25510 Federal Register / Vol. 77, No. 83 / Monday, April 30, 2012 / Notices 

1Applicants request that the relief apply to each 

existing and future series of the Trusts and to each 

existing and future registered open-end 

management investment company or series thereof 

(each a ‘‘Fund’’ and collectively, ‘‘Funds’’) that is 

advised by the Adviser or any entity controlling, 

controlled by or under common control with the 

Adviser and which is part of the same group of 

investment companies (as defined in section 

12(d)(1)(G)(ii)) as the Trusts. 

2Certain of the Unaffiliated Funds may be 

registered under the Act as either UITs or open-end 

management investment companies and have 

received exemptive relief to permit their shares to 

be listed and traded on a national securities 

exchange at negotiated prices (‘‘ETFs’’). 

3All entities that currently intend to rely on the 

requested order are named as applicants. Any other 

entity that relies on the order in the future will 

comply with the terms and conditions of the 

application. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

30044; File No. 812–13986] 

GPS Funds I, et al.; Notice of 

Application 

April 24, 2012. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

order under section 12(d)(1)(J) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) for an exemption from sections 

12(d)(1)(A) and (B) of the Act, 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 6(c) of the 

Act for an exemption from rule 12d1– 

2(a) under the Act. 

SUMMARY OF THE APPLICATION: The 

requested order would (a) permit certain 

registered open-end management 

investment companies that operate as 

‘‘funds of funds’’ to acquire shares of 

certain registered open-end management 

investment companies and unit 

investment trusts (‘‘UITs’’) that are 

within and outside the same group of 

investment companies as the acquiring 

investment companies, and (b) permit 

funds of funds relying on rule 12d1–2 

under the Act to invest in certain 

financial instruments. 

APPLICANTS: GPS Funds I, GPS Funds II 

(each a ‘‘Trust’’ and together, the 

‘‘Trusts’’) and Genworth Financial 

Wealth Management, Inc. (‘‘Adviser’’). 

DATES: Filing Dates: The application was 

filed on December 5, 2011, and 

amended on March 9, 2012. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the application 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 May 21, 2012, 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: 2300 Contra Costa 

Boulevard, Suite 425, Pleasant Hill, CA 

94523–3967. 

FOR FURTHER INFORMATION CONTACT: 

Laura L. Solomon, Senior Counsel, at 

(202) 551–6915 or Daniele Marchesani, 

Branch Chief, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 

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 for an applicant using the 

Company name box, at http:// 

www.sec.gov/search/search.htm, or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. Each Trust is an open-end 

management investment company 

registered under the Act and organized 

as a Delaware statutory trust. Each Trust 

is comprised of separate series that 

pursue distinct investment objectives 

and strategies.1 The Adviser, a 

California corporation and a whollyowned subsidiary of Genworth 

Financial, Inc., is registered as an 

investment adviser under the 

Investment Advisers Act of 1940 

(‘‘Advisers Act’’) and serves as 

investment adviser for each of the 

Funds. 

2. Applicants request an order to 

permit (a) a Fund that operates as a 

‘‘fund of funds’’ (each a ‘‘Fund of 

Funds’’) to acquire shares of (i) 

registered open-end management 

investment companies that are not part 

of the same ‘‘group of investment 

companies,’’ within the meaning of 

section 12(d)(1)(G)(ii) of the Act, as the 

Fund of Funds (‘‘Unaffiliated 

Investment Companies’’) and UITs that 

are not part of the same group of 

investment companies as the Fund of 

Funds (‘‘Unaffiliated Trusts,’’ together 

with the Unaffiliated Investment 

Companies, ‘‘Unaffiliated Funds’’) 2 or 

(ii) registered open-end management 

companies or UITs that are part of the 

same group of investment companies as 

the Fund of Funds (collectively, 

‘‘Affiliated Funds,’’ together with the 

Unaffiliated Funds, ‘‘Underlying 

Funds’’) and (b) each Underlying Fund, 

any principal underwriter for the 

Underlying Fund, and any broker or 

dealer registered under the Securities 

Exchange Act of 1934 (‘‘Broker’’) to sell 

shares of the Underlying Fund to the 

Fund of Funds.3 Applicants also request 

an order under sections 6(c) and 17(b) 

of the Act to exempt applicants from 

section 17(a) to the extent necessary to 

permit Underlying Funds to sell their 

shares to Funds of Funds and redeem 

their shares from Funds of Funds. 

3. Applicants also request an 

exemption under section 6(c) from rule 

12d1–2 under the Act to permit any 

existing or future Fund that relies on 

section 12(d)(1)(G) of the Act (‘‘Same 

Group Investing Fund’’) and that 

otherwise complies with rule 12d1–2 to 

also invest, to the extent consistent with 

its investment objective, policies, 

strategies and limitations, in financial 

instruments that may not be securities 

within the meaning of section 2(a)(36) of 

the Act (‘‘Other Investments’’). 

4. Consistent with its fiduciary 

obligations under the Act, the board of 

trustees (‘‘Board’’) of each Same Group 

Investing Fund will review the advisory 

fees charged by the Same Group 

Investing Fund’s investment adviser to 

ensure that they are based on services 

provided that are in addition to, rather 

than duplicative of, services provided 

pursuant to the advisory agreement of 

any investment company in which the 

Same Group Investing Fund may invest. 

Applicants’ Legal Analysis 

Investments in Underlying Funds 

A. Section 12(d)(1) 

1. Section 12(d)(1)(A) of the Act, in 

relevant part, prohibits a registered 

investment company from acquiring 

shares of an investment company if the 

securities represent more than 3% of the 

total outstanding voting stock of the 

acquired company, more than 5% of the 

total assets of the acquiring company, 

or, together with the securities of any 

other investment companies, more than 

10% of the total assets of the acquiring 

company. Section 12(d)(1)(B) of the Act 

prohibits a registered open-end 

investment company, its principal 

underwriter, and any Broker from 

selling the investment company’s shares 

to another investment company if the 

sale will cause the acquiring company 

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Federal Register / Vol. 77, No. 83 / Monday, April 30, 2012 / Notices 25511 

4A ‘‘Fund of Funds Affiliate’’ is the Adviser, any 

Subadviser (as defined below), promoter or 

principal underwriter of a Fund of Funds, as well 

as any person controlling, controlled by, or under 

common control with any of those entities. An 

‘‘Unaffiliated Fund Affiliate’’ is an investment 

adviser, sponsor, promoter, or principal 

underwriter of an Unaffiliated Fund, as well as any 

person controlling, controlled by, or under common 

control with any of those entities. 

5An Unaffiliated Investment Company, including 

an ETF, would retain its right to reject any initial 

investment by a Fund of Funds in excess of the 

limit in section 12(d)(1)(A)(i) of the Act by 

declining to execute the Participation Agreement 

with the Fund of Funds. 

6Any references to NASD Conduct Rule 2830 

include any successor or replacement FINRA rule 

to NASD Conduct Rule 2830. 

to own more than 3% of the acquired 

company’s total outstanding voting 

stock, or if the sale will cause more than 

10% of the acquired company’s total 

outstanding voting stock to be owned by 

investment companies generally. 

2. Section 12(d)(1)(J) of the Act 

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities or transactions, from 

any provision of section 12(d)(1) if the 

exemption is consistent with the public 

interest and the protection of investors. 

Applicants seek an exemption under 

section 12(d)(1)(J) of the Act to permit 

a Fund of Funds to acquire shares of the 

Underlying Funds in excess of the limits 

in section 12(d)(1)(A), and an 

Underlying Fund, any principal 

underwriter for an Underlying Fund, 

and any Broker to sell shares of an 

Underlying Fund to a Fund of Funds in 

excess of the limits in section 

12(d)(1)(B) of the Act. 

3. Applicants state that the terms and 

conditions of the proposed arrangement 

will not give rise to the policy concerns 

underlying sections 12(d)(1)(A) and (B), 

which include concerns about undue 

influence by a fund of funds over 

underlying funds, excessive layering of 

fees, and overly complex fund 

structures. Accordingly, applicants 

believe that the requested exemption is 

consistent with the public interest and 

the protection of investors. 

4. Applicants believe that the 

proposed arrangement will not result in 

the exercise of undue influence by a 

Fund of Funds or a Fund of Funds 

Affiliate over the Unaffiliated Funds.4

To limit the control that a Fund of 

Funds may have over an Unaffiliated 

Fund, applicants propose a condition 

prohibiting the Adviser, any person 

controlling, controlled by, or under 

common control with the Adviser, and 

any investment company or issuer that 

would be an investment company but 

for section 3(c)(1) or 3(c)(7) of the Act 

that is advised or sponsored by the 

Adviser or any person controlling, 

controlled by, or under common control 

with the Adviser (the ‘‘Advisory 

Group’’) from controlling (individually 

or in the aggregate) an Unaffiliated Fund 

within the meaning of section 2(a)(9) of 

the Act. The same prohibition would 

apply to any other investment adviser 

within the meaning of section 

2(a)(20)(B) of the Act to a Fund of Funds 

(‘‘Subadviser’’), any person controlling, 

controlled by or under common control 

with the Subadviser, and any 

investment company or issuer that 

would be an investment company but 

for section 3(c)(1) or 3(c)(7) of the Act 

(or portion of such investment company 

or issuer) advised or sponsored by the 

Subadviser or any person controlling, 

controlled by or under common control 

with the Subadviser (the ‘‘Subadvisory 

Group’’). Applicants propose other 

conditions to limit the potential for 

undue influence over the Unaffiliated 

Funds, including that no Fund of Funds 

or Fund of Funds Affiliate (except to the 

extent it is acting in its capacity as an 

investment adviser to an Unaffiliated 

Investment Company or sponsor to an 

Unaffiliated Trust) will cause an 

Unaffiliated Fund to purchase a security 

in an offering of securities during the 

existence of any underwriting or selling 

syndicate of which a principal 

underwriter is an Underwriting Affiliate 

(‘‘Affiliated Underwriting’’). An 

‘‘Underwriting Affiliate’’ is a principal 

underwriter in any underwriting or 

selling syndicate that is an officer, 

director, trustee, advisory board 

member, investment adviser, 

Subadviser, or employee of the Fund of 

Funds, or a person of which any such 

officer, director, trustee, member of an 

advisory board, investment adviser, 

Subadviser, or employee is an affiliated 

person. An Underwriting Affiliate does 

not include any person whose 

relationship to an Unaffiliated Fund is 

covered by section 10(f) of the Act. 

5. To further assure that an 

Unaffiliated Investment Company 

understands the implications of an 

investment by a Fund of Funds under 

the requested order, prior to a Fund of 

Funds’ investment in the shares of an 

Unaffiliated Investment Company in 

excess of the limit in section 

12(d)(1)(A)(i) of the Act, the Fund of 

Funds and the Unaffiliated Investment 

Company will execute an agreement 

stating, without limitation, that their 

Boards and their investment advisers 

understand the terms and conditions of 

the order and agree to fulfill their 

responsibilities under the order 

(‘‘Participation Agreement’’). Applicants 

note that an Unaffiliated Investment 

Company (other than an ETF whose 

shares are purchased by a Fund of 

Funds in the secondary market) will 

retain its right at all times to reject any 

investment by a Fund of Funds.5

6. Applicants state that they do not 

believe that the proposed arrangement 

will involve excessive layering of fees. 

The Board of each Fund of Funds, 

including a majority of the trustees who 

are not ‘‘interested persons’’ (within the 

meaning of section 2(a)(19) of the Act) 

(‘‘Independent Trustees’’), will find that 

the advisory fees charged under 

investment advisory or management 

contract(s) are based on services 

provided that will be in addition to, 

rather than duplicative of, the services 

provided under such advisory 

contract(s) of any Underlying Fund in 

which the Fund of Funds may invest. In 

addition, the Adviser will waive fees 

otherwise payable to it by the Fund of 

Funds in an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company under 

rule 12b-1 under the Act) received from 

an Unaffiliated Fund by the Adviser or 

an affiliated person of the Adviser, other 

than any advisory fees paid to the 

Adviser or its affiliated person by an 

Unaffiliated Investment Company, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated Fund. 

Any sales charges and/or service fees 

charged with respect to shares of the 

Fund of Funds will not exceed the 

limits applicable to a fund of funds as 

set forth in Rule 2830 of the Conduct 

Rules of the NASD (‘‘NASD Conduct 

Rule 2830’’).6

7. Applicants submit that the 

proposed arrangement will not create an 

overly complex fund structure. 

Applicants note that no Underlying 

Fund will acquire securities of any 

investment company or company 

relying on section 3(c)(1) or 3(c)(7) of 

the Act in excess of the limits contained 

in section 12(d)(1)(A) of the Act, except 

in certain circumstances identified in 

condition 11 below. 

B. Section 17(a) 

1. Section 17(a) of the Act generally 

prohibits sales or purchases of securities 

between a registered investment 

company and any affiliated person of 

the company. Section 2(a)(3) of the Act 

defines an ‘‘affiliated person’’ of another 

person to include (a) Any person 

directly or indirectly owning, 

controlling, or holding with power to 

vote, 5% or more of the outstanding 

voting securities of the other person; (b) 

any person 5% or more of whose 

outstanding voting securities are 

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25512 Federal Register / Vol. 77, No. 83 / Monday, April 30, 2012 / Notices 

7Applicants acknowledge that receipt of any 

compensation by (a) an affiliated person of a Fund 

of Funds, or an affiliated person of such person, for 

the purchase by a Fund of Funds of shares of an 

Underlying Fund or (b) an affiliated person of an 

Underlying Fund, or an affiliated person of such 

person, for the sale by the Underlying Fund of its 

shares to a Fund of Funds may be prohibited by 

section 17(e)(1) of the Act. The Participation 

Agreement also will include this acknowledgement. 

8Applicants note that a Fund of Funds generally 

would purchase and sell shares of an Unaffiliated 

Fund that operates as an ETF through secondary 

market transactions rather than through principal 

transactions with the Unaffiliated Fund. To the 

extent that a Fund of Funds purchases or redeems 

shares from an ETF that is an affiliated person of 

the Fund of Funds in exchange for a basket of 

specified securities as described in the application 

for the exemptive order upon which the ETF relies, 

applicants also request relief from section 17(a) of 

the Act for those in-kind transactions. Applicants 

are not seeking relief from section 17(a) for, and the 

requested relief will not apply to, transactions 

where an ETF could be deemed an affiliated person, 

or an affiliated person of an affiliated person of a 

Fund of Funds, because an investment adviser to 

the ETF is also an investment adviser to the Fund 

of Funds. 

directly or indirectly owned, controlled, 

or held with power to vote by the other 

person; and (c) any person directly or 

indirectly controlling, controlled by, or 

under common control with the other 

person. 

2. Applicants state that a Fund of 

Funds and the Affiliated Funds might 

be deemed to be under common control 

of the Adviser and therefore affiliated 

persons of one another. Applicants also 

state that a Fund of Funds and the 

Unaffiliated Funds might be deemed to 

be affiliated persons of one another if 

the Fund of Funds acquires 5% or more 

of an Unaffiliated Fund’s outstanding 

voting securities. In light of these and 

other possible affiliations, section 17(a) 

could prevent an Underlying Fund from 

selling shares to and redeeming shares 

from a Fund of Funds. 

3. Section 17(b) of the Act authorizes 

the Commission to grant an order 

permitting a transaction otherwise 

prohibited by section 17(a) if it finds 

that (a) The terms of the proposed 

transaction are fair and reasonable and 

do not involve overreaching on the part 

of any person concerned; (b) the 

proposed transaction is consistent with 

the policies of each registered 

investment company involved; and (c) 

the proposed transaction is consistent 

with the general purposes of the Act. 

Section 6(c) of the Act permits the 

Commission to exempt any persons or 

transactions from any provision of the 

Act if 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. 

4. Applicants submit that the 

proposed transactions satisfy the 

standards for relief under sections 17(b) 

and 6(c) of the Act.7 Applicants state 

that the terms of the transactions are 

reasonable and fair and do not involve 

overreaching. Applicants state that the 

terms upon which an Underlying Fund 

will sell its shares to or purchase its 

shares from a Fund of Funds will be 

based on the net asset value of the 

Underlying Fund.8 Applicants state that 

the proposed transactions will be 

consistent with the policies of each 

Fund of Funds and each Underlying 

Fund and with the general purposes of 

the Act. 

Other Investments by Same Group 

Investing Funds 

1. Section 12(d)(1)(G) of the Act 

provides that section 12(d)(1) will not 

apply to securities of an acquired 

company purchased by an acquiring 

company if: (i) The acquiring company 

and acquired company are part of the 

same group of investment companies; 

(ii) the acquiring company holds only 

securities of acquired companies that 

are part of the same group of investment 

companies, government securities, and 

short-term paper; (iii) the aggregate sales 

loads and distribution-related fees of the 

acquiring company and the acquired 

company are not excessive under rules 

adopted pursuant to section 22(b) or 

section 22(c) of the Act by a securities 

association registered under section 15A 

of the Exchange Act of 1934 (‘‘Exchange 

Act’’) or by the Commission; and (iv) the 

acquired company has a policy that 

prohibits it from acquiring securities of 

registered open-end management 

investment companies or registered unit 

investment trusts in reliance on section 

12(d)(1)(F) or (G) of the Act. 

2. Rule 12d1–2 under the Act permits 

a registered open-end investment 

company or a registered unit investment 

trust that relies on section 12(d)(1)(G) of 

the Act to acquire, in addition to 

securities issued by another registered 

investment company in the same group 

of investment companies, government 

securities, and short-term paper: (1) 

Securities issued by an investment 

company that is not in the same group 

of investment companies, when the 

acquisition is in reliance on section 

12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) 

securities (other than securities issued 

by an investment company); and (3) 

securities issued by a money market 

fund, when the investment is in reliance 

on rule 12d1–1 under the Act. For the 

purposes of rule 12d1–2, ‘‘securities’’ 

means any security as defined in section 

2(a)(36) of the Act. 

3. Applicants state that the proposed 

arrangement would comply with the 

provisions of rule 12d1–2 under the Act, 

but for the fact that a Same Group 

Investing Fund may invest a portion of 

its assets in Other Investments. 

Applicants request an order under 

section 6(c) of the Act for an exemption 

from rule 12d1–2(a) to allow the Same 

Group Investing Funds to invest in 

Other Investments. Applicants assert 

that permitting Same Group Investing 

Funds to invest in Other Investments as 

described in the application would not 

raise any of the concerns that the 

requirements of section 12(d)(1) were 

designed to address. 

Applicants’ Conditions 

Investments by Funds of Funds in 

Underlying Funds 

Applicants agree that the relief to 

permit Funds of Funds to invest in 

Underlying Funds shall be subject to the 

following conditions: 

1. The members of an Advisory Group 

will not control (individually or in the 

aggregate) an Unaffiliated Fund within 

the meaning of section 2(a)(9) of the Act. 

The members of a Subadvisory Group 

will not control (individually or in the 

aggregate) an Unaffiliated Fund within 

the meaning of section 2(a)(9) of the Act. 

If, as a result of a decrease in the 

outstanding voting securities of an 

Unaffiliated Fund, the Advisory Group 

or a Subadvisory Group, each in the 

aggregate, becomes a holder of more 

than 25 percent of the outstanding 

voting securities of the Unaffiliated 

Fund, then the Advisory Group or the 

Subadvisory Group will vote its shares 

of the Unaffiliated Fund in the same 

proportion as the vote of all other 

holders of the Unaffiliated Fund’s 

shares. This condition will not apply to 

a Subadvisory Group with respect to an 

Unaffiliated Fund for which the 

Subadviser or a person controlling, 

controlled by, or under common control 

with the Subadviser acts as the 

investment adviser within the meaning 

of section 2(a)(20)(A) of the Act (in the 

case of an Unaffiliated Investment 

Company) or as the sponsor (in the case 

of an Unaffiliated Trust). 

2. No Fund of Funds or Fund of 

Funds Affiliate will cause any existing 

or potential investment by the Fund of 

Funds in shares of an Unaffiliated Fund 

to influence the terms of any services or 

transactions between the Fund of Funds 

or a Fund of Funds Affiliate and the 

Unaffiliated Fund or an Unaffiliated 

Fund Affiliate. 

3. The Board of each Fund of Funds, 

including a majority of the Independent 

Trustees, will adopt procedures 

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Federal Register / Vol. 77, No. 83 / Monday, April 30, 2012 / Notices 25513 

reasonably designed to assure that its 

Adviser and any Subadviser(s) to the 

Fund of Funds are conducting the 

investment program of the Fund of 

Funds without taking into account any 

consideration received by the Fund of 

Funds or Fund of Funds Affiliate from 

an Unaffiliated Fund or an Unaffiliated 

Fund Affiliate in connection with any 

services or transactions. 

4. Once an investment by a Fund of 

Funds in the securities of an 

Unaffiliated Investment Company 

exceeds the limit of section 

12(d)(1)(A)(i) of the Act, the Board of 

the Unaffiliated Investment Company, 

including a majority of the Independent 

Trustees, will determine that any 

consideration paid by the Unaffiliated 

Investment Company to a Fund of 

Funds or a Fund of Funds Affiliate in 

connection with any services or 

transactions: (a) Is fair and reasonable in 

relation to the nature and quality of the 

services and benefits received by the 

Unaffiliated Investment Company; (b) is 

within the range of consideration that 

the Unaffiliated Investment Company 

would be required to pay to another 

unaffiliated entity in connection with 

the same services or transactions; and 

(c) does not involve overreaching on the 

part of any person concerned. This 

condition does not apply with respect to 

any services or transactions between an 

Unaffiliated Investment Company and 

its investment adviser(s) or any person 

controlling, controlled by, or under 

common control with such investment 

adviser(s). 

5. No Fund of Funds or Fund of 

Funds Affiliate (except to the extent it 

is acting in its capacity as an investment 

adviser to an Unaffiliated Investment 

Company or sponsor to an Unaffiliated 

Trust) will cause an Unaffiliated Fund 

to purchase a security in any Affiliated 

Underwriting. 

6. The Board of an Unaffiliated 

Investment Company, including a 

majority of the Independent Trustees, 

will adopt procedures reasonably 

designed to monitor any purchases of 

securities by the Unaffiliated Investment 

Company in an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of the Unaffiliated 

Investment Company exceeds the limit 

of section 12(d)(1)(A)(i) of the Act, 

including any purchases made directly 

from an Underwriting Affiliate. The 

Board of the Unaffiliated Investment 

Company will review these purchases 

periodically, but no less frequently than 

annually, to determine whether the 

purchases were influenced by the 

investment by the Fund of Funds in the 

Unaffiliated Investment Company. The 

Board of the Unaffiliated Investment 

Company will consider, among other 

things, (a) Whether the purchases were 

consistent with the investment 

objectives and policies of the 

Unaffiliated Investment Company; (b) 

how the performance of securities 

purchased in an Affiliated Underwriting 

compares to the performance of 

comparable securities purchased during 

a comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (c) 

whether the amount of securities 

purchased by the Unaffiliated 

Investment Company in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board of the Unaffiliated Investment 

Company will take any appropriate 

actions based on its review, including, 

if appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interests 

of shareholders. 

7. Each Unaffiliated Investment 

Company shall maintain and preserve 

permanently in an easily accessible 

place a written copy of the procedures 

described in the preceding condition, 

and any modifications to such 

procedures, and shall maintain and 

preserve for a period not less than six 

years from the end of the fiscal year in 

which any purchase in an Affiliated 

Underwriting occurred, the first two 

years in an easily accessible place, a 

written record of each purchase of 

securities in an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of an Unaffiliated 

Investment Company exceeds the limit 

of section 12(d)(1)(A)(i) of the Act, 

setting forth the: (a) Party from whom 

the securities were acquired, (b) identity 

of the underwriting syndicate’s 

members, (c) terms of the purchase, and 

(d) information or materials upon which 

the determinations of the Board of the 

Unaffiliated Investment Company were 

made. 

8. Prior to its investment in shares of 

an Unaffiliated Investment Company in 

excess of the limit in section 

12(d)(1)(A)(i) of the Act, the Fund of 

Funds and the Unaffiliated Investment 

Company will execute a Participation 

Agreement stating, without limitation, 

that their Boards and their investment 

advisers understand the terms and 

conditions of the order and agree to 

fulfill their responsibilities under the 

order. At the time of its investment in 

shares of an Unaffiliated Investment 

Company in excess of the limit in 

section 12(d)(1)(A)(i), a Fund of Funds 

will notify the Unaffiliated Investment 

Company of the investment. At such 

time, the Fund of Funds will also 

transmit to the Unaffiliated Investment 

Company a list of the names of each 

Fund of Funds Affiliate and 

Underwriting Affiliate. The Fund of 

Funds will notify the Unaffiliated 

Investment Company of any changes to 

the list of the names as soon as 

reasonably practicable after a change 

occurs. The Unaffiliated Investment 

Company and the Fund of Funds will 

maintain and preserve a copy of the 

order, the Participation Agreement, and 

the list with any updated information 

for the duration of the investment and 

for a period of not less than six years 

thereafter, the first two years in an 

easily accessible place. 

9. Before approving any advisory 

contract under section 15 of the Act, the 

Board of each Fund of Funds, including 

a majority of the Independent Trustees, 

shall find that the advisory fees charged 

under such advisory contract are based 

on services provided that are in addition 

to, rather than duplicative of, services 

provided under the advisory contract(s) 

of any Underlying Fund in which the 

Fund of Funds may invest. Such finding 

and the basis upon which the finding 

was made will be recorded fully in the 

minute books of the appropriate Fund of 

Funds. 

10. The Adviser will waive fees 

otherwise payable to it by a Fund of 

Funds in an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company under 

rule 12b–1 under the Act) received from 

an Unaffiliated Fund by the Adviser, or 

an affiliated person of the Adviser, other 

than any advisory fees paid to the 

Adviser or its affiliated person by an 

Unaffiliated Investment Company, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated Fund. 

Any Subadviser will waive fees 

otherwise payable to the Subadviser, 

directly or indirectly, by the Fund of 

Funds in an amount at least equal to any 

compensation received by the 

Subadviser, or an affiliated person of the 

Subadviser, from an Unaffiliated Fund, 

other than any advisory fees paid to the 

Subadviser or its affiliated person by an 

Unaffiliated Investment Company, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated Fund 

made at the direction of the Subadviser. 

In the event that the Subadviser waives 

fees, the benefit of the waiver will be 

passed through to the Fund of Funds. 

11. No Underlying Fund will acquire 

securities of any other investment 

company or company relying on section 

3(c)(1) or 3(c)(7) of the Act in excess of 

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25514 Federal Register / Vol. 77, No. 83 / Monday, April 30, 2012 / Notices 

the limits contained in section 

12(d)(1)(A) of the Act, except to the 

extent that such Underlying Fund: (a) 

Receives securities of another 

investment company as a dividend or as 

a result of a plan of reorganization of a 

company (other than a plan devised for 

the purpose of evading section 12(d)(1) 

of the Act); or (b) acquires (or is deemed 

to have acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to (i) 

acquire securities of one or more 

investment companies for short-term 

cash management purposes, or (ii) 

engage in interfund borrowing and 

lending transactions. 

12. Any sales charges and/or service 

fees charged with respect to shares of a 

Fund of Funds will not exceed the 

limits applicable to fund of funds set 

forth in NASD Conduct Rule 2830. 

Other Investments by Same Group 

Investing Funds 

Applicants agree that the relief to 

permit Same Group Investing Funds to 

invest in Other Investments shall be 

subject to the following condition: 

13. Applicants will comply with all 

provisions of rule 12d1–2 under the Act, 

except for paragraph (a)(2) to the extent 

that it restricts any Same Group 

Investing Fund from investing in Other 

Investments as described in the 

application. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–10290 Filed 4–27–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

30045; 812–13868] 

Northern Trust Investments, Inc., et al.; 

Notice of Application 

April 24, 2012. 

AGENCY: 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. 

APPLICANTS: Northern Trust 

Investments, Inc. (‘‘Northern Trust’’), 

FlexShares Trust (‘‘Trust’’), and 

Foreside Fund Services, LLC 

(‘‘Foreside’’). 

SUMMARY OF APPLICATION: Applicants 

request an order that permits: (a) An 

actively managed series of the Trust to 

issue shares (‘‘Shares’’) redeemable in 

large aggregations only (‘‘Creation 

Units’’); (b) secondary market 

transactions in Shares to occur at 

negotiated market prices; (c) certain 

series to pay redemption proceeds, 

under certain circumstances, more than 

seven days from the tender of Shares for 

redemption; (d) certain affiliated 

persons of the series to deposit 

securities into, and receive securities 

from, the series in connection with the 

purchase and redemption of Creation 

Units; (e) certain registered management 

investment companies and unit 

investment trusts outside of the same 

group of investment companies as the 

series to acquire Shares; and (f) certain 

series to perform creations and 

redemptions of Shares in-kind in a 

master-feeder structure. 

DATES: Filing Dates: The application was 

filed on February 11, 2011, and 

amended on August 8, 2011, January 11, 

2012, March 9, 2012, and April 23, 

2012. 

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 May 21, 2012, 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: Secretary, U.S. Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

Applicants, c/o Northern Trust 

Investments, Inc., 50 S. LaSalle Street, 

Chicago, IL 60603. 

FOR FURTHER INFORMATION CONTACT: 

Courtney S. Thornton, Senior Counsel, 

at (202) 551–6812 or Mary Kay Frech, 

Branch Chief, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 

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 http:// 

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. The Trust is a statutory trust 

organized under the laws of the state of 

Maryland and is registered under the 

Act as an open-end management 

investment company. Subject to market 

conditions, the initial series of the Trust 

(‘‘Initial Fund’’) will be FlexShares 

Liquid Access Fund, which seeks to 

achieve its investment objective by 

investing in a non-diversified portfolio 

of fixed income instruments, including 

bonds, debt securities and other similar 

instruments issued by U.S. and non-U.S. 

public and private sector entities. 

2. Northern Trust is an Illinois state 

bank registered as an investment adviser 

under the Investment Advisers Act of 

1940 (the ‘‘Advisers Act’’) and will be 

the investment adviser to the Initial 

Fund. Subject to approval by the board 

of trustees (‘‘Board’’) of the Trust, 

Northern Trust, or any entity 

controlling, controlled by, or under 

common control with Northern Trust 

(collectively with Northern Trust, the 

‘‘Adviser’’) will advise the Funds (as 

defined below). The Adviser may enter 

into subadvisory agreements with one or 

more investment advisers to serve as 

subadvisers to a Fund (each, a 

‘‘Subadviser’’). Any Subadviser will be 

registered under the Advisers Act. 

3. The Trust may enter into a 

distribution agreement with one or more 

distributors (each a ‘‘Distributor’’). 

Foreside, a Delaware limited liability 

company, is expected to serve as 

Distributor of the Initial Fund. Foreside 

is, and each Distributor will be, a 

broker-dealer (‘‘Broker’’) registered 

under the Securities Exchange Act of 

1934 (‘‘Exchange Act’’). No Distributor 

is or will be affiliated with any national 

securities exchange as defined in 

section 2(a)(26) of the Act (‘‘Stock 

Exchange’’). A Distributor may be an 

‘‘affiliated person,’’ within the meaning 

of section 2(a)(3) of the Act, of the 

Adviser or any Subadviser. 

4. Applicants are requesting relief to 

permit the Trust to create and operate 

certain actively managed series of the 

Trust that offer Shares with limited 

redeemability (‘‘ETF Relief’’) and to 

operate certain series in a master-feeder 

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