,i  #aaf? ,,congress  #b;d ,session  ,h4
 ,r4 #fgcb  ,,9 ,,! ,,h\se ,,(          
,,repres5tatives  ,may #e1 #bjbj,mr4    
,w5/rup introduc$ ! foll[+ bill2 :i* 0  
ref]r$ to ! ,committee on ,ways & ,means
  ,a ,,bill  ,to direct ! ,secret>y ( ! 
,treasury to modify c]ta9 regulations   
relat+ to insurance-d$icat$             
ex*ange-trad$ funds4  #a4               
,insurance-d$icat$ ex*ange-trad$ funds  
7a7 ,9 g5]al ,n lat] ?an ! date :i* is  
#a ye> aft] ! date ( ! enactm5t ( ?is   
,act1 ! ,secret>y ( ! ,treasury 7or !   
,secret>y's delegate7 %all am5d !       
regulation issu$ by ! ,dep>tm5t ( !     
,treasury relat+ to ,income ,tax2       
,div]sification ,requirem5ts = ,v>iable 
,annuity1 ,end[m5t1 & ,life ,insurance  
,contracts1 #ed ,f$4 ,reg4 #hgbh 7,m>*  
#b1 #aihi71 & make any necess>y         
correspond+ am5dm5ts to o!r regulations1
 9 ord] to facilitate ! use (           
ex*ange-trad$ funds z inve/m5t options  
"u v>iable contracts )9 ! mean+ (       
section #hag7;d7 ( ! ,int]nal ,rev5ue   

,code ( #aihf1 9 accordance )           
subsections 7b7 & 7c7 ( ?is section4    
7b7 ,designate c]ta9 au?oriz$           
p>ticipants & m>ket mak]s z eligible    
inve/ors ,! ,secret>y ( ! ,treasury 7or 
! ,secret>y's delegate7 %all am5d       
,treas4 ,reg4 section #a4hag-e7;f77#c7  
to provide t satisfaction ( !           
requirem5ts 9 ,treas4 ,reg4 section     
#a4hag-e7;f77#b77;i7 ) respect to an    
ex*ange-trad$ fund %all n be prev5t$ by 
reason ( b5eficial int]e/s 9 su* a fund 
be+ held by "o or m au?oriz$ p>ticipants
 or m>ket mak]s4  7c7 ,confirm t        
simil>ities to o!r funds are irrelevant 
,! ,secret>y ( ! ,treasury 7or !        
,secret>y's delegate7 %all am5d ,treas4 
,reg4 section #a4hag-e7;f7 to confirm t1
 = ,f$]al income tax purposes1 a        
regulat$ inve/m5t company1 p>tn]%ip1 or 
tru/ 7includ+ an ex*ange-trad$ fund7 t  
satisfies ! requirem5ts ( ,treas4 ,reg4 
section #a4hag-e7;f7 7#b7 & 7#c7 %all n 
be treat$ z own$ by ! hold] ( a v>iable 
contract pursuant to ! pr9ciples ( ,rev4

 ,rul4 #ha-bbe1 #aiha-b ,c4,b4 #ab1     
m]ely because ano!r regulat$ inve/m5t   
company1 p>tn]%ip1 tru/1 or simil>      
inve/m5t vehicle foll[s ! same inve/m5t 
/rategy1 has ! same inve/m5t manag]1 or 
holds ! same inve/m5ts4  7d7 ,def9e     
relevant t]ms ,9 am5d+ ,treas4 ,reg4    
section #a4hag-e7;f77#c7 9 accordance ) 
subsections 7b7 & 7c7 ( ?is section1 !  
,secret>y ( ! ,treasury 7or !           
,secret>y's delegate7 %all provide      
def9itions consi/5t ) ! foll[+3 7#a7    
,ex*ange-trad$ fund ,! t]m ex*ange-trad$
 fund means a regulat$ inve/m5t company1
 p>tn]%ip1 or tru/-- 7,a7 t is regi/]$ )
 ! ,securities & ,ex*ange ,commission z 
an op5-end inve/m5t company or a unit   
inve/m5t tru/2  7,b7 ! %>es ( :i* c be  
pur*as$ or r$eem$ directly f ! fund only
 by an au?oriz$ p>ticipant2 &  7,c7 !   
%>es ( :i* are trad$ ?r\gh\t ! day on a 
national /ock ex*ange at m>ket prices t 
may or may n be ! same z ! net asset    
value ( ! %>es4  7#b7 ,au?oriz$         
p>ticipant ,! t]m au?oriz$ p>ticipant   

means a f9ancial in/itution t is a memb]
 or p>ticipant ( a cle>+ ag5cy regi/]$  
"u section #ag;,a7b7 ( ! ,securities    
,ex*ange ,act ( #aicd t ent]s into a    
contractual relation%ip ) an            
ex*ange-trad$ fund pursuant to :i* !    
f9ancial in/itution is p]mitt$ to       
pur*ase & r$eem %>es directly f ! fund &
 to sell su* %>es to ?ird p>ties1 b only
 if ! contractual arrangem5t or         
applicable law precludes ! f9ancial     
in/itution f-- 7,a7 pur*as+ ! %>es = its
 own inve/m5t purposes r ?an = !        
exclusive purpose ( creat+ & r$eem+ su* 
%>es on behalf ( ?ird p>ties2 &  7,b7   
sell+ ! %>es to ?ird p>ties :o are n    
m>ket mak]s or o!rwise describ$ 9       
,treas4 ,reg4 section #a4hag-e7;f7 7#a7 
& 7#c74  7#c7 ,m>ket mak] ,! t]m m>ket  
mak] means a f9ancial in/itution t is a 
regi/]$ brok] or deal] "u section       
#ae7;b7 ( ! ,securities ,ex*ange ,act ( 
#aicd t ma9ta9s liquidity = an          
ex*ange-trad$ fund on a national /ock   
ex*ange by be+ always ready to buy &    

sell %>es ( su* fund on ! m>ket1 b only 
if ! f9ancial in/itution is             
contractually or legally preclud$ f     
sell+ or buy+ su* %>es to or f p]sons :o
 are n au?oriz$ p>ticipants or o!rwise  
describ$ 9 ,treas4 ,reg4 section        
#a4hag-e7;f7 7#b7 & 7#c74  7e7          
,effective dates1 en=cem5t1 &           
int]pretations  7#a7 ,effective dates   
7,a7 ,subsection 7b71 & ! def9itions "u 
subsection 7d71 %all apply to segregat$ 
asset acc\nt inve/m5ts made on or aft] !
 date ( enactm5t ( ?is ,act4  7,b7      
,subsection 7c7 %all apply to taxable   
ye>s beg9n+ aft] ,decemb] #ca1 #aihc4   
7#b7 ,en=cem5t & int]pretations ,prior  
to ! date t ! ,secret>y ( ! ,treasury   
7or ! ,secret>y's delegate7 issues f9al 
regulations pursuant to ?is section--   
7,a7 ! ,secret>y 7or delegate7 %all     
adm9i/] & en=ce ! law 9 accordance ) ?is
 section & ! effective dates 9 p>agraph 
7#a7 ( ?is subsection2 &  7,b7 taxpay]s 
may rely ^u _! reasonable good fai?     
int]pretations ( ! prec$+ subsections ( 

?is section4