10-Plus

Zardari was welcomed by President Hu Jintao and received a 21-gun military salute at the Tian'anmen Square, festooned with the national flags of China and Pakistan.

During the meeting, Hu reviewed the close bilateral ties, particularly the days of the Bhutto family.

"Your entire family are old friends of the Chinese people," Hu told Zardari. "We will never forget the outstanding contribution Benazir Bhutto and Zulfikar Ali Bhutto had made to boosting ties with China."

Zardari's late wife, Benazir Bhutto, was assassinated in December 2007, and her late father, Zulfikar Ali Bhutto, had also served as Pakistan president.

While reviewing the 57-year-old diplomatic ties, Hu attributed its sound and smooth growth to the leadership of the two nations, among others.

He said China had always given priority to its relation with Pakistan, an important neighbour and strategic partner.

Zardari said he was grateful for "the warm welcome that you have shown us and the love and affection that I can feel from across the aisle."

"The only way I could do justice to the memory of my late wife and father-in-law was to make sure that I made my first presidential trip to China," the 53-year-old said.

"I am hoping to assist the Pakistan-China relationship and take it further along. It's a duty history has bestowed upon me."

On the economic front, Hu said the two countries were enjoying robust cooperation in economy and trade. They should continue to implement their free-trade pact, five-year trade programme and other joint deals.

He also proposed the two nations create new areas and explore new ways of cooperation. "China and Pakistan should vigorously boost border trade so as to bring more substantive benefits to their citizens."

Zardari said the two should carry out big projects and work more closely in infrastructure, transport, environmental protection and finance, among others.

The two leaders agreed to step up people-to-people exchanges and cooperation in culture, education, health and journalism.

Hu thanked Pakistan for its support on issues concerning Taiwan and Tibet. He also appreciated Pakistani efforts in backing Beijing's hosting of the Olympic Games.

Zardari reaffirmed Pakistan's adherence to the one-China policy and support of China's peaceful reunification,

They also agreed on enhancing coordination and collaboration on international and regional issues, cooperating on addressing global challenges and ensuring peace, stability and development in the world.

As part of his four-day trip, Zardari is also scheduled to meet with other Chinese leaders, including top legislator Wu Bangguo, Premier Wen Jiabao and top adviser Jia Qinglin on Thursday.

Source: Xinhua news agency, Beijing, in English 1405 gmt 15 Oct 08

BBC Mon AS1 AsPol SA1 SAsPol nm

The package of agreements came out of a two-hour summit at Beijing's Great Hall of the People as China rolled out the red carpet for Pakistan President Asif Ali Zardari, who is on his first state visit to the country since taking office in September.

Zardari was welcomed by President Hu Jintao and received a 21-gun military salute at the Tian'anmen Square, festooned with the national flags of China and Pakistan.

During the meeting, Hu reviewed the close bilateral ties, particularly the days of the Bhutto family.

"Your entire family are old friends of the Chinese people," Hu told Zardari. "We will never forget the outstanding contribution Benazir Bhutto and Zulfikar Ali Bhutto had made to boosting ties with China."

Zardari's late wife, Benazir Bhutto, was assassinated in December 2007, and her late father, Zulfikar Ali Bhutto, had also served as Pakistan president.

While reviewing the 57-year-old diplomatic ties, Hu attributed its sound and smooth growth to the leadership of the two nations, among others.

He said China had always given priority to its relation with Pakistan, an important neighbor and strategic partner.

Zardari said he was grateful for "the warm welcome that you have shown us and the love and affection that I can feel from across the aisle."

"The only way I could do justice to the memory of my late wife and father-in-law was to make sure that I made my first presidential trip to China," the 53-year-old said.

"I am hoping to assist the Pakistan-China relationship and take it further along. It's a duty history has bestowed upon me."

On the economic front, Hu said the two countries were enjoying robust cooperation in economy and trade. They should continue to implement their free-trade pact, five-year trade program and other joint deals.

He also proposed the two nations create new areas and explore new ways of cooperation. "China and Pakistan should vigorously boost border trade so as to bring more substantive benefits to their citizens."

Zardari said the two should carry out big projects and work more closely in infrastructure, transport, environmental protection and finance, among others.

The two leaders agreed to step up people-to-people exchanges and cooperation in culture, education, health and journalism.

Hu thanked Pakistan for its support on issues concerning Taiwan and Tibet. He also appreciated Pakistani efforts in backing Beijing's hosting of the Olympic Games.

Zardari reaffirmed Pakistan's adherence to the one-China policy and support of China's peaceful reunification,

They also agreed on enhancing coordination and collaboration on international and regional issues, cooperating on addressing global challenges and ensuring peace, stability and development in the world.

As part of his four-day trip, Zardari is also scheduled to meet with other Chinese leaders, including top legislator Wu Bangguo, Premier Wen Jiabao and top advisor Jia Qinglin on Thursday.

*1 15 U.S.C. 78s(b)(1).

*2 17 CFR 240.19b-4.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

NYSE Arca, through its wholly-owned subsidiary NYSE Arca Equities, Inc. ("NYSE Arca Equities" or the "Corporation"), proposes to amend its rules governing NYSE Arca, LLC, which is the equities trading facility of NYSE Arca Equities. NYSE Arca is proposing to adopt new NYSE Arca Equities Rule 5.2(j)(7) to permit listing of Trust Certificates. The Exchange proposes to list 14 issues of Trust Certificates, as described herein, which are currently listed and traded on NYSE Alternext U.S. LLC (NYSE Alternext U.S.

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(formerly, the American Stock Exchange LLC ("Amex")). The text of the proposed rule change is available on the Exchange's Web site at http://www.nyse.com, at the Exchange's principal office, and the Public Reference Room of the Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

NYSE Arca is proposing to adopt new NYSE Arca Equities Rule 5.2(j)(7) to permit listing and trading of Trust Certificates. Pursuant to new NYSE Arca Equities Rule 5.2(j)(7), the Exchange proposes to list 14 issues of Trust Certificates, as described herein, which are currently listed and traded on NYSE Alternext U.S. (formerly, Amex).

Trust Certificates are certificates representing an interest in a special purpose trust ("Trust") created pursuant to a trust agreement. The Trust will only issue Trust Certificates, which may or may not provide for the repayment of the original principal investment amount. The sole purpose of the Trust will be to invest the proceeds from its initial public offering to provide for a return linked to the performance of specified assets and to engage only in activities incidental to these objectives. Trust Certificates pay an amount at maturity based upon the performance of specified assets, including an index or indexes or equity securities, index warrants, or a combination thereof, as set forth in proposed Rule 5.2(j)(7).

Proposed Rule 5.2(j)(7) provides that the Exchange will consider trading, whether by listing or pursuant to unlisted trading privileges, of Trust Certificates based on the following: (i) An underlying index or indexes of equity securities (an "Equity Index Reference Asset"); *3 (ii) instruments that are direct obligations of the issuing company, either exercisable throughout their life (i.e., American style) or exercisable only on their expiration date (i.e., European style), entitling the holder to a cash settlement in U.S. dollars to the extent that the foreign or domestic index has declined below (for put warrant) or increased above (for a call warrant) the pre-stated cash settlement value of the index ("Index Warrants"); *4 or (iii) a combination of two or more Equity Index Reference Assets or Index Warrants.

*3 The Exchange notes that the description of Equity Reference Asset is identical to the description of Equity Reference Asset in Rule 5.2(j)(6)(i) for Equity Index-Linked Securities.

*4 The definition of Index Warrants in proposed Rule 5.2(j)(7) is identical to the definition of "index warrants" in Rule 8.2(e).

Commentary .01 provides criteria for continued listing and provides that the Corporation will commence delisting or removal proceedings with respect to an issue of Trust Certificates (unless the Commission has approved the continued trading of such issue): (i) If the aggregate market value or the principal amount of the securities publicly held is less than $400,000; (ii) if the value of the index or composite value of the indexes is no longer calculated or widely disseminated on at least a 15-second basis with respect to indexes containing only securities listed on a national securities exchange, or on at least a 60-second basis with respect to indexes containing foreign country securities; or (iii) if such other event shall occur or condition exists which in the opinion of the Corporation makes further dealings on the Corporation inadvisable.

Commentary .02 provides that the term of the Trust shall be as stated in the Trust prospectus. However, a Trust may be terminated under such earlier circumstances as may be specified in the Trust prospectus. Commentary .03 sets forth requirements applicable to the trustee of a Trust including that the trustee must be a trust company or banking institution having substantial capital and surplus and the experience and facilities for handling corporate trust business. Commentary .04 provides that voting rights shall be as set forth in the applicable Trust prospectus.

Commentary .05 provides that the Exchange will implement written surveillance procedures for Trust Certificates. Trust Certificates will be subject to the Exchange's equity trading rules (Commentary .06). Prior to the commencement of listing and trading of a particular issue of Trust Certificates, the Corporation will evaluate the nature and complexity of the issue and, if appropriate, distribute a circular to ETP Holders providing guidance regarding compliance responsibilities (including suitability recommendations and account approval) when handling transactions in Trust Certificates (Commentary .07).

Trust Certificates may be exchangeable at the option of the holder into securities that participate in the return of the applicable underlying asset. In the event that the Trust Certificates is exchangeable at the option of the holder and contains an Index Warrant, then, the ETP Holder must ensure that the holders account is approved for options trading in accordance with NYSE Arca Rule 9.2 in order to exercise such rights (Commentary .08). Trust Certificates may pass-through periodic payments of interest and principle of the underlying securities (Commentary .09). Trust payments may be guaranteed pursuant to a financial guaranty insurance policy which may include swap agreements (Commentary .10). Commentary .11 provides that Trust Certificates may be subject to early termination or call features.

The Exchange also proposes to amend footnote 4 to the NYSE Arca Equities Schedule of Fees and Charges to include Trust Certificates as "Structured Products" for purposes of such schedule.

Issues of Trust Certificates To Be Listed on NYSE Arca

The Exchange proposes to list and trade 14 issues of Trust Certificates, as described below. The Trust Certificates are currently listed and traded on NYSE Alternext US LLC (NYSE Alternext US (formerly, the American Stock Exchange LLC ("Amex")). The proposed rule change is intended to provide rules to permit the listing and trading on the Exchange of the Trust Certificates described below in a timely manner at the same time that all equities trading is relocated from the Amex legacy trading systems and facilities located at 86 Trinity Place, New York, New York, to New York Stock Exchange trading facilities and systems located at 11 Wall Street, New York, New York. The Exchange does not currently list Trust Certificates and this proposed rule change is intended only to accommodate listing of the 14 issues of Trust Certificates currently listed on NYSE Alternext US on the Exchange. *5 Prior to listing on the Exchange, the

[Page Number 68481]

Trust Certificates would be required to satisfy the applicable delisting procedures of NYSE Alternext US and applicable statutory and regulatory requirements, including, without limitation, Section 12 of the Securities Exchange Act of 1934 ("Exchange Act"), *6 relating to listing the Trust Certificates on the Exchange. *7

*5 The Exchange will not list an additional issue of Trust Certificates unless the Exchange has previously filed with the Commission a proposed rule change pursuant to Rule 19b-4 under the Act to permit such listing.

*6 15 U.S.C. 78(l).

*7 The Exchange will seek the voluntary consent of the issuer of the Trust Certificates to be delisted from NYSE Alternext US and listed on the Exchange. The Exchange notes that its approval of the Trust Certificates' listing applications would be required prior to listing.

Descriptions of the Trust Certificates are included in their respective Registration Statements, as noted below. The Exchange represents that the Trust Certificates satisfy the requirements of proposed Rule 5.2(j)(7) and thereby qualify for listing on the Exchange.

Safety First Trust Series 2007-1 (symbol: AZP). According to the prospectus for the Principal-Protected Trust Certificates Linked to the U.S.-Europe-Japan Basket, the certificates are preferred securities of Safety First Trust Series 2007-1 and will mature on November 22, 2010. Investors will receive at maturity for each certificate held an amount in cash equal to $10 plus a supplemental distribution amount, which may be positive or zero. The supplemental distribution amount will be based on the percentage change of the value of the U.S.-Europe-Japan Basket comprised of the S&P 500(R) Index, the Dow Jones EUROSTOXX 50 Index(R) and the Nikkei 225 Stock Average(R), each initially equally weighted, during the term of the certificates. The supplemental distribution amount for each certificate will equal the product of (a) $10 and (b) the percentage change in the value of the U.S.-Europe-Japan Basket, provided that the supplemental distribution amount will not be less than zero. *8

*8 Terms relating to each issue of Trust Certificates described in this filing that are referred to, but not defined, herein are defined in the applicable Registration Statement.

The assets of the trust will consist of equity index participation securities and equity index warrants Citigroup Funding Inc. The equity index participation securities will mature on November 22, 2010. At maturity, each security will pay an amount equal to $10 plus a security return amount, which could be positive, zero or negative. The security return amount for each security will equal the product of (a) $10 and (b) the percentage change in the value of the U.S.-Europe-Japan Basket.

The equity index warrants will be automatically exercised on November 22, 2010. If the value of the U.S.-Europe-Japan Basket increases or does not change, the warrants will pay zero. If the value of the U.S.-Europe-Japan Basket decreases, the warrants will pay a positive amount equal to the product of (a) $10 and (b) the percentage decrease in the value of the U.S.-Europe- Japan Basket.

Investors will have the right to exchange, at any time ending on the date that is one business day prior to the valuation date, each $10 principal amount of certificates the investor then holds for one equity index participation security with a $10 face amount and one equity index warrant with a $10 notional amount. The securities and warrants will be separate transferable by the investor after exercise of the exchange right. In order to exercise the exchange right, the investor's brokerage account must be approved for options trading. An investor who exercises the exchange right and holds only the securities or warrants will lose the benefit of principal protection at maturity. *9

*9 See prospectus for Safety First Trust Series 2007-1, dated February 22, 2007 (Registration No. 333-135867/135867-09/135867-11).

Safety First Investments TIERS(R) Principal-Protected Minimum Return Trust Certificates, Series Nasdaq 2003-13 (symbol: NAS). According to the prospectus for the certificates, the certificates are securities of TIERS(R) Principal- Protected Minimum Return Asset Backed Certificates Trust, Series Nasdaq 2003- 13 and will mature on January 30, 2009. Investors will receive at maturity for each certificate held principal amount ( $10 per certificate) plus an interest distribution amount. The interest distribution amount will be based on the return of the Nasdaq-100 Index, subject to a monthly appreciation cap of 5.5%. However, the interest distribution amount will be at least $0.70 per certificate at maturity regardless of the performance of the Nasdaq-100 Index.

The assets of the trust primarily consist of a specified aggregate principal amount of asset backed securities issued by various issuers ("term assets"), the swap agreement described below, and rights under the insurance policy described below. The certificates do not provide for early redemption by the investor.

On the closing date, the trustee and Citigroup Global Market Holdings, Inc., the swap counterparty, entered into a swap agreement. The swap agreement is a contract which provides that the swap counterparty will pay the trustee an amount equal to the distribution scheduled to be made on the certificates on the final scheduled distribution date. The obligations of the swap counterparty under the swap agreement on a swap termination date or upon the occurrence of a term assets credit event will be insured pursuant to the terms of a financial guaranty insurance policy issued by Ambac Assurance Corporation.

The index return used to determine the interest distribution amount payable to the investor on the final scheduled distribution date is based on the return of the Nasdaq-100 Index subject to the monthly appreciation cap. The Index return will be calculated by compounding the periodic capped returns, as determined over the term of the certificates. The interest distribution amount payable to the investor on the final scheduled distribution date will equal the product of the principal amount of each certificate and the compounded index return over the term of the certificate (but will not be less than $0.70 per certificate). *10

*10 See prospectus for Safety First Investments TIERS(R) Principal- Protected Minimum Return Trust Certificates, Series Nasdaq 2003-13, dated July 28, 2003 (Registration No. 333-57357).

Safety First Trust Series 2008-1 (symbol: ATA). According to the prospectus for the Principal-Protected Trust Certificates, Linked to the U.S.-Europe- Japan Basket, the certificates are preferred securities of Safety First Trust Series 2008-1 and will mature on March 6, 2014. Investors will receive at maturity for each certificate an amount in cash equal to $10 plus a supplemental distribution amount, which may be positive or zero. The supplemental distribution amount will be based on the percentage change of the value of the U.S.-Europe-Japan Basket comprised of the SP 500(R) Index, the Dow Jones EUROSTOXX 50 Index(R) and the Nikkei 225 Stock Average(R), each initially equally weighted, during the term of the certificates. The supplemental distribution amount for each certificate will equal the product of (a) $10, and (b) the percentage change in the value of the U.S.-Europe- Japan Basket and (c) the participation rate, which is equal to 92.5% of the basket return, provided that the supplemental distribution amount will not be less than zero.

The assets of the trust consist of equity index participation securities and equity index warrants of Citigroup Funding Inc. The equity index participation securities will mature on March 6, 2014. At maturity, each security will pay an amount equal to $10 plus a security return amount,

[Page Number 68482]

which could be positive, zero or negative. If the value of the U.S.-Europe- Japan Basket on the third index business day before maturity (the "valuation date") is greater than the value on the date on which the certificates were priced for initial sale to the public (the "pricing date"), the security return amount for each security will equal the product of (a) $10, (b) the percentage increase in the value of U.S.-Europe-Japan Basket and (c) the participation rate, which is equal to 92.5% of the basket return. If the closing value of the U.S.-Europe-Japan Basket date (the "ending value") is less than or equal to the value on the pricing date (the "starting value"), the security return amount for each security will equal the product of (a) $10 and (b) the percentage decrease in the U.S.-Europe-Japan Basket. The equity index warrants will be automatically exercised on March 6, 2014. If the ending value of the U.S.-Europe-Japan Basket is greater than or equal to the starting value, the warrants will pay zero. If the ending value of the U.S.-Europe- Japan Basket is less than the starting value, the warrants will pay a positive amount equal to the product of (a) $10 and (b) the percentage decrease in the value of the U.S.-Europe-Japan Basket.

Investors will have the right to exchange, at any time beginning on the date on which the certificates are issued and ending on the date that is one business day prior to the valuation date, each $10 principal amount of certificates the investor then holds for one equity index participation security with a $10 face amount and one equity index warrant with a $10 notional amount. The securities and warrants will be separately transferable by the investor after the exercise of the investor's exchange right. In order to exercise such exchange right, the investor's brokerage account must be approved for options trading. An investor who exercises the exchange right and holds only the securities or warrants will lose the benefit of principal protection at maturity. *11

*11 See prospectus for Safety First Trust Series 2008-1, dated February 25, 2008 (Registration Nos. 333-135867/135867-05/135867-11).

Safety First Trust Series 2007-2 (symbol: AFO). According to the prospectus for the Principal-Protected Trust Certificates Linked to the Nikkei 225 Stock Average, the certificates are preferred securities of Safety First Trust Series 2007-2 and will mature on March 23, 2011. Investors will receive at maturity for each certificate an amount in cash equal to $10 plus a supplemental distribution amount, which may be positive or zero. The supplemental distribution amount will be based on the percentage change of the Nikkei 225 Stock Average(R) during the term of the certificates. The supplemental distribution amount for each certificate will equal the product of (a) $10 and (b) the percentage change in the Nikkei 225 Stock Average, provided that the supplemental distribution amount will not be less than zero.

The assets of the trust consist of equity index participation securities and equity index warrants of Citigroup Funding Inc. The equity index participation securities will mature on March 23, 2011. At maturity, each security will pay an amount equal to $10 plus a security return amount, which could be positive, zero or negative. The security return amount for each security will equal the product of (a) $10 and (b) the percentage change in the value of the Nikkei 225 Stock Average. The equity index warrants will be automatically exercised on March 23, 2011. If the Nikkei 225 Stock Average increases or does not change, the warrants will pay zero. If the Nikkei 225 Stock Average decreases, the warrants will pay a positive amount equal to the product of (a) $10 and (b) the percentage decrease in the value of the Nikkei 225 Stock Average.

Investors have the right to exchange, at any time ending on the date that is one business day prior to the valuation date, each $10 principal amount of certificates the investor then holds for one equity index participation security with a $10 face amount and one equity index warrant with a $10 notional amount. The securities and warrants will be separately transferable by the investor after the exercise of the investor's exchange right. In order to exercise such exchange right, the investor's brokerage account must be approved for options trading. An investor who exercised the exchange right and holds only the securities or warrants will lose the benefit of principal protection at maturity. *12

*12 See prospectus for Safety First Trust Series 2007-2, dated April 24, 2007 (Registration Nos. 333-135867/135867-08/135867-11).

Safety First Investments TIERS(R) Principal-Protected Minimum Return Trust Certificates, Series S&P 2003-33 (symbol: SYP). According to the prospectus for the certificates, the certificates are securities of TIERS(R) Principal- Protected Minimum Return Asset Backed Certificates Trust, Series S&P 2003-33 and will mature on January 7, 2009. Investors will receive at maturity for each certificate held the principal amount ( $10 per certificate) plus an interest distribution amount. The interest distribution amount will be based on the return of the S&P 500 Index, subject to a monthly appreciation cap of 4.5%. However, the interest distribution amount will be at least $0.90 per certificate at maturity regardless of the performance of the S&P 500 Index.

The assets of the trust primarily consist of a specified aggregate principal amount of asset backed securities of various issuers ("term assets"), the swap agreement described below, and rights under the insurance policy described below. The certificates do not provide for early redemption by the investor.

On the closing date, the trustee and Citigroup Global Market Holdings, Inc., the swap counterparty, entered into a swap agreement. The swap agreement is a contract which provides that the swap counterparty will pay the trustee an amount equal to the distribution scheduled to be made on the certificates on the final scheduled distribution date. The obligations of the swap counterparty under the swap agreement on a swap termination date or upon the occurrence of a term assets credit event will be insured pursuant to the terms of a financial guaranty policy issued by Ambac Assurance Corporation.

The index return will be calculated by compounding the periodic capped returns, as determined over the term of the certificates. The index return used to determine the interest distribution amount payable to the investor on the final scheduled distribution date will equal the product of the principal amount of each certificate and the compounded index return over the term of the certificate (but will not be less than $0.90 per certificate). *13

*13 See prospectus for Safety First Investments TIERS(R) Principal- Protected Minimum Return Trust Certificates, Series S&P 2003-33, dated July 28, 2003 (Registration No. 333-89080).

Safety First Investments TIERS(R) Principal-Protected Minimum Return Trust Certificates, Series S&P 2003-23 (symbol: SPO). According to the prospectus for the certificates, the certificates are securities of TIERS(R) Principal- Protected Minimum Return Asset Backed Certificates Trust Series S&P 2003-23 and will mature on January 6, 2009. Investors will receive at maturity for each certificate held a principal amount ( $10 per certificate) plus an interest distribution amount (which will equal at least $0.90 per certificate), regardless of the performance of the S&P 500(R) Index. The interest distribution amount will be based on the return of the S&P 500(R) Index, subject to a monthly appreciation

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cap of 4.5%. However, the interest distribution amount will be at least $0.90 per certificate at maturity.

The assets of the trust primarily consist of a specified aggregate principal amount of asset backed securities of various issuers, which, as of the closing date, will be rated in the highest rating category of at least one nationally recognized rating agency, and rights under a swap agreement and a financial guaranty insurance policy issued by Ambac Assurance Corporation. The certificates do not provide for early redemption by the investor.

On the closing date, the trustee and Citigroup Global Market Holdings Inc., the swap counterparty, entered into a swap agreement. The swap agreement is a contract which provides that the swap counterparty will pay the trustee an amount equal to the distribution scheduled to be made on the certificates on the final scheduled distribution date. The obligations of the swap counterparty under the swap agreement on a swap termination date or upon the occurrence of a term assets credit event will be insured under the financial guaranty policy.

The index return used to determine the interest distribution amount, if any, payable to the investor on the final scheduled distribution date is based on the return of the S&P 500(R) Index subject to a monthly appreciation cap. The interest distribution amount is capped and, therefore, even if the value of the S&P 500(R) Index has increased at one or more times during the term of the certificates or if the value of the S&P 500(R) Index as of the final scheduled distribution date is greater than the value of the S&P 500(R) Index on the date the certificates are priced, investors will not receive more than the capped amount. *14

*14 See prospectus for Safety First Investments TIERS(R) Principal- Protected Minimum Return Trust Certificates, Series S&P 2003-23, dated July 28, 2003 (Registration No. 333-57357-03).

Safety First Investments TIERS(R) Principal-Protected Minimum Return Trust Certificates, Series Nasdaq 2003-12 (symbol: SFH). According to the prospectus for the certificates, the certificates are securities of TIERS(R) Principal- Protected Minimum Return Asset Backed Certificates, Trust Series Nasdaq 2003- 12 and will mature on January 5, 2009. Investors will receive at maturity for each certificate held a principal amount ( $10 per certificate) plus an interest distribution amount (which will equal at least $0.70 per certificate), regardless of the performance of the Nasdaq-100 Index. The interest distribution amount will be based on the return of the Nasdaq-100 Index, subject to a monthly appreciation cap of 5.5%. However, the interest distribution amount will be at least $0.70 per certificate at maturity.

The assets of the trust primarily consist of a specified aggregate principal amount of asset backed securities of various issuers, which, as of the closing date, will be rated in the highest rating category of at least one nationally recognized rating agency, and rights under a swap agreement and a financial guaranty insurance policy issued by Ambac Assurance Corporation. The certificates do not provide for early redemption by the investor.

On the closing date, the trustee and Citigroup Global Markets Holdings Inc., the swap counterparty, entered into a swap agreement. The swap agreement is a contract which provides that the swap counterparty will pay the trustee an amount equal to the distribution scheduled to be made on the certificates on the final scheduled distribution date. The obligations of the swap counterparty under the swap agreement on a swap termination date or upon the occurrence of a term assets credit event will be insured under the financial guaranty insurance policy.

The index return used to determine the interest distribution amount, if any, payable to the investor on the final scheduled distribution date is based on the return of the Nasdaq-100 Index subject to a monthly appreciation cap. The interest distribution amount is capped and, therefore, even if the value of the Nasdaq-100 Index has increased at one or more times during the term of the certificates or if the value of the Nasdaq-100 Index as of the final scheduled distribution date is greater than the value of the Nasdaq-100 Index on the date the certificates are priced, investors will not receive more than the capped amount. *15

*15 See prospectus for Safety First Investments TIERS(R) Principal- Protected Minimum Return Trust Certificates, Series Nasdaq 2003-12, dated May 19, 2003 (Registration No. 333-57357).

Safety First Investments TIERS(R) Principal-Protected Minimum Return Trust Certificates, Series Russell 2004-1 (symbol: RUD). According to the prospectus for the certificates, the certificates are securities of the TIERS(R) Principal-Protected Minimum Return Asset Backed Certificates Trust Series Russell 2004-1, and will mature on April 29, 2009. Investors will receive at maturity for each certificate held a principal amount ( $10 per certificate) plus an interest distribution amount (which will equal at least $0.70 per certificate) regardless of the performance of the Russell 2000 Index. The interest distribution amount will be based on the return of the Russell 2000 Index subject to a monthly appreciation cap of 3.5%. However, the interest distribution amount will be at least $0.70 per certificate at maturity regardless of the performance of the Russell 2000 Index.

The assets of the trust primarily consist of a specified aggregate principal amount of asset backed securities issued by various issuers ("term assets"), the swap agreement described below, and rights under the insurance policy described below. The certificates do not provide for early redemption by the investor.

On the closing date, the trustee and Citigroup Global Market Holdings, Inc., the swap counterparty, entered into a swap agreement. The swap agreement is a contract which provides that the swap counterparty will pay the trustee an amount equal to the distribution scheduled to be made on the certificates on the final scheduled distribution date. The obligations of the swap counterparty under the swap agreement on a swap termination date or upon the occurrence of a term assets credit event will be insured pursuant to the terms of a financial guaranty insurance policy issued by Ambac Assurance Corporation.

The index return used to determine the interest distribution amount, if any, payable to the investor on the final scheduled distribution date is based on the return of the Russell 2000 Index subject to a monthly appreciation cap. The interest distribution amount is capped and, therefore, even if the value of the Russell 2000 Index has increased at one or more times during the term of the certificates or if the value of the Russell 2000 Index as of the final scheduled distribution date is greater than the value of the Russell 2000 Index on the date the certificates are priced, investors will not receive more than the capped amount. *16

*16 See prospectus for Safety First Investments TIERS(R) Principal- Protected Minimum Return Trust Certificates, Series Russell 2004-1, dated July 28, 2003 (Registration 333-89080).

Safety First Trust Series 2008-2 (symbol: AMM). According to the prospectus for the Principal-Protected Trust Certificates Linked to the S&P 500(R) Index, the certificates are preferred securities of Safety First Trust Series 2008-2 and will mature on July 11, 2013. Investors will receive at maturity for each certificate held an amount in cash equal to $10 plus a supplemental distribution amount, which may be positive or zero, but in no circumstance

[Page Number 68484]

more than $7 dollars. The supplemental distribution amount will be based on the percentage change of the value of the S&P 500(R) Index, during the term of the certificates. The supplemental distribution amount for each certificate will equal the product of (a) $10 and (b) the percentage increase in the value of the S&P 500(R) Index, provided that the supplemental distribution amount will be limited to 70%.

The assets of the trust will consist of Citigroup Funding Inc.'s equity index participation securities and equity index warrants. The equity index participation securities will mature on July 11, 2013. At maturity, each security will pay an amount equal to $10 plus a security return amount, which could be positive, zero or negative. The security return amount for each security will equal the product of (a) $10 and (b) the percentage decrease in the value of the S&P 500(R) Index.

The equity index warrants will be automatically exercised on July 11, 2013. If the value of the S&P 500(R) Index increases or does not change, the warrants will pay zero. If the value of the S&P 500(R) Index decreases, the warrants will pay a positive amount equal to the product of (a) $10 and (b) the percentage decrease in the value of the S&P 500(R) Index.

Investors will have the right to exchange, at any time ending on the date that is one business day prior to the valuation date, each $10 principal amount of certificates the investor then holds for one equity index participation security with a $10 face amount and one equity index warrant with a $10 notional amount. The securities and warrants will be separately transferable by the investor after exercise of the exchange right. In order to exercise the exchange right, the investor's account must be approved for options trading. *17

*17 See prospectus for Safety First Trust Series 2008-2, dated June 24, 2008 (Registration Nos. 333-135867/135867-04/135867-11).

Safety First Trust Series 2008-3 (symbol: AHB). According to the prospectus for the Principal-Protected Trust Certificates Linked to the Global Basket, the certificates are preferred securities of Safety First Trust Series 2008-3 and will mature on September 12, 2013. Investors will receive at maturity for each certificate held an amount in cash equal to $10 plus a supplemental distribution amount, which may be positive or zero. The supplemental distribution amount will be based on the percentage change of the value of the Global Index Basket comprised of the S&P 500(R) Index, the Dow Jones EUROSTOXX 50(R) Index and the S&P BRIC 40(R) Index, each initially equally weighted one- third each, during the term of the certificates. The supplemental distribution amount for each certificate will equal the product of (a) $10 and (b) the percentage change in the value of the Global Index Basket and (c) the participation rate which is 85%, provided that the supplemental distribution amount will not be less than zero.

The assets of the trust will consist of equity index participation securities and equity index warrants of Citigroup Funding Inc. The equity index participation securities will mature on September 12, 2013. At maturity, each security will pay an amount equal to $10 plus a security return amount, which could be positive, zero or negative. If the value of the Global Index Basket on the valuation date is greater than the value on the pricing date, the security return amount for each security will equal the product of (a) $10, (b) the percentage increase in the Global Index Basket and (c) the participation rate, which is 85%. If the value of the Global Index Basket on the valuation date is less than or equal to the value on the pricing date, the security return amount for each security will equal the product of (a) $10 and (b) the percentage decrease in the Global Index Basket.

The equity index warrants will be automatically exercised on September 12, 2013. If the value of the Global Index Basket increases or does not change, the warrants will pay zero. If the value of the Global Index Basket decreases, the warrants will pay a positive amount equal to the product of (a) $10 and (b) the percentage decrease in the value of the Global Index Basket.

Investors will have the right to exchange, at any time ending on the date that is one business day prior to the valuation date, each $10 principal amount of certificates the investor then holds for one equity index participation security with a $10 face amount and one equity index warrant with a $10 notional amount. The securities and warrants will be separately transferable by the investor after exercise of the exchange right. In order to exercise the exchange right, the investor's account must be approved for options trading. *18

*18 See prospectus for Safety First Trust Series 2008-3, dated August 25, 2008 (Registration Nos. 333-135867/135867-03/135867-11)

Safety First Trust Series 2008-4 (symbol: AHY). According to the prospectus for the Principal-Protected Trust Certificates Linked to the S&P 500(R) Index, the certificates are preferred securities of Safety First Trust Series 2008-4 and will mature on October 10, 2013. Investors will receive at maturity for each certificate held an amount in cash equal to $10 plus a supplemental distribution amount, which may be positive or zero. The supplemental distribution amount will be based on the percentage change of the value of the S&P 500(R) Index during the term of the certificates. The supplemental distribution amount for each certificate will equal the product of (a) $10, (b) the percentage change in the value of the S&P 500(R) Index and (c) the participation rate, which is 90%, provided that the supplemental distribution amount will not be less than zero.

The assets of the trust will consist of equity index participation securities and equity index warrants of Citigroup Funding Inc. The equity index participation securities will mature on October 10, 2013. At maturity, each security will pay an amount equal to $10 plus a security return amount, which could be positive, zero or negative. If the value of the S&P 500(R) Index on the valuation date is greater than its value on the pricing date, the security return amount for each security will equal the product of (a) $10, (b) the percentage increase in the S&P 500(R) Index and (c) the participation rate, which equals 90%. If the value of the S&P 500(R) Index on the valuation date is less than or equal to its value on the pricing date, the security return amount for each security will equal the product of (a) $10 and (b) the percentage decrease in the S&P 500(R) Index. If the value of the S&P 500(R) Index on the valuation date is less than its value on the pricing date, investors will participate fully in the depreciation of the S&P 500(R) Index.

The equity index warrants will be automatically exercised on October 10, 2013. If the value of the S&P 500(R) Index increases or does not change, the warrants will pay zero. If the value of the S&P 500(R) Index decreases, the warrants will pay a positive amount equal to the product of (a) $10 and (b) the percentage decrease in the value of the S&P 500(R) Index.

Investors will have the right to exchange, at any time ending on the date that is one business day prior to the valuation date, each $10 principal amount of certificates the investor then holds for one equity index participation security with a $10 face amount and one equity index warrant with a $10 notional amount. The securities and warrants will be separately transferable by the investor after exercise of the exchange right. In order to exercise the

[Page Number 68485]

exchange right, the investor's account must be approved for options trading. *19

*19 See prospectus for Safety First Trust Series 2008-4, dated September 24, 2008 (Registration Nos. 333-135867/135867-02/135867-11).

Safety First Trust Series 2007-3 (symbol: AKE). According to the prospectus for the Principal-Protected Trust Certificates Linked to the Global Index Basket, the certificates are preferred securities of Safety First Trust Series 2007-3 and will mature on July 11, 2012. Investors will receive at maturity for each certificate held an amount in cash equal to $10 plus a supplemental distribution amount, which may be positive or zero. The supplemental distribution amount will be based on the percentage change of the value of the Global Index Basket comprised of the Dow Jones Industrial Average, the Dow Jones EUROSTOXX 50 Index(R), the Nikkei 225 Stock Average(R) and the S&P BRIC(R) Index during the term of the certificates. The Dow Jones Industrial Average and the Dow Jones EUROSTOXX 50 Index(R), each initially will comprise 30% of the value of the Global Index Basket, the Nikkei 225 Stock Average(R) and the S&P BRIC(R) Index will compose 20% of the value of the Global Index Basket. The supplemental distribution amount for each certificate will equal the product of (a) $10 and (b) the weighted percentage increase in the value of the Global Index Basket.

The assets of the trust will consist of equity index participation securities and equity index warrants of Citigroup Funding Inc. The equity index participation securities will mature on July 11, 2012. At maturity, each security will pay an amount equal to $10 plus a security return amount, which could be positive, zero or negative. The security return amount for each security will equal the product of (a) $10 and (b) the percentage change in the value of the Global Basket Index.

The equity index warrants will be automatically exercised on July 11, 2012. If the value of the Global Basket Index increases or does not change, the warrants will pay zero. If the value of the Global Basket Index decreases, the warrants will pay a positive amount equal to the product of (a) $10 and (b) the weighted average percentage decrease in the value of the Global Basket Index.

Investors will have the right to exchange, at any time ending on the date that is one business day prior to the valuation date, each $10 principal amount of certificates the investor then holds for one equity index participation security with a $10 face amount and one equity index warrant with a $10 notional amount. The securities and warrants will be separately transferable by the investor after exercise of the exchange right. In order to exercise the exchange right, the investor's account must be approved for options trading. *20

*20 See prospectus for Safety First Trust Series 2007-3, dated June 28, 2007 (Registration Nos. 333-135867/135867-07/135867-11).

Safety First Trust Series 2007-4 (symbol: AKN). According to the prospectus for the Principal-Protected Trust Certificates Linked to the U.S.-Europe-Japan Basket, the certificates are preferred securities of Safety First Trust Series 2007-4 and will mature on May 23, 2013. Investors will receive at maturity for each certificate held an amount in cash equal to $10 plus a supplemental distribution amount, which may be positive or zero. The supplemental distribution amount will be based on the percentage change of the value of the U.S.-Europe-Japan Basket comprised of the S&P 500(R) Index, the Dow Jones EUROSTOXX 50 Index(R) and the Nikkei 225 Stock Average(R), each initially equally weighted one-third each, during the term of the certificates. The supplemental distribution amount for each certificate will equal the product of (a) $10 and (b) the weighted percentage increase in the value of the U.S.- Europe-Japan Basket provided the supplemental distribution amount is not less than zero.

The assets of the trust will consist of equity index participation securities and equity index warrants of Citigroup Funding Inc. The equity index participation securities will mature on May 23, 2013. At maturity, each security will pay an amount equal to $10 plus a security return amount, which could be positive, zero or negative. The security return amount for each security will equal the product of (a) $10 and (b) the percentage change in the value of the U.S.-Europe-Japan Basket Basket.

The equity index warrants will be automatically exercised on May 23, 2013. If the value of the U.S.-Europe-Japan Basket increases or does not change, the warrants will pay zero. If the value of the U.S.-Europe-Japan Basket decreases, the warrants will pay a positive amount equal to the product of (a) $10 and (b) the weighted average percentage decrease in the value of the U.S.- Europe-Japan Basket.

Investors will have the right to exchange, at any time ending on the date that is one business day prior to the valuation date, each $10 principal amount of certificates the investor then holds for one equity index participation security with a $10 face amount and one equity index warrant with a $10 notional amount. The securities and warrants will be separately transferable by the investor after exercise of the exchange right. In order to exercise the exchange right, the investor's account must be approved for options trading. *21

*21 See prospectus for Safety First Trust Series 2007-4, dated November 21, 2007 (Registration Nos. 333-135867/135867-06/135867-11).

Safety First Trust Series 2006-1 (symbol: AGB). According to the prospectus for the Principal-Protected Trust Certificates Linked to the Dow Jones Industrial Average and the Nikkei 225 Stock Average(R), the certificates are preferred securities of Safety First Trust Series 2006-1 and will mature on May 26, 2010. Investors will receive at maturity for each certificate held an amount in cash equal to $10 plus a supplemental distribution amount, which may be positive or zero. The supplemental distribution amount will be based on the percentage change of the value of a underlying basket comprised of the Dow Jones Industrial Average and the Nikkei 225 Stock Average(R), each initially equally weighted during the term of the certificates. The supplemental distribution amount for each certificate will equal the product of (a) $10 and (b) the percentage increase in the value of the underlying basket provided the supplemental distribution amount is not less than zero.

The assets of the trust will consist of equity index participation securities and equity index warrants of Citigroup Funding Inc. The equity index participation securities will mature on May 26, 2010. At maturity, each security will pay an amount equal to $10 plus a security return amount, which could be positive, zero or negative. The security return amount for each security will equal the product of (a) $10 and (b) the percentage change in the value of the underlying basket.

The equity index warrants will be automatically exercised on May 26, 2010. If the value of the underlying basket increases or does not change, the warrants will pay zero. If the value of the underlying basket decreases, the warrants will pay a positive amount equal to the product of (a) $10 and (b) the weighted average percentage decrease in the value of the underlying basket.

Investors will have the right to exchange, at any time ending on the date that is one business day prior to the valuation date, each $10 principal amount of certificates the investor then holds for one equity index participation

[Page Number 68486]

security with a $10 face amount and one equity index warrant with a $10 notional amount. The securities and warrants will be separately transferable by the investor after exercise of the exchange right. In order to exercise the exchange right, the investor's account must be approved for options trading. *22

*22 See prospectus for Safety First Trust Series 2006-1, dated November 24, 2006 (Registration No. 333-135867/135867-10/135867-11).

Exchange Rules Applicable to Trust Certificates

The Trust Certificates will be subject to all Exchange rules governing the trading of equity securities. The Exchange's equity margin rules will apply to transactions in Trust Certificates. Trust Certificates will trade during trading hours set forth in Rule 7.34(a). *23

*23 Pursuant to NYSE Arca Rule 7.34(a), the NYSE Arca Marketplace will have three trading sessions each day the Corporation is open for business unless otherwise determined by the Corporation:

Opening Session--begins at 1 a.m. (Pacific Time) and concludes at the commencement of the Core Trading Session. The Opening Auction and the Market Order Auction shall occur during the Opening Session. Core Trading Session-- begins for each security at 6:30 a.m. (Pacific Time) or at the conclusion of the Market Order Auction, whichever comes later, and concludes at 1 p.m. (Pacific Time).

Late Trading Session--begins following the conclusion of the Core Trading Session and concludes at 5 p.m. (Pacific Time).

The Exchange notes that none of the indexes related to the 14 issues of Trust Certificates described above is maintained by a broker-dealer. The Exchange notes further that, with respect to such indexes, any advisory committee, supervisory board or similar entity that advises an index licensor or administrator or that makes decisions regarding the index composition, methodology and related matters must implement and maintain, or be subject to, procedures designed to prevent the use and dissemination of material, non- public information regarding the applicable index.

Trading Halts

With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in Trust Certificates. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in Trust Certificates inadvisable. These may include: (1) The extent to which trading is not occurring in the underlying securities; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. *24

*24 See NYSE Arca Equities Rule 7.12, Commentary .04.

Information Dissemination

The value of the applicable index relating to an issue of Trust Certificates, or, for Trust Certificates based on multiple indexes, the composite value of the indexes, will be calculated and disseminated on at least a 15-second basis with respect to indexes containing only securities listed on a national securities exchange, or on at least a 60-second basis with respect to indexes containing foreign country securities. *25 If the index or composite value applicable to an issue of Trust Certificates is not being disseminated as required, the Exchange may halt trading during the day on which the interruption first occurs. If such interruption persists past the trading day in which it occurred, the Exchange will halt trading no later than the beginning of the trading day following the interruption.

*25 For issues of Trust Certificates based on multiple indexes, the Exchange will cause to be calculated and disseminated a composite value for such indexes.

Quotation and last-sale information will be disseminated by the Exchange via the Consolidated Tape. In addition, the Exchange will disseminate the composite value of the indexes, as applicable, via the Consolidated Tape. The values of the indexes noted above relating to the Trust Certificates to be listed on the Exchange are widely disseminated by major market data vendors and financial publications.

Surveillance

The Exchange intends to utilize its existing surveillance procedures applicable to derivative products, which will include Trust Certificates, to monitor trading in the securities. The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the securities in all trading sessions and to deter and detect violations of Exchange rules.

The Exchange's current trading surveillance focuses on detecting when securities trade outside their normal patterns. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.

The Exchange may obtain information via ISG from other exchanges who are members of the ISG. *26

*26 For a list of current members of the ISG, see http://www.isgportal.org. The Exchange notes that some of the index components on which the Trust Certificates are valued may trade on markets that are not ISG members. The Exchange notes further that, as of October 30, 2008, with the exceptions noted below, for all issues of Trust Certificates described above, no more than 20% of the dollar weight in the aggregate of the index or composite indexes, as applicable, consists of component securities having their primary trading market outside the United States on foreign trading markets that are not members of ISG or parties to comprehensive surveillance sharing agreements with the Exchange. As of October 30, 2008, for AZP, ATA, AHB and AKN, 20.56% of the applicable composite index weights consisted of non-U.S. securities having a primary trading market that is not an ISG member or is not a party to a comprehensive surveillance sharing agreement with the Exchange.

In addition, the Exchange also has a generally policy prohibiting the distribution of material, non-public information by its employees.

Information Bulletin

Prior to the commencement of trading, the Exchange will inform its ETP Holders in an Information Bulletin of the special characteristics and risks associated with trading an issue of Trust Certificates and suitability recommendation requirements.

Specifically, the Information Bulletin will discuss the following: (1) The procedures for purchases and redemptions of Trust Certificates; (2) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading an issue of Trust Certificates; and (3) trading information.

In addition, the Information Bulletin will reference that an issue of Trust Certificates is subject to various fees and expenses described in the applicable prospectus.

2. Statutory Basis

The proposed rule change is consistent with Section 6(b) *27 of the Act in general and furthers the objectives of Section 6(b)(5) *28 in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transaction in securities, and, in general to protect investors and the public interest. The Exchange believes that the proposal will facilitate the listing and trading of additional types of commodity and currency-based investments that will enhance competition among market participants, to the benefit of investors and the marketplace.

*27 15 U.S.C. 78f(b).

*28 15 U.S.C. 78f(b)(5).

In addition, the proposed rule change is consistent with Rule 12f-5 *29 under

[Page Number 68487]

the Exchange Act because it deems the Shares to be equity securities, thus rendering the Shares subject to the Exchange's rules governing the trading of equity securities.

*29 17 CFR 240.12f-5.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others

No written comments were solicited or received with respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will:

A. By order approve the proposed rule change; or

B. Institute proceedings to determine whether the proposed rule change should be disapproved.

The Exchange has requested accelerated approval of this proposed rule change prior to the 30th day after the date of publication of the notice of the filing thereof. The Commission has determined that a 15-day comment period is appropriate in this case.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:

Electronic Comments

. Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or

. Send an e-mail to rule-comments@sec.gov. Please include File Number SR- NYSEArca-2008-123 on the subject line.

Paper Comments

. Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2008-123. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEArca- 2008-123 and should be submitted on or before December 3, 2008.

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. *30

*30 17 CFR 200.30-3(a)(12).

Florence E. Harmon,

Acting Secretary.

[FR Doc. E8-27251 Filed 11-17-08; 8:45 am]

BILLING CODE 8011-01-P

Vol. 73, No. 223

[Release No. 34-58920; File No. SR-NYSEArca-2008-123]

Notices

    <<
    Operational and Financial Highlights Q3-2008 vs. Q3-2007:

    Financial Highlights:
        -  8.9% increase in revenues
        -  6.7% increase in gross profits
        -  6.2% increase in EBITDA(1)
        -  6.3% increase in distributable cash flow(1)

    Distributable Cash Flow Payout Ratio:
        -  77.0% for the three months ended September 30, 2008
        -  79.1% for the nine months ended September 30, 2008

    Operational Highlights:
        -  13.3% increase in number of active ATM's
        -  5.7% increase in ATM transactions
        -  11.8% increase in number of active debit terminals
        -  23.8 % increase in debit terminal transactions processed
        -  20.9% increase in Prepaid Cash Card activations
        -  32.1% increase in Prepaid Cash Card transactions
    >>

Management's Commentary

"We continue to be pleased with our strong stable cash flows generated by our mature ATM business and are excited with the growth prospects and the continued strong performance of our Prepaid Debit Card and Prepaid MasterCard and Debit terminal businesses," said Jeffrey Smith, DirectCash's President and Chief executive Officer.

The third quarter of 2008 demonstrated the continuation of DirectCash Income Fund's ability to generate consistent financial performance for its unitholders. The increase in the number of active ATM's and transactions in the third quarter of 2008 compared to 2007 is a direct result of the impact of the ATM acquisition completed at the end of the second quarter of 2008. We also continue to generate organic growth in the debit terminal and Prepaid Cash Card businesses. This continued growth in activations and transactional activity has translated into overall higher gross profits, EBITDA and distributable cash flow on a quarter over quarter comparison.

On a year over year basis for the nine months ended September 30, 2008, we have also realized improvements in both EBITDA (up 8.1%) and Distributable Cash Flow (up 7.2%). The primary driver for this improvement over the prior year period is the higher gross profit being realized from the Prepaid MasterCard business.

Inventory obsolescence write downs and lower product sales activities have impacted the ATM business in the third quarter and for the full year. The ATM business, which is the backbone of our Fund, continues to generate consistent performance.

In the ATM business, DirectCash will continue to focus on adding sites both organically and via acquisitions, and to maximize site profitability through cost and quality control. DirectCash has also established a new geographic market for its ATM business in Mexico. Mexico's ATM market is in an early development stage with good growth prospects. It is our expectation that by the end of the first quarter of 2009 we will be breakeven or incurring a marginal operating deficit on the ATM operations in Mexico. At present approximately 32 ATM's are operational. These ATMs are located at Mexican resort facilities in Cabo San Lucas, Mazatlan, Cancun and Playa del Carmen.

The focus for the balance of 2008 is to continue to pursue growth in a sustainable manner via organic means and through additional accretive acquisitions as opportunities arise. We will target cash distributions paid to Unit holders of between 75% and 80% of distributable cash flow. Stable, contracted revenue streams, a dominant market position, and continued growth will continue to provide consistent cash distributions to our Unitholders.

For purposes of comparison, we have provided the following operational data:

    <<
    -------------------------------------------------------------------------
                              Three Months Ended        Nine Months Ended
                                 September 30              September 30
    -------------------------------------------------------------------------
                              2008         2007         2008         2007
    -------------------------------------------------------------------------
    Operational Highlights (unaudited)  (unaudited)  (unaudited)  (unaudited)

    Number of machines
     - end of period

      ATM terminals             6,346        5,569        6,346        5,569
      ATM terminals -
       active in past
       30 days(2)               6,081        5,369        6,081        5,369
      Debit terminals           3,235        2,846        3,235        2,846
      Debit terminals -
       active in past
       30 days(2)               3,091        2,765        3,091        2,765

    Number of transactions
     for the period

      ATM transactions      8,103,506    7,662,842   22,311,042   21,889,479
      Debit terminal
       transactions         2,575,303    2,080,212    7,064,559    5,311,000
      Prepaid cash card
       activations            648,058      536,036    1,947,021    1,621,426
      Prepaid cash card
       transactions         1,551,281    1,173,983    4,894,453    3,651,306
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (2) In addition to total ATM and Debit terminal counts, DirectCash has
        included statistics for sites that only record a transaction in the
        past calendar month in order to provide comparison to other industry
        players in the financial transaction processing business, who record
        sites as active in this manner. This has the impact of eliminating
        some seasonal sites or sites temporarily dormant for a number of
        reasons from the count, resulting in a net decrease in ATM and Debit
        terminal totals of 265 (2007 - 200) and 144 (2007 - 81) respectively.
    >>

ATM transactions have increased on an overall basis reflecting the impact of the recent acquisitions. On a per unit basis transactions have declined which is reflective of the Canadian market place where more ATM's are being added but the total number of transactions is not increasing.

The year over year increase in debit terminal count of 389 is entirely a result of organic growth. The respective 24% and 33% growth in transactions for the three and nine months ended September 30, 2008 over the prior year period is reflective of the higher numbers of devices deployed as well as higher per average transactions in devices acquired in March of 2007. DirectCash continues to pursue organic growth in this area and to grow market share by providing retailers with unique products and services.

The respective 21% and 20% growth in prepaid cash card activations for the three and nine months ended September 30, 2008 is a result of the establishment of new customer relationships and growth within existing customer relationships. Activation and transaction figures include both prepaid debit and prepaid credit card transactions. The prepaid MasterCard program continues to find traction and displace some debit card activations. The respective 32% and 34% increase in prepaid cash card transactions for the three and nine months ended September 30, 2008 is due to the increase in growth with existing customers as well as transaction growth per card as prepaid products continue to gain consumer acceptance and confidence.

DirectCash continues to pursue avenues of growth in the prepaid cash card business as this segment of the business provides numerous opportunities.

Selected Financial Information

The following table provides selected comparative financial information for the three and nine months ended September 30, 2008 and 2007.

    <<
    Selected financial information
    (thousands of canadian dollars, except per unit amounts)
    -------------------------------------------------------------------------
                              Three Months Ended        Nine Months Ended
                                 September 30             September  30
    -------------------------------------------------------------------------
                              2008         2007         2008         2007
    -------------------------------------------------------------------------
                           (unaudited)  (unaudited)  (unaudited)  (unaudited)

    Financial Highlights
    Revenue
      Recurring services
       revenue            $    16,540  $    14,204  $    46,858  $    40,983
      Products revenue          6,075        6,381       19,259       19,062
      Interest income              95          429          263          557
    -------------------------------------------------------------------------
    Total revenue         $    22,710  $    20,848  $    66,546  $    60,602
    -------------------------------------------------------------------------

    Gross Profit -
     Recurring services
     and interest         $     9,588  $     8,707       27,304  $    25,376
      Gross Profit
       Margin %                 57.6%        60.2%        57.7%        61.1%
    Gross Profit -
     products             $       159          430        1,227  $     1,749
      Gross Profit
       Margin %                  2.6%         6.7%         6.4%         9.2%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total Gross Profit    $     9,747  $     9,137  $    28,531  $    27,126
      Total Gross Profit
       Margin                   42.9%        43.8%        42.9%        44.8%

    Selling, general and
     administration             2,940        2,663        8,640        8,454
    Long-term incentive
     plan                         415          457          930        1,129
    Interest                      549          580        1,537        1,595
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EBITDA                $     6,392  $     6,018  $    18,961  $    17,543
      EBITDA Margin             28.1%        28.9%        28.5%        28.9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net Earnings          $       116  $       246  $     1,236  $       683
    Net Earnings per unit $      0.01  $      0.02  $      0.10  $      0.05
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total assets at
     September 30         $   124,649  $   127,531  $   124,649  $   127,531
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total debt at
     September 30         $    40,470  $    32,090  $    40,470  $    32,090
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total debt net of
     cash at September 30 $    22,243  $    20,498  $    22,243  $    20,498
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Results of Operations for the three and nine months ended September 30,
    2008

    Revenue

    On an aggregate basis, revenues have increased by 9.8% for the nine months
ended September 30, 2008, as compared to the prior year. Revenue by line of
business ("LOB"), which includes both recurring services and products revenue,
is as follows:

    -------------------------------------------------------------------------
                       Three Months Ended            Nine Months Ended
                           September 30                  September 30
    -------------------------------------------------------------------------
    Revenue by LOB
     (thousands):    2008   % change     2007      2008   % change     2007
    -------------------------------------------------------------------------
    (unaudited)
    ATM Business  $ 10,229      4.2%  $  9,819  $ 28,617      1.2%  $ 28,278
    Prepaid
     products
     business       12,024     12.9%    10,654    36,640     17.8%    31,114
    Debit terminal
     business          457     21.9%       375     1,289      6.5%     1,210
    -------------------------------------------------------------------------
    Total Revenue $ 22,710      8.9%  $ 20,848  $ 66,546      9.8%  $ 60,602
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Revenue by type
     (thousands)
    Recurring
     services     $ 16,540     16.4%  $ 14,204  $ 46,858     14.3%  $ 40,983
    Products         6,075     -4.8%     6,381    19,259      1.0%    19,062
    Interest            95    -63.9%       263       429    -23.0%       557
    -------------------------------------------------------------------------
    Total Revenue $ 22,710      8.9%  $ 20,848  $ 66,546      9.8%  $ 60,602
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Revenue - Recurring Services

Recurring services revenue relates to revenue earned from transaction processing activities, including ATM, debit terminal and prepaid product transactions. For the three and nine months ended September 30, 2008 recurring services revenue rose by $2.3 million (16.4%) and $5.9 million (14.3%) respectively over the prior year.

For the three and nine months ended September 30, 2008, the increase in recurring services revenues was primarily attributable to the prepaid products line of business. The increase in prepaid products recurring services revenue is attributable to the roll out of the prepaid MasterCard product. ATM and debit terminal recurring services revenues are also up over the prior year.

There is historic seasonality of processing transaction volumes, with the highest ATM transaction activity typically occurring in the second and third quarters of the year. The first and fourth quarters are traditionally DirectCash's weakest quarters in terms of processing transactions and gross profitability. The Fund has eliminated the impact of seasonal fluctuations in cash flows to Unitholders by equalizing monthly cash distributions. This seasonality factor is considered when determining levels of available cash at the end of each reporting period.

Revenue - Products

Product revenue includes sales of ATMs and related parts, debit terminals and related parts, and prepaid products, which includes the sale of cash cards (debit and credit) and prepaid telecommunications products, both physical ("hard cards") and electronic ("virtual vouchers"). For the nine months ended September 30, 2008 revenue from product sales was up 1.0% and down 4.8% on a quarter over quarter comparison to the prior year. The decline is primarily attributable to lower ATM and debit terminal sales as the business model continues to lean towards full placement, that is, where DirectCash owns and maintains the products, and the rental of units versus the outright sale of the units.

Interest Income

Interest income has declined significantly on a quarter over quarter comparison and for the full year as a result of the impact of lower interest rates and also as a result of a lower amount of restricted funds being held in longer term securities.

Gross Profits

On an aggregate basis, gross profits have increased by 6.7% and 5.2% respectively for the three and nine months ended September 30, 2008, as compared to the prior year. Gross profit by line of business, which includes both recurring services and products revenue, is as follows:

    <<
    -------------------------------------------------------------------------
                       Three Months Ended            Nine Months Ended
                           September 30                  September 30
    -------------------------------------------------------------------------
    Gross profit by
     LOB
     (thousands):    2008   % change     2007      2008   % change     2007
    -------------------------------------------------------------------------
    (unaudited)

    ATM Business  $  5,856     -2.0%  $  5,977  $ 17,015     -1.5%  $ 17,270
      gross profit
       margin        57.2%               60.9%     59.5%               61.1%
    Prepaid
     products
     business        3,602     22.6%     2,938    10,696     18.0%     9,067
      gross profit
       margin        30.0%               27.6%     29.2%               29.1%
    Debit terminal
     business          289     29.6%       223       820      3.9%       789
      gross profit
       margin        63.2%               59.4%     63.6%               65.2%
    -------------------------------------------------------------------------
    Total Gross
     Profit       $  9,747      6.7%  $  9,137  $ 28,531      5.2%  $ 27,126
      gross profit
       margin        42.9%               43.8%     42.9%               44.8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Gross profit
     by type
     (thousands)
    Recurring
     services and
     interest     $  9,588     10.1%  $  8,707  $ 27,304      7.6%  $ 25,376
      gross profit
       margin        57.6%               60.2%     57.7%               61.1%
    Products           159    -63.0%       430     1,227    -29.8%     1,749
      gross profit
       margin         2.6%                6.7%      6.4%                9.2%
    -------------------------------------------------------------------------
    Total gross
     profit       $  9,747      6.7%  $  9,137  $ 28,531      5.2%  $ 27,126
      gross profit
       margin        42.9%               43.8%     42.9%               44.8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Gross Profitability - Recurring Services

Gross profit from recurring service and interest revenues for the three and nine months ended September 30, 2008 was 10.1% and 7.6% respectively higher than the prior year, due to a combination of acquisitions and organic growth, which was partially tempered by higher costs of goods sold and operating costs.

The lower gross profit margins on a quarter over quarter comparison and for the full nine months is primarily attributable to the prepaid products line of business as a result of a product mix shift towards lower margin, higher volume transactions associated with MasterCard prepaid products. Overall transaction levels and gross profits continue to increase from a quarter over quarter perspective. Additional revenues added in the debit terminal business via acquisition were also at lower margins than existing DirectCash debit terminal accounts.

Gross Profitability - Products

Gross profit from product revenues for the three and nine months ended September 30, 2008 were below 2007 levels. On a year to date basis, gross profit margins were 6.4% versus 9.2% in the prior year. The decline in gross profit margins is largely due to a shift in product revenues towards additional low margin virtual voucher sales and less emphasis on ATM and debit terminal sales. In addition, in 2008 DirectCash is incurring additional costs on inventory obsolescence write downs related to upgrading the ATM inventory to meet next generation Chip and pin technology as mandated by Interac, MasterCard and VISA.

DirectCash has a strategic focus of keeping ATM and debit terminal prices as low as possible in order to maximize the number of machines placed in customer locations. By maintaining relatively low margins on this business, we believe we will maximize the number of long-term revenue generating processing and recurring service contracts.

Selling, General & Administrative expenses ("SG&A")

For the three and nine months ended September 30, 2008 SG&A expenses increased by 10.4% and 2.2% respectively from the prior year periods. The increase on a quarter over quarter comparison is a result of higher general operating costs, which in part, include higher litigation costs related to ATM site contracts. Year over year expenses are running lower than inflation primarily as a result of lower salary costs resulting from a review of costs, primarily at satellite offices, as well as lower overall executive salary costs. A concentrated effort on across the board cost reductions have been partially offset by additional costs associated with system security enhancements and increased legal expenses on a year over year comparison due to litigation related to ATM site contracts as mentioned previously. As a percentage of gross profits, SG&A increased during the three months ended September 30, 2008 to 30.2% from 29.1% when compared to the same period in the prior year. For the nine months ended September 30, 2008 SG&A was 30.3% of gross profits compared to 31.2% for the comparative period in 2007.

Long-term incentive plan ("LTIP")

Pursuant to the LTIP, DirectCash sets aside a pool of funds based upon the amount by which the Fund's per Unit distributable cash flow exceed certain defined threshold amounts per below:

    <<
    -------------------------------------------------------------------------
    Percentage by which               Maximum proportion of excess
    distributable cash flow per       distributable cash available for
    Unit exceeds base threshold(1)    LTIP payments
    -------------------------------  ----------------------------------------

    5% or less                        0%

    -------------------------------------------------------------------------
    greater than 5% and up to 10%     10% of any excess over 5%

    -------------------------------------------------------------------------
    greater than 10% and up to 20%    10% of any excess over 5% to 10%, plus
                                      20% of any excess over 10% to 20%

    -------------------------------------------------------------------------
    greater than 20%                  10% of any excess over 5% to 10%, plus
                                      20% of any excess over 10% to 20%, plus
                                      30% of any excess over 20%

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) $1.32 per Unit per fiscal year (2007 - $1.20 per Unit).
    >>

Effective January 1, 2008 to align management LTIP compensation with Unitholders the base threshold was increased to $1.32 from $1.20, resulting in an LTIP expense reduction for the three and nine months ended September 30, 2008.

For the three and nine months ended September 30, 2008, total LTIP expense was $415,419 (2007 - $456,627), and $930,333 respectively (2007 - $1,128,732). The LTIP expense for the three and nine months ended September 30, 2008 is net of proceeds of $1,021 (2007 - $nil) and $101,864 respectively (2007 - $11,654) from unvested units sold in the open market. Unvested units are not reallocated to other participants. DirectCash calculates the current period LTIP expenditure by annualizing the year to date financial results over the course of the year and then pro-rating and accruing the resultant annualized LTIP expenditure in the current period. It is expected that the LTIP base threshold will be periodically reviewed for appropriateness relative to the market and compensation requirements.

EBITDA

For the three and nine months ended September 30, 2008, EBITDA increased 6.2% and 8.1% respectively over the prior period levels. As a percentage of revenue, EBITDA was slightly lower over the prior year period at 28.1% as compared to 28.9% for the three months ended September 30. On a year to date basis, EBITDA as a percentage of revenue was also slightly lower at 28.5% as compared to 28.9% during the prior year period.

Interest expense

For the three and nine months ended September 30, 2008 interest expense is relatively flat with a slight decline in interest expense of 5.3% and 3.6% respectively when compared to the prior year periods. The company has benefited from lower interest rates in the current fiscal period compared to last year (See "Liquidity and Capital Resources"). Effect of lower interest rates has been partially offset by the need for a higher revolving credit facility to meet the increased vault cash requirements as a result of the ATM acquisitions in 2008 and seasonal ATM placements.

The increase in the use of our acquisition credit facility is the result of acquisitions undertaken in 2008. All DirectCash debt is currently on floating interest rates.

A one percent change in interest rates would result in an approximate $400 thousand annual change in interest expense based upon current debt levels.

Net Earnings

Net earnings for the three and nine months ended September 30, 2008 were $115,608 and $1,235,982 respectively, versus net earnings of $246,120 and $662,533 during the prior year periods. Earnings for the quarter and year to date before the inventory obsolescence write down would have been $306,996 and $1,540,146 respectively.

The disparity between net earnings and cash distributions is primarily due to amortization of intangible assets related to ATM, debit terminal and prepaid product contracts. Typically, these contracts include automatic renewals for a further minimum five-year period (new contracts are six years) unless the customer terminates the contract within a specified time period and the contract typically includes a right of first refusal to match a competitor's bona fide offer on renewal, which Management believes could result in the assets having a longer life than the period they are amortized over.

    <<
    Standardized Distributable Cash Flow and Distributable Cash Flow per Unit
    -------------------------------------------------------------------------
                             Three Months Ended  Nine Months Ended
                                September 30       September 30
    -------------------------------------------------------------------------
    (thousands, except for                                          Cumu-
     per unit amounts)         2008      2007      2008      2007   lative(1)
    -------------------------------------------------------------------------
    Per consolidated
     financial statements:
    Net earnings/(loss)     $    116  $    246  $  1,236  $    663  $  5,179
    Add/(Deduct):
    Minority interest              -         -         -         -       838
    Depreciation of
     equipment                   656       570     1,838     1,767     7,140
    Amortization of
     intangible and other
     assets                    5,070     4,621    14,349    13,518    63,491
    Changes in non-cash
     working capital             832     1,643     1,283      (893)   (1,230)
    -------------------------------------------------------------------------
    Cash provided by
     operations:            $  6,674  $  7,080  $ 18,706  $ 15,055  $ 75,417
    Productive capacity
     maintenance                (251)     (176)   (1,091)     (710)   (3,820)
    -------------------------------------------------------------------------
    Standardized
     distributable cash
     flow                   $  6,423  $  6,904  $ 17,615  $ 14,345  $ 71,597
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Per unit                $ 0.5151  $ 0.5536  $ 1.4126  $ 1.1502  $ 5.7410
    Changes in non-cash
     working capital            (832)   (1,643)   (1,283)      893     1,230
    Deferred rent expense         (7)       (6)      (19)      (20)      (46)
    -------------------------------------------------------------------------
    Distributable Cash Flow $  5,584  $  5,255  $ 16,313  $ 15,218  $ 72,781
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Per Unit                $ 0.4478  $ 0.4214  $ 1.3082  $ 1.2202  $ 5.8360
    Distributions declared  $  4,302  $  4,303  $ 12,907  $ 12,908  $ 59,397
    Distributions declared
     per unit               $ 0.3450  $ 0.3450  $  1.035  $  1.035  $ 4.7627
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Standardized
     Distributable Cash
     Flow Payout ratio         67.0%     62.3%     73.3%     90.0%     83.0%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributable Cash Flow
     Payout Ratio              77.0%     81.9%     79.1%     84.8%     81.6%
    -------------------------------------------------------------------------
    (1) Since the Fund's initial public offering in December, 2004.
    >>

Distributions typically exceed net earnings as a result of non-cash expenses, such as depreciation of equipment and amortization of intangible assets. These non-cash expenses result in a reduction to net earnings, with no impact on cash flow from operating activities. DirectCash's policy is to distribute all available cash from operations after cash required to maintain productive capacity, working capital reserves and other reserves as considered advisable by DirectCash's Board, which reflects the difference between distributions declared and distributable cash flow. The lower distributable cash flow payout ratio in 2008 versus 2007 reflects higher distributable cash flows in 2008 without a corresponding increase in cash distribution levels. Since inception, the Fund has distributed 81.6% of its distributable cash flow to holders of units, exchangeable partnership units and Class B subordinated partnership units.

Cash distributions and productive maintenance capital programs have been historically funded via cash from operations, while growth capital expenditures have primarily been funded with debt. Over time, additional borrowings and equity issues may be required to increase productive capacity.

Neither standardized distributable cash flow nor distributable cash flow can be assured. See Key Business Risks for a list of factors which could negatively impact cash flows. The Fund intends to utilize its credit facilities as part of its capital structure in order to fund future capital growth, operating within the covenants of its credit facility, thus enhancing distributable cash flow from operations.

Since inception, 100% of the Fund's distributions declared are considered other income. The consolidated excess of the carrying value of the Fund's equipment, intangible and other assets over their tax basis is approximately $10.1 million.

    <<
    Capital Expenditures
    -------------------------------------------------------------------------
                                          Three Months         Nine Months
                                             Ended                Ended
                                          September 30        September 30
    -------------------------------------------------------------------------
                                         2008      2007      2008      2007
    -------------------------------------------------------------------------
    Per consolidated financial
     statements:
    Acquisitions                       $     -   $   205   $ 6,850   $ 5,458
    Other capital expenditures             356       391     1,419     1,510
    Other intangible expenditures           11       243       105       672
    -------------------------------------------------------------------------
                                       $   367   $   839   $ 8,374   $ 7,640
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Split between growth and
     maintenance:
    Growth capital                         116       663     7,283     6,930
    Productive capital maintenance         251       176     1,091       710
    -------------------------------------------------------------------------
                                       $   367   $   839   $ 8,374   $ 7,640
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Growth capital expenditures relate to acquisitions and other expenditures that increase DirectCash's productive capacity, while productive capital maintenance expenditures maintain productive capacity at existing levels. Productive capital maintenance expenditures are reasonably predictable with large lead times typically provided for project completion; however, inter-period expenditures vary significantly depending upon project timing. Growth capital expenditures vary widely between periods due to the volatility of acquisition opportunities.

Acquisitions

For the nine months ended September 30, 2008, DirectCash has acquired certain assets of a number of privately held corporations and individuals engaged in ATM and debit terminal services for cash consideration of $6.85 million (2007 - $5.5 million), subject to customary performance holdbacks and normal course purchase adjustments. The acquisitions resulted in 797 additional ATMs being added to the DirectCash ATM network (2007 - 401).

Liquidity and Capital Resources

Management believes that the funds generated from operations will be sufficient to allow it to meet ongoing requirements for working capital, maintenance capital expenditures including investments in technology capital, interest expense, and cash distributions to Unitholders. DirectCash's actual cash generated from operations will be dependent upon future financial performance, which in turn will be subject to financial, tax, business and other factors.

As of September 30, 2008, DirectCash utilized approximately $40.5 million of a total available credit facility of $65.0 million. A summary of DirectCash's available credit at September 30, 2008 is as follows:

    <<
    -------------------------------------------------------------------------
    (thousands)                             Utilized      Limit   Available
    -------------------------------------------------------------------------

    Revolving credit facility               $  9,670    $ 25,000    $ 15,330
    Acquisition credit facility               30,800      40,000       9,200
    -------------------------------------------------------------------------
                                            $ 40,470    $ 65,000    $ 24,530
    -------------------------------------------------------------------------
    >>

Included in the revolving credit facility utilization are two $US 1.0 million (CDN$ 1,059,900 each) letters of credit, both in favour of MasterCard International. Both letters of credit are pertaining to DirectCash's prepaid MasterCard program. The revolving credit facility is demand in nature and is utilized for ATM cash machine loading, working capital requirements and commercial letters of credit. The revolving credit facility bears interest at the Bank's prime lending rate.

The amount of the revolving credit facility was increased from $18 million to $25 million in 2008 ($2 million in June and another $5 million in August). The principal reason for the requirement for a higher operating credit line facility is the ATM cash load increase DirectCash has experienced as a result of the acquisitions and organic growth in 2008.

The acquisition credit facility is utilized to facilitate acquisitions and to fund equipment in new locations. The facility is demand in nature and bears interest at the Bank's prime lending rate or at banker's acceptance rates plus 1.4%. Notwithstanding the demand nature of the facility, there are no scheduled principal repayments. Depending upon interest rates and future capital requirements, all or a portion of the acquisition credit facility could be repaid via a public offering of DirectCash securities.

For the nine months ended September 30, 2008, DirectCash operated within its covenant limits and anticipates it will continue to do so in the future. Breach of its covenants could result in the triggering of remedies by DirectCash's lenders, which could ultimately result in the curtailing of distribution payments.

Additional Information

Additional information about the Fund, including the Fund's Annual Information Form and other public filings is available on SEDAR (www.sedar.com) and on the Fund's website (www.directcash.net).

    <<
    (1) Non-GAAP measures
    ----------------------
    >>

There are a number of financial calculations that are not defined performance measurements under Canadian generally accepted accounting principles ("GAAP") but which Management believes are useful and accepted performance measurements utilized by the investing public in assessing the overall financial performance of Income Trusts.

EBITDA

EBITDA represents gross profits less selling, general and administrative expenses ("SG&A) and long-term incentive plan expenses, and is not a defined performance measure under GAAP. Management believes that EBITDA is a useful supplementary disclosure commonly used by the investing community to assess and compare cash flows between entities. EBITDA specifically excludes depreciation, amortization, income taxes and interest expense. The Fund's EBITDA may differ from similar computations as reported by other issuers and, accordingly, may not be comparable to EBITDA as reported by such issuers.

    <<
    Standardized distributable cash flow and standardized distributable cash
    flow per unit
    >>

On July 6, 2007, the Canadian Securities Administrators ("CSA") published revised National Policy Statement 41-201 Income Trusts and Other Direct Offerings that includes guidance around distributable cash flow measures and their related disclosure. In accordance with the interpretive release issued by the Canadian Institute of Chartered Accountants ("CICA"), we have calculated a distributable cash flow measure called Standardized Distributable Cash Flow and have included it as an additional disclosure. Standardized Distributable Cash Flow is calculated as cash flow from operations including the effect of changes in non-cash working capital less total capital expenditures required to preserve productive capacity, and restrictions on distributions resulting from compliance covenants and minority interests. Due to normal course changes of non-cash working capital between periods, Standardized Distributable Cash Flow has the potential to be volatile between periods compared to the Fund's existing measure of Distributable Cash Flow, which is calculated as cash flow from operations excluding the impact of non-cash working capital changes less productive capital maintenance requirements (See discussion below). In order to reconcile the two measures, we have calculated Standardized Distributable Cash Flow and reconciled it to Distributable Cash Flow.

Distributable cash flow and distributable cash flow per unit

Distributable cash flow and distributable cash flow per unit are non-GAAP measures generally used by Canadian open-ended income funds as an indicator of financial performance. Readers are cautioned that distributable cash flow is not a defined performance measure under GAAP, and that distributable cash flow cannot be assured. The Fund calculates distributable cash flow as equal to the consolidated funds flow from operations before changes in non-cash working capital, after provision for productive capital maintenance capital expenditures (See discussion below) and amortization of deferred rent expense. The Fund's distributable cash flow and distributable cash flow per unit may differ from similar computations