Application Numbers and Proposed Exemptions

Federal RegisterJan 19, 2010

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[D-11502, D-11518, D-11521, D-11425, D-11448, D-11495]

Application Numbers and Proposed Exemptions

AGENCY:

Employee Benefits Security Administration, Labor.

ACTION:

Notice of Proposed Exemptions.

[Application Nos. and Proposed Exemptions; Putnam Fiduciary Trust Company (PFTC), The PNC Financial Services Group, Inc.; Deutsche Asset Management (UK) Limited (the Applicant); UBS Financial Services Inc. and Its Affiliates; Deutsche Bank AG and Its Affiliates (together, Deutsche Bank of the Applicant); Morgan Stanley & Co. Inc. and its current and future affiliates and subsidiaries (Morgan Stanley) and Union bank, N.A. and its affiliates (Union Bank), et al.]

SUMMARY:

This document contains notices of pendency before the Department of Labor (the Department) of proposed exemptions from certain of the prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (ERISA or the Act) and/or the Internal Revenue Code of 1986 (the Code).

Written Comments and Hearing Requests

All interested persons are invited to submit written comments or requests for a hearing on the pending exemptions, unless otherwise stated in the Notice of Proposed Exemption, within 45 days from the date of publication of this

Federal Register

Notice. Comments and requests for a hearing should state: (1) The name, address, and telephone number of the person making the comment or request, and (2) the nature of the person's interest in the exemption and the manner in which the person would be adversely affected by the exemption. A request for a hearing must also state the issues to be addressed and include a general description of the evidence to be presented at the hearing.

ADDRESSES:

All written comments and requests for a hearing (at least three copies) should be sent to the Employee Benefits Security Administration (EBSA), Office of Exemption Determinations, Room N-5700, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210. Attention: Application No. __, stated in each Notice of Proposed Exemption. Interested persons are also invited to submit comments and/or hearing requests to EBSA via e-mail or Fax. Any such comments or requests should be sent either by e-mail to:

“moffitt.betty@dol.gov”,

or by Fax to (202) 219-0204 by the end of the scheduled comment period. The applications for exemption and the comments received will be available for public inspection in the Public Documents Room of the Employee Benefits Security Administration, U.S. Department of Labor, Room N-1513, 200 Constitution Avenue, NW., Washington, DC 20210.

Warning:

If you submit written comments or hearing requests, do not include any personally-identifiable or confidential business information that you do not want to be publicly-disclosed. All comments and hearing requests are posted on the Internet exactly as they are received, and they can be retrieved by most Internet search engines. The Department will make no deletions, modifications or redactions to the comments or hearing requests received, as they are public records.

Notice to Interested Persons

Notice of the proposed exemptions will be provided to all interested persons in the manner agreed upon by the applicant and the Department within 15 days of the date of publication in the

Federal Register.

Such notice shall include a copy of the notice of proposed exemption as published in the

Federal Register

and shall inform interested persons of their right to comment and to request a hearing (where appropriate).

SUPPLEMENTARY INFORMATION:

The proposed exemptions were requested in applications filed pursuant to section 408(a) of the Act and/or section 4975(c)(2) of the Code, and in accordance with procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990). Effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of the Secretary of the Treasury to issue exemptions of the type requested to the Secretary of Labor. Therefore, these notices of proposed exemption are issued solely by the Department.

The applications contain representations with regard to the proposed exemptions which are summarized below. Interested persons are referred to the applications on file with the Department for a complete statement of the facts and representations.

Putnam Fiduciary Trust Company (PFTC), Located in Boston, Massachusetts, [Application No. D-11425].

Proposed Exemption

The Department is considering granting an exemption under the authority of section 408(a) of the Act and section 4975(c)(2) of the Code and in accordance with the procedures set forth in 29 CFR 2570, subpart B (55 FR 32836, 32847, August 10, 1990).

Section I—Proposed Exemption

Effective as of January 19, 2010, the restrictions of section 406(a) and (b) of the Act, and the taxes imposed by section 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(A) through (F) of the Code, shall not apply to either (a) the purchase or sale by a Collective Fund (as defined in Section III(b) below) of shares of a Mutual Fund (as defined in Section III(d) below) where Putnam Fiduciary Trust Company (“PFTC” or the “Applicant”) or its affiliate (PFTC and its affiliates are referred to herein as “Putnam”) is the investment advisor of the Mutual Fund as well as a fiduciary with respect to the Collective Fund (or an affiliate of such fiduciary) or (b) the receipt of fees by Putnam from a Mutual Fund for acting as an investment advisor for the Mutual Fund and/or for providing other services to the Mutual Fund which are Secondary Services (as defined in Section III(g) below) in connection with the investment by the Collective Fund in shares of the Mutual Fund, provided that the following conditions and the general conditions of Section II are met: (a) Each Collective Fund satisfies either (but not both) of the following:

(1) The Collective Fund receives a cash credit equal to such Collective Fund's proportionate share of all fees charged to the Mutual Fund by Putnam for investment advisory services. Such credit shall be paid to the Collective Fund no later than the same day on which such investment advisory fees are paid to Putnam. The crediting of all such fees to the Collective Funds by Putnam is audited by an independent accounting firm on at least an annual basis to verify the proper crediting of the fees to each Collective Fund. The audit report shall be completed not later than six months after the period to which it relates; or

(2) No management fees, investment advisory fees, or similar fees are paid to Putnam with respect to any of the assets of such Collective Fund that are invested in shares of the Mutual Fund. This condition does not preclude the payment of investment advisory or similar fees by the Mutual Fund to Putnam under the terms of an investment management agreement adopted in accordance with section 15

of the Investment Company Act of 1940 (the 1940 Act), nor does it preclude the payment of fees for Secondary Services to Putnam pursuant to a duly adopted agreement between Putnam and the Mutual Fund if the conditions of this proposed exemption are otherwise met.

(b) The price paid or received by a Collective Fund for shares in the Mutual Fund is the net asset value (NAV) per share (as defined in Section III (h)) and is the same price that would have been paid or received for the shares by any other investor in the Mutual Fund at that time, and all other dealings between the Collective Funds and the Mutual Fund will be on a basis no less favorable to the Collective Fund than such dealings will be with the other shareholders of the Mutual Fund.

(c) Putnam, including any officer or director of Putnam, does not purchase or sell shares of the Mutual Fund from or to any Collective Fund; provided that this condition shall not preclude the purchase or redemption of such shares between a Collective Fund and an affiliate of PFTC acting solely in its capacity as underwriter for the Mutual Fund, if such affiliate acts as a riskless principal, the purchase or redemption is at NAV at the time of the transaction, and the affiliate does not receive any direct or indirect compensation, spread or other consideration in connection with such purchase or redemption.

(d) No sales commissions, redemption fees, or other similar fees are paid by the Collective Funds in connection with the purchase or sale of shares of the Mutual Fund.

(e) For each Collective Fund, the combined total of all fees received by Putnam for the provision of services to the Collective Fund, and in connection with the provision of services to the Mutual Fund in which the Collective Fund may invest, are not in excess of “reasonable compensation” within the meaning of section 408(b)(2) of the Act.

(f) Putnam does not receive any fees payable pursuant to Rule 12b-1 under the 1940 Act in connection with the transactions covered by this proposed exemption.

(g) The Second Fiduciary (as defined in Section III (f) below) with respect to each plan having an interest in a Collective Fund (a “Client Plan”) receives in writing, in advance of any investment by the Collective Fund in the Mutual Fund, full and detailed disclosure of information concerning the Mutual Fund, including but not limited to: (1) A current prospectus issued by the Mutual Fund; (2) a statement describing the fees for investment advisory or similar services, any Secondary Services and all other fees to be charged to or paid by (or with respect to) the Collective Fund and by the Mutual Fund, including the nature and extent of any differential between the rates of such fees; (3) the reasons why PFTC may consider such investment to be appropriate for the Collective Fund; (4) a statement describing whether there are any limitations applicable to PFTC with respect to which Collective Fund assets may be invested in shares of the Mutual Fund and, if so, the nature of such limitations; and (5) upon request of the Second Fiduciary, a copy of both the notice of proposed exemption and a copy of the final exemption once it is published in the

Federal Register

, and any other reasonably available information regarding the transactions covered by this proposed exemption.

(h) On the basis of the information described in paragraph (g) above, the Second Fiduciary authorizes in writing the investment of assets of the Collective Fund in the Mutual Fund and the fees to be paid by the Mutual Fund to Putnam.

(i) On an annual basis, Putnam will provide to the Second Fiduciary of each Client Plan having an interest in the Collective Fund: (1) A current prospectus issued by the Mutual Fund in which the Collective Fund invests, and, upon the Second Fiduciary's request, a copy of the Statement of Additional Information for such Mutual Fund that contains a description of all fees paid by the Mutual Fund to Putnam; (2) a copy of the annual financial disclosure report prepared by Putnam that includes information about the Mutual Fund portfolios, as well as audit findings of an independent auditor, within 60 days of the preparation of the report; (3) oral or written responses to inquiries of the Second Fiduciary as they arise; (4) a statement (i) of the approximate percentage (which may be in the form of a range) of the assets of the Collective Fund that were invested in the Mutual Fund during the year and (ii) that, if the Second Fiduciary objects to the continued investment by the Collective Fund in the Mutual Fund, the Client Plan should withdraw from the Collective Fund; and (5) a form (Termination Form) expressly providing an election to withdraw from the Collective Fund, together with instructions on the use of such form. The instructions will inform the Second Fiduciary that: (i) The prior written authorization is terminable at will by the Plan, without penalty to the Plan, upon receipt by Putnam of written notice from the Second Fiduciary, and (ii) failure to return the form will result in continued authorization of Putnam to engage in the transactions described above on behalf of the Plan.

However, if the Termination Form has been provided to the Second Fiduciary pursuant to Section I(j), the Termination Form need not be provided again for an annual reauthorization pursuant to this Section I(i) unless at least six months has elapsed since the form was previously provided.

(j) Except as provided in Section I(j)(E), paragraph (h) of this Section I does not apply if:

(A) The purchase, holding and sale of Mutual Fund shares by the Collective Fund is performed subject to the prior and continuing authorization, in the manner described in this paragraph (j), of a Second Fiduciary with respect to each Client Plan whose assets are invested in the Collective Fund.

(B)(1) For each Collective Fund using the fee structure described in paragraph (a)(2) above with respect to investments in the Mutual Fund, in the event of an increase in the rate of fees paid by the Mutual Fund to Putnam regarding any investment management services, investment advisory services, or similar services that Putnam provides to the Mutual Fund over an existing rate for such services that had been authorized by a Second Fiduciary in accordance with paragraph (h) above or this paragraph (j); or

(2) For each Collective Fund under this exemption (regardless of whether the fee structure described in paragraph (a)(1) or (a)(2) is used), in the event an additional Secondary Service is provided by Putnam to the Mutual Fund for which a fee is charged, or an increase in the rate of any fee paid by the Mutual Fund to Putnam for any Secondary Service that results either from an increase in the rate of such fee or from a decrease in the number or kind of services performed by Putnam for such fee over an existing rate for such Secondary Service that had been authorized by a Second Fiduciary in accordance with paragraph (h) above or this paragraph (j):

Putnam will, at least 30 days in advance of the implementation of such additional service for which a fee is charged or for which there is a fee increase, provide a written notice (which may take the form of a letter or similar communication that is separate from the prospectus of the Fund and that explains the nature and amount of the additional service for which a fee is charged or of the increase in the rate of fee) to the Second Fiduciary of each Client Plan having an interest in the Collective Fund. Such written notice will include a Termination Form

expressly providing an election to withdraw from the Collective Fund, together with instructions on the use of such form.

(C) In the event a Second Fiduciary submits a notice in writing to PFTC objecting to the initial investment by the Collective Fund in the Mutual Fund or the implementation of such additional service for which a fee is charged or such rate of fee increase, whichever is applicable, the Client Plan on whose behalf the objection was intended is given the opportunity to terminate its investment in the Collective Fund, without penalty to such Client Plan, within such time as may be necessary to effect the withdrawal in an orderly manner that is equitable to all withdrawing Client Plans and to the non-withdrawing Client Plans. In the case of a Client Plan that elects to withdraw under this subparagraph (C), the withdrawal shall be effected prior to the initial investment by the Collective Fund in the Mutual Fund or the implementation of such additional service for which a fee is charged or such rate of fee increase, whichever is applicable.

(D) Notwithstanding the foregoing subparagraphs (B) and (C), Putnam may commence providing an additional Secondary Service for a fee or implement any increase in the rate of fee paid by the Mutual Fund to Putnam prior to providing the notice referred to in subparagraph (B) above or prior to the withdrawal of an objecting Client Plan, whichever is applicable, provided that, in either such event, the Collective Fund receives a cash credit equal to the Collective Fund's proportionate share of the fee for the additional Secondary Service or such fee increase charged to the Mutual Fund by Putnam, whichever is applicable, for the period from the date of such commencement or implementation to the later of the date that is 30 days after the notice referred to in subparagraph (B) above has been provided or, if applicable, the date on which any Client Plan that objects to the provision of such additional Secondary Service or to such fee increase has withdrawn from the Collective Fund pursuant to subparagraph (C) above. Any such cash credits shall be paid to the Collective Fund, with interest thereon at the prevailing Federal funds rate plus two percent (2%), no later than the fifth business day following the receipt of the increased fee by Putnam.

The crediting of all such fees to the Collective Fund by Putnam will be audited by an independent accounting firm on at least an annual basis to verify the proper crediting of the fees and interest to the Collective Fund. The audit report shall be completed not later than six months after the period to which it relates.

Putnam will pay interest on any such amounts from the date it receives such incremental amounts to the date it makes the rebate payment to the Collective Fund.

(E) In the case of a Client Plan whose assets are proposed to be invested in the Collective Fund subsequent to the implementation of the arrangement and that has not authorized the investment of assets of the Collective Fund in the Mutual Fund, the Client Plan's investment in the Collective Fund is subject to: (1) The receipt by a Second Fiduciary of the full and detailed disclosures concerning the Mutual Fund pursuant to Section I(g), above, and (2) the prior written authorization of a Second Fiduciary pursuant to Section I(h), above (

i.e.

, the authorization must be provided by such new Client Plan investor in advance of the initial investment).

(k) For each Collective Fund using the fee structure described in paragraph (a)(1) above with respect to investments in the Mutual Fund, the Second Fiduciary of the Client Plan receives full written disclosure in a Fund prospectus or otherwise of any increases in the rates of fees charged by Putnam to the Mutual Fund for investment advisory services, or of a decrease in the number or kind of services performed by Putnam.

Section II—General Conditions

(a) PFTC maintains for a period of six years the records necessary to enable the persons described in paragraph (b) below to determine whether the conditions of this exemption have been met, except that:

(1) A separate prohibited transaction will not be considered to have occurred if, solely because of circumstances beyond the control of PFTC, the records are lost or destroyed prior to the end of the six-year period; and

(2) No party in interest other than Putnam shall be subject to the civil penalty that may be assessed under Section 502(i) of the Act or to the taxes imposed by Section 4975(a) and (b) of the Code, if the records are not maintained or are not available for examination as required by paragraph (b) below.

(b)(1) Except as provided in paragraph (b)(2) below and notwithstanding any provisions of Section 504(a)(2) of the Act, the records referred to in paragraph (a) above are unconditionally available at their customary location for examination during normal business hours by:

(i) Any duly authorized employee or representative of the Department, the Internal Revenue Service, or the Securities & Exchange Commission,

(ii) Any fiduciary of a Client Plan who has authority to acquire or dispose of the interest in the Collective Fund owned by such Client Plan, or any duly authorized employee or representative of such fiduciary, and

(iii) Any participant or beneficiary of a Client Plan having an interest in the Collective Fund or duly authorized employee or representative of such participant or beneficiary.

(2) None of the persons described in paragraph (b)(1)(ii) or (iii) above shall be authorized to examine trade secrets of Putnam, or commercial or financial information that is privileged or confidential.

Section III—Definitions

(a) An “affiliate” of a person includes:

(1) Any person directly or indirectly through one or more intermediaries, controlling, controlled by, or under common control with the person;

(2) Any officer, director, employee, relative, or partner in any such person; and

(3) Any corporation or partnership of which such person is an officer, director, partner, or employee.

(b) The term “Collective Fund” means any common or collective trust fund maintained by PFTC.

(c) The term “control” means the power to exercise a controlling influence over the management or policies of a person other than an individual.

(d) The term “Mutual Fund” means the Putnam Prime Money Market Fund and any other money market fund that is a diversified open-end investment company registered under the 1940 Act and operated in accordance with Rule 2a-7 under the 1940 Act as to which Putnam serves as an investment adviser. Putnam may also serve as a custodian, dividend disbursing agent, shareholder servicing agent, transfer agent, fund accountant, or provider of some other “Secondary Service” (as defined below in paragraph (g) below).

(e) The term “relative” means a “relative” as that term is defined in section 3(15) of the Act (or a “member of the family”) as that term is defined in section 4975(e)(6) of the Code), or a brother, a sister, or a spouse of a brother or a sister.

(f) The term “Second Fiduciary” means a fiduciary of a Client Plan who is independent of, and unrelated to, Putnam. For purposes of this exemption, the Second Fiduciary will

not be deemed to be independent of an unrelated to Putnam if:

(1) Such fiduciary directly or indirectly controls, is controlled by, or is under common control with Putnam;

(2) Such fiduciary, or any officer, director, partner, employee, or relative of the fiduciary is an officer, director, partner or employee of Putnam (or is a relative of such persons); or

(3) Such fiduciary directly or indirectly receives any compensation or other consideration for his or her own personal account in connection with any transaction described in this exemption.

If an officer, director, partner or employee of Putnam (or a relative of such a person), is a director of such Second Fiduciary, and if he or she abstains from participation in (i) the decision of the Client Plan to invest in, and remain invested in, the Collective Fund and (ii) the granting of any authorization contemplated by Section I(h) or any deemed authorization contemplated by Section I(i) and (j) with respect to the Collective Fund, then paragraph (f)(2) above shall not apply.

(g) The term “Secondary Service” means a service other than an investment management, investment advisory, or similar service, which is provided by Putnam to the Mutual Fund, including but not limited to custodial, accounting, administrative, or any other service.

(h) The term “net asset value (

i.e.

, NAV)” means the amount for purposes of pricing all purchases and sales, calculated by dividing the value of all securities, determined by a method as set forth in a Fund's prospectus and statement of additional information, and other assets belonging to the Fund or portfolio of the Fund, less the liabilities charged to each such portfolio or Fund, by the number of outstanding shares.

Summary of Facts and Representations

1. The applicant is Putnam Fiduciary Trust Company (PFTC), a Massachusetts trust company subject to supervision by the Massachusetts Division of Banks. PFTC is a wholly-owned subsidiary of Putnam, LLC (together with PFTC and its other wholly-owned subsidiaries, collectively referred to herein as “Putnam”). Putnam is a majority-owned subsidiary of Great-West Lifeco U.S. Inc. Putnam is a global financial services firm primarily involved in the investment management business including the management of registered, open-end investment companies (“mutual funds”), other collective investment vehicles and single-client separate accounts. As of May 31, 2009, Putnam's total assets under management were approximately $102 billion.

2. PFTC manages assets held in both collective investment vehicles (other than mutual funds) and single-client separate accounts. As of May 31, 2009, 2006, PFTC managed approximately $9 billion in assets.

3. In particular, PFTC maintains a number of collective investment funds, the assets of which are managed by PFTC on a discretionary basis (the “Collective Funds”). The Collective Funds are common or collective trust funds of a bank within the meaning of DOL Regulation 2510.3-101(h)(1)(ii) and, as such, the assets of the Collective Funds are “plan assets” subject to Title I of the Act to the extent of the interests of ERISA Plans therein.

4. Each of the Collective Funds generally has some level of cash balances and/or other assets to be invested in short-term, money market instruments. In the past, PFTC has typically invested such amounts in the short-term investment fund (the “STIF”) made available by the custodian of the particular Collective Fund's assets or some other similar money market instrument or vehicle unrelated to Putnam.

5. Putnam acts as the advisor of the Putnam Prime Money Market Fund (the “Mutual Fund”), a money market mutual fund designed to serve as a short-term investment vehicle. The Mutual Fund is registered under the Investment Company Act of 1940 and is operated in accordance with the Securities & Exchange Commission (SEC) rules relating to money market funds (see, Rule 2a-7 under the Investment Company Act of 1940, as amended). The Applicant represents that since January 2006, the yield generated by the Mutual Fund has generally been superior to the yield generated by the STIF. Accordingly, PFTC believes it would be desirable for the Collective Funds to have the flexibility to invest in the Mutual Fund when such investment is prudent and in the best interest of the Collective Funds.

Putnam further believes that it would be desirable to have the same flexibility to invest the assets of the Collective Funds in other money market mutual funds managed by Putnam when it is in the interest of the Collective Funds to do so.

In order to achieve the benefits of this higher yield as soon as practicable, PFTC requests that the exemption, if granted, be retroactive to the date the proposed exemption is published in the

Federal Register

References to the Mutual Fund in this Summary of Facts and Representations should be read to include such other money market mutual funds where the context so requires.

6. Given that an affiliate of PFTC receives investment management or advisory fees from the Mutual Fund, a decision by PFTC to cause assets of a Collective Fund to be invested in the Mutual Fund could constitute a self-dealing prohibited transaction under Section 406(b)(1) of ERISA, absent an available exemption. Putnam may also receive fees from the Mutual Fund for services provided to the Mutual Fund other than investment management, investment advisory or similar services (“Secondary Services”) in which event any increase in such fees as a result of PFTC's decision to invest assets of the Collective Funds in the Mutual Fund or the engagement of Putnam to perform an additional Secondary Service for which a fee is charged could constitute prohibited self-dealing, absent an exemption. Prohibited Transaction Exemption 77-4 (PTE 77-4, 42 FR 18732, April 8, 1977) is designed to provide exemptive relief in such situations. However, one of the conditions of PTE 77-4 is that an independent plan fiduciary approve in writing the investment of plan assets in the affiliated mutual fund.

7. In the case at hand, PFTC has not sought, and the relevant independent fiduciaries of existing ERISA Plan investors in the Collective Funds have not provided, any such written approval. Since the Collective Funds generally have numerous ERISA Plan investors (in many cases, a very large number of ERISA Plan investors), PFTC does not believe it is feasible, as a practical matter, to obtain the affirmative written approval of the relevant independent fiduciary of each and every ERISA Plan investor in the Collective Funds. Without such unanimous written approval, the exemption provided by PTE 77-4 will not be available and the Collective Funds will be precluded from investing in the Mutual Fund.

8. Similarly, in the event that Putnam is engaged to render an additional Secondary Service or any of the fees paid by the Mutual Fund is changed, PTE 77-4 would require PFTC to obtain the affirmative written approval of the relevant independent fiduciary of each ERISA Plan having an interest in the Collective Funds at the time of such engagement or change. Again, given the large number of ERISA Plans involved and the practical difficulty of obtaining an affirmative written approval from each and every one of them, it is unlikely that the requirements of PTE 77-4 would be able to be satisfied in the context of such an engagement or change.

9. No sales commissions are charged in connection with the purchase of any shares of the Mutual Fund. In addition, no 12b-1 fees are charged by the Mutual Fund with respect to any class of shares of the Mutual Fund to be purchased by the Collective Funds pursuant to the exemption transactions, nor will any redemption fees be charged in connection with any sale of shares of the Mutual Fund by the Collective Funds. Putnam, including any officer or director of Putnam, will not purchase or sell shares of the Mutual Fund from or to any Collective Fund. However, there may be purchases or redemptions of such shares between a Collective Fund and an affiliate of PFTC acting solely in its capacity as underwriter for the Mutual Fund, if the sale is at NAV, and such affiliate acts as a riskless principal and does not receive any compensation, spread or other consideration in connection with such purchase or redemption.

10. The Applicant represents that Putnam will not be providing any brokerage services for the acquisition or sale of securities by any Mutual Fund involved in this proposed exemption.

11. Prior to investing the assets of any Collective Fund in shares of the Mutual Fund, PFTC will provide advance notice to the relevant independent fiduciary of each ERISA Plan then having an interest in such Collective Fund. Such notice will include a current prospectus for the Fund and a written statement giving full disclosure of the fee structure under which either Putnam's investment advisory fees will be credited back to the Collective Fund or the investment management fees applicable to the Collective Fund with respect to the assets invested in the Mutual Fund will be waived. The notice will also describe why PFTC believes the investment of the Collective Fund's assets in the Mutual Fund may be appropriate. In the case of a Client Plan whose assets are proposed to be invested in the Collective Fund subsequent to the implementation of the arrangement and that has not authorized the investment of assets of the Collective Fund in the Mutual Fund, the Client Plan's investment in the Collective Fund is subject to the prior written authorization of a Second Fiduciary.

12. In the event the fee credit approach is utilized, the credit will not include any fees received by Putnam for Secondary Services rendered to the Mutual Fund because any such Secondary Services will not be duplicative of any services being provided by PFTC to the Collective Funds.

13. PFTC represents that, for each ERISA Plan having an interest in a Collective Fund that engages in transactions described in this proposed exemption, the combined total of all fees that Putnam will receive, directly or indirectly, with respect to such ERISA Plan's interest in the Collective Fund for the provision of services to the Collective Fund and/or to the Mutual Fund will not be in excess of “reasonable compensation” within the meaning of Section 408(b)(2) of the Act.

14. Prior to either the addition of any Secondary Service that will result in the payment of a fee by the Mutual Fund to Putnam or any increase in the rate of any fee paid to Putnam by the Mutual Fund, PFTC will provide advance notice to the relevant independent fiduciary of each ERISA Plan then having an interest in a Collective Fund as to which the utilization of the Mutual Fund has been approved. Such notice will include a description, as applicable, of the (i) additional Secondary Service to be provided by Putnam and the resultant fee payable to Putnam or (ii) increase in the rate of any such fee payable to Putnam by the Mutual Fund or from a decrease in the number or kind of services performed by Putnam. Such written notice will also include a form (the Termination Form) expressly providing an election to withdraw from the Collective Fund, together with instructions on the use of such form.

The advance notice described in this representation 13 need not be furnished 30 days in advance of the effective date for a fee increase provided an amount equal to the Collective Fund's proportionate share of the fee for such additional Secondary Service or the fee increase, whichever is applicable, for the period from the date of commencement of the additional Secondary Service or implementation of the fee increase, whichever is applicable, to the date that is 30 days after the delivery of the required notice or the date of the withdrawal of any objecting Client Plan, whichever is later, is credited to the Collective Fund with interest thereon at the prevailing Federal funds rate plus two percent (2%) (“the Applicable Interest Rate”).

As an example, assume the Mutual Fund fee increase becomes effective on June 1, Putnam provides notice of the fee increase on May 16 and one (and only one) participating Plan objects to the fee increase on June 10, and the sole objecting Plan withdraws from the Collective Fund on June 20. In this case, Putnam will pay a rebate to the Collective Fund equal to the allocable portion of the fee increase for the period from June 1 (

i.e.,

the effective date of the fee increase) to June 20 (

i.e.,

the date that one objecting Plan withdrew, (with interest at the Applicable Interest Rate) because that date is later than the expiration of the 30-day notice period).

15. PFTC will maintain a system of internal accounting controls for the crediting or waiving of all relevant fees. In addition, PFTC proposes to retain Ernst & Young or another independent accounting firm to audit annually the crediting of such fees. Such audits will provide independent verification of the proper crediting of such fees. In the event an error is identified, it will be promptly corrected. If the correction requires a payment by PFTC, such payment shall include interest at the money market rate earned by the Mutual Fund. An independent accounting firm will also audit the crediting of fees and interest at the Applicable Interest Rate for the scenario described in paragraph 13, above.

16. The information described above (including (a) the information to be provided prior to the initial utilization of the Mutual Fund and (b) the information to be provided in connection with any additional Secondary Service or any increase in the rate of any fee payable by the Mutual Fund to Putnam (unless an amount equal to the Collective Fund's proportionate share of the fee for such additional Secondary Service or fee increase, whichever is applicable, is credited to the Collective Fund with interest at the Applicable Interest Rate thereon)), will be furnished to the relevant independent fiduciary of each ERISA Plan then investing in the Collective Fund not less than 30 days prior to the initiation of investment in the Mutual Fund by such Collective Fund or the implementation of the additional Secondary Service or the increase in the rate of any such fee payable to Putnam.

The requested exemption would not apply to any plans maintained by Putnam or any of its affiliates for their own employees. The Applicant represents that to the extent any such plans have an interest in a Collective Fund, the investment of such Collective Fund's assets attributable to such plans in the Mutual Fund would be covered by Prohibited Transaction Exemption 77-3 (42 FR 18734, April 8, 1977). The Department expresses no opinion herein on whether such transactions would qualify for exemptive relief under PTE 77-3.

17. In the event any such independent fiduciary submits a notice in writing to PFTC objecting to the initial utilization, additional Secondary Service or increased rate of fee, including a decrease in the number or kind of services performed by Putnam (unless an amount equal to the Collective Fund's share of the fee for such additional service or fee increase, whichever is applicable, is credited to the Collective Fund with interest at the Applicable Interest Rate thereon), the

ERISA Plan on whose behalf the objection was tendered will be given the opportunity to withdraw its investment in the Collective Fund, without penalty to such ERISA Plan, within such time as may be necessary to effect such withdrawal in an orderly manner that is equitable to all withdrawing ERISA Plans and all non-withdrawing ERISA Plans. In the case of an ERISA Plan that elects to withdraw pursuant to the preceding sentence, such withdrawal shall be effected prior to (a) the initial utilization of the Mutual Fund, or (b) the implementation of the additional Secondary Service or the increase in the rate of fee (unless an amount equal to the fee for such additional Secondary Service or fee increase, whichever is applicable, for the period from the date of such implementation to the date on which the objecting Client Plan has withdrawn from the Collective Fund is credited to the Collective Fund with interest at the Applicable Interest Rate thereon); provided, however, that the Collective Fund's existing investment in the Mutual Fund need not be discontinued by reason of an ERISA Plan electing to withdraw. Putnam confirms that it will not receive any “float” with respect to its receipt of incremental fees for Secondary Services that become effective before the requisite negative consent has been obtained and that, as a result, must be credited to the Collective Fund. This is because Putnam will credit interest on any such amounts from the date it receives such incremental amounts to the date they are actually credited to the Collective Fund. Putnam emphasizes that the amount credited to the Collective Fund would not be limited to the portion of the fee increase that is allocable to the objecting Client Plan(s), but rather will be equal to the portion of the fee increase that is allocable to the Collective Fund's entire position in the Mutual Fund. Putnam represents that any such cash credits will be paid to the Collective Fund, with interest thereon at the Applicable Interest Rate, no later than the fifth business day following the receipt of the increased fee by Putnam.

Putnam further confirms that if a Client Plan objects to a Mutual Fund fee increase at a time when, due to extraordinary circumstances, withdrawals from the Collective Fund are suspended, then Putnam would continue to credit the allocable amount of the fee increase to the Collective Fund, with interest, until the objecting Client Plan is able to withdraw. To summarize, if Putnam were to implement an additional Secondary Service or increase the rate of fee for any Secondary Service before the expiration of the 30-day period after notice has been given to Plans, and a Plan objects and wishes to withdraw from the Collective Fund, Putnam will pay a rebate to the Collective Fund, with interest at the Applicable Interest Rate thereon, from the effective date of the fee increase to the later of the expiration of the 30-day period or the date on which the objecting Plan withdraws from the Collective Fund. Such rebate will be paid by Putnam within five business days of the date that Putnam actually receives the increased fee from the Mutual Fund.

As an example, assume the mutual fund fee increase is effective on June 1, Putnam provides notice of the fee increase to the participating Plans on May 31, one (and only one) participating Plan objects to the fee increase on June 25, and the sole objecting Plan withdraws from the Collective Fund on July 10. In this case, the aggregate rebate amount would be equal to the allocable portion of the fee increase for the period from June 1 (

i.e.,

the effective date of the fee increase) to July 10 (

i.e.,

the date that the sole objecting Plan withdraws, given that it is later than the expiration of the 30-day notice period). Further, assuming that Putnam receives payments of the increased fee from the Mutual Fund on the fifth day of each month, Putnam would receive a payment that includes the fee increase for the month of June on July 5 and would rebate the entire allocable portion of that fee increase to the Collective Fund within 5 business days of July 5, with interest at the Applicable Interest Rate. Moreover, on August 5, Putnam would receive another payment from the Mutual Fund that includes the fee increase for the month of July. The allocable portion of the fee increase for the period from July 1 to July 10 (

i.e.,

the date that the sole objecting Plan withdrew) would be rebated to the Collective Fund within 5 business days of August 5, with interest at the Applicable Interest Rate.

18. On an annual basis, Putnam will provide notice to the relevant independent fiduciary of each ERISA Plan having an interest in the Collective Fund, which notice will include: (a) The approximate percentage (which may be in the form of a range) of the Collective Fund's assets that were invested in the Mutual Fund during the year; and (b) a statement that, if the fiduciary objects to the continued investment by the Collective Fund in the Mutual Fund, the ERISA Plan should withdraw from the Collective Fund, and (c) a Termination Form

expressly providing an election to withdraw from the Collective Fund, together with instructions on the use of such form. Specifically, the instructions will explain that the Client Plan has the opportunity to withdraw from the Collective Fund by submitting the completed Termination Form to PFTC. Further, the instructions will provide the PFTC address to which the form must be submitted. The form will further provide that upon receipt thereof, the Client Plan's interest in the Collective Fund that is the subject of such withdrawal election will be redeemed as of the next regularly scheduled withdrawal date of the Collective Fund, following whatever advance notice period is applicable to the particular Collective Fund (assuming, of course, that such Collective Fund is not subject to a suspension of withdrawals due to extraordinary events). PFTC represents that, consistent with standard practice in the industry with respect to collective funds, the governing documents of Putnam's Collective Funds contain provisions that allow for the suspension of withdrawals in extraordinary and unusual circumstances, such as market shutdowns, etc.

19. All other dealings between the Collective Funds and the Mutual Fund will be on a basis no less favorable to the Collective Fund than such dealings will be with the other shareholders of the Mutual Fund.

20. In summary, PFTC represents that the exemption transactions described herein will satisfy the statutory criteria of Section 408(a) of the Act because (a) the ability to invest in the Mutual Fund will provide the Collective Funds the opportunity to enhance the yield on their cash balances and other short-term investments; (b) PFTC will require annual audits by an independent accounting firm to verify the proper crediting of the relevant fees and interest due, if applicable; (c) PFTC will provide written notice to the relevant independent fiduciary of each affected ERISA Plan in advance of (i) the initial utilization by the Collective Fund of the Mutual Fund, (ii) the commencement of an additional Secondary Service by Putnam (unless an amount equal to the Collective Fund's proportionate share of the fee for such additional Secondary Service is credited to the Collective Fund with interest at the Applicable Interest Rate thereon) or (iii) the effective date of any increase in the rate of any fee payable to Putnam by the Mutual Fund (unless an amount equal to the Collective Fund's proportionate share of the fee increase is credited to the Collective Fund with interest at the Applicable Interest Rate thereon); (d) prior to any such initial utilization, commencement or increase, such independent fiduciary will have an opportunity to express an objection and to cause the Client Plan to withdraw from the Collective Fund, provided that Putnam may commence providing an

additional Secondary Service for a fee or implement an increase in the rate of fee paid by the Mutual Fund to Putnam prior to the withdrawal of the objecting Client Plan as long as the amount described in (c) above is credited to the Collective Fund; (e) no commissions or redemption fees will be paid by an ERISA Plan in connection with either the purchase or sale of shares of the Mutual Fund; (f) Putnam will not receive any 12b-1 fees as a result of the Collective Fund's purchase or holding of shares of the Mutual Fund; and (g) all dealings between the Collective Funds and the Mutual Fund will be on a basis that is at least as favorable to the ERISA Plans as such dealings are with other shareholders of the Mutual Fund.

FOR FURTHER INFORMATION CONTACT:

Mr. Gary H. Lefkowitz of the Department, telephone (202) 693-8546. (This is not a toll-free number.)

The PNC Financial Services Group, Inc., Located in Pittsburgh, Pennsylvania, [Application No. D-11448].

Proposed Exemption

Section I—Exemption for In-Kind Redemption of Assets

The Department is considering granting an exemption under the authority of section 408(a) of the Act and 4975(c)(2) of the Code, and in accordance with the procedures set forth in 29 CFR Part 2570 Subpart B (55 FR 32836, 32847, August 10, 1990). If the proposed exemption is granted, the restrictions in sections 406(a)(1)(A) through (D) and 406(b)(1) and (b)(2) of the Act, and the sanctions resulting from the application of section 4975 of the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, shall not apply

to certain in-kind redemptions (the Redemption(s)) by The Employees' Thrift Plan of Mercantile Bankshares Corporation and Participating Affiliates (the Mercantile Plan) that occurred overnight on October 31, 2007, of shares (the Shares) of proprietary mutual funds (the Funds) for which The PNC Financial Services Group, Inc. (PNC) or an affiliate thereof provides investment advisory and other services, provided that the following conditions were satisfied:

For purposes of this proposed exemption, references to specific provisions of Title I of the Act, unless otherwise specified, refer also to the corresponding provisions of the Code.

(A) No sales commissions, redemption fees, or other similar fees were paid in connection with the Redemptions (other than customary transfer charges paid to parties other than PNC and any affiliates of PNC (PNC Affiliates));

(B) The assets transferred to the Mercantile Plan pursuant to the Redemptions consisted entirely of cash and Transferable Securities, as such term is defined in Section II, below;

(C) In each Redemption, the Mercantile Plan received its pro rata portion of the securities with respect to the Capital Opportunities Fund, and certain securities, selected pursuant to a verifiable methodology, that were approved by an independent fiduciary (Independent Fiduciary, as such term is defined in Section II) with respect to the other four Funds covered by this proposed exemption, such that the securities received were equal in value to that of the number of Shares redeemed, as determined in a single valuation (using sources independent of PNC and PNC Affiliates) performed in the same manner and as of the close of business on the same day, in accordance with Rule 2a-4 under the Investment Company Act of 1940, as amended (the 1940 Act) and the then-existing procedures adopted by the Board of Directors of PNC Funds, Inc., which were in compliance with all applicable securities laws;

(D) Neither PNC nor any PNC Affiliate received any direct or indirect compensation or any fees, including any fees payable pursuant to Rule 12b-1 under the 1940 Act, in connection with any Redemption of the Shares;

(E) Prior to a Redemption, the Independent Fiduciary received a full written disclosure of information regarding the Redemption;

(F) Prior to a Redemption, the Independent Fiduciary communicated its approval for such Redemption to PNC;

(G) Prior to a Redemption, based on the disclosures provided to the Independent Fiduciary, the Independent Fiduciary determined that the terms of the Redemption were fair to the Mercantile Plan, and comparable to and no less favorable than terms obtainable at arm's length between unaffiliated parties, and that the Redemption was in the best interests of the Mercantile Plan and its participants and beneficiaries;

(H) Not later than thirty (30) business days after the completion of a Redemption, the Independent Fiduciary received a written confirmation regarding such Redemption containing:

(i) The number of Shares held by the Mercantile Plan immediately before the Redemption (and the related per Share net asset value and the total dollar value of the Shares held) for each Fund;

(ii) The identity (and related aggregate dollar value) of each security provided to the Mercantile Plan pursuant to the Redemption, including each security valued in accordance with Rule 2a-4 under the 1940 Act and procedures adopted by the Board of Directors of PNC Funds, Inc. (using sources independent of PNC and PNC Affiliates);

(iii) The current market price of each security received by the Mercantile Plan pursuant to the Redemption; and

(iv) If applicable, the identity of each pricing service or market maker consulted in determining the value of such securities;

(I) The value of the securities received by the Mercantile Plan for each redeemed Share equaled the net asset value of such Share at the time of the transaction, and such value equaled the value that would have been received by any other investor for shares of the same class of the Fund at that time;

(J) Subsequent to a Redemption, the Independent Fiduciary performed a post-transaction review that included, among other things, a random sampling of the pricing information it received;

(K) Each of the Mercantile Plan's dealings with the Funds, the investment advisors to the Funds, the principal underwriter for the Funds, or any affiliated person thereof, were on a basis no less favorable to the Mercantile Plan than dealings between the Funds and other shareholders holding shares of the same class as the Shares;

(L) Within sixty (60) days of the date of publication of this notice of proposed exemption, PNC reimburses The PNC Financial Services Group, Inc. Incentive Savings Plan (the PNC Plan), into which the Mercantile Plan was merged on November 1, 2007, for all brokerage costs incurred by the Mercantile Plan on November 1, 2007 to liquidate the securities that the Mercantile Plan received in kind pursuant to a Redemption;

(M) PNC maintains, or causes to be maintained, for a period of six years from the date of any covered transaction such records as are necessary to enable the persons described in paragraph (N) below to determine whether the conditions of this exemption have been met, except that (i) a separate prohibited transaction will not be considered to have occurred if, due to circumstances beyond the control of PNC, the records are lost or destroyed prior to the end of the six-year period and (ii) no party in interest with respect to the Mercantile Plan other than PNC shall be subject to the civil penalty that may be assessed under section 502(i) of the Act or to the taxes imposed by section 4975(a) and (b) of the Code if such records are not maintained or are not available for examination as required by paragraph (N) below;

(N)(1) Except as provided in subparagraph (2) of this paragraph (N), and notwithstanding any provisions of section 504(a)(2) and (b) of the Act, the records referred to in paragraph (M) above are unconditionally available at their customary locations for examination during normal business hours by (i) any duly authorized employee or representative of the Department, the Internal Revenue Service, or the Securities and Exchange Commission (SEC), (ii) any fiduciary of the PNC Plan as the successor to the Mercantile Plan or any duly authorized representative of such fiduciary, (iii) any participant or beneficiary of the PNC Plan as the successor to the Mercantile Plan or duly authorized representative of such participant or beneficiary, and (iv) any employer whose employees are covered by the PNC Plan as the successor to the Mercantile Plan and any employee organization whose members are covered by such plan;

(2) None of the persons described in paragraphs (N)(1)(ii), (iii) and (iv) shall be authorized to examine trade secrets of PNC or the Funds, or commercial or financial information which is privileged or confidential;

(3) Should PNC or the Funds refuse to disclose information on the basis that such information is exempt from disclosure pursuant to paragraph (N)(2) above, PNC or the Funds shall, by the close of the thirtieth (30th) day following the request, provide a written notice advising that person of the reasons for the refusal and that the Department may request such information.

Section II—Definitions

For purposes of this exemption—

(A) The term “affiliate” means:

(1) Any person (including corporation or partnership) directly or indirectly through one or more intermediaries, controlling, controlled by, or under common control with the person;

(2) Any officer, director, employee, relative, or partner in any such person; and

(3) Any corporation or partnership of which such person is an officer, director, partner, or employee.

(B) The term “control” means the power to exercise a controlling influence over the management or policies of a person other than an individual.

(C) The term “net asset value” means the amount for purposes of pricing all purchases and sales calculated by dividing the value of all securities, determined by a method as set forth in the Fund's prospectus and statement of additional information, and other assets belonging to the Fund, less the liabilities charged to each such Fund, by the number of outstanding shares.

(D) The term “Independent Fiduciary” means a fiduciary who is: (i) Independent of and unrelated to PNC and its affiliates, and (ii) appointed to act on behalf of the Mercantile Plan with respect to the in-kind transfer of assets from one or more Funds to, or for the benefit of, the Mercantile Plan. For purposes of this exemption, a fiduciary will not be deemed to be independent of and unrelated to PNC if: (i) Such fiduciary directly or indirectly controls, is controlled by, or is under common control with, PNC; (ii) such fiduciary directly or indirectly receives any compensation or other consideration in connection with any transaction described in this exemption (except that an independent fiduciary may receive compensation from PNC in connection with the transactions contemplated herein if the amount or payment of such compensation is not contingent upon, or in any way affected by, the independent fiduciary's decision); and (iii) an amount equal to more than one percent (1%) of such fiduciary's gross income (for federal income tax purposes, in its prior tax year), is paid by PNC and its affiliates to the fiduciary in 2007, the tax year at issue.

(E) The term “Transferable Securities” means securities (1) for which market quotations are readily available (as determined under Rule 2a-4 of the 1940 Act) from persons independent of PNC and (2) which are not:

(i) Securities that, if publicly offered or sold, would require registration under the Securities Act of 1933;

(ii) Securities issued by entities in countries which (a) restrict or prohibit the holding of securities by non-nationals other than through qualified investment vehicles, such as the Funds, or (b) permit transfers of ownership of securities to be effected only by transactions conducted on a local stock exchange;

(iii) Certain portfolio positions (such as forward foreign currency contracts, futures and options contracts, swap transactions, certificates of deposit, and repurchase agreements) that, although liquid and marketable, involve the assumption of contractual obligations, require special trading facilities, or can only be traded with the counter-party to the transaction to effect a change in beneficial ownership;

(iv) Cash equivalents (such as certificates of deposit, commercial paper, and repurchase agreements);

(v) Other assets that are not readily distributable (including receivables and prepaid expenses), net of all liabilities (including accounts payable); and

(vi) Securities subject to “stop transfer” instructions or similar contractual restrictions on transfer.

(F) The term “relative” means a “relative” as that term is defined in section 3(15) of the Act (or a “member of the family” as that term is defined in section 4975(e)(6) of the Code), or a brother, sister, or a spouse of a brother or a sister.

Effective Date:

The exemption, if granted, will be effective as of October 31, 2007.

As a general matter, it is the Department's view that the model practice to effect an in-kind redemption by a mutual fund to a shareholder-pension plan, subject to Title I of ERISA, is through a pro rata distribution because the adoption of such a method ensures that the individual stocks selected for the in-kind redemption are objectively determined. The Department recognizes that the in-kind redemption described in this notice of proposed exemption involves unique circumstances because, among other things, it facilitated the transfer of plan assets and the merger of The Employees' Thrift Plan of Mercantile Bankshares Corporation and Participating Affiliates (the Mercantile Plan) with The PNC Financial Services Group, Inc. Incentive Savings Plan (the PNC Plan).

See also

Facts and Representations #12, which summarizes the basis for satisfying the section 408(a) statutory criteria for providing exemptive relief. In this regard, an important condition contained in this notice of proposed exemption is that PNC will pay all brokerage commissions associated with the Mercantile Plan's sale of the securities received in the Redemptions. Further, the Department encourages applicants, their advisers and counsel to confer, in advance, with EBSA's Office of Exemption Determinations as to whether a contemplated non-

pro rata

in-kind redemption involving plan assets may qualify for prohibited transaction exemptive relief. Although the applicant requested both retroactive and prospective exemptive relief, the Department is proposing only retroactive exemptive relief relating to the October 31, 2007 Redemptions.

Summary of Facts and Representations

1. The PNC Financial Services Group, Inc. (PNC) is a bank holding company that owns or controls two principal banks, (i) PNC Bank, National Association (PNC Bank, N.A.) and (ii) PNC Bank, Delaware, as well as a number of non-bank subsidiaries. In addition, on March 2, 2007, PNC acquired Mercantile Bankshares Corporation (Mercantile), the parent company of eleven subsidiary banks. PNC merged the Mercantile subsidiary banks with, and into, PNC Bank, N.A. on September 14, 2007, pursuant to an application filed with, and approved by, the Office of the Comptroller of the Currency. Immediately after consummation of that merger, PNC Bank, N.A. transferred to PNC Bank, Delaware nine Delaware branches previously held by two of the Mercantile subsidiary banks, pursuant to a Bank Merger Act application filed

with, and approved by, the Federal Reserve Bank of Cleveland.

PNC provides, through its subsidiaries, a wide variety of trust and banking services to individuals, corporations, and institutions. Through its banking subsidiaries, PNC provides investment management, fiduciary, and trustee services to employee benefit plans and charitable and endowment assets, as well as non-discretionary services and investment options for defined contribution plans. PNC also provides a range of tailored investment, trust, and private banking products to affluent individuals and families.

PNC, through its affiliates, also provides various types of administrative services to mutual funds, including acting as transfer and disbursing agent and providing custodial and accounting services.

2. In connection with PNC's acquisition of Mercantile, PNC assumed sponsorship of The Employees' Thrift Plan of Mercantile Bankshares Corporation and Participating Affiliates (the Mercantile Plan), a qualified defined contribution retirement plan, and PNC Bank, N.A. became the Mercantile Plan's trustee. PNC Bank, N.A. is also the trustee of The PNC Financial Services Group, Inc. Incentive Savings Plan (the PNC Plan), a qualified defined contribution plan sponsored by PNC.

The applicant represents that the Administrative Committee of PNC (the Committee), the named fiduciary for plan investments for the PNC Plan, acting in its fiduciary capacity, initiated a study of how best to integrate the investment options under the two Plans, which had different investment platforms. The Mercantile Plan used eight proprietary mutual funds, each of which is a series of PNC Funds, Inc.

(

i.e.,

the Funds),

while the PNC Plan used an “open” platform that includes non-proprietary funds.

Prior to October 1, 2007, the name of the Fund family was “Mercantile Funds, Inc.”

It is represented that the Mercantile Plan's assets were invested in the Funds in accordance with Prohibited Transaction Exemption (PTE) 77-3. PTE 77-3 (42 FR 18734, April 8, 1977) is a class exemption that permits, under certain conditions, the acquisition or sale of shares of a registered, open-end investment company by an employee benefit plan covering only employees of such investment company, employees of the investment adviser or principal underwriter for such investment company, or employees of any affiliated person (as defined therein) of such investment adviser or principal underwriter. The Department expresses no opinion herein as to whether the terms and conditions of PTE 77-3 were satisfied.

The applicant has disclosed that several of these third-party mutual funds included among the PNC Plan investment options are advised by BlackRock, Inc., in which PNC has a significant minority interest (approximately 34%).

The Committee was advised by its investment consultant Wilshire Associates (Wilshire), who is also the Independent Fiduciary for the Mercantile Plan in the subject Redemptions, to transition the Mercantile Plan participants to the PNC Plan investment platform as soon as it would be prudent to do so. Wilshire's recommendation considered, among other things, the additional costs to the PNC Plan to maintain two separate investment platforms, the appropriateness of the funds on the PNC Plan investment platform, and the upcoming administrative costs associated with the transition of Mercantile employees to the PNC payroll. On this basis, the Committee determined that it would be prudent, and in the best interests of the Mercantile Plan participants and beneficiaries, to transfer out of such plan's investment options as soon as possible.

Effective November 1, 2007, the Mercantile Plan was merged into the PNC Plan. In connection therewith, Mercantile Plan assets invested in shares of the Funds (the Shares) were redeemed in order to acquire shares of mutual funds available as investment options under the PNC Plan.

3. According to the applicant, each of the eight Funds is a registered investment company subject to the 1940 Act and constitutes a distinct investment vehicle, which has a joint prospectus with the other Funds. The overall management of the Funds, including the negotiation of investment advisory contracts, rests with the Board of Directors of the Funds (the Fund Board); the Fund Board is elected by the shareholders of the Funds and includes a majority of individuals who are not “interested persons” (as defined in the 1940 Act) of the Funds and are represented to be independent directors.

PNC, through its affiliate PNC Capital Advisors, Inc. (PCA),

serves as the investment adviser, within the meaning of section 2(20) of the 1940 Act, to each Fund. In certain instances, the investment adviser may pay fees to sub-advisers, which may also be PNC affiliates.

Prior to September 17, 2007, PCA was named “Mercantile Capital Advisors, Inc.”

PCA also serves as administrator for the Funds. As administrator, PCA maintains the Fund's offices, coordinates preparation of reports to shareholders, prepares filings with state securities commissions, and coordinates federal and state tax returns, among other administrative functions.

The other service providers to the Funds, including the additional sub-advisers, the distributor, the fund accountant, the transfer agent, and the custodian, are all independent of, and unaffiliated with, PNC.

The Funds charge a Rule 12b-1 distribution fee that is between 0.50% and 1.00% with respect to their Class A and Class C shares. However, Institutional Shares, the class offered to plan investors, are not subject to 12b-1 fees.

4. In accordance with the procedures of the Funds, the Fund Board, including a majority of the directors who are represented to be unaffiliated and independent of PNC and Mercantile, determined that the redemption of Shares by the Mercantile Plan with respect to five of the eight Funds should be effected in kind and in cash. The Funds elected to be governed by the provisions of Rule 18f-1 under the 1940 Act. This election committed each Fund, during any ninety-day period for any one shareholder, to redeem its shares solely in cash up to the lesser of $250,000 or 1% of the Fund's net asset value at the beginning of such period. Accordingly, the redemption with respect to each Fund included a cash redemption of $250,000.

The applicant notes that PTE 77-3 provides exemptive relief for the sale of shares of a mutual fund by an employee benefit plan covering employees of the investment adviser for the mutual fund and its affiliates, subject to certain conditions. However, in previous published exemptions involving the in-kind redemption of shares by plans sponsored by the investment advisers of mutual funds, the notices describe PTE 77-3 as being available for a redemption of shares for cash, implying that PTE 77-3 would not be available for an in-kind redemption. See,

e.g.,

PTE 2003-01 (68 FR 6194, February 6, 2003) granted to the Northern Trust Company and Affiliates; PTE 2002-20 (67 FR 4986, March 28, 2002) granted to the Union Bank of California; and PTE 2001-46 (66 FR 64280, December 12, 2001) granted to Bank of America Corporation.

The most recent examples are PTE 2008-4 (73 FR 13585, March 13, 2008) granted to GE Asset Management Incorporated and 2007-04 (72 FR 13126, March 20, 2007) granted to Mellon Financial Corporation.

The Redemptions commenced after the close of the financial markets on October 31, 2007. In its application dated November 1, 2007, PNC requests retroactive exemptive relief for the in-kind Redemption of the Mercantile Plan's investments in the Funds. PNC asserts that it meets the standards for a retroactive exemption set forth in ERISA

Technical Release 85-1 because it acted in good faith,

i.e.,

PNC identified the potential prohibited transactions, sought legal counsel prior to the execution of the Redemptions, and structured the Redemption transactions in a manner to ensure that the necessary safeguards were in place, including review and approval by a qualified, independent fiduciary (as described further in Item 10, below).

The five of the eight Funds involved in the in-kind Redemption transactions were: the Growth & Income Fund, the Equity Growth Fund, the Equity Income Fund, the Capital Opportunities Fund, and the International Equity Fund. It is represented that, as of October 30, 2007, the Mercantile Plan's approximate percentages of ownership for each of these Funds were as follows.

Fund

Estimated

mercantile

plan assets

Approximate

percentage of fund held by mercantile plan

Growth & Income Fund

$87,622,519.81

21.22

Equity Growth Fund

12,285,590.58

23.43

Equity Income Fund

11,246,725.44

12.52

Capital Opportunities Fund

11,154,446.73

5.39

International Equity Fund

29,540,576.94

3.58

Fund Redemption Procedures.

The applicant represents that neither the Mercantile Plan nor the Committee had any control over the manner in which the Redemptions were consummated. The Fund Board had the authority, pursuant to the Funds' procedures, to decide the manner in which the Redemptions were effected, and the counsel to the Funds has represented that the Redemptions were effected in compliance with federal securities laws.

Because the Mercantile Plan's investment in some of the Funds exceeded 5% of Fund assets, the Fund's pre-established redemption procedures required a determination by the Fund Board whether the redemption should be made in kind rather than in cash. The Funds' “Procedures for Redemptions In Kind to Affiliated Shareholders” (adopted by the Fund Board on May 19, 2006) were designed to comply with the 1940 Act rules governing transactions with affiliated entities and, in particular, with the SEC no-action letter issued to

Signature Financial Group, Inc.

(the

Signature

letter).

These redemption procedures require the Fund Board to consider the following factors:

According to the applicant, the

Signature

letter (Dec. 28, 1999) permits in-kind redemptions by an affiliated shareholder under certain conditions set forth in the letter. Those conditions are designed to address the fact that, in many instances, the affiliate may have the ability and pecuniary incentive to influence the actions of the mutual fund, which presents the affiliate with an opportunity to inappropriately influence the mutual fund. To this end, the

Signature

letter requires a mutual fund's Board of Directors to adopt procedures designed to ensure that the affiliated shareholder does not influence the selection of the securities to be redeemed in kind. The SEC staff made clear its view that a pro rata security selection process essentially eliminated the affiliated shareholder's ability to influence or control the security selection process and, therefore, the SEC staff would not recommend enforcement action under the 1940 Act with respect to a pro rata in-kind redemption to an affiliate. However, also according to the applicant, the SEC staff also made clear that a mutual fund's Board of Directors could use any other method for selecting the securities to be redeemed in kind, provided that such selection process addressed the affiliate's ability to influence or control the security selection process.

(b) The percentage of the Fund's shares that are being redeemed and over what time period the transactions will occur;

(d) Portfolio transaction costs, including associated commission and transfer fees, and potential market impact;

(e) Other direct expenses, including custody transaction charges and fund accounting charges; and

e. Effect on the Fund's investment policies. For example, would the Fund temporarily be out of compliance with stated investment objectives due to the need to increase cash holdings, and if so for what period of time?

Further, the pre-established redemption procedures require that the Fund Board, including a majority of its members who are not “interested persons” (as defined in the 1940 Act), determine that (1) the redemption will not favor the redeeming shareholder to the detriment of any other shareholder; and (2) the redemption will be in the best interests of the Fund. If the distribution of securities from the Fund in the redemption is

pro rata - i.e.,

of each security in the Fund's portfolio in proportion to the redeeming shareholder's interest in the overall Fund—prior approval of the Fund Board is not required; however, if the distribution is not pro rata, then the Fund Board must approve the redemption in advance of the redemption date, in conformity with the conditions of the

Signature

letter.

In late July 2007, the Fund Board, including a majority of its independent Directors, determined, in accordance with the Fund procedures, not only that the Redemptions should be effected in kind for five of the eight Funds but also that the distribution of securities from four of those five Funds (all except the Capital Opportunities Fund) would be made on a non-

pro rata

basis, and approved conducting the Redemptions in this manner. The distribution of securities from the Capital Opportunities Fund would be made on a pro rata basis, except for those not meeting the definition of “Transferable Securities” as defined in Section II(E) of this notice. The Fund Board's determinations regarding the Redemptions were based upon the conclusions reached by the Chief Compliance Officer (CCO) of the Funds.

Non-pro rata Exemptions.

The applicant acknowledges that similar individual exemptions involving in-kind redemptions previously granted by the Department contained a condition requiring that the distribution of securities be pro rata. The applicant distinguishes the instant exemption request—involving the in-kind Redemption of shares from five Funds, four on a non-pro rata basis—by noting that the prior cases involved an in-kind transfer of the distributed securities to another proprietary fund of the fiduciary or an affiliate or to a separate account managed by the fiduciary or an affiliate, with a similar portfolio of investments. The applicant points out that, as a general matter, the Mercantile Plan had no intention of holding the securities received. Thus, the focus was on the ability of the Mercantile Plan to immediately sell the securities received rather than to continue to manage those securities, based upon Wilshire's advice for the Mercantile Plan to replace its investment platform. The Redemptions in the instant case were immediately followed by liquidation of the vast majority of the distributed securities

and reinvestment of the sale proceeds in third-party mutual funds available under the PNC Plan.

The Committee, in consultation with Wilshire, determined that it was in the Mercantile Plan's best interests to receive a smaller number of highly liquid securities in larger blocks in order to facilitate an easier and less costly liquidation, a goal that could be achieved only by means of a non-

pro rata

redemption. For example, in the case of the International Equity Fund, the implementation of a pro rata redemption would have resulted in the receipt of over 480 different securities.

According to the applicant, the only securities not liquidated were those accepted in kind by two of the third-party receiving funds; those securities were immediately transferred to the new funds within one business day from the date of the Mercantile Plan's receipt.

Security Selection Criteria.

The applicant represents that the selection of the particular securities to be distributed was made in accordance with the established procedures of the Funds, pursuant to the methodology described below, and was reviewed and approved in advance by the CCO, who is represented by the applicant to be “independent” of, and not affiliated with, PNC. The CCO reviewed the securities selected for the Redemptions and the method of selection. The CCO concluded in his report of October 29, 2007 to the Fund Board that the selection of the securities was made so as not to harm either the Mercantile Plan or the shareholders remaining in the Funds.

When the Committee learned that the Funds planned to make several of the distributions in kind, it communicated to the Funds the Mercantile Plan's preference for large blocks of highly liquid securities. It is represented that the Funds took the Mercantile Plan's preferences into consideration in determining the security selection criteria used for the Redemptions.

Ultimately, following review of the proposed selection methodology by the Funds' CCO, the Funds used three criteria for the selection of the securities to be distributed in the Redemptions. As memorialized in an October 29, 2007 memorandum by the CCO, who was required to review the methodology to assure that Fund procedures were satisfied and that there was no overreaching in favor of either the redeeming shareholder or the non-redeeming shareholder, those criteria were:

• A minimum detriment to the remaining shareholders in the fund (

i.e.

tax and other expenses).

• A minimum number of securities transferred and, therefore, a minimum in associated transaction costs [

i.e.,

for the Mercantile Plan as the redeeming shareholder receiving the securities].

• A preference for liquid securities.

Large Cap Domestic Funds.

For the three domestic equity Funds involved in the non-

pro rata

Redemptions—the Equity Income Fund, the Equity Growth Fund and the Growth and Income Fund—liquidity was not an issue, as all of their security holdings were liquid. It was decided that the other two criteria could best be met by delivering those tax lots in each fund that represented the greatest percentage appreciation over their cost, because that would minimize the tax impact on the remaining shareholders while reducing the number of securities distributed to the redeeming shareholder. The CCO noted in his report that the Funds' investment adviser, and Citi Fund Services, Inc., the Funds' sub-administrator and an independent party, both verified that the selection methodology properly identified the tax lots with the greatest increases and ranked the tax lots accordingly.

The applicant represents that the Funds would have used the same approach of allocating by tax lot even in conducting an in-kind redemption with a taxable shareholder because the redeeming shareholder is indifferent to the tax basis of the received securities. According to the applicant, the reason is that the shareholder, if subject to tax, recognizes gain or loss equal to the difference between the fair market value of the assets distributed and the shareholder's adjusted tax basis in its fund shares—the tax basis of the distributed assets is not a factor. At the same time, a mutual fund that qualifies as a regulated investment company (a RIC) under the Code does not recognize gain on the distribution of securities to a redeeming shareholder.

International Equity Fund.

For the International Equity Fund, the Fund's independent sub-adviser, Morgan Stanley,

consistent with the criteria described in the CCO's memorandum, followed the objective of selecting as small a number of securities as possible and limiting the selections to tradable issues in tradable volumes, as preferred by the Committee, while also avoiding an adverse effect on the remaining shareholders. The Fund Board had concerns about the transferability of many of the securities in the International Equity Fund and, if transferable, the associated transfer costs, as some foreign jurisdictions require that their domestic securities be held under special custody arrangements within the respective jurisdiction. On this basis, it recommended redeeming out the securities of ten large companies whose highly liquid securities were freely traded on European stock exchanges. In addition to avoiding the issue of custody costs and delays on transfer noted above, this also avoided the problem of trying to allocate multiple small positions, as the Fund held approximately 482 different investment securities at the time.

Morgan Stanley was one of two sub-advisers for the International Equity Fund, managing approximately 80% of the Fund's assets. The Mercantile Plan's proportionate interest in the portfolio of the other sub-adviser was distributed in cash.

While the CCO was concerned that this approach would not encompass the tax lots with the most profit, as under the equity fund methodology, he found that 72 of the 91 most profitable tax lots would be included. Because of changes in the Fund's portfolio and market values during the period between the initial selection date (in August or September 2007) and the Redemption date, Morgan Stanley determined that the Redemption amount could be satisfied using only eight of the ten securities on the list. The applicant represents that many of the International Equity Fund's other freely transferable foreign securities were relatively less liquid, and including those securities in the Redemption would have taken a longer time to sell them.

8. According to the applicant, the procedures utilized in the valuation of securities in the in-kind Redemptions were protective of the rights of the Mercantile Plan and its participants and beneficiaries. The Redemptions were accomplished by transferring, in exchange for Shares of the Funds held by the Mercantile Plan, a selection of the securities held by each Fund as determined by the Funds in accordance with the Funds' redemption policies. The Fund assets transferred to the Mercantile Plan consisted entirely of cash and securities for which market quotations were readily available. Securities not meeting the definition of “Transferable Securities” as defined in Section II(E) of this notice were excluded,

i.e.,

(i) Securities that, if publicly offered or sold, would require registration under the Securities Act of 1933; (ii) Securities issued by entities in countries which (a) restrict or prohibit the holding of securities by non-nationals other than through qualified investment vehicles, such as the Funds, or (b) permit transfers of ownership of securities to be effected only by

transactions conducted on a local stock exchange; (iii) Certain portfolio positions (such as forward foreign currency contracts, futures and options contracts, swap transactions, certificates of deposit, and repurchase agreements) that, although liquid and marketable, involve the assumption of contractual obligations, require special trading facilities, or can only be traded with the counter-party to the transaction to effect a change in beneficial ownership; (iv) Cash equivalents (such as certificates of deposit, commercial paper, and repurchase agreements); (v) Other assets that are not readily distributable (including receivables and prepaid expenses), net of all liabilities (including accounts payable); and (vi) Securities subject to “stop transfer” instructions or similar contractual restrictions on transfer.

In addition, the Redemptions did not include securities that were odd lots, fractional shares, and accruals on such securities. The applicant also represents that no Rule 144A securities were involved in the Redemptions.

For purposes of the in-kind Redemptions, the value of the securities in the Funds generally were determined based on their market value as of the close of business on the Redemption date (using sources independent of PNC and PNC Affiliates), in accordance with the requirements of the 1940 Act and the procedures adopted by the Fund Board, in conformity with the

Signature

letter.

The pricing methodology to be applied with respect to an in-kind redemption under these procedures complies with Rule 2a-4 under the 1940 Act, the general rule that governs the valuation process for purposes of determining the current price of mutual fund shares. The value for the types of securities held by the Funds was determined as follows.

In the

Signature

letter, the Division of Investment Management of the SEC states that it will not recommend enforcement action pursuant to section 17(a) of the 1940 Act for certain in-kind distributions of portfolio securities to an affiliate of a mutual fund. Funds seeking to use this “safe harbor” must value the securities to be distributed to an affiliate in an in-kind distribution “in the same manner as they are valued for purposes of computing the distributing fund's net asset value.” As explained in Item 5, “Fund Redemption Procedures,” the Funds had pre-established procedures for conducting affiliated transactions in accordance with the

Signature

letter.

The

Signature

letter does not address the marketability of the securities distributed in kind. The range of securities distributed pursuant to this “safe harbor” may therefore be broader than the range of securities covered by SEC Rule 17a-7, 17 CFR 270.17a-7. In granting past exemptive relief with respect to in-kind transactions involving mutual funds, the Department has required that the securities being distributed in-kind fall within Rule 17a-7. One of the requirements of Rule 17a-7 is that the securities are those for which “market quotations are readily available.” SEC Rule 17a-7(a). Under this exemption request, exemptive relief also would be limited to in-kind distribution of securities for which market quotations are readily available.

(i) Securities primarily traded on a domestic securities exchange are valued at the last price on that exchange or, if there were no sales during the day, at the current quoted bid price. Securities traded through the National Association of Securities Dealers Automated Quotations (NASDAQ) National Market System are valued at the NASDAQ Official Closing Price;

(ii) Securities primarily traded on foreign exchanges are valued at the closing values of such securities on their respective exchanges, provided that if such securities are not traded on the valuation date, they will be valued at the preceding closing values;

(iii) Over-the-counter domestic securities and securities listed or traded on foreign exchanges with operations similar to the U.S. over-the-counter market are valued at the closing price of the primary exchange for which the security is traded; or

(iv) With respect to the International Equity Fund, the Fund Board determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations no longer represent the fair value of the foreign securities held by the International Equity Fund and may require fair value pricing. Therefore, the Fund Board adopted written policies and procedures requiring that, when there is a market movement greater than 50 basis points in the Russell 1000 Index from the open and close of the U.S. market, the securities in the International Equity Fund are priced utilizing a fair value determined by an independent pricing service, Investment Technology Group, Inc. (ITG).

Securities of non-U.S. issuers may be traded on U.S. exchanges or NASDAQ, directly or in the form of ADRs, or may be acquired on foreign exchanges or foreign over-the-counter markets. In the latter case, valuation is in accordance with (iv).

9. The Redemptions occurred after the close of the markets on Wednesday, October 31, 2007, at which time the five Funds distributed to the Mercantile Plan a combination of securities and a small amount of cash.

The securities previously identified as acceptable by two of the receiving funds in the PNC Plan were transferred to those funds in kind, and the remaining securities that were received pursuant to the Redemptions were liquidated to cash on November 1, 2007.

In accordance with the provisions of Rule 18f-1 under the 1940 Act, the Funds were obligated to redeem in cash the lesser of $250,000 or 1% of their net asset value. Consequently, each of the non-

pro rata

Funds distributed $250,000 in cash, and the

pro rata

distribution from the Capital Opportunities Fund included a

pro rata

portion of the Fund's cash holdings and the cash value of any non-transferable securities, in an amount that exceeded $250,000.

The Committee had arranged for the liquidation of the securities with two brokers (the Liquidation Arrangements)—one for the domestic securities and one for the foreign securities. To help minimize the time during which the Mercantile Plan participants' accounts would remain uninvested, the Liquidation Arrangements provided for the brokers to accept the securities at the close of the markets on October 31, 2007 at their closing prices so that the brokers assumed the market risk involved in liquidating the securities. In the view of the Committee, a factor in the brokers' willingness to accept this risk was the limited number of securities involved, because it would be more difficult for the brokers to arrange buyers for a significantly larger number of positions. According to the applicant, it is unlikely the Committee could have secured such a commitment if the larger number of securities resulting from a

pro rata

Redemption of all five Funds had been involved. The Committee further entered into agreements with the receiving funds to accept the new investments on the next business day, November 1, 2007, with an extended settlement date (up to three days later in most instances) to cover the possibility of a delay in payment of the liquidation proceeds, at no additional cost to the Mercantile Plan so that the Mercantile Plan participants would not lose the benefit of being fully invested in their chosen investment options (through the respective successor options on the PNC Plan platform) for more than one day.

According to the applicant, this arrangement created an additional benefit for the Mercantile Plan participants. Because there was a market decline on November 1, 2007, the participants were able to receive the higher October 31, 2007 closing prices on the liquidation of the distributed securities, and were able to reinvest those proceeds at the lower November 1, 2007 share prices of the receiving funds. The overall benefit to the participants was approximately $3 million.

10. No brokerage commissions or other fees or expenses (other than customary transfer charges paid to parties other than PNC's affiliates) were charged to the Mercantile Plan as part of the Redemptions. Third-party brokerage costs, however, were incurred in connection with the liquidation of the securities that the Mercantile Plan received in kind pursuant to the Redemptions. The liquidation of all such securities was completed on

November 1, 2007, and those brokerage costs were paid from the PNC Plan's forfeiture account, which held forfeitures accumulated from prior plan mergers. As a condition of this proposed exemption, PNC will reimburse the PNC Plan, into which the Mercantile Plan was merged on November 1, 2007, for all brokerage costs that the Mercantile Plan incurred on November 1, 2007.

During the process leading up to the Redemption date, the Funds provided the Mercantile Plan trustee with lists of the securities that were likely to be included in the Redemptions, to permit the Mercantile Plan fiduciaries to determine in advance how best to dispose of the securities. The Mercantile Plan trustee passed those lists along to the funds on the PNC Plan investment platform that were to receive the proceeds of the respective Redemptions. Two of the receiving funds—a Vanguard fund and a Harbor Capital fund (neither affiliated with PNC)—informed the Mercantile Plan trustee that they would be willing to accept certain securities from the lists in kind. As a result, on the Redemption date, those securities were not liquidated, but rather were transferred in kind to the receiving funds.

Because the Committee was not able to lock in the October 31, 2007 values of the securities that were transferred in kind to the new funds, the shares acquired with those securities on November 1st were less in value than the value of the distributed securities the previous day. The applicant represents that the Plan participants were in the same financial position that they would have been in had they remained invested in the Funds, because their investments in the Funds would have suffered a corresponding decrease. Nevertheless, the Committee decided that it would be appropriate under the unique circumstances of the Redemptions to insulate the participants' accounts from the impact of this brief period of negative investment performance, by making up the difference from the PNC Plan's forfeiture account.

The Department is not opining herein as to whether this use of the forfeiture account is permitted under Title I of ERISA.

11. As previously noted in Item 2, the applicant appointed Wilshire, also located in Pittsburgh, Pennsylvania, to serve as the Independent Fiduciary on behalf of the Mercantile Plan in regard to the subject Redemptions. It is represented that, as of the end of 2007, all fees paid by PNC to Wilshire equaled less than 1% of Wilshire's annual gross income.

Prior to the Redemptions, Wilshire received a full written disclosure of information regarding the Redemptions and communicated in writing its approval of the Mercantile Plan's participation in such Redemptions. In a letter dated November 1, 2007, Wilshire opined,

Based on our review of the proposed procedure and methodology for the in-kind redemption, and discussions with members of The Administrative Committee, PNC staff, and legal counsel for the [Mercantile] Plan, it is Wilshire's opinion that an in-kind redemption of Mercantile Plan participants' assets in certain funds is in their best interests. As you know, a redemption of fund interests is necessary to transition participant assets from the funds currently available in the Mercantile Plan into the funds available in the PNC Incentive Savings Plan. * * * Based on the process set forth, participants in funds for which redemption is completed in kind are not exposed to greater market risk, security specific risk, investment management or other costs, than they would be in any other arms-length transaction between unaffiliated parties.

No later than thirty (30) business days after the completion of the Redemptions, Wilshire received a written confirmation regarding such Redemptions containing: (i) The number of Shares held by the Mercantile Plan immediately before the Redemption (and the related per Share net asset value and the total dollar value of the Shares held); (ii) The identity (and related aggregate dollar value) of each security provided to the Mercantile Plan pursuant to the Redemption, including each security valued in accordance with Rule 2a-4 under the 1940 Act and procedures adopted by the Board of Directors of PNC Funds, Inc. (using sources independent of PNC and PNC Affiliates); (iii) The current market price of each security received by the Mercantile Plan pursuant to the Redemption; and (iv) The identity of each pricing service or market maker consulted in determining the value of such securities.

Subsequent to the Redemptions, Wilshire performed a post-transaction review, which is summarized in its letter dated December 21, 2007, to determine whether or not the Redemptions were effected at a fair market price. In the letter, Wilshire confirmed that the Redemptions were conducted in accordance with the conditions of this proposed exemption as described in PNC's exemption application of November 1, 2007.

Wilshire downloaded the “Committee on Uniform Security Identification Procedures” of each individual security from the Funds (totaling nearly 300 equity securities) into Atlas, Wilshire's proprietary security database to independently review the prices for securities received by the Mercantile Plan from the Funds. Wilshire wrote:

It is noted that the condition in Section I(L) of this notice was not contained therein.

The prices received by Mercantile Plan participants for their investments in these funds were equal to the closing market price as of October 31, 2007, with the exception of the investments in the International Equity Fund. According to the policies utilized by the Board of Directors of PNC Funds, a fair value pricing methodology is employed if, subsequent to the closing of foreign securities exchanges, the U.S. equity market, as measured by the Russell 1000 stock index, closes at a value that differs from its opening value by more than 0.5%. On October 31, 2007, the Russell 1000 Index increased by 1.22% from its opening price. This increase was large enough to trigger the fair value pricing policy employed by the Funds. Investors in the International Equity Fund received prices through the in-kind redemption that were higher than the closing prices of these securities on their local exchanges. The use of prices that were greater than the closing prices on the local exchanges indicates that the fair value adjustment was made in the International Equity Fund.

At the Department's request, Wilshire provided a supplemental letter dated August 28, 2009, which addressed the methodologies for selecting the securities to be distributed on a non-pro rata basis and the securities liquidation process.

First, Wilshire noted:

Because the [Mercantile] Plan did not intend to continue to hold the securities it received in the redemptions, but rather immediately to reinvest the proceeds of their sale in other mutual funds, * * * it was in the Mercantile Plan's best interest to receive a limited number of investment positions that were highly liquid, to facilitate an easier and less costly sale and liquidation to cash.

Wilshire also stated, “[W]e reviewed the securities selected for the redemptions, based on lists provided in advance of the redemption date, to confirm that they were highly liquid.”

Regarding the International Equity Fund, Wilshire stated:

By contrast, a pro rata redemption from this fund would have caused the [Mercantile] Plan to receive a much larger number of smaller investment positions (the fund held over 480 different securities at the time), which would have required a more difficult, costly and time consuming liquidation process—particularly for those foreign jurisdictions that would have required the [Mercantile] Plan to set up special custody arrangements to hold the securities pending their disposition.

Finally, Wilshire noted:

The [Mercantile] Plan entered into arrangements for brokers to acquire the distributed securities from the [Mercantile] Plan at their closing prices on October 31, 2007, and to assume the risk of future price changes. In addition, the [Mercantile] Plan arranged for the receiving funds to accept the proceeds from the sale of the securities on November 1.

These arrangements were in the best interests of the [Mercantile] Plan because they (1) locked in the values at which the securities were distributed to the [Mercantile] Plan and (2) reduced the time during which the [Mercantile] Plan participants were out of the market to one day. In our view, a positive factor in the brokers' willingness to accept the risk of selling the securities was the limited number of securities involved, because it would be more difficult for the brokers to arrange buyers for a significantly larger number of positions.

In the interests of clarity, Wilshire is referring here to the Mercantile Plan's broker agreements regarding the distributed securities that were liquidated; however, as previously noted in Item 9, the receiving funds agreed to accept a small percentage of the distributed securities in kind.

12. In summary, the applicant represents that the Redemptions satisfied the statutory criteria for an exemption under section 408(a) of the Act for the following reasons: (i) The Mercantile Plan received its pro rata portion of the securities with respect to the Capital Opportunities Fund; (ii) the absence of a pro rata distribution for four of the other Funds benefited the Mercantile Plan by permitting the distribution of securities that could be more easily and quickly liquidated to cash, consistent with the Mercantile Plan's objective to reinvest the proceeds as soon as possible in the PNC Plan's “open” investment platform that included non-proprietary funds; (iii) the security selection criteria used were determined by parties independent of PNC, namely, the Fund Board, the Fund CCO and (in the case of the International Equity Fund) an unaffiliated sub-adviser; (iv) the transaction was overseen by an Independent Fiduciary and written authorization was provided by the Independent Fiduciary based on its determination, following full and detailed disclosure of information regarding the transaction, that the terms of the Redemptions were fair and reasonable to the Mercantile Plan, and comparable to and no less favorable than terms obtainable at arm's length between unaffiliated parties, and that the Redemptions were in the best interests of the Mercantile Plan and its participants and beneficiaries; and (v) the Independent Fiduciary conducted a post-transaction analysis of the securities selected for the Redemptions based upon the lists provided in advance of the Redemption date and confirmed that the in-kind Redemptions were effected at a fair market value price. It is also noted that condition I(L) requires PNC to reimburse the PNC Plan for all brokerage costs incurred to liquidate the securities that the Mercantile Plan received in kind pursuant to the Redemptions so that, in combination with the methodology used in the selection of stocks for the non-pro rata Redemptions, the distribution of such stocks was economically equivalent to a cash Redemption.

Notice to Interested Persons

The applicant represents that notice to interested persons shall be furnished to the Independent Fiduciary, inactive participants and beneficiaries of the Mercantile Plan by first-class mail, and by e-mail to Mercantile Plan participants who are actively employed (provided that such active participants have effective access to electronic documents at work—otherwise, the active participants must receive such notice by first-class mail), within 30 days of the date of publication of this notice of pendency in the

Federal Register

. The notice shall inform interested persons of their right to comment and/or request a hearing with respect to the proposed exemption. Comments and requests for a hearing are due within 30 days following completion of notice to interested persons.

FOR FURTHER INFORMATION CONTACT:

Ms. Karin Weng of the Department, telephone (202) 693-8557. (This is not a toll-free number.)

Deutsche Asset Management (UK) Limited (the Applicant), Located in London, England, a Wholly-Owned Subsidiary of Deutsche Bank AG, Located in Frankfurt, Germany, and Throughout the World, [Exemption Application Number D-11495].

Proposed Exemption

The Department is considering granting an exemption under the authority of section 408(a) of the Act and section 4975(c)(2) of the Code, and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990).

Section I—Covered Transactions

If the proposed exemption is granted, the restrictions of sections 406(a)(1)(A), 406(a)(1)(B), 406(a)(1)(D), 406(b)(1), and 406(b)(2) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of sections 4975(c)(1)(A), (B), (D), and (E) of the Code, shall not apply to certain foreign exchange hedging transactions that occurred between November 30, 2007 and May 30, 2008, inclusive, between the DB Torus Japan Master Portfolio (the Master Fund), in which the assets of certain client employee benefit plans (the Client Plans) were invested, and Deutsche Asset Management (UK) Ltd. or its affiliates (collectively, Deutsche Bank), a party in interest with respect to the Client Plans, provided that the conditions contained herein are satisfied.

Section II—General Conditions

(a) The foreign exchange transactions were executed solely in connection with the Master Fund's hedging of the Japanese yen currency risk for its share classes denominated in U.S. dollars (USD);

(b) At the time that the foreign exchange transactions were entered into, the terms of the foreign exchange transactions were not less favorable to the Fund than the terms generally available in comparable arm's length foreign exchange transactions between unrelated parties;

(c) Any foreign exchange transactions authorized or executed by Deutsche Bank or its affiliates were not part of any agreement, arrangement, or understanding, written or otherwise, designed to benefit Deutsche Bank, its affiliates, or any other party in interest;

(d) Prior to investing in the Master Fund, the fiduciary of each Client Plan received the offering memorandum for the DB Torus Japan Fund Ltd., the feeder fund (Feeder Fund) through which investments in the Master Fund are effected;

(e) The exchange rate used for a particular foreign exchange transaction did not deviate by more than three percent (above or below) the interbank bid and ask rate for such currency at the time of the foreign exchange transaction, as displayed on an independent, nationally-recognized service that reports rates of exchange in the foreign currency market for such currency;

(f) Prior to the granting of an exemption concerning the subject foreign exchange transactions, Deutsche Bank shall reimburse each such Client Plan for its pro-rata share of: (1) The spread on each foreign exchange transaction subject to this proposed exemption; and (2) Any fees charged by financial institutions for executing the subject foreign exchange transaction(s), plus interest at the applicable Internal Revenue Service underpayment penalty rate, up to the date of reimbursement;

(g) Within 30 days of taking the corrective action described in Section II(f) above, Deutsche Bank provides the independent fiduciaries of each Client

Plan whose assets were involved in the foreign exchange transactions with: (1) Written information, formulas, and/or other documentation sufficient to enable such fiduciaries to independently verify that the Plans have been reimbursed in accordance with the requirements of Section II(f) above; and (2) a copy of this notice of proposed exemption (the Notice);

(h) Within 30 days of taking the corrective action described in Section II(f) above, Deutsche Bank provides the Department with written documentation demonstrating that the foregoing reimbursements to each Client Plan were correctly computed and paid;

(i) Effective May 31, 2008, Deutsche Bank, in conjunction with the administrator of both the Master Fund and the Feeder Fund (together, the Funds), continuously monitors the percentage of total assets invested by benefit plan investors in the Funds so that, as of each acquisition or redemption of equity interests, Deutsche Bank and the administrator of the Funds are able to verify whether equity participation in the Funds by benefit plan investors is not significant pursuant to section 3(42) of the Act and 29 CFR 2510.3-101;

(j) Deutsche Bank maintains, or causes to be maintained, for a period of six years from the date of the transactions that are the subject of this proposed exemption, the following records, as well as any other records necessary to enable the persons described in Section II(l) of this exemption, to determine whether the conditions of this exemption have been met:

(1) The account name;

(2) The trade and settlement dates of the subject foreign exchange hedging transactions;

(3) The USD/Japanese yen currency exchange rates on the trade and settlement dates;

(4) The high and low currency prices on Bloomberg or similar independent service on the dates of the subject transactions;

(5) The identification of the type of currency trade undertaken (whether spot or forward);

(6) The amount of Japanese yen sold or purchased in the hedging transactions; and

(7) The amount of U.S. dollars exchanged for Japanese yen in the hedging transactions.

(k) The following are exceptions to the requirements of Section II(j):

(1) A separate prohibited transaction shall not be considered to have occurred solely because, due to circumstances beyond the control of Deutsche Bank or its affiliates, the records necessary to enable the persons described in Section II(l) to determine whether the conditions of the exemption have been met or lost or destroyed prior to the end of the six-year period; and

(2) No party in interest, other than Deutsche Bank and its affiliates, shall be subject to the civil penalty that may be assessed under section 502(i) of the Act or to the excise taxes imposed by section 4975(a) and (b) of the Code if the records are not maintained for examination as required by Section II(l) below.

(l)(1) Except as provided in paragraph (2) of this Section II(l) and notwithstanding the provisions of subsections (a)(2) and (b) of section 504 of the Act, the records referred to above in Section II(j) are unconditionally available for examination during normal business hours at their customary location to the following persons or an authorized representative thereof:

(i) Any duly authorized employee or representative of the Department or of the Internal Revenue Service (the Service);

(ii) The independent fiduciary of each Client Plan (or a duly authorized employee or representative of such fiduciary), or

(iii) Any participant or beneficiary of such Client Plans or any duly authorized employee or representative of a participant or beneficiary in such Client Plans.

(2) None of the persons described above in paragraphs (ii) and (iii) of Section II(l)(1) shall be authorized to examine trade secrets of Deutsche Bank or its affiliates, or any commercial or financial information, which is privileged or confidential.

Section III—Definitions

For purposes of this proposed exemption:

(a) An “affiliate” of the Applicant means: (1) Any person or entity directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with such person or entity; (2) Any officer, director, partner, employee, or relative (as defined in section 3(15) of the Act) of such other person or entity; and (3) Any corporation or partnership of which such other person or entity is an officer, director, partner, or employee.

(b) The term “control” means the power to exercise a controlling influence over the management or policies of a person other than an individual.

(c) The term “client plan” means an employee benefit plan, other than a plan sponsored by the Applicant and its affiliates, as described in section 3(3) of the Act or section 4975(e)(1) of the Code that invested in the Master Fund and the Feeder Fund, and for which the Applicant or its affiliate served as an investment advisor

(d) The term “foreign exchange transaction” means the exchange of the currency of one nation for the currency of another nation.

(e) The term “hedging” means a strategy used to offset the investment risk of future gains or losses resulting from anticipated fluctuations in the value of currency, such as an investor's decision to exchange foreign currency in anticipation of upward or downward movement in the value of that currency.

Summary of Facts and Representations

1. Deutsche Asset Management (UK) Limited (DeAM UK) is a wholly-owned subsidiary of Deutsche Bank AG. DeAM UK (the Applicant) is an investment adviser domiciled in the United Kingdom with approximately $2.2 billion is assets under management, and is registered in the United States under the Investment Advisers Act of 1940. The Applicant also represents that it is regulated by the Financial Services Authority (FSA), an independent non-governmental body, which was granted statutory powers by the United Kingdom Financial Services and Markets Act 2000.

The Applicant is a sub-advisor to both the DB Torus Japan Master Portfolio (the Master Fund), a Cayman Islands exempted company, and the DB Torus Japan Master Portfolio Ltd. (the Feeder Fund), also a Cayman Islands exempted company. The adviser to both the Master Fund and the Feeder Fund is Deutsche Bank Trust Company Americas (DBTCA), a New York banking corporation, which also is wholly-owned by Deutsche Bank AG.

2. Deutsche Bank AG (together with its affiliates, Deutsche Bank), a German banking corporation and a leading commercial bank, provides a wide range of global banking, fiduciary, record keeping, custodial, brokerage, and investment services to corporations, institutions, employee benefit plans, and private investors. Through its numerous affiliates, subsidiaries, and branches, Deutsche Bank has a worldwide physical presence. As of December 31, 2007, Deutsche Bank had approximately $1.19 trillion in assets under management and had approximately $54.09 billion in shareholder equity.

The Applicant represents that Deutsche Bank is subject to a comprehensive system of regulatory oversight and a mandatory insurance program. The Applicant also represents

that Deutsche Bank, its branches, and its subsidiary banks worldwide are subject to regulatory requirements and protections that are, qualitatively, at least equal to those imposed on U.S.-domiciled banks.

Within the United States, the Applicant represents that both the New York branch of Deutsche Bank and DBTCA are regulated and supervised by the New York State Banking Department. In addition, the Applicant represents that certain activities of Deutsche Bank's New York branch and DBTCA are regulated and supervised by the Federal Reserve Bank of New York.

The Applicant represents that the U.S. Department of the Treasury has accorded national treatment to German bank branches, and the German Ministry of Finance has granted relief to branches of U.S. banks in Germany, in particular with respect to “dotation” or endowment capital requirements and capital adequacy standards.

3. The Applicant represents that the Master Fund invests in Japanese equity and equity-related securities. Client investment is effected through the Feeder Fund. The Feeder Fund, in turn, has invested all of its assets in the Master Fund, with the exception of cash reserves maintained, for example, for the payment of fees and expenses. The “base” currency in which both the Master Fund and the Feeder Fund maintain their books, records, and financial statements (and in which they charge applicable fees) is the Japanese yen. The Feeder Fund offers distinct share classes denominated in U.S. dollars (USD) for the convenience of investors wishing to invest with USD (USD Investors). Among the investors in the USD share class of the Feeder Fund are client employee benefit plans (the Client Plans).

4. As disclosed in the Feeder Fund's offering memorandum, which is distributed to all potential investors (including potential Client Plan investors) prior to investment, the managing member of the Master Fund is charged with maintaining a continuous dollar/yen hedge with respect to investments in its USD share class in order to disaggregate the impact of currency fluctuations on the performance of a USD Investor's investment. The currency hedge offers USD Investors exposure to the portfolio of the Master Fund while reducing exposure to fluctuations in relative value of yen to the USD. Thus, the Applicant represents that an investor investing in the USD share class of the Feeder Fund necessarily expects that its investments will, as fully as possible, hedge the USD against the yen. The Applicant represents that it has investment discretion over the assets involved in the exemption transactions described herein. In addition, the Applicant represents that it is affiliated with the counterparty to those transactions.

The Applicant represents that the currency hedging activity was fully disclosed to Client Plans and other investors in the Feeder Fund's offering memorandum, and it would have occurred regardless of the identity of the counterparty. The Applicant further represents that, by investing in the USD share class of the Feeder Fund, the independent fiduciaries of the investing employee benefit plans consented to the hedging transactions. The Applicant also states that, in investing in the Feeder Fund, each Client Plan's independent fiduciary necessarily approved the execution of currency trades through DeAM UK as principal.

5. The foregoing hedge is effected each month through the following transactions: (1) A foreign exchange “forward trade”

that settles on the last business day of the month; (2) A foreign exchange spot trade

that settles on the last business day of the month (which closes out the forward trade); and (3) Another foreign exchange forward trade. The Applicant represents that this currency hedging activity is largely automatic and ministerial in nature. Since the inception of the Master Fund, the Applicant represents, hedging transactions have been consistently effected each month at particular times and in mechanically determined amounts, which are specified in the operating procedures of the Master Fund. The Applicant further represents that, since all gains and losses resulting from the currency hedging activity are “reversed out” from the performance of the USD share classes prior to calculation of the performance fee and the “high water mark”

, the hedging transactions are canceled out for purposes of the performance fees paid to the investment manager.

A foreign exchange “forward” is an agreement to purchase or sell a fixed amount of foreign currency at a fixed price and on a predetermined future date (or within a predetermined range of dates).

A foreign exchange “spot” trade is a purchase of one currency with a different currency for immediate delivery. These trades typically settle within two days from the date of execution. See also the Notice of Proposed Exemption preceding the final grant of PTE 94-20 at 56 FR 11757, 11759, n.3 (March 20, 1991).

“High water mark” is a reference point by which a hedge fund manager's performance compensation is calculated. When a high water mark formula applies, the manager receives performance compensation only if the value of the fund is greater than its previous greatest value (

i.e.

, the high water mark). If the value of the fund falls below the high water mark, the manager receives no performance fees until the value rises above the high water mark.

6. From their inception, both the Master Fund and the Feeder Fund were intended to operate as “non-plan asset” vehicles. In particular, the Applicant represents that the Master Fund intended to limit the aggregate investment by benefit plan investors in each class of its equity to less than 25%, so that the quantity of assets in each class would not be deemed to constitute significant equity participation by benefit plan investors within the meaning of the Department's “plan asset regulation” at 29 CFR 2510.3-101.

This regulation generally defines what constitutes assets of a plan with respect to a plan's investment in another entity for purposes of Subtitle A, and Parts 1 and 4 of Subtitle B, of Title I of the Act and section 4975 of the Code. Generally, the plan asset regulation states that when a plan invests in another entity, the plan's assets include its investment, but do not, solely by reason of such investment, include any of the underlying assets of the entity. However, in the case of a plan's investment in an equity interest that is neither a publicly-offered security nor a security issued by an investment company registered under the Investment Company Act of 1940, its assets include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is established that, among other things, equity participation in the entity by benefit plan investors is not significant.

According to 29 CFR 2510.3-101(f)(1), “[e]quity participation in an entity by benefit plan investors is `significant' on any date if, immediately after the most recent acquisition of any equity interest in the entity, 25 percent or more of the value of any class of equity interests in the entity is held by benefit plan investors.” A “benefit plan investor” is defined in section 3(42) of the Act as “an employee benefit plan subject to part 4 [of the Act], any plan to which section 4975 of the [Code] applies, and any entity whose underlying assets include plan assets by reason of a plan's investment in such entity.” For a discussion of the general scope and construction of the term “acquisition” as referenced in 29 CFR 2510.3-101(f)(1), including a benefit plan investor's redemption of an equity interest in an investment entity, see Advisory Opinion 89-05 (Apr. 6, 1989).

7. Effective May 1, 2006, the Master Fund and the Feeder Fund (together, the Funds) entered into an administrative services agreement with International Fund Services (Ireland) Limited (hereinafter IFS or the Administrator). The Applicant represents that IFS is not related to or affiliated with Deutsche Bank, and provides fund accounting, fund administration, and risk services to asset management groups with trading operations throughout the world. Under the agreement, IFS was responsible for, among other things, monitoring the percentage investment by benefit plan investors in each share class of the Funds and reporting such percentage on a monthly basis to the Funds. The agreement also required IFS to report the percentage of investment by benefit plan investors “on such other dates as [a] Fund accepts subscriptions and/or effects redemptions and delivering such

calculation to the Fund or to the Fund's counsel for approval.” The agreement also states that, “[f]or the avoidance of doubt, each Fund shall instruct IFS [as to] the method of determining class of shares for the purpose of the calculation of percentages contemplated in this clause.”

The Applicant represents that in December of 2007, IFS, through an error in its recordkeeping, failed to notify DeAM UK that the percentage of plan assets in one of the USD-denominated share classes may have exceeded 25% of the assets maintained in that corporate class. The Applicant has specifically identified the U.S. dollar-denominated nominal share class with respect to which the subject hedging transaction occurred (and in which redemptions may have caused benefit plan investor participation to equal or exceed the 25% limitation) as Class A of the Feeder Fund.

For a period of time after the redemptions, the Applicant represents, the Master Fund continued to execute hedging transactions with its DeAM UK-affiliated counterparty, the London branch of Deutsche Bank AG. The Applicant further represents that DeAM UK was not aware that redemptions associated with the foregoing currency hedging transactions caused a breach of the 25% limitation until approximately April 15, 2008. In this connection, the Applicant initiated communication with the Department with respect to the foregoing hedging transactions shortly after DeAM UK became aware of the problem, and has met with representatives from the Department concerning this matter.

In its exemption application, the Applicant represents that the Master Fund may have held plan assets during the period between November 30, 2007 and May 30, 2008, inclusive, as a consequence of net redemptions involving Class A of the Feeder Fund.

8. The Applicant additionally represents that Bloomberg screen prints of the currency prices at the time of the subject currency hedging transactions demonstrate that the trades did not deviate by more than three percent (above or below) the interbank bid and ask rate for such currencies at the time of the foreign exchange transaction. In this connection, the Applicant represents that Bloomberg is an independent, nationally-recognized quotation service that reports rates of exchange in the foreign currency market for widely-traded currencies, including the Japanese yen. The Applicant further represents that, because it knows both the precise rate at which the Master Fund executed each of the subject currency hedging transactions and the best rate available on these trades based on the aforementioned Bloomberg screen prints, it will calculate the difference between these rates and give any positive difference to the Client Plan, based on its ownership percentage in the Feeder Fund.

The Applicant also represents that, with respect to the assessment of fees, commissions, and related transactional expenses, any Client Plan whose assets were involved in the foreign exchange transactions that are the subject of this proposed exemption were treated the same as all other investors with assets invested in the Master Fund and the Feeder Fund that engaged in the subject hedging transactions.

9. The Applicant represents that, after discovering the foreign exchange hedging transactions that gave rise to the current exemption application, it revised its compliance procedures in May of 2008 to minimize the risk that such a situation may recur. These updated procedures include, among other things, the following elements: (i) On a monthly basis, the Deutsche Bank sales team will notify the Deutsche Bank shareholder services team of any prospective Client Plan who will be making an investment in the Master Fund or the Feeder Fund in the coming month(s); (ii) All Client Plan investments must be approved by the Office of the Chief Operating Officer (COO) of the DB Advisors Hedge Fund Group before the investment is accepted; (iii) The Administrator of the Master Fund and the Feeder Fund will provide the Deutsche Bank shareholder services team a copy of all subscription agreements for those flagged investments upon receipt for review. The Administrator also will provide to the Deutsche Bank shareholder services team copies of the subscription documents of all incoming U.S. tax-exempt investors, to perform a duplicate check to ensure that none are in fact plan assets (for example, to identify any incorrectly completed documents); (iv) The Administrator of the Master Fund and the Feeder Fund will add to its monthly “ERISA Executive Summary” (a report of the current plan asset totals in each Deutsche Bank Advisors Hedge Fund through the most recent dealing date for subscriptions and redemptions) a column which calculates the month-to-month change in plan asset percentages for both the Master Fund and the Feeder Fund; and (v) When the total plan assets percentage of either the Master Fund or the Feeder Fund reaches 10%, it is placed on a “watch list.” Investments by benefit plan investors into any funds on the watch list require additional approval by the office of the COO before they can be accepted. The office of the COO may decide to close a Fund to any future investments by a benefit plan investor when the Fund's total plan assets percentage exceeds 10%.

According to the offering memorandum of the Feeder Fund, an investor generally may redeem all or a portion of its shares in the Fund at the close of business on the last business day of any calendar month by submitting to the administrator of the Fund a redemption request at least thirty days prior to the end of such month. An investor redeeming all or a portion of its shares will receive an amount equal to the net asset value per share for the relevant series of shares at the close of business on the redemption date. The Fund also may, upon five days notice, cause the involuntary redemption of any or all of an investor's shares at the end of any calendar month.

In addition, the offering memorandum of the Feeder Fund states that, in general, the directors of the Fund intend to restrict, through utilization of a “test” that is “ongoing”, the aggregate investment by benefit plan investors to under 25% of the total capital of each class of shares in order to achieve compliance with the requirements of section 3(42) of the Act and 29 CFR § 2510.3-101. As a consequence of this ongoing test, not only may additional investments by benefit plan investors be restricted, but existing benefit plan investors may be required by the directors of the Fund to redeem their shares from the Fund in the event that other investors redeem.

10. The Applicant represents that the requested exemption is administratively feasible because correction of the prohibited transaction would occur pursuant to an objective, independently verifiable pricing mechanism (namely, the Bloomberg currency exchange data for the time period described in this proposed exemption). The Applicant also represents that the exemption would be in the interest of the participants and beneficiaries of each of the affected Plans because the correction will place each affected Plan in a better position than it would have been in had the currency hedging been executed through an unrelated third party in the first instance. The Applicant further represents that the exemption would be protective of the rights of participants and beneficiaries of the affected Plans because: (i) The correction will negate any benefit received by the Applicant (or its affiliate) in connection with the subject transactions; and (ii) The proposed conditions for exemptive relief are consistent with the safeguards generally required by the Department

for foreign exchange transactions of this nature.

11. In summary, the past transactions for which exemptive relief is sought meet the statutory criteria of section 408(a) of the Act because: (a) The foreign exchange transactions were executed solely in connection with the Master Fund's hedging of the Japanese yen currency risk for its share classes denominated in U.S. dollars (USD); (b) At the time that the foreign exchange transactions were entered into, the terms of the foreign exchange transactions were not less favorable to the Fund than the terms generally available in comparable arm's length foreign exchange transactions between unrelated parties; (c) Any foreign exchange transactions authorized or executed by Deutsche Bank or its affiliates were not part of any agreement, arrangement, or understanding, written or otherwise, designed to benefit Deutsche Bank, its affiliates, or any other party in interest; (d) Prior to investing in the Master Fund, the fiduciary of each Client Plan received the offering memorandum for the DB Torus Japan Fund Ltd., the feeder fund (Feeder Fund) through which investments in the Master Fund are effected; (e) The exchange rate used for a particular foreign exchange transaction did not deviate by more than three percent (above or below) the interbank bid and ask rate for such currency at the time of the foreign exchange transaction, as displayed on an independent, nationally-recognized service that reports rates of exchange in the foreign currency market for such currency; (f) Prior to the granting of an exemption concerning the subject foreign exchange transactions, Deutsche Bank shall reimburse each such Client Plan for its pro-rata share of: (1) The spread on each foreign exchange transaction subject to this proposed exemption; and (2) Any fees charged by financial institutions for executing the subject foreign exchange transaction(s), plus interest at the applicable Internal Revenue Service underpayment penalty rate; (g) Within 30 days of taking the corrective action described in Section II(f) above, Deutsche Bank provides the independent fiduciaries of each Client Plan whose assets were involved in the foreign exchange transactions with: (1) Written information, formulas, and/or other documentation sufficient to enable such fiduciaries to independently verify that the Plans have been reimbursed in accordance with the requirements of Section II(f) above; and (2) a copy of this notice of proposed exemption (the Notice); (h) Within 30 days of taking the corrective action described in Section II(f) above, Deutsche Bank provides the Department with written documentation demonstrating that the foregoing reimbursements to each Client Plan were correctly computed and paid; (i) Effective May 31, 2008, Deutsche Bank, in conjunction with the administrator of both the Master Fund and the Feeder Fund (together, the Funds), continuously monitors the percentage of total assets invested by benefit plan investors in the Funds so that, as of each acquisition or redemption of equity interests, Deutsche Bank and the administrator of the Funds are able to verify whether equity participation in the Funds by benefit plan investors is not significant pursuant to section 3(42) of the Act and 29 CFR 2510.3-101; and (j) Deutsche Bank generally maintains records that are sufficient for regulatory authorities and independent third parties to determine whether the conditions of this exemption have been met.

FOR FURTHER INFORMATION CONTACT:

Mr. Mark Judge of the Department, telephone (202) 693-8550. (This is not a toll-free number.)

UBS Financial Services Inc. and Its Affiliates (UBS), Located in Weehawken, New Jersey, [Application No. D-11502].

Proposed Exemption

The Department is considering granting an exemption under the authority of section 408(a) of the Act (or ERISA), and section 4975(c)(2) of the Code, and in accordance with the procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990).

For purposes of this proposed exemption, references to section 406 of the Act should be read to refer as well to the corresponding provisions of section 4975 of the Code.

Section I. Transactions Involving Plans Described in Both Title I and Title II of ERISA

If the proposed exemption is granted, the restrictions of sections 406(a)(1)(A) through (D) and section 406(b) of the Act, and the taxes imposed by sections 4975(a) and (b) of the Code, by reason of section 4975(c)(1) of the Code, shall not apply, effective February 1, 2008, to the following transactions, if the conditions set forth in Section III have been met:

(a) The sale or exchange of an Auction Rate Security (as defined in Section IV(b)) by a Plan (as defined in Section IV(h)) to the Sponsor (as defined in Section IV(g)) of such Plan; or

(b) A lending of money or other extension of credit to a Plan in connection with the holding of an Auction Rate Security by the Plan, from: (1) UBS; (2) an Introducing Broker (as defined in Section IV(f)); or (3) a Clearing Broker (as defined in Section IV(d)); where the loan is: (i) repaid in accordance with its terms; and (ii) guaranteed by the Sponsor.

Section II. Transactions Involving Plans Described in Title II of ERISA Only

If the proposed exemption is granted, the sanctions resulting from the application of sections 4975(a) and (b) of the Code, by reason of section 4975(c)(1) of the Code, shall not apply, effective February 1, 2008, to the following transactions, if the conditions set forth in Section III have been met:

(a) The sale or exchange of an Auction Rate Security by a Title II Only Plan (as defined in Section IV(i)) to the Beneficial Owner (as defined in Section IV(c)) of such Plan; or

(b) A lending of money or other extension of credit to a Title II Only Plan in connection with the holding of an Auction Rate Security by the Title II Only Plan, from: (1) UBS; (2) an Introducing Broker; or (3) a Clearing Broker; where the loan is: (i) repaid in accordance with its terms and; (ii) guaranteed by the Beneficial Owner.

Section III. Conditions

(a) UBS acted as a broker or dealer, non-bank custodian, or fiduciary in connection with the acquisition or holding of the Auction Rate Security that is the subject of the transaction;

(b) For transactions involving a Plan (including a Title II Only Plan) not sponsored by UBS for its own employees, the decision to enter into the transaction is made by a Plan fiduciary who is independent (as defined in Section IV(e)). For transactions involving a Plan sponsored by UBS for its own employees, UBS may direct such Plan to engage in a transaction described in Section I if all of the other conditions of this Section III have been met. Notwithstanding the foregoing, an employee of UBS who is the Beneficial Owner of a Title II Only Plan may direct such Plan to engage in a transaction described in Section II, if all of the other conditions of this Section III have been met;

(d) The Plan does not waive any rights or claims in connection with the loan or sale as a condition of engaging in the above-described transaction;

(e) The Plan does not pay any fees or commissions in connection with the transaction;

(f) The transaction is not part of an arrangement, agreement or understanding designed to benefit a party in interest;

(g) With respect to any sale described in Section I(a) or Section II(a):

(1) The sale is for no consideration other than cash payment against prompt delivery of the Auction Rate Security; and

(2) For purposes of the sale, the Auction Rate Security is valued at par, plus any accrued but unpaid interest;

This proposed exemption does not address tax issues. The Department has been informed by the Internal Revenue Service (the Service) and the Department of the Treasury that they are considering providing limited relief from the requirements of sections 72(t)(4), 401(a)(9), and 4974 of the Code with respect to retirement plans that hold Auction Rate Securities. The Department has also been informed by the Service that if Auction Rate Securities are purchased from a Plan in a transaction described in Sections I and II at a price that exceeds the fair market value of those securities, then the excess value would be treated as a contribution for purposes of applying applicable contribution and deduction limits under sections 219, 404, 408, and 415 of the Code.

(h) With respect to an in-kind exchange described in Section I(a) or Section II(a), the exchange involves the transfer by a Plan of an Auction Rate Security in return for a Delivered Security, as such term is defined in Section IV(j), where:

(1) The exchange is unconditional;

(2) For purposes of the exchange, the Auction Rate Security is valued at par, plus any accrued but unpaid interest;

(3) The Delivered Security is valued at fair market value, as determined at the time of the in-kind exchange by a third party pricing service or other objective source;

(4) The Delivered Security is appropriate for the Plan and is a security that the Plan is otherwise permitted to hold under applicable law;

and

The Department notes that the Act's general standards of fiduciary conduct also would apply to the transactions described herein. In this regard, section 404 of the Act requires, among other things, that a fiduciary discharge his duties respecting a plan solely in the interest of the plan's participants and beneficiaries and in a prudent manner. Accordingly, a Plan fiduciary must act prudently with respect to, among other things: (1) The decision to exchange an Auction Rate Security for a Delivered Security; and (2) the negotiation of the terms of such exchange (or a cash sale or loan described above), including the pricing of such securities. The Department further emphasizes that it expects Plan fiduciaries, prior to entering into any of the proposed transactions, to fully understand the risks associated with these types of transactions following disclosure by UBS of all relevant information.

[REMOVED ADVANCE FIELD]

(5) The total value of the Auction Rate Security (

i.e.,

par plus any accrued but unpaid interest) is equal to the fair market value of the Delivered Security;

(i) With respect to a loan described in Sections I(b) or II(b):

(1) The loan is documented in a written agreement that contains all of the material terms of the loan, including the consequences of default;

(2) The Plan does not pay an interest rate that exceeds one of the following three rates as of the commencement of the loan:

(A) The coupon rate for the Auction Rate Security;

(B) The Federal Funds Rate; or

(3) The loan is unsecured; and

(4) The amount of the loan is not more than the total par value of the Auction Rate Securities held by the Plan.

Section IV. Definitions

(a) The term “affiliate” means: any person directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with such other person;

(b) The term “Auction Rate Security” or “ARS” means a security:

(1) That is either a debt instrument (generally with a long-term nominal maturity) or preferred stock; and

(2) With an interest rate or dividend that is reset at specific intervals through a Dutch auction process;

(c) The term “Beneficial Owner” means: the individual for whose benefit the Title II Only Plan is established and includes a relative or family trust with respect to such individual;

(d) The term “Clearing Broker” means: a member of a securities exchange that acts as a liaison between an investor and a clearing corporation and that helps to ensure that a trade is settled appropriately, that the transaction is successfully completed and that is responsible for maintaining the paper work associated with the clearing and executing of a transaction;

(e) The term “independent” means a person who is: (1) Not UBS or an affiliate; and (2) not a relative (as defined in section 3(15) of the Act) of the party engaging in the transaction;

(f) The term “Introducing Broker” means: a registered broker that is able to perform all the functions of a broker except for the ability to accept money, securities, or property from a customer;

(g) The term “Sponsor” means: a plan sponsor as described in section 3(16)(B) of the Act and any affiliates;

(h) The term “Plan” means: any plan described in section 3(3) of the Act and/or section 4975(e)(1) of the Code;

(i) The term “Title II Only Plan” means: any plan described in section 4975(e)(1) of the Code which is not an employee benefit plan covered by Title I of the Act;

(j) The term “Delivered Security” means a security that is: (1) Listed on a national securities exchange (excluding OTC Bulletin Board-eligible securities and Pink Sheets-quoted securities); (2) a US Treasury obligation; (3) a fixed income security that has a rating at the time of the exchange that is in one of the two highest generic rating categories from an independent nationally recognized statistical rating organization (

e.g.

, a highly rated municipal bond or a highly rated corporate bond); or (4) a certificate of deposit insured by the Federal Deposit Insurance Corporation. Notwithstanding the above, the term “Delivered Security” shall not include any Auction Rate Security, or any related Auction Rate Security, including derivatives or securities materially comprised of Auction Rate Securities or any illiquid securities.

Effective Date:

If granted, this proposed exemption will be effective as of February 1, 2008.

Summary of Facts and Representations

1. The Applicant is UBS Financial Services Inc. and its affiliates (hereinafter, either “UBS” or the “Applicant”). UBS is a financial institution whose businesses provide a wide range of financial services to both consumer and corporate customers around the world. As of December 31, 2007, UBS Wealth Management US and its subsidiaries had total consolidated assets of approximately $741 billion. UBS has approximately 8,220 financial advisors, located in approximately 484 offices across the United States, who serve approximately 2 million client relationships. In the ordinary course of its business, UBS provides a range of financial services to Title II Only Plans and pension, profit sharing, and 401(k) plans qualified under section 401(a) of the Code under which some or all of the participants are employees described in section 401(c) of the Code. Among other things, UBS acts as a broker and dealer with respect to the purchase and sale of securities, including Auction Rate Securities. The Applicant describes Auction Rate Securities and the arrangement by which ARS are bought and sold as follows. Auction Rate Securities are securities (issued as debt or preferred stock) with an interest rate or dividend that is reset at periodic intervals pursuant to a process called a Dutch Auction. Investors submit orders to buy, hold, or sell a specific ARS to a broker-dealer selected by the entity that issued the ARS. The broker-dealers, in turn, submit all of these orders to an auction agent. The auction agent's functions include collecting orders from all participating broker-dealers by the auction deadline, determining the amount of securities available for sale,

and organizing the bids to determine the winning bid. If there are any buy orders placed into the auction at a specific rate, the auction agent accepts bids with the lowest rate above any applicable minimum rate and then successively higher rates up to the maximum applicable rate, until all sell orders and orders that are treated as sell orders are filled. Bids below any applicable minimum rate or above the applicable maximum rate are rejected. After determining the clearing rate for all of the securities at auction, the auction agent allocates the ARS available for sale to the participating broker-dealers based on the orders they submitted. If there are multiple bids at the clearing rate, the auction agent will allocate securities among the bidders at such rate on a pro-rata basis.

2. The Applicant states that UBS is permitted, but not obligated, to submit orders in auctions for its own account either as a bidder or a seller and routinely does so in the auction rate securities market in its sole discretion. UBS may routinely place one or more bids in an auction for its own account to acquire ARS for its inventory, to prevent: (a) A failed auction (

i.e.

, an event where there are insufficient clearing bids which would result in the auction rate being set at a specified rate); or (b) an auction from clearing at a rate that UBS believes does not reflect the market for the particular ARS being auctioned.

3. The Applicant states that for many ARS, UBS has been appointed by the issuer of the securities to serve as a dealer in the auction and is paid by the issuer for its services. UBS is typically appointed to serve as a dealer in the auctions pursuant to an agreement between the issuer and UBS. That agreement provides that UBS will receive from the issuer auction dealer fees based on the principal amount of the securities placed through UBS.

4. The Applicant states further that UBS may share a portion of the auction rate dealer fees it receives from the issuer with other broker-dealers that submit orders through UBS, for those orders that UBS successfully places in the auctions. Similarly, with respect to ARS for which broker-dealers other than UBS act as dealer, such other broker-dealers may share auction dealer fees with UBS for orders submitted by UBS.

5. According to the Applicant, since February 2008, a minority of auctions have cleared, particularly involving municipalities. As a result, Plans holding Auction Rate Securities may not have sufficient liquidity to make benefit payments, mandatory payments and withdrawals and expense payments when due.

The Department notes that Prohibited Transaction Exemption 80-26 (45 FR 28545 (April 29, 1980), as amended at 71 FR 17917 (April 7, 2006)) permits interest-free loans or other extensions of credit from a party in interest to a Plan if, among other things, the proceeds of the loan or extension of credit are used only: (1) For the payment of ordinary operating expenses of the Plan, including the payment of benefits in accordance with the terms of the Plan and periodic premiums under an insurance or annuity contract, or (2) for a purpose incidental to the ordinary operation of the Plan.

6. The Applicant represents that, in certain instances, UBS may have previously advised or otherwise caused a Plan to acquire and hold an Auction Rate Security and thus may be considered a fiduciary to the Plan so that a loan to the Plan by UBS may violate sections 406(a) and (b) of the Act; in addition, a sale between a Plan and its sponsor or a Title II Only Plan and its Beneficial Owner violates section 406 of the Act and/or section 4975(c)(1) of the Code.

The Applicant is therefore requesting relief for the following transactions, involving all Plans, effective February 1, 2008: (a) The sale or exchange of an Auction Rate Security from a Plan to the Plan's Sponsor; and (b) a lending of money or other extension of credit to a Plan in connection with the holding of an Auction Rate Security from: UBS, an Introducing Broker, or a Clearing Broker, where the subsequent repayment of the loan is made in accordance with its terms and is guaranteed by the Sponsor.

The relief contained in this proposed exemption does not extend to the fiduciary provisions of section 404 of the Act.

7. The Applicant is requesting similar relief for Title II Only Plans, also effective February 1, 2008. In this regard, the Applicant is requesting relief for: (a) The sale or exchange of an Auction Rate Security from a Title II Only Plan to the Beneficial Owner of such Plan; and (b) a lending of money or other extension of credit to a Title II Only Plan in connection with the holding of an Auction Rate Security from: UBS; an Introducing Broker; or a Clearing Broker; where the subsequent repayment of the loan is made in accordance with its terms and is guaranteed by the Beneficial Owner.

8. The Applicant represents that the transactions have been or will be in the interests of the Plans. In this regard, the Applicant states that the exemption, if granted, will provide Plan fiduciaries with liquidity notwithstanding changes that occurred in the Auction Rate Securities markets. The Applicant also notes that, other than for Plans sponsored by the Applicant, the decision to enter into a transaction described herein has been made or will be made by a Plan fiduciary which is independent of UBS.

9. The proposed exemption contains a number of safeguards designed to protect the interests of each Plan. With respect to the sale of an Auction Rate Security by a Plan, the Plan must receive cash equal to the par value of the Security, plus any accrued interest. The sale must also be unconditional, other than being for payment against prompt delivery. For in-kind exchanges covered by the proposed exemption, the security delivered to the Plan (

i.e.

, the Delivered Security) must be: (a) Listed on a national securities exchange (excluding OTC Bulletin Board-eligible securities and Pink Sheets-quoted securities); (b) a US Treasury obligation; (c) a fixed income security that has a rating at the time of the exchange that is in one of the two highest generic rating categories from an independent nationally recognized statistical rating organization (

e.g.

, a highly rated municipal bond or a highly rated corporate bond); or (d) a certificate of deposit insured by the Federal Deposit Insurance Corporation. The Delivered Security must also be appropriate for the Plan, and a security that the Plan is permitted to hold under applicable law. The proposed exemption further requires that the Delivered Security be valued at its fair market value, as determined at the time of the exchange from a third party pricing service or other objective source, and must equal the total value of the Auction Rate Security being exchanged (

i.e.

, par value, plus any accrued interest).

10. With respect to a loan to a Plan holding an Auction Rate Security, such loan must be documented in a written agreement containing all of the material terms of the loan, including the consequences of default. Further, the Plan may not pay an interest rate that exceeds one of the following three rates as of the commencement of the loan: The coupon rate for the Auction Rate Security; the Federal Funds Rate; or the Prime Rate. Additionally, such loan must be unsecured and for an amount that is no more than the total par value of Auction Rate Securities held by the affected Plan.

11. Additional conditions apply to each transaction covered by the exemption, if granted. Among other things, the Plan may not pay any fees or commissions in connection with the transaction and the transaction may not be part of an arrangement, agreement, or understanding designed to benefit a party in interest. The exemption expressly prohibits any waiver of rights

or claims by a Plan in connection with the sale or exchange of an Auction Rate Security by such Plan, or a lending of money or other extension of credit to a Plan holding an Auction Rate Security.

12. In summary, the Applicant represents that the transactions described herein have satisfied or will satisfy the statutory criteria for an exemption set forth in section 408(a) of the Act and section 4975(c)(2) of the Code because:

(a) Any sale has been or will be:

(1) For no consideration other than cash payment against prompt delivery of the Auction Rate Security; and

(2) At par, plus any accrued but unpaid interest;

(b) Any in-kind exchange has been or will be unconditional, other than being for payment against prompt delivery, and has involved or will involve Delivered Securities that are:

(1) Appropriate for the Plan;

(2) Listed on a national securities exchange (but not OTC Bulletin Board-eligible securities and Pink Sheets-quoted securities); U.S. Treasury obligations; fixed income securities; or certificates of deposit; and

(3) Securities that the Plan is permitted to hold under applicable law; and,

(1) Documented in a written agreement containing all of the material terms of the loan, including the consequences of default;

(2) At an interest rate not in excess of: The coupon rate for the Auction Rate Security, the Federal Funds Rate, or the Prime Rate;

(3) Unsecured; and

(4) For an amount that is not more than the total par value of Auction Rate Securities held by the affected Plan.

Notice to Interested Persons

The Applicant represents that the potentially interested participants and beneficiaries cannot all be identified, and, therefore, the only practical means of notifying such participants and beneficiaries of this proposed exemption is by the publication of this notice in the

Federal Register

. Comments and requests for a hearing must be received by the Department not later than 30 days from the date of publication of this notice of proposed exemption in the

Federal Register

FOR FURTHER INFORMATION CONTACT:

Brian Shiker of the Department, telephone (202) 693-8552. (This is not a toll-free number.)

Deutsche Bank AG and Its Affiliates (together, Deutsche Bank or the Applicant), Located in New York, New York, [Application Number D-11518].

Proposed Exemption

The Department is considering granting an exemption under the authority of section 408(a) of the Act (or ERISA) and section 4975(c)(2) of the Code, and in accordance with the procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990).

For purposes of this proposed exemption, references to section 406 of ERISA should be read, unless otherwise specified, to refer to the corresponding provisions of ection 4975 of the Code.

Section I. Sales of Auction Rate Securities From Plans to Deutsche Bank: Unrelated to a Settlement Agreement

If the proposed exemption is granted, the restrictions of section 406(a)(1)(A) and (D) and section 406(b)(1) and (2) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of section 4975(c)(1)(A), (D), and (E) of the Code, shall not apply, effective February 1, 2008, to the sale by a Plan (as defined in Section V(e)) of an Auction Rate Security (as defined in Section V(c)) to Deutsche Bank, where such sale (an Unrelated Sale) is unrelated to, and not made in connection with, a Settlement Agreement (as defined in Section V(f)), provided that the conditions set forth in Section II have been met.

Section II. Conditions Applicable to Transactions Described in Section I

(a) The Plan acquired the Auction Rate Security in connection with brokerage or advisory services provided by Deutsche Bank;

(b) The last auction for the Auction Rate Security was unsuccessful;

(c) Except in the case of a Plan sponsored by Deutsche Bank for its own employees (a Deutsche Bank Plan), the Unrelated Sale is made pursuant to a written offer by Deutsche Bank (the Offer) containing all of the material terms of the Unrelated Sale, including, but not limited to the most recent rate information for the Auction Rate Security (if reliable information is available). Either the Offer or other materials available to the Plan provide the identity and par value of the Auction Rate Security. Notwithstanding the foregoing, in the case of a pooled fund maintained or advised by Deutsche Bank, this condition shall be deemed met to the extent each Plan invested in the pooled fund (other than a Deutsche Bank Plan) receives written notice regarding the Unrelated Sale, where such notice contains the material terms of the Unrelated Sale (including, but not limited to, the material terms described in the preceding sentence);

(d) The Unrelated Sale is for no consideration other than cash payment against prompt delivery of the Auction Rate Security;

(e) The sales price for the Auction Rate Security is equal to the par value of the Auction Rate Security, plus any accrued but unpaid interest or dividends;

(f) The Plan does not waive any rights or claims in connection with the Unrelated Sale;

(g) The decision to accept the Offer or retain the Auction Rate Security is made by a Plan fiduciary or Plan participant or IRA owner who is independent (as defined in Sec

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