Correspondence 0001432353-22-000511 from Global X Funds (CIK 0001432353)
Global X Funds (CIK 0001432353)
Date: Dec. 13, 2022 · CIK: 0001432353 · Accession: 0001432353-22-000511
AI Filing Summary & Sentiment
File numbers found in text: 333-151713, 811-22209
Letter
VIA EDGAR Division of Investment Management Washington, D.C. 20549-9303 Attention: Karen Rossotto, Esq. Re: Global X Funds File Nos. 333-151713, 811-22209
Dear Ms. Rossotto:
On behalf of the Global X Funds (the “Registrant” or the “Trust”), and its series, the Global X Emerging Markets ETF (the “Emerging Markets ETF”) and the Global X Emerging Markets Consumer ETF (the “Emerging Markets Consumer ETF” to be renamed the Global X Emerging Markets Great Consumer ETF) (each, a "Fund" and together, the “Funds”), included in Post-Effective Amendment No. 681 and Post-Effective Amendment No. 682, respectively, (each, an "Amendment" and together, the “Amendments”) to the Registrant’s registration statement on Form N-1A (the “Registration Statement”), below you will find the Registrant’s responses to the comments that you had conveyed to the undersigned on November 9, 2022 and December 5, 2022, with regard to the Amendments. The Amendments were filed with the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) on September 23, 2022, pursuant to the Investment Company Act of 1940, as amended (the “1940 Act”), and Rule 485(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”).
Below we have summarized your comments, in italics, and presented the Registrant’s response to the comments. The responses will be incorporated into post-effective amendment filings to the Registration Statement to be made pursuant to Rule 485(b) under the Securities Act. Capitalized terms not otherwise defined in this letter have the meanings assigned to the terms in the Amendment. Unless otherwise indicated, the comments below apply to both Funds.
PROSPECTUS
FEES AND EXPENSES
1. Comment: Please provide the Staff with a completed copy of the fee table and expense example prior to the effectiveness of the post-effective amendment to each Fund’s Registration Statement.
U.S. Securities and Exchange Commission
Attention: Karen Rossotto
December 13, 2022
Page 2
Response: The Registrant has completed each Fund’s fee table and expense example, which is included below.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees:
0.75%
Distribution and Service (12b-1) Fees:
None
Other Expenses:1
0.00%
Total Annual Fund Operating Expenses:
0.75%
1 Other Expenses are based on estimated amounts for the current fiscal year.
Example: The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. This example does not take into account customary brokerage commissions that you pay when purchasing or selling Shares of the Fund in the secondary market. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your Shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years
$77 $240
PRINCIPAL INVESTMENT STRATEGIES
2. Comment: With respect to the second paragraph in the section of the Emerging Markets ETF's Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, please clarify what a “sector leader” is and how such determination is made. In addition, please disclose the universe of securities from which “sector leaders” are chosen. Furthermore, the Staff notes that the Adviser defines “sector leaders” as “issuers that are highly ranked, or those that the Adviser expects to be highly ranked in the future, in terms of market share or market capitalization within their respective country, region, industry, products produced or services offered, as applicable.” Please clarify the term “highly ranked” by discussing the basis for determining that an issuer is “highly ranked”. Please state what factors determine an issuer’s ranking and how the factors are applied. In addition, please clarify how the Adviser determines that an issuer may be ''highly ranked" in the future. Moreover, please include a description of how issuers are screened including what criteria is used, how the analysis is conducted and whether such analysis is quantitative or qualitative in nature as well as what type(s) of fundamental analysis is used or what such process entails. Please also discuss the composition of the eligible universe of securities.
Response: The Registrant has replaced the first three paragraphs in the section of the Emerging Markets ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES” with the disclosure set forth below:
The Fund is an actively managed exchange traded fund (“ETF”) advised by Global X Management Company LLC (the “Adviser”) and sub-advised by Mirae Asset Global Investments (Hong Kong) Limited (the “Sub-Adviser”) that seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets, plus any borrowings for investment purposes, measured at the time of purchase, in equity securities: (i) of issuers in emerging markets; and/or (ii) that are tied economically to emerging markets,
U.S. Securities and Exchange Commission
Attention: Karen Rossotto
December 13, 2022
Page 3
provided that, in either case, the issuers of any such securities are deemed by the Adviser to have a current or future leading position in terms of market share and/or market capitalization within their respective country, region, industry, products produced or services offered, as applicable. Equity securities consist of common stock and related securities, such as preferred stock and depositary receipts. The Fund may lend securities representing up to one-third of the value of the Fund’s total assets (including the value of the collateral received).
In determining whether an issuer is, or is likely to be, in a current or future leading position in terms of market share and/or market capitalization within its respective country, region, industry, products produced or services offered, the Adviser considers, among other things: (i) issuers with a sustainable long-term business model or strategy that the Adviser considers to be a competitive advantage; (ii) issuers with businesses that the Adviser expects to benefit from long-term economic trends; and (iii) issuers with management practices and philosophies that the Adviser considers beneficial to shareholder value. These are companies that the Adviser believes are poised to benefit from the socio-economic changes occurring in emerging markets and may have the potential to achieve high levels of growth over the medium- to long-term.
The Adviser utilizes an active and bottom-up approach to portfolio construction, and does not apply a top-down country or sector allocation. The initial investment universe is derived primarily from quantitative analysis, using metrics like trading volume and market capitalization. After the initial investment universe has been screened, fundamental and qualitative analysis are applied for purposes of country and sector allocations and stock selection, all within a risk management framework. This risk management framework includes, but is not limited to, individual position size limits, country and sector weight limits relative to a broad-based benchmark, and a target number of holdings. As a result, the Fund’s portfolio reflects what the Adviser believes are the most compelling investment opportunities within the eligible universe and subject to the parameters of the risk management framework.
3. Comment: With respect to the fourth paragraph in the section of the Emerging Markets ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, please explain how the Adviser makes choices about what countries and companies to make allocations to. Please provide additional detail as to the investment process including whether the Adviser considers sector and country allocations or whether the Adviser ranks the best available investments from the overall population.
Response: Please see the Registrant’s response to Comment #2 above.
4. Comment: With respect to the section of the Emerging Markets Consumer ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, the Staff believes that “Consumer” is subject to Rule 35d-1 under the 1940 Act (the “Names Rule”). Please explain the Adviser’s definition of “Consumer” for purposes of the Names Rule and provide the metric that the Fund uses to make this determination. Please explain how the Adviser makes choices about what countries and companies to make allocations to. Please provide additional detail as to the investment process including whether the Adviser considers sector and country allocations or whether the Adviser ranks the best available investments from the overall population.
Response: Please note that the Registrant will be revising the name of the Fund to the “Global X Emerging Markets Great Consumer ETF”. Accordingly, the Registrant does not believe that the revised name is subject to the Names Rule as the term “Great Consumer” does not refer to a specific sector or industry, but rather to the broad concept of the growing middle class across the countries in which the Fund invests.
U.S. Securities and Exchange Commission
Attention: Karen Rossotto
December 13, 2022
Page 4
5. Comment: With respect to the section of the Emerging Markets Consumer ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, in light of how varied emerging markets are in terms of demographics, economics and cultures, how does the Adviser form its belief that “the issuers of any such securities are expected to be beneficiaries of the increasing consumption and growing purchasing power of individuals in the world’s emerging markets”.
Response: The Adviser and Sub-Adviser have significant experience and track record managing active strategies that are focused on emerging market equities. In addition, the Adviser and Sub-Adviser are subsidiaries of Mirae Asset Global Investments Co., Ltd. (“Mirae Asset”), which has a deep history in and understanding of emerging markets. Established in Asia more than 25 years ago, Mirae Asset’s global network has grown to 15 offices across 12 countries, and includes more than 230 investment professionals. This includes analysts and portfolio managers who understand their local landscapes, speak local languages, and witness first-hand local spending habits and appetites (i.e. consumption). These investment professionals maintain a pulse on their respective markets and can potentially identify opportunities and headwinds before they are widely discovered by the market. With Mirae Asset’s size, the Adviser and Sub-Adviser also have access to corporate management teams, sell-side research, and other industry experts across all countries in which the Funds will invest. The Adviser and Sub-Adviser are able to engage in frequent company visits, channel checks/competitor analysis, and meetings with management, which are critical components of the investment process. While emerging markets are quite varied in terms of demographics, economics and cultures, the Adviser believes that the local presence (“boots-on the ground”) of its parent company, Mirae Asset, helps the Adviser and Sub-Adviser to understand these differences and affords a competitive advantage compared to peers that are situated only within developed markets.
6. Comment: With respect to the section of the Emerging Markets Consumer ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, please explain how the Adviser buys and sells securities based on its investment thesis. Please revise the section of the Emerging Markets Consumer ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES” to disclose the Adviser’s investment process and the basis that the Adviser selects portfolio securities for the Fund including whether the Adviser relies on fundamental or qualitative analysis and what types of data the Adviser considers. Please disclose how the Emerging Markets Consumer ETF applies its thesis in choosing securities and whether the Adviser relies on quantitative or qualitative analysis in making investment decisions for the Emerging Markets Consumer ETF. If the Adviser relies on quantitative analysis, please include corresponding risk disclosures.
Response: The Adviser applies a strict and repeatable investment process for security selection. This process can be summarized as follows:
1.Proprietary screening of the eligible emerging market universe, which takes into account factors such as market capitalization, liquidity, relative return profiles and balance sheet metrics, to arrive at an Investable Universe (IU);
2.Generation of a Recommendation List (RL) of securities conducted by each sector analyst for each respective region based on fundamental and qualitative research;
3.Model portfolio (MP) constructed by the investment team based on conviction levels from the RL; and
4.Actual portfolio (AP) construction completed by the portfolio manager based on fundamental and qualitative views along with risk guidelines. Overall, the portfolio manager utilizes the Fund’s thesis to focus on companies that benefit from middle class growth and domestic consumption across emerging market countries
U.S. Securities and Exchange Commission
Attention: Karen Rossotto
December 13, 2022
Page 5
The process requires each analyst to identify and validate the highest conviction ideas, based on fundamental company analysis, and weight them in their RL. The investment team utilizes the RLs to determine a MP, which reflects stock weightings to indicate the relative conviction level of ideas. The portfolio manager utilizes the MP to construct an efficient actual portfolio.
The Registrant has updated the section of the Emerging Markets Consumer ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES” as follows in response to the comment:
The Adviser utilizes an active and bottom-up approach to portfolio construction, and does not apply a top-down country or sector allocation. The initial investment universe is derived primarily from quantitative analysis, using metrics like trading volume and market capitalization. After the initial investment universe has been screened, fundamental and qualitative analysis are applied for purposes of country and sector allocations and stock selection, all within a risk management framework. This risk management framework includes, but is not limited to, individual position size limits, country and sector weight limits relative to a broad-based benchmark, and a target number of holdings. As a result, the Fund’s portfolio reflects what the Adviser believes are the most compelling investment opportunities within the eligible universe and subject to the parameters of the risk management framework.
7. Comment: With respect to the fourth paragraph in the section of each Fund’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, in light of the Names Rule, the disclosure notes that the Adviser may determine that an investment is tied economically to an emerging market considers if “the issuer is organized under the laws of . . .emerging markets”. Please explain why an issuer that is organized under the laws of an emerging market country qualifies under the Names Rule. Please supplementally explain to the Staff how an issuer’s economic fortunes are necessarily dependent on where such issuer is organized.
Response: The Registrant respectfully submits that its conditions for determining whether an investment is economically tied to an emerging market is consistent with Rule 35d-1 under the 1940 Act. Rule 35
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Global X Funds
605 Third Avenue, 43rd Floor
New York, NY 10158
December 13, 2022
VIA EDGAR
U.S. Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, D.C. 20549-9303
Attention: Karen Rossotto, Esq.
Re: Global X Funds
File Nos. 333-151713, 811-22209
Dear Ms. Rossotto:
On behalf of the Global X Funds (the “Registrant” or the “Trust”), and its series, the Global X Emerging Markets ETF (the “Emerging Markets ETF”) and the Global X Emerging Markets Consumer ETF (the “Emerging Markets Consumer ETF” to be renamed the Global X Emerging Markets Great Consumer ETF) (each, a "Fund" and together, the “Funds”), included in Post-Effective Amendment No. 681 and Post-Effective Amendment No. 682, respectively, (each, an "Amendment" and together, the “Amendments”) to the Registrant’s registration statement on Form N-1A (the “Registration Statement”), below you will find the Registrant’s responses to the comments that you had conveyed to the undersigned on November 9, 2022 and December 5, 2022, with regard to the Amendments. The Amendments were filed with the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) on September 23, 2022, pursuant to the Investment Company Act of 1940, as amended (the “1940 Act”), and Rule 485(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”).
Below we have summarized your comments, in italics, and presented the Registrant’s response to the comments. The responses will be incorporated into post-effective amendment filings to the Registration Statement to be made pursuant to Rule 485(b) under the Securities Act. Capitalized terms not otherwise defined in this letter have the meanings assigned to the terms in the Amendment. Unless otherwise indicated, the comments below apply to both Funds.
PROSPECTUS
FEES AND EXPENSES
1. Comment: Please provide the Staff with a completed copy of the fee table and expense example prior to the effectiveness of the post-effective amendment to each Fund’s Registration Statement.
1
U.S. Securities and Exchange Commission
Attention: Karen Rossotto
December 13, 2022
Page 2
Response: The Registrant has completed each Fund’s fee table and expense example, which is included below.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees:
0.75%
Distribution and Service (12b-1) Fees:
None
Other Expenses:1
0.00%
Total Annual Fund Operating Expenses:
0.75%
1 Other Expenses are based on estimated amounts for the current fiscal year.
Example: The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. This example does not take into account customary brokerage commissions that you pay when purchasing or selling Shares of the Fund in the secondary market. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your Shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years
$77 $240
PRINCIPAL INVESTMENT STRATEGIES
2. Comment: With respect to the second paragraph in the section of the Emerging Markets ETF's Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, please clarify what a “sector leader” is and how such determination is made. In addition, please disclose the universe of securities from which “sector leaders” are chosen. Furthermore, the Staff notes that the Adviser defines “sector leaders” as “issuers that are highly ranked, or those that the Adviser expects to be highly ranked in the future, in terms of market share or market capitalization within their respective country, region, industry, products produced or services offered, as applicable.” Please clarify the term “highly ranked” by discussing the basis for determining that an issuer is “highly ranked”. Please state what factors determine an issuer’s ranking and how the factors are applied. In addition, please clarify how the Adviser determines that an issuer may be ''highly ranked" in the future. Moreover, please include a description of how issuers are screened including what criteria is used, how the analysis is conducted and whether such analysis is quantitative or qualitative in nature as well as what type(s) of fundamental analysis is used or what such process entails. Please also discuss the composition of the eligible universe of securities.
Response: The Registrant has replaced the first three paragraphs in the section of the Emerging Markets ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES” with the disclosure set forth below:
The Fund is an actively managed exchange traded fund (“ETF”) advised by Global X Management Company LLC (the “Adviser”) and sub-advised by Mirae Asset Global Investments (Hong Kong) Limited (the “Sub-Adviser”) that seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets, plus any borrowings for investment purposes, measured at the time of purchase, in equity securities: (i) of issuers in emerging markets; and/or (ii) that are tied economically to emerging markets,
U.S. Securities and Exchange Commission
Attention: Karen Rossotto
December 13, 2022
Page 3
provided that, in either case, the issuers of any such securities are deemed by the Adviser to have a current or future leading position in terms of market share and/or market capitalization within their respective country, region, industry, products produced or services offered, as applicable. Equity securities consist of common stock and related securities, such as preferred stock and depositary receipts. The Fund may lend securities representing up to one-third of the value of the Fund’s total assets (including the value of the collateral received).
In determining whether an issuer is, or is likely to be, in a current or future leading position in terms of market share and/or market capitalization within its respective country, region, industry, products produced or services offered, the Adviser considers, among other things: (i) issuers with a sustainable long-term business model or strategy that the Adviser considers to be a competitive advantage; (ii) issuers with businesses that the Adviser expects to benefit from long-term economic trends; and (iii) issuers with management practices and philosophies that the Adviser considers beneficial to shareholder value. These are companies that the Adviser believes are poised to benefit from the socio-economic changes occurring in emerging markets and may have the potential to achieve high levels of growth over the medium- to long-term.
The Adviser utilizes an active and bottom-up approach to portfolio construction, and does not apply a top-down country or sector allocation. The initial investment universe is derived primarily from quantitative analysis, using metrics like trading volume and market capitalization. After the initial investment universe has been screened, fundamental and qualitative analysis are applied for purposes of country and sector allocations and stock selection, all within a risk management framework. This risk management framework includes, but is not limited to, individual position size limits, country and sector weight limits relative to a broad-based benchmark, and a target number of holdings. As a result, the Fund’s portfolio reflects what the Adviser believes are the most compelling investment opportunities within the eligible universe and subject to the parameters of the risk management framework.
3. Comment: With respect to the fourth paragraph in the section of the Emerging Markets ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, please explain how the Adviser makes choices about what countries and companies to make allocations to. Please provide additional detail as to the investment process including whether the Adviser considers sector and country allocations or whether the Adviser ranks the best available investments from the overall population.
Response: Please see the Registrant’s response to Comment #2 above.
4. Comment: With respect to the section of the Emerging Markets Consumer ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, the Staff believes that “Consumer” is subject to Rule 35d-1 under the 1940 Act (the “Names Rule”). Please explain the Adviser’s definition of “Consumer” for purposes of the Names Rule and provide the metric that the Fund uses to make this determination. Please explain how the Adviser makes choices about what countries and companies to make allocations to. Please provide additional detail as to the investment process including whether the Adviser considers sector and country allocations or whether the Adviser ranks the best available investments from the overall population.
Response: Please note that the Registrant will be revising the name of the Fund to the “Global X Emerging Markets Great Consumer ETF”. Accordingly, the Registrant does not believe that the revised name is subject to the Names Rule as the term “Great Consumer” does not refer to a specific sector or industry, but rather to the broad concept of the growing middle class across the countries in which the Fund invests.
U.S. Securities and Exchange Commission
Attention: Karen Rossotto
December 13, 2022
Page 4
5. Comment: With respect to the section of the Emerging Markets Consumer ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, in light of how varied emerging markets are in terms of demographics, economics and cultures, how does the Adviser form its belief that “the issuers of any such securities are expected to be beneficiaries of the increasing consumption and growing purchasing power of individuals in the world’s emerging markets”.
Response: The Adviser and Sub-Adviser have significant experience and track record managing active strategies that are focused on emerging market equities. In addition, the Adviser and Sub-Adviser are subsidiaries of Mirae Asset Global Investments Co., Ltd. (“Mirae Asset”), which has a deep history in and understanding of emerging markets. Established in Asia more than 25 years ago, Mirae Asset’s global network has grown to 15 offices across 12 countries, and includes more than 230 investment professionals. This includes analysts and portfolio managers who understand their local landscapes, speak local languages, and witness first-hand local spending habits and appetites (i.e. consumption). These investment professionals maintain a pulse on their respective markets and can potentially identify opportunities and headwinds before they are widely discovered by the market. With Mirae Asset’s size, the Adviser and Sub-Adviser also have access to corporate management teams, sell-side research, and other industry experts across all countries in which the Funds will invest. The Adviser and Sub-Adviser are able to engage in frequent company visits, channel checks/competitor analysis, and meetings with management, which are critical components of the investment process. While emerging markets are quite varied in terms of demographics, economics and cultures, the Adviser believes that the local presence (“boots-on the ground”) of its parent company, Mirae Asset, helps the Adviser and Sub-Adviser to understand these differences and affords a competitive advantage compared to peers that are situated only within developed markets.
6. Comment: With respect to the section of the Emerging Markets Consumer ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, please explain how the Adviser buys and sells securities based on its investment thesis. Please revise the section of the Emerging Markets Consumer ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES” to disclose the Adviser’s investment process and the basis that the Adviser selects portfolio securities for the Fund including whether the Adviser relies on fundamental or qualitative analysis and what types of data the Adviser considers. Please disclose how the Emerging Markets Consumer ETF applies its thesis in choosing securities and whether the Adviser relies on quantitative or qualitative analysis in making investment decisions for the Emerging Markets Consumer ETF. If the Adviser relies on quantitative analysis, please include corresponding risk disclosures.
Response: The Adviser applies a strict and repeatable investment process for security selection. This process can be summarized as follows:
1.Proprietary screening of the eligible emerging market universe, which takes into account factors such as market capitalization, liquidity, relative return profiles and balance sheet metrics, to arrive at an Investable Universe (IU);
2.Generation of a Recommendation List (RL) of securities conducted by each sector analyst for each respective region based on fundamental and qualitative research;
3.Model portfolio (MP) constructed by the investment team based on conviction levels from the RL; and
4.Actual portfolio (AP) construction completed by the portfolio manager based on fundamental and qualitative views along with risk guidelines. Overall, the portfolio manager utilizes the Fund’s thesis to focus on companies that benefit from middle class growth and domestic consumption across emerging market countries
U.S. Securities and Exchange Commission
Attention: Karen Rossotto
December 13, 2022
Page 5
The process requires each analyst to identify and validate the highest conviction ideas, based on fundamental company analysis, and weight them in their RL. The investment team utilizes the RLs to determine a MP, which reflects stock weightings to indicate the relative conviction level of ideas. The portfolio manager utilizes the MP to construct an efficient actual portfolio.
The Registrant has updated the section of the Emerging Markets Consumer ETF’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES” as follows in response to the comment:
The Adviser utilizes an active and bottom-up approach to portfolio construction, and does not apply a top-down country or sector allocation. The initial investment universe is derived primarily from quantitative analysis, using metrics like trading volume and market capitalization. After the initial investment universe has been screened, fundamental and qualitative analysis are applied for purposes of country and sector allocations and stock selection, all within a risk management framework. This risk management framework includes, but is not limited to, individual position size limits, country and sector weight limits relative to a broad-based benchmark, and a target number of holdings. As a result, the Fund’s portfolio reflects what the Adviser believes are the most compelling investment opportunities within the eligible universe and subject to the parameters of the risk management framework.
7. Comment: With respect to the fourth paragraph in the section of each Fund’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES”, in light of the Names Rule, the disclosure notes that the Adviser may determine that an investment is tied economically to an emerging market considers if “the issuer is organized under the laws of . . .emerging markets”. Please explain why an issuer that is organized under the laws of an emerging market country qualifies under the Names Rule. Please supplementally explain to the Staff how an issuer’s economic fortunes are necessarily dependent on where such issuer is organized.
Response: The Registrant respectfully submits that its conditions for determining whether an investment is economically tied to an emerging market is consistent with Rule 35d-1 under the 1940 Act. Rule 35