FlexShares Trust, et al.; Notice of Application, 42114-42115 [2013-16858]

Download as PDF 42114 Federal Register / Vol. 78, No. 135 / Monday, July 15, 2013 / Notices established pursuant to Rule 6h–1 would be filed with the Commission as proposed rule changes pursuant to Section 19(b) of the Act, and would be published in the Federal Register. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following Web site: www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Shagufta_Ahmed@omb.eop.gov; and (ii) Thomas Bayer, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi PavlikSimon, 6432 General Green Way, Alexandria, VA 22312 or send an email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: July 10, 2013. Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–16859 Filed 7–12–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 30593; 812–14150] FlexShares Trust, et al.; Notice of Application July 9, 2013. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice of an application to amend prior orders 1 under section 6(c) of the Investment Company Act of 1940 (‘‘Act’’) granting an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c–1 under the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (2) of the Act, and under tkelley on DSK3SPTVN1PROD with NOTICES AGENCY: 1 Northern Trust Investments, Inc., Investment Company Act Release Nos. 29752 (Aug. 10, 2011) (notice) and 29782 (Sept. 6, 2011) (order); Northern Trust Investments, Inc., Investment Company Act Release Nos. 30045 (Apr. 24, 2012) (notice) and 30068 (May 22, 2012) (order); Northern Trust Investments, Inc., Investment Company Act Release Nos. 30211 (Sept. 24, 2012) (notice) and (30240 (Oct. 23, 2012) (order). All capitalized terms not otherwise defined in the application have the meanings ascribed to them in the applications for the Prior Orders (the ‘‘Prior Applications’’). VerDate Mar<15>2010 18:53 Jul 12, 2013 Jkt 229001 statutory trust. The Adviser is an Illinois state banking corporation that is registered under the Investment Advisers Act of 1940 and serves as SUMMARY OF APPLICATION: Applicants investment adviser to the 13 series of seek to amend the Prior Orders to the Trust (‘‘Existing Funds’’), all of permit the Funds (as defined in the which rely on one of the Prior Orders. applications for the Prior Orders) to The distributor for the Existing Funds is issue Shares in less than Creation Unit Foreside, a Delaware limited liability size to investors participating in the company. Applicants request relief for Distribution Reinvestment Program (as the Existing Funds and for any defined below). additional Funds, as defined in the Prior APPLICANTS: FlexShares Trust (the Applications. ‘‘Trust’’), Northern Trust Investments, 2. The Prior Applications stated that Inc. (the ‘‘Adviser’’), and Foreside Fund the Funds would not make the DTC Services, LLC (‘‘Foreside’’). book-entry dividend reinvestment DATES: Filing Dates: The application was service available for use by Beneficial filed on April 12, 2013, and amended on Owners for reinvestment of their cash July 3, 2013. proceeds. The Prior Applications also HEARING OR NOTIFICATION OF HEARING: An stated that ‘‘[b]rokers may, however, offer a dividend reinvestment service order granting the requested relief will be issued unless the Commission orders which uses dividends to purchase Shares on the secondary market at a hearing. Interested persons may market value.’’ In addition, the Prior request a hearing by writing to the Applications included several Commission’s Secretary and serving representations and a condition noting applicants with a copy of the request, that Shares could be acquired from the personally or by mail. Hearing requests Funds and the Funds would issue should be received by the Commission Shares in Creation Units only. The by 5:30 p.m. on August 5, 2013 and applicants seek an order amending the should be accompanied by proof of Prior Orders (‘‘Amended Order’’) so that service on applicants, in the form of an the representations and condition A.2 affidavit or, for lawyers, a certificate of specifically permit the Funds to operate service. Hearing requests should state the ‘‘Distribution Reinvestment the nature of the writer’s interest, the Program,’’ as described below.2 reason for the request, and the issues 3. The Trust will make the DTC bookcontested. Persons who wish to be entry Dividend Reinvestment Service notified of a hearing may request (‘‘DTC Dividend Reinvestment Service’’) notification by writing to the available for use by the beneficial Commission’s Secretary. owners of Shares (‘‘Beneficial Owners’’) ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange through DTC Participants for reinvestment of their cash dividends.3 Commission, 100 F Street NE., DTC Participants whose customers Washington, DC 20549–1090. Applicants, Trust and Adviser, c/o Peter participate in the program will have the distributions of their customers K. Ewing, 50 S. LaSalle Street, Chicago, automatically reinvested in additional IL 60603, Foreside, Three Canal Plaza, whole Shares issued by the applicable Suite 100, Portland, ME 04101. Fund at NAV per Share. Shares will be FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Special Counsel, at (202) issued at NAV under the DTC Dividend Reinvestment Service regardless of 551–6813 or Mary Kay Frech, Branch whether the Shares are trading in the Chief, at (202) 551–6821 (Division of secondary market at a premium or Investment Management, Exemptive discount to NAV as of the time NAV is Applications Office). calculated. Thus, Shares may be SUPPLEMENTARY INFORMATION: The purchased through the DTC Dividend following is a summary of the Reinvestment Service at prices that are application. The complete application higher (or lower) than the may be obtained via the Commission’s contemporaneous secondary market Web site by searching for the file trading price. Applicants state that the number, or an applicant using the Company name box, at https:// 2 All entities that currently intend to rely on the www.sec.gov/search/search.htm or by Amended Order are named as applicants. Any other calling (202) 551–8090. entity that relies on the Amended Order in the section 12(d)(1)(J) of the Act for an exemption from sections 12(d)(1)(A) and (B) of the Act (‘‘Prior Orders’’). Applicants’ Representations 1. The Trust is registered under the Act as an open-end management investment company with multiple series and organized as a Maryland PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 future will comply with the terms and conditions of the application. 3 Some DTC Participants may not elect to utilize the DTC Dividend Reinvestment Service. Beneficial Owners will be encouraged to contact their broker to ascertain the availability of the DTC Dividend Reinvestment Service through such broker. E:\FR\FM\15JYN1.SGM 15JYN1 tkelley on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 78, No. 135 / Monday, July 15, 2013 / Notices DTC Dividend Reinvestment Service differs from dividend reinvestment services offered by broker-dealers in two ways. First, in dividend reinvestment programs typically offered by brokerdealers, the additional shares are purchased in the secondary market at current market prices at a date and time determined by the broker-dealer at its discretion. Shares purchased through the DTC Dividend Reinvestment Service are purchased directly from the fund on the date of the distribution at the NAV per share on such date. Second, in dividend reinvestment programs typically offered by broker-dealers, shareholders are typically charged a brokerage or other fee in connection with the secondary market purchase of shares. Applicants state that brokers typically do not charge customers any fees for reinvesting distributions through the DTC Dividend Reinvestment Service. 4. Applicants state that the DTC Dividend Reinvestment Service will be operated by DTC in exactly the same way it runs such service for other openend management investment companies. The initial decision to participate in the DTC Dividend Reinvestment Service is made by the DTC Participant. Once a DTC Participant elects to participate in the DTC Dividend Reinvestment Service, it offers its customers the option to participate. Beneficial Owners will have to make an affirmative election to participate by completing an election notice. Before electing to participate, Beneficial Owners will receive disclosure describing the terms of the DTC Dividend Reinvestment Service and the consequences of participation. This disclosure will include a clear and concise explanation that under the Distribution Reinvestment Program, Shares will be issued at NAV, which could result in such Shares being acquired at a price higher or lower than that at which they could be sold in the secondary market on the day they are issued (this will also be clearly disclosed in the Prospectus). Brokers providing the DTC Dividend Reinvestment Service to their customers will determine whether to charge Beneficial Owners a fee for this service. Applicants represent that brokers typically do not charge a fee for the DTC Dividend Reinvestment Service. 5. The Prospectus will make clear to Beneficial Owners that the Distribution Reinvestment Program is optional and that its availability is determined by their broker, at its own discretion. Broker-dealers are not required to utilize the DTC Dividend Reinvestment Service, and may instead offer a VerDate Mar<15>2010 18:53 Jul 12, 2013 Jkt 229001 dividend reinvestment program under which Shares are purchased in the secondary market at current market prices or no dividend reinvestment program at all. Applicants’ Legal Analysis 1. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction, or any class of persons, securities or transactions, from any provision of the Act, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. 2. Applicants seek to amend the Prior Orders to specifically permit the Funds to operate the Distribution Reinvestment Program. The only difference between the terms and conditions in the Prior Orders and the Amended Order relates to a Fund issuing Shares in less than Creation Unit size under the Distribution Reinvestment Program. Applicants represent that the relief granted in the Prior Orders under section 6(c) remains appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. 3. Applicants state that the Distribution Reinvestment Program is reasonable and fair because it is voluntary and each Beneficial Owner will have in advance accurate and explicit information that makes clear the terms of the Distribution Reinvestment Program and the consequences of participation. The Distribution Reinvestment Program does not involve any overreaching on the part of any person concerned because it operates the same for each Beneficial Owner who elects to participate, and is structured in the public interest because it is designed to give those Beneficial Owners who elect to participate a convenient and efficient method to reinvest distributions without paying a brokerage commission. In addition, although brokers providing the Distribution Reinvestment Program could charge a fee, applicants represent that typically brokers do not charge for this service. 4. Applicants do not believe that the issuance of Shares under the Distribution Reinvestment Program will have a material effect on the overall operation of the Funds, including on the efficiency of the arbitrage mechanism inherent in ETFs. In addition, applicants do not believe that providing Beneficial Owners with an added optional benefit (the ability to reinvest in Shares at NAV) will change the PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 42115 Beneficial Owners’ expectations about the Funds or the fact that individual Shares trade at secondary market prices. Applicants believe that Beneficial Owners (other than Authorized Participants) generally expect to buy and sell individual Shares only through secondary market transactions at market prices and that such owners will not be confused by the Distribution Reinvestment Program. Therefore, applicants believe that the Distribution Reinvestment Program meets the standards for relief under section 6(c) of the Act. Applicants’ Conditions Applicants agree that the Amended Order will be subject to the same conditions as those imposed by the Prior Orders, except that condition A.2 is revised in its entirety as follows: Neither the Trust nor any Fund will be advertised or marketed as an openend investment company or a mutual fund. Any advertising material that describes the purchase or sale of Creation Units or refers to redeemability will prominently disclose that Shares are not individually redeemable and that owners of Shares may acquire those Shares from a Fund (other than pursuant to the Distribution Reinvestment Program) and tender those Shares for redemption to a Fund in Creation Units only. For the Commission, by the Division of Investment Management, under delegated authority. Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–16858 Filed 7–12–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 30594; 812–13941] NGAM Advisors, LP, et al.; Notice of Application July 9, 2013. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (‘‘Act’’) for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c-1 under the Act, under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (a)(2) of the Act, and under section 12(d)(1)(J) of the Act for an exemption from sections 12(d)(1)(A) and (B) of the Act. AGENCY: E:\FR\FM\15JYN1.SGM 15JYN1

Agencies

[Federal Register Volume 78, Number 135 (Monday, July 15, 2013)]
[Notices]
[Pages 42114-42115]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16858]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30593; 812-14150]


FlexShares Trust, et al.; Notice of Application

July 9, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application to amend prior orders \1\ under 
section 6(c) of the Investment Company Act of 1940 (``Act'') granting 
an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the 
Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of 
the Act for an exemption from sections 17(a)(1) and (2) of the Act, and 
under section 12(d)(1)(J) of the Act for an exemption from sections 
12(d)(1)(A) and (B) of the Act (``Prior Orders'').

-----------------------------------------------------------------------
---------------------------------------------------------------------------

    \1\ Northern Trust Investments, Inc., Investment Company Act 
Release Nos. 29752 (Aug. 10, 2011) (notice) and 29782 (Sept. 6, 
2011) (order); Northern Trust Investments, Inc., Investment Company 
Act Release Nos. 30045 (Apr. 24, 2012) (notice) and 30068 (May 22, 
2012) (order); Northern Trust Investments, Inc., Investment Company 
Act Release Nos. 30211 (Sept. 24, 2012) (notice) and (30240 (Oct. 
23, 2012) (order). All capitalized terms not otherwise defined in 
the application have the meanings ascribed to them in the 
applications for the Prior Orders (the ``Prior Applications'').

Summary of Application: Applicants seek to amend the Prior Orders to 
permit the Funds (as defined in the applications for the Prior Orders) 
to issue Shares in less than Creation Unit size to investors 
participating in the Distribution Reinvestment Program (as defined 
---------------------------------------------------------------------------
below).

Applicants: FlexShares Trust (the ``Trust''), Northern Trust 
Investments, Inc. (the ``Adviser''), and Foreside Fund Services, LLC 
(``Foreside'').

DATES: Filing Dates: The application was filed on April 12, 2013, and 
amended on July 3, 2013.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on August 5, 2013 and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants, 
Trust and Adviser, c/o Peter K. Ewing, 50 S. LaSalle Street, Chicago, 
IL 60603, Foreside, Three Canal Plaza, Suite 100, Portland, ME 04101.

FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Special Counsel, at 
(202) 551-6813 or Mary Kay Frech, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Exemptive Applications Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or an applicant 
using the Company name box, at https://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicants' Representations

    1. The Trust is registered under the Act as an open-end management 
investment company with multiple series and organized as a Maryland 
statutory trust. The Adviser is an Illinois state banking corporation 
that is registered under the Investment Advisers Act of 1940 and serves 
as investment adviser to the 13 series of the Trust (``Existing 
Funds''), all of which rely on one of the Prior Orders. The distributor 
for the Existing Funds is Foreside, a Delaware limited liability 
company. Applicants request relief for the Existing Funds and for any 
additional Funds, as defined in the Prior Applications.
    2. The Prior Applications stated that the Funds would not make the 
DTC book-entry dividend reinvestment service available for use by 
Beneficial Owners for reinvestment of their cash proceeds. The Prior 
Applications also stated that ``[b]rokers may, however, offer a 
dividend reinvestment service which uses dividends to purchase Shares 
on the secondary market at market value.'' In addition, the Prior 
Applications included several representations and a condition noting 
that Shares could be acquired from the Funds and the Funds would issue 
Shares in Creation Units only. The applicants seek an order amending 
the Prior Orders (``Amended Order'') so that the representations and 
condition A.2 specifically permit the Funds to operate the 
``Distribution Reinvestment Program,'' as described below.\2\
---------------------------------------------------------------------------

    \2\ All entities that currently intend to rely on the Amended 
Order are named as applicants. Any other entity that relies on the 
Amended Order in the future will comply with the terms and 
conditions of the application.
---------------------------------------------------------------------------

    3. The Trust will make the DTC book-entry Dividend Reinvestment 
Service (``DTC Dividend Reinvestment Service'') available for use by 
the beneficial owners of Shares (``Beneficial Owners'') through DTC 
Participants for reinvestment of their cash dividends.\3\ DTC 
Participants whose customers participate in the program will have the 
distributions of their customers automatically reinvested in additional 
whole Shares issued by the applicable Fund at NAV per Share. Shares 
will be issued at NAV under the DTC Dividend Reinvestment Service 
regardless of whether the Shares are trading in the secondary market at 
a premium or discount to NAV as of the time NAV is calculated. Thus, 
Shares may be purchased through the DTC Dividend Reinvestment Service 
at prices that are higher (or lower) than the contemporaneous secondary 
market trading price. Applicants state that the

[[Page 42115]]

DTC Dividend Reinvestment Service differs from dividend reinvestment 
services offered by broker-dealers in two ways. First, in dividend 
reinvestment programs typically offered by broker-dealers, the 
additional shares are purchased in the secondary market at current 
market prices at a date and time determined by the broker-dealer at its 
discretion. Shares purchased through the DTC Dividend Reinvestment 
Service are purchased directly from the fund on the date of the 
distribution at the NAV per share on such date. Second, in dividend 
reinvestment programs typically offered by broker-dealers, shareholders 
are typically charged a brokerage or other fee in connection with the 
secondary market purchase of shares. Applicants state that brokers 
typically do not charge customers any fees for reinvesting 
distributions through the DTC Dividend Reinvestment Service.
---------------------------------------------------------------------------

    \3\ Some DTC Participants may not elect to utilize the DTC 
Dividend Reinvestment Service. Beneficial Owners will be encouraged 
to contact their broker to ascertain the availability of the DTC 
Dividend Reinvestment Service through such broker.
---------------------------------------------------------------------------

    4. Applicants state that the DTC Dividend Reinvestment Service will 
be operated by DTC in exactly the same way it runs such service for 
other open-end management investment companies. The initial decision to 
participate in the DTC Dividend Reinvestment Service is made by the DTC 
Participant. Once a DTC Participant elects to participate in the DTC 
Dividend Reinvestment Service, it offers its customers the option to 
participate. Beneficial Owners will have to make an affirmative 
election to participate by completing an election notice. Before 
electing to participate, Beneficial Owners will receive disclosure 
describing the terms of the DTC Dividend Reinvestment Service and the 
consequences of participation. This disclosure will include a clear and 
concise explanation that under the Distribution Reinvestment Program, 
Shares will be issued at NAV, which could result in such Shares being 
acquired at a price higher or lower than that at which they could be 
sold in the secondary market on the day they are issued (this will also 
be clearly disclosed in the Prospectus). Brokers providing the DTC 
Dividend Reinvestment Service to their customers will determine whether 
to charge Beneficial Owners a fee for this service. Applicants 
represent that brokers typically do not charge a fee for the DTC 
Dividend Reinvestment Service.
    5. The Prospectus will make clear to Beneficial Owners that the 
Distribution Reinvestment Program is optional and that its availability 
is determined by their broker, at its own discretion. Broker-dealers 
are not required to utilize the DTC Dividend Reinvestment Service, and 
may instead offer a dividend reinvestment program under which Shares 
are purchased in the secondary market at current market prices or no 
dividend reinvestment program at all.

Applicants' Legal Analysis

    1. Section 6(c) of the Act provides that the Commission may exempt 
any person, security or transaction, or any class of persons, 
securities or transactions, from any provision of the Act, if and to 
the extent that such exemption is necessary or appropriate in the 
public interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act.
    2. Applicants seek to amend the Prior Orders to specifically permit 
the Funds to operate the Distribution Reinvestment Program. The only 
difference between the terms and conditions in the Prior Orders and the 
Amended Order relates to a Fund issuing Shares in less than Creation 
Unit size under the Distribution Reinvestment Program. Applicants 
represent that the relief granted in the Prior Orders under section 
6(c) remains appropriate in the public interest and consistent with the 
protection of investors and the purposes fairly intended by the policy 
and provisions of the Act.
    3. Applicants state that the Distribution Reinvestment Program is 
reasonable and fair because it is voluntary and each Beneficial Owner 
will have in advance accurate and explicit information that makes clear 
the terms of the Distribution Reinvestment Program and the consequences 
of participation. The Distribution Reinvestment Program does not 
involve any overreaching on the part of any person concerned because it 
operates the same for each Beneficial Owner who elects to participate, 
and is structured in the public interest because it is designed to give 
those Beneficial Owners who elect to participate a convenient and 
efficient method to reinvest distributions without paying a brokerage 
commission. In addition, although brokers providing the Distribution 
Reinvestment Program could charge a fee, applicants represent that 
typically brokers do not charge for this service.
    4. Applicants do not believe that the issuance of Shares under the 
Distribution Reinvestment Program will have a material effect on the 
overall operation of the Funds, including on the efficiency of the 
arbitrage mechanism inherent in ETFs. In addition, applicants do not 
believe that providing Beneficial Owners with an added optional benefit 
(the ability to reinvest in Shares at NAV) will change the Beneficial 
Owners' expectations about the Funds or the fact that individual Shares 
trade at secondary market prices. Applicants believe that Beneficial 
Owners (other than Authorized Participants) generally expect to buy and 
sell individual Shares only through secondary market transactions at 
market prices and that such owners will not be confused by the 
Distribution Reinvestment Program. Therefore, applicants believe that 
the Distribution Reinvestment Program meets the standards for relief 
under section 6(c) of the Act.

Applicants' Conditions

    Applicants agree that the Amended Order will be subject to the same 
conditions as those imposed by the Prior Orders, except that condition 
A.2 is revised in its entirety as follows:
    Neither the Trust nor any Fund will be advertised or marketed as an 
open-end investment company or a mutual fund. Any advertising material 
that describes the purchase or sale of Creation Units or refers to 
redeemability will prominently disclose that Shares are not 
individually redeemable and that owners of Shares may acquire those 
Shares from a Fund (other than pursuant to the Distribution 
Reinvestment Program) and tender those Shares for redemption to a Fund 
in Creation Units only.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-16858 Filed 7-12-13; 8:45 am]
BILLING CODE 8011-01-P
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