[Federal Register Volume 60, Number 122 (Monday, June 26, 1995)]
[Notices]
[Pages 33024-33025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15573]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21152; 812-9592]
Van Kampen American Capital Equity Opportunity Trust, Series 10
June 20, 1995.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of Application for Exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANT: Van Kampen American Capital Equity Opportunity Trust, Series
10.
RELEVANT ACT SECTIONS: Order requested under section 6(c) of the Act
that would exempt applicant from section 12(d)(3) of the Act.
SUMMARY OF APPLICATION: Applicant requests an order on behalf of itself
and subsequently established series (the ``Series'') to permit each
Series to invest up to 10.5% of its total assets in securities of
issuers that derived more than 15% of their gross revenues in their
most recent fiscal year from securities related activities.
FILING DATE: The application was filed on May 10, 1995.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on July 17, 1995,
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 SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 5th Street NW., Washington, DC 20549.
Applicants, Van Kampen American Capital Distributors, Inc., One
Parkview Plaza, Oakbrook Terrace, Illinois 60181.
FOR FURTHER INFORMATION CONTACT:
James M. Curtis, Senior Counsel, at (202) 942-0563, or Robert A.
Robertson, Branch Chief, (202) 942-0564 (Office of Investment Company
Regulation, Division of Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch.
Applicant's Representations
1. Each Series will be a series of applicant, a unit investment
trust registered under the Act. Van Kampen American Capital
Distributors, Inc. is applicant's depositor (the ``Sponsor'').
2. Each Series will invest approximately 10%, but in no event more
than 10.5%,\1\ of the value of its total assets in each of the ten
common stocks in the FT Index or the Hang Seng Index, as the case may
be, having the highest dividend yields in such respective index for a
specified period (e.g. approximately one year).
\1\The objective for each Series is to purchase securities so
that each of the ten common stocks represents approximately 10% of
the value of the Series' total assets on the initial date of
deposit. However, the Sponsor generally purchases the securities for
each Series in 100 share lots; if necessary to come closer to having
each stock represent 10% of the value of a Series' assets, it will
purchase securities in 50 share lots. It is most efficient to buy
securities in 100 share lots and 50 share lots because it allows
each of the ten common stocks of any Series to represent close to
10% of the value of a Series' total assets, while still permitting
the Sponsor to obtain the best price for the securities. Therefore,
in order to accommodate these purchase requirements, at the time of
deposit into a Series' portfolio, some stocks may represent up to
10.5% of the value of the Series' assets, while others may represent
less than 10%.
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3. The FT Index is comprised of 30 companies representative of
British industry and commerce. The average shares outstanding for each
FT Index company is 187,894,000. All of the FT Index companies are
listed and traded on the London Stock Exchange. The Hang Seng Index is
comprised of 33 companies representative of Hong Kong industry. The
average number of shares outstanding for each Hang Seng Index company
is 2,016,013.
4. The portfolio securities deposited in each Series will be chosen
solely according to the formula described above, and will not
necessarily reflect the research opinions or buy or sell
recommendations of the Sponsor. The Sponsor will have no discretion as
to which securities are purchased. Securities deposited in a Series may
include securities of issuers that derived more than 15% of their gross
revenues in their most recent fiscal year from securities related
activities.
5. During the 90-day period following the initial date of deposit,
the Sponsor may deposit additional securities, maintaining to the
extent practicable the original proportionate relationship among the
number of shares of each stock in the portfolio. Deposits made after
the 90-day period following the initial date of deposit generally must
replicate exactly the proportionate relationship among the face amounts
of the securities comprising the portfolio at the end of the initial
90-day period, whether or not a stock continues to be among the ten
highest dividend yielding stocks.
6. A Series's portfolio will not be actively managed. Sales of
portfolio securities will be made in connection with redemptions and at
termination of the trust on a date specified a year in advance. The
Sponsor does not have discretion as to when securities will be sold
except that the Sponsor is authorized to sell securities in extremely
limited circumstances. For example, if an issuer defaults on the
payment on any of its outstanding obligations or the price of a
security has declined to such an extent or other such credit facts
exist so that in the opinion of the Sponsor the retention of such
securities would be detrimental to the Series, the Sponsor may sell the
securities. The adverse financial condition of an issuer will not
necessarily require the sale of its securities from a Series'
portfolio.
Applicant's Legal Analysis
1. Section 12(d)(3) of the Act prohibits an investment company from
acquiring any security in any company which is a broker, dealer,
underwriter, or investment adviser. Rule 12d3-1 under the Act exempts
the purchase of securities of an issuer that derived less than 15% of
its gross revenues in its most recent fiscal year from securities
related activities, provided that, among other things, immediately
after such acquisition, the acquiring company has invested not more
than 5% of the value of its total assets in securities of the issuer.
2. Section 6(c) of the Act provides that the SEC may exempt a
person from any provision of the Act or any rule thereunder, if and to
the extent that the 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.
3. Applicant requests an exemption under section 6(c) from section
12(d)(3) [[Page 33025]] to permit any Series to invest up to
approximately 10%, but in no event more than 10.5%, of the value of its
total assets in securities of an issuer that derives more than 15% of
its gross revenues from securities related activities. Each Series
undertakes to comply with all of the conditions of rule 12d3-1, except
that each Series seeks to invest up to approximately 10%, but in no
event more than 10.5%, of that value of any Series' assets at its
initial date of deposit in the securities of any company that is an
issuer of any of the ten highest dividend yielding stocks in the FT
Index or the Hang Seng Index.
4. Section 12(d)(3) was intended to prevent investment companies
from exposing their assets to the entrepreneurial risks of securities
related businesses to prevent potential conflicts of interests, and to
eliminate certain reciprocal practices between investment companies and
securities related businesses. One potential conflict could occur if an
investment company purchased securities or other interests in a broker-
dealer to reward that broker-dealer for selling fund shares, rather
than solely on investment merit. Applicant believes that this concern
does not arise in connection with its application because neither
applicant nor the Sponsors have discretion in choosing the portfolio
securities or percentage amount purchased. The security must first be
included in the FT Index or the Hang Seng Index, which indexes are
unaffiliated with the Sponsors and applicant, and must also qualify as
one of the ten highest dividend yielding securities.
5. Applicant also believes that the effect of a Series's purchase
on the stock of parents of broker-dealers would be de minimis. The
common stocks of securities related issuers represented in the FT Index
or the Hang Seng Index are widely held, have active markets, and
applicant believes that the purchases by any Series would represent an
insignificant amount of the outstanding common stock and the trading
volume of any of these issues. Accordingly, applicant believes that it
is highly unlikely that Series purchases of these securities would have
any significant impact on the securities' market value.
6. Another potential conflict of interest could occur if an
investment company directed brokerage to a broker-dealer in which the
company has invested to enhance the broker-dealer's profitability or to
assist it during financial difficulty, even though that broker-dealer
may not offer the best price and execution. To prelude this type of
conflict, applicant and each Series agree, as a condition of this
application, that no company held in a Series's portfolio nor any
affiliate thereof will act as a broker for any Series in the purchase
or sale of any security for its portfolio. In light of the above,
applicant believes that its proposal meets the section 6(c) standards.
Applicant's Condition
Applicant and each Series agrees that any order granted under this
application may be conditioned upon no company held in a Series's
portfolio nor any affiliate thereof acting as broker for any Series in
the purchase or sale of any security for a Series's portfolio.
For the SEC, by the Division of Investment Management, pursuant
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-15573 Filed 6-23-95; 8:45 am]
BILLING CODE 8010-01-M
