ)?W7chaseone or

p.t()te·G1:~ti(m (Jnit•.p.~re~tions,.QfHealtlfSl'w:c~'t}fI-, .• i£mgq~illCQgfommllCe.witht;p.e

following:. (i)suchbids/orpurchases.areeffected mtheormmu:ycourscb£business. m

~Qlllfes~~O(l'wjthl\ blt~k~to£70 oJ;lnQJ:e.$e.curitiesin WhiS1J~llY$eFl.ltitythatis;#leSJ.l9ject

of ilmstribution,OrJlnyreferencesecur1l], doeSllot comprisembre than 5% ofthe value

Qfthe'.pashetpurc;ha;seQ;P1: <ii)PtIJ:q~a$eSarei~feqted .~$.?9iustn.1el;!~sto. sJ.l~h,9a*etU1the

orclinarycourse .o~busfllessasaTesult ofa chall~eitlt1lewmpositionoftheUnderlying

Im1¢)(;..illilU·fliJ) ·.sl1qb.•.• pids.o:t:.p;grchl;lSes;are-nQt•• effe~ted..cr~.rthepw:pl?~e.()f·:f~cilihl.tit1g$P9h

teiW[etdffet.

Rute tOh;:1:7

c

Rll1el:Qp'-17t:e'lWr~alli~suet()K··~·· plass .()fpJ.lbli¢lYt:r~(l~4.. se~w:ft1estggive~Qti~e •. ofqettain sl'ecifiedactions(~.g.) .dividends, stock:splits·>rlghts.offcrings)reIatihgto~uchclasso£

s~Cqri~e'lhln~~corcla1,1ce"Yi1:h1ttUe .1?p~17\p) .. l?ar~gxaph(c).b~wev~r~ .sta.te~~atw.e

fu1~.shal1norapply toiedeefuahlesecuritiesissued byopen-endinvestfilehtcQJnpahies

Mldw¥tinves!mep.t~tstegi,st~r~llndert!W194:9 ~ct..B?'c.eptfottJ3;~f~cttb!ltHeali:h,.

Shates{Minust ~eredeemed in.Greation Uhit-.size~ggtegatioils) .HealtbSliaresJ'M are re,..

4~~:1lIa1?l~ se~tg'itic::§'iss}:ledbyp.pen,.ellq,inveSllIl.e(ltc01IJ,pa.mes.19 fortl).e. J:ea~o.n~<:lis·

·Mr;JafuesA. Bj:j'gagliano,

J~n\l@Y 17, $QQ7

P~O:e/24

'~).

c,ils:s:e:d"ab'ove:ir.r¢ortrtet:ti()'lif;with:ilieJ;elieft~(fue~t~dJl1:J,d;er Re~ti()p: 1vI;'w~:):eqy.e,$J:~t

tlle'e:temption un!ietp:aiagraplHc)qfRWe lOb"l'llj~;applicablb'ttfth~?Furi.tlli'. .

IV .

contlusiorr

~~ ~~

..

..

Polltenick P~g~~t;

.

c'~: '~:;:~~~:::~~~:n~'ofIVlarkct Reg~11ation