[Federal Register Volume 63, Number 227 (Wednesday, November 25, 1998)]
[Notices]
[Pages 65266-65268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31443]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-23540; File No. 812-11258]
INVESCO Value Trust; Notice of Application
November 18, 1998.
AGENCY: The Securities and Exchange Commission (``Commission'').
ACTION: Notice of application under Section 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: INVESCO Value Trust (the ``Trust'') on behalf
of INVESCO Total Return Fund (the ``Fund''), seeks an exemption
permitting an in-kind redemption of Fund shares held by an affiliated
person of the Trust.
APPLICANT: The Trust on behalf of the Fund.
FILING DATE: The application was filed on August 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 Secretary of the
Commission 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 14, 1998, 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 may request notification of a hearing by
writing to the Secretary of the Commission.
ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. Applicant, c/o Glen A. Payne,
Esq., INVESCO Funds Group, Inc., 7800 East Union Avenue, Denver,
Colorado 80237.
FOR FURTHER INFORMATION CONTACT:
Ethan D. Corey, Senior Counsel, at (202) 942-0675, or Kevin M.
Kirchoff, Branch Chief, at (202) 942-0672, Office of Insurance
Products, Division of Investment Management.
SUPPLEMENTARY INFORMATION: The following is a summary of the
application; the complete application may be obtained for a fee from
the Public Reference Branch of the Commission, 450 5th Street, N.W.,
Washington, D.C. 20549 (tel. (202) 942-8090).
Applicant's Representations
1. The Trust, a Massachusetts business trust, currently offers
three series, including the Fund. INVESCO Funds Group, Inc.
(``Adviser'') is the Trust's investment adviser. INVESCO Capital
Management, Inc. serves as the Fund's sub-adviser.
2. Connecticut General Life Insurance Company (``Connecticut
General'') is a Connecticut life insurance company. Separate Account
55K is a pooled separate account established and maintained by
Connecticut General for receipt of amounts allocated to it in
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accordance with the terms of group annuity contracts and funding
agreements. All amounts allocated to Separate Account 55K are invested
in shares of the Fund. Connecticut General, on behalf of Separate
Account 55K (the ``Affiliated Shareholder'') owned beneficially, as of
June 30, 1998, 14.15% of the outstanding shares of the Fund.
3. Connecticut General has determined that it would be in the best
interest of pension, profit-sharing and annuity plans invested in
Separate Account 55K if the shares of the Fund owned by the Affiliated
Shareholder were redeemed and the proceeds placed in Separate Account
55K, which thereafter will be separately managed by Adviser or its
affiliate. Consequently, the Affiliated Shareholder has advised the
Trust that it expects to redeem all of its shares of the Fund and
reinvest the proceeds in Separate Account 55K.
4. The Fund's prospectus and statement of additional information
provide that shares may be redeemed at the net asset value per share
next determined after receipt of a proper redemption request. If,
however, the Board of Trustees of the Trust (the ``Board'') determines
that conditions exist which make payment of redemption proceeds wholly
in cash unwise or undesirable, the Fund may satisfy all or part of a
redemption request by delivering readily marketable portfolio
securities to a redeeming shareholder. The Board has determined that it
would be in the best interests of the Fund and its shareholders to
redeem the shares of the Affiliated Shareholder in-kind as described
below.
5. Applicant proposes to redeem the shares of the Affiliated
Shareholder in the form of a pro rata distribution of each portfolio
security held by the Fund after excluding: (a) Securities which, if
distributed, would be required to be registered under the Securities
Act of 1933; and (b) certain portfolio assets (such as futures and
options contracts and repurchase agreements) that, although they may be
liquid and marketable, must be traded through the marketplace or with
the counterparty to the transaction in order to effect a change in
beneficial ownership.
6. Securities to be distributed to the Affiliated Shareholder
through the in-kind redemption will be further limited to securities
which are traded on a public securities market or for which quoted bid
prices are available. Cash will be paid for that portion of the Fund's
assets represented by cash equivalents (such as certificates of
deposit, 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.
Applicant's Legal Analysis
1. Section 17(a)(2) of the Act prohibits affiliated persons of a
registered investment company from knowingly purchasing any security
from the company. Section 2(a)(3)(A) of the Act defines ``affiliated
person'' of another person to include any person owning 5% or more of
the outstanding voting securities of the other person. The Affiliated
Shareholder is an affiliated person of the Fund under section
2(a)(3)(A) of the Act because it owns beneficially in excess of 5% of
the Funds shares. In addition, the Affiliated Shareholder may be deemed
to be an affiliated person of the Fund under Section 2(a)(3)(C) of the
Act because the Affiliated Shareholder and the Fund may be deemed to be
under the common control of Adviser, which serves as investment adviser
of the Fund and which (or its affiliate), following the redemption,
will be retained by the Affiliated Shareholder to serve as investment
adviser to Separate Account 55K. To the extent that the proposed in-
kind redemption would be considered to involve the ``purchase'' of
portfolio securities (of which the Fund is not the issuer) by the
Affiliated Shareholder, the proposed in-kind redemption would be
prohibited by Section 17(a)(2) of the Act.
2. Section 17(b) of the Act provides that 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 purposes of the Act. Applicant submits that the terms of
the proposed in-kind redemption by the Affiliated Shareholder meet the
standards set forth in Section 17(b).
3. Applicant asserts that the terms of the proposed in-kind
redemption do not involve overreaching on the part of any person and
are reasonable and fair to the Fund, its shareholders and the
Affiliated Shareholder. The Affiliated Shareholder will have no choice
as to the type of consideration to be received in connection with its
redemption request, and neither the Adviser nor the Affiliated
Shareholder will have any opportunity to select the specific portfolio
securities to be distributed. In addition, the Fund will use an
objective, verifiable standard to value any security to be distributed
pursuant to the proposed in-kind redemption. In addition, the proposed
in-kind redemption is consistent with the investment policies of the
Fund, as set forth in its prospectus, which expressly discloses the
Fund's ability to redeem shares in-kind. Finally, applicant asserts
that the proposed in-kind redemption is consistent with the general
purposes of the Act to protect shareholders of investment companies
from self-dealing on the part of investment company affiliates to the
detriment of other shareholders because the Affiliated Shareholder
would not receive any advantage not available to other shareholders if
the proposed in-kind redemption is permitted.
Applicant's Conditions
1. Applicant has consented to the following conditions:
a. The protfolio securities of the Fund distributed to the
Affiliated Shareholder pursuant to the 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 prices are available.
b. The In-Kind Securities will be distributed by the Fund on a pro
rate basis after excluding: (1) Securities which, if distributed, would
be required to be register under the Securities Act of 1933; and (2)
certain portfolio assets (such as futures and options contracts and
repurchase agreements) that, although they may be liquid and
marketable, must be traded through the marketplace or 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 represnted by cash equivalents (such as certificates of deposit,
commercail paper, and repurchase agreements) and other assets which are
not readily distrutable (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 distridution), fractional shares, and accruals
on such securities.
c. The In-Kind Securities distributed to the Affiliated Shareholder
will be
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valued in the same manner as they would be valued for 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
avaialble, is their last reported sales price on the exhange 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 prices
(or, if no asked price is available, the last quoted bid price).
2. 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 security
distributed, the terms of the distribution, and the information or
materials upon which the valuation was made.
Conclusion
For the reasons summarized above, Applicant assets that the
requested exemption is 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.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-31443 Filed 11-24-98; 8:45 am]
BILLING CODE 8010-01-M