[Federal Register Volume 64, Number 72 (Thursday, April 15, 1999)]
[Notices]
[Pages 18645-18646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9357]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-23778; 812-11570]


INVESCO Global Health Sciences Fund et al.; Notice of Application

April 9, 1999.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order under section 6(c) of the 
Investment Company Act of 1940 (the ``Act'') for an exemption from 
section 19(b) of the Act, and rule 19b-1 under the Act.

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SUMMARY OF APPLICATION: Applicants request an order to amend a prior 
order that permits the INVESCO Global Health Sciences Fund (the 
``Fund'') to make up to four distributions of net long-term capital 
gains in any one taxable year, so long as the Fund maintains in effect 
a distribution policy calling for quarterly distributions of a mixed 
percentage of its net asset value (``NAV'') (``Prior Order'').\1\

    \1\ Invesco Global Health Sciences Fund, Investment Company Act 
Release Nos. 23061 (March 6, 1998) (notice) and 23099 (April 3, 
1998) (order).
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APPLICANTS: The Fund and INVESCO Funds Group, Inc. (``IFG'').

FILING DATE: The application was filed on April 8, 1999.

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 4, 1999, 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 Commission's 
Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW, Washington, DC 
20549-0609. Applicants, 7800 East Union Avenue, Denver, CO 80237.

FOR FURTHER INFORMATION CONTACT: John K. Forst, Attorney Advisor, at 
(202) 942-0569, or Mary Kay Frech, 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, NW, 
Washington, DC 20549-0102 (tel. (202) 942-8090).

Applicants' Representations

    1. The Fund is a closed-end diversified management investment 
company organized as a Massachusetts business trust and registered 
under the

[[Page 18646]]

Act. The Fund's investment objective is capital appreciation through 
investment in health sciences related business sectors. IFG, an 
investment adviser registered under the Investment Advisers Act of 
1940, serves as the Fund's investment adviser.
    2. On October 6, 1997, the Fund's board of trustees (``Board'') 
adopted a distribution policy (the ``Distribution Policy'') that calls 
for four quarterly distributions of 2.5% of the Fund's NAV at the time 
of the declaration, for a total of approximately 10% of the NAV per 
year. Applicants believe that the Distribution Policy will help reduce 
the discount for NAV at which the Fund's shares typically trade.
    3. On April 3, 1998, the Commission issued the Prior Order. The 
requested order (``Amended Order'') would amend the condition in the 
Prior Order concerning rights offerings by the Fund.\2\
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    \2\ Applicants request that the relief extend to any other 
registered closed-end management investment company in the future 
advised by IFG or any entity controlling, controlled by, or under 
common control (within the meaning of section 2(a)(9) of the Act) 
with IFG (``Future Fund''). Applicants state that any Future Fund 
that relies on the relief will do so only in accordance with the 
terms and conditions of the application.
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Applicant's Legal Analysis

    1. Section 19(b) of the Act provides that a registered investment 
company may not, in contravention of such rules, regulations, or orders 
as the Commission may prescribe, distribute long-term capital gains 
more often than once every twelve months. Rule 19b-1(a) under the Act 
permits a registered investment company, with respect to any one 
taxable year, to make one capital gains distribution, as defined in 
section 852(b)(3)(C) of the Internal Revenue Code of 1986, as amended 
(the ``Code''). Rule 19b-1(a) also permits a supplemental distribution 
to be made pursuant to section 855 of the Code not exceeding 10% of the 
total amount distributed for the year. Rule 19b-1(f) permits one 
additional long-term capital gains distribution to be made to avoid the 
excise tax under section 4982 of the Code.
    2. Applicants state that one of the concerns underlying section 
19(b) and rule 19b-1 is that frequent capital gains distributions could 
facilitate improper sales practices, including, in particular, the 
practice of urging an investor to purchase fund shares on the basis of 
an upcoming dividend (``selling the dividend''), when the dividend 
would result in an immediate corresponding reduction in NAV and would 
be, in effect, a return of the investor's capital. Applicants submit 
that this concern does not apply to closed-end investment companies, 
such as the Fund, that do not continuously distribute shares.
    3. Applicants also assert that the requested amended condition 
would protect against the concern about ``selling the dividend'' in 
connection with a rights offering by the Fund. Applicants state also 
that if the Fund makes a rights offering to its shareholders, the 
rights offering will be timed so that shares issuable upon exercise of 
the rights will be issued only in the six week period immediately 
following the record date for the declaration of a dividend. Thus, the 
abuse of selling the dividend could not occur as a matter of timing. 
Applicants further state that any rights offering by the Fund will 
comply with all Commission and staff guidelines concerning such 
offering. In determining compliance with these guidelines, the Board 
may rely on the advice of outside counsel, IFG and other appropriate 
persons, and will consider, among other things, the brokerage 
commissions that would be paid in connection with the offering. Any 
rights offering by the Fund will also comply with any applicable NASD 
rules regarding the fairness of compensation.
    4. 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 any provisions of the Act, 
or any rule thereunder, 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. For the reasons stated above, applicants believe that the 
requested amendment to the Prior Order meets the standards set forth in 
section 6(c) of the Act.

Applicant's Condition

    Applicants agree that the Amended Order shall terminate upon the 
effective date of a registration statement under the Securities Act of 
1933 for any future public offering by the Fund of its shares other 
than: (i) a rights offering to shareholders of the Fund, in which: (a) 
shares are issued only within the six-week period immediately following 
the record date of a quarterly dividend, (b) the prospectus for such 
rights offering makes it clear that shareholders exercising the rights 
will not be entitled to receive such dividend; and (c) the Fund has not 
engaged in more than one rights offering during any given calendar 
year; or (ii) an offering in connection with a merger, consolidation, 
acquisition, or reorganization of the Fund; unless the Fund has 
received from the staff of the Commission written assurance that the 
Amended Order will remain in effect.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-9357 Filed 4-14-99; 8:45 am]
BILLING CODE 8010-01-M