Applications, hearings, determinations, etc.: INVESCO Value Trust,

[Federal Register: November 25, 1998 (Volume 63, Number 227)]

[Notices]

[Page 65266-65268]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr25no98-146]

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.

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 filedon 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:

   1. 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.

   2. 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.

   3. 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. 98-31443Filed11-24-98; 8:45 am]

   BILLING CODE 8010-01-M