[Federal Register Volume 63, Number 225 (Monday, November 23, 1998)]
[Notices]
[Pages 64743-64744]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31228]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 23537; 812-11320]


Kemper Global/International Series, Inc., et al.; Notice of 
Application

November 17, 1998.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under sections 6(c) and 17(b) of the 
Investment Company Act of 1940 (the ``Act'') for an exemption from 
section 17(a) of the Act.

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SUMMARY OF APPLICATION: Kemper Global/International Series, Inc. (the 
``Company'') and Scudder Kemper Investments, Inc. (the ``Adviser'') 
seek an order to permit in-kind redemptions of shares of The Growth 
Fund of Spain (the ``Fund''), a portfolio of the Company, by certain 
affiliated shareholders of the Fund.

applicants: Company and Adviser.

FILING DATES: The application was filed on September 23, 1998 and 
amended on November 12, 1998.

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 December 10, 1998, and should be accompanied by proof of 
service on the 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, Securities and Exchange Commission, 450 Fifth 
Street, N.W., Washington, D.C. 20549. Applicants, c/o William J. 
Kotapish, Esq., Dechert Price & Rhoads, 1775 Eye Street, N.W., 
Washington, D.C. 20006-2401.

FOR FURTHER INFORMATION CONTACT:
Emerson S. Davis, Sr., Senior Counsel, at (202) 942-0714, or George J. 
Zornada, Branch Chief, at (202) 942-0564 (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 for a fee from 
the Commission's Public Reference Branch, 450 Fifth Street, N.W., 
Washington, D.C. 20549 (telephone (202) 942-8090).

Applicants' Representations

    1. The Company, a Maryland corporation, is registered under the Act 
as an open-end management investment company and operates as a series 
company. The Fund will be established as a new series of the Company 
and will be a successor to The Growth Fund of Spain, Inc., a closed-end 
management investment company that will convert to an open-end 
management investment company and reorganize as the Fund. The 
reorganization is expected to occur on December 11, 1998. The Fund will 
invest primarily in equity securities of Spanish issuers. The Adviser 
is registered under the Investment Advisers Act of 1940 and serves as 
investment adviser to the Fund.
    2. Applicants state that four shareholders are expected to own 5% 
or more of the outstanding shares of the Fund.\1\ Applicants request 
relief to permit the Fund to satisfy redemption requests made by any 
shareholders of the Fund who, at the time of such redemption requests, 
are ``affiliated persons'' of the Fund solely by reason of owning, 
controlling, or holding with the power to vote, five percent or more of 
the Fund's shares (``Affiliated Shareholders'') by distributing 
portfolio securities in-kind. The relief sought would not extend to 
shareholders who are ``affiliated persons'' of the Fund within the 
meaning of sections 2(a)(3)(B) through (F) of the Act.
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    \1\ These shareholders are: Bankgesellshaft Berlin AG (11.30%), 
Cargill Financial Markets PLC (9.34%), FMR Corporation (5.31%), and 
Stichting Azko Pensioenfonds (5.5%).
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    3. The Fund's prospectus and statement of additional information 
provide that, in limited circumstances, the Fund may satisfy all or 
part of a redemption request by distribution in-

[[Page 64744]]

kind of portfolio securities. The board of directors of the Fund 
(``Board''), including all of the directors who are not ``interested 
persons'' as defined in section 2(a)(19) of the Act, has determined 
that it would be in the best interests of the Fund and its shareholders 
to pay to an Affiliated Shareholder the redemption price for its shares 
in-kind.\2\
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    \2\ The Fund has elected to be governed by the provisions of 
rule 18f-1 under the Act.
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Applicants' Legal Analysis

    1. Section 17(a)(2) of the Act prohibits an affiliated person of a 
registered investment company, or an affiliated person of such person, 
acting as principal, from knowingly purchasing any security or other 
property (except securities of which the seller is the issuer) from the 
registered investment company. Section 2(a)(3)(A) of the Act defines an 
``affiliated person'' to include any person owning 5% or more of the 
outstanding voting securities of the other person. Applicants state 
that to the extent that an in-kind redemption could be deemed to 
involve the purchase of portfolios securities (of which the Fund is not 
the issuer) by an Affiliated Shareholder, the proposed redemption in-
kind would be prohibited by section 17(a)(2).
    2. Section 17(b) of the Act provides that, notwithstanding section 
17(a) of the Act, the Commission shall exempt a proposed transaction 
from section 17(a) if evidence establishes that: (a) the terms of the 
proposed transaction are reasonable and fair and do not involve 
overreaching; (b) the proposed transaction is consistent with the 
policy of each registered investment company involved; and (c) the 
proposed transaction is consistent with the general purpose of the Act.
    3. Section 6(c) 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 the provisions of the Act, 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.
    4. Applicants request an order under sections 6(c) and 17(b) of the 
Act exempting applicants from section 17(a) of the Act to permit 
Affiliated Shareholders to redeem their shares in-kind. The requested 
order would not apply to redemptions by shareholders who are affiliated 
persons of the Fund within the meaning of sections 2(a)(3)(B) through 
(F) of the Act.
    5. Applicants submit that the terms of the proposed in-kind 
redemptions by Affiliated Shareholders meet the standards set forth in 
sections 6(c) and 17(b) of the Act. Applicants assert that neither the 
Fund nor the Affiliated Shareholders will have any choice as to the 
type of consideration to be received in connection with a redemption 
request, and neither the Adviser nor the Affiliated Shareholder will 
have any opportunity to select the specific portfolio securities to be 
distributed. Applicants further state that the portfolio securities to 
be distributed in the proposed in-kind redemptions will be valued 
according to an objective, verifiable standard and the in-kind 
redemptions are consistent with the investment policies of the Fund. 
Applicants also state that the proposed in-kind redemptions are 
consistent with the general purposes of the Act because the Affiliated 
Shareholders would not receive any advantage not available to other 
redeeming shareholders.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. The securities distributed pursuant to a redemption in-kind (the 
``In-Kind Securities'') will be limited to securities that are traded 
on a public securities market or for which quoted bid and asked prices 
are available.
    2. The In-Kind Securities will be distributed to Affiliated 
Shareholders on a pro rata basis after excluding: (a) Securities which, 
if distributed, would be required to be registered under the Securities 
Act of 1933; (b) securities issued by entities in countries which 
restrict or prohibit the holding of securities by non-nationals other 
than through qualified investment vehicles, such as the Fund; and (c) 
certain portfolio assets (such as forward foreign currency exchange 
contracts, futures and options contracts, and repurchase agreements) 
that, although they may be liquid and marketable, involve the 
assumption of contractual obligations, require special trading 
facilities or can only be traded with the counterparty to the 
transaction in order to effect a change in beneficial ownership. Cash 
will be paid for that portion of the Fund's assets represented by cash 
equivalents (such as certificates of deposits, commercial paper and 
repurchase agreements) and other assets which are not readily 
distributable (including receivables and prepaid expenses), net of all 
liabilities (including accounts payable). In addition, the Fund will 
distribute cash in lieu of securities held in its portfolio not 
amounting to round lots (or which would not amount to round lots if 
included in the in-kind distribution), fractional shares, and accruals 
on such securities.
    3. The In-Kind Securities will be valued in the same manner as they 
would be valued for the purposes of computing the Fund's net asset 
value, which, in the case of securities traded on a public securities 
market for which quotations are available, is their last reported sales 
price on the exchange on which the securities are primarily traded or 
at the last sales price on the national securities market, or, if the 
securities are not listed on an exchange or the national securities 
market, or, if there is no such reported price, the average of the most 
recent bid and asked price (or, if no such price is available, the last 
quoted bid price).
    4. The Board, including a majority of the directors who are not 
``interested persons'' (as defined in section 2(a)(19) of the Act) of 
the Fund, will determine no less frequently than annually: (a) Whether 
the In-Kind Securities, if any, have been distributed in accordance 
with conditions 1 and 2; (b) whether the In-Kind Securities, if any, 
have been valued in accordance with condition 3; and (c) whether the 
distribution of any such In-Kind Securities is consistent with the 
policies of the Fund as reflected in the prospectus. In addition, the 
Board shall make and approve such changes as the Board deems necessary 
in its procedures for monitoring applicants' compliance with the terms 
and conditions of this application.
    5. The Fund will maintain and preserve for a period of not less 
than six years from the end of the fiscal year in which the proposed 
in-kind redemption occurs, the first two years in an easily accessible 
place, a written record of each redemption that includes the identity 
of the Affiliated Shareholder, a description of each security 
distributed, the terms of the distribution, and the information or 
materials upon which the valuation was made.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-31228 Filed 11-20-98; 8:45 am]
BILLING CODE 8010-01-M