[Federal Register Volume 61, Number 145 (Friday, July 26, 1996)]
[Notices]
[Pages 39166-39167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18994]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Rel. No. 22083; International Series Rel. No.
1008; 812-10188]
Van Kampen American Capital Equity Opportunity Trust, Series 28;
Notice of Application
July 19, 1996.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (``Act'').
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APPLICANT: Van Kampen American Capital Equity Opportunity Trust, Series
28.
RELEVANT ACT SECTIONS: Order requested under section 6(c) for an
exemption from section 12(d)(3).
SUMMARY OF APPLICATION: Applicant requests an order on behalf of itself
and certain subsequent series (each a ``Series'') to permit certain
Series (the ``Strategic Five Series'') to invest up to 20.5% and other
Series (the ``Strategic Ten Series'') to invest up to 10.5% of their
respective 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 DATES: The application was filed on June 7, 1996.
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
applicant with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on August 13, 1996,
and should be accompanied by proof of service on applicant, 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 such notification by writing to the
SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Applicant, c/o Van Kampen American Capital Distributors, Inc.,
One Parkview Plaza, Oakbrook Terrace, Illinois 60181.
FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel,
at (202) 942-0583, or Robert A. Robertson, 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 SEC's Public Reference Branch.
Applicant's Representations
1. Each Series will be a series of Van Kampen American Capital
Equity Opportunity Trust, a unit investment trust registered under the
Act. Van Kampen American Capital Distributors, Inc. is the depositor
for the Trust (the ``Sponsor'').
2. Each Strategic Five Series will invest approximately 20%, but in
no event more than 20.5%, of the value of its total assets in each of
the five stocks with the second through the sixth lowest per share
stock price of the ten common stocks having the highest dividend yields
in the Dow Jones Industrial Average (the ``DJIA''), the Financial Times
Industrial Ordinary Share Index (the ``FT Index''), the Hang Seng
Index, the Nikkei 225 Index, the German Stock Index (the ``DAX''), the
Chilean IPSA Index (the ``IPSA''), the Mexican Bolsa Index (the
``IPC''), or the Straits Times Industrial Index (the ``Straits'')
(collectively, the ``Strategic Five Indexes'').\1\ Each Strategic Ten
Series will invest approximately 10%, but in no event more than 10.5%,
of the value of the Series' total assets in each of the ten common
stocks having the highest dividend yields on the Nikkei 225 Index, the
DAX, the IPSA, the IPC, or the Straits (collectively, the ``Strategic
Ten Indexes''). Dividend yields will be calculated as of a date no more
than five business days prior to the Series' initial date of deposit.
Each Series will hold its stocks for approximately one year.
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\1\ The Sponsor will attempt to purchase equal values of each of
the common stocks in a Series' portfolio. However, it is more
efficient if securities are purchased in 100 share lots and 50 share
lots. As a result, each Strategic Five Series may purchase
securities of a securities related issuer that represent in excess
of 20%, but in no event more than 20.5%, of such Series' assets on
the initial date of deposit. Similarly, each Strategic Ten Series
may purchase securities of a securities related issuer that
represent over 10%, but in no event more than 10.5%, of such Series'
assets.
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3. Each Index is recognized indicator of the stock market in its
respective country. The DJIA, which is the property of DOW Jones &
Company, Inc., comprises 30 common stocks chosen by the editors of The
Wall Street Journal. The FT Index comprises 30 common stocks chosen by
the editors of the Financial Times as representative of British
industry and commerce. The Hang Seng Index comprises 33 of the stocks
listed on the Stock Exchange of Hong Kong Ltd. The Nikkei 225 index is
comprised of 225 Japanese companies listed on the Tokyo Stock Exchange.
The DAX is a total return index of 30 selected German blue chip stocks
traded on the Frankfurt Stock Exchange. The IPSA is a capitalization-
weighted index of 40 stocks trading on the Santiago Stock Exchange. The
IPC is a capitalization-weighted index of the leading stocks on the
Mexican Stock Exchange. The Straits is a price-weighted index of 30
stocks traded on the Stock Exchange of Singapore compiled by the
Straits Times newspaper of Singapore. The publishers of the Indexes are
not affiliated with any Series or the Sponsor, and do not
[[Page 39167]]
participate in any way in the creation of any Series or the selection
of its stocks.
4. The 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 is authorized to determine the date of deposit, to
purchase securities for deposit in the Series, and do supervise each
Series' portfolio. The Sponsor will have no discretion as to which
securities are purchased. Securities deposited in a Series may include
securities of securities related issuers.
5. The portfolios of the Series will not be actively managed. Sales
of portfolio securities will be made in connection with redemptions,
for payment of expenses, and at termination of the Series on a date
specified a year in advance. The Sponsor does not have discretion as to
when securities will be sold except in extremely limited circumstances,
such as a default in the payment of any outstanding obligation, a
decrease in the price of a security, or other credit factors so that,
in the opinion of the Sponsor, the retention of the securities would be
detrimental to the Series.
Applicant's Legal Analysis
1. Section 12(d)(3) of the Act prohibits an investment company from
acquiring any security issued by any person who is a broker, dealer,
underwriter, or investment adviser. Rule 12d3-1 thereunder exempts the
purchase of securities of an issuer that derived more 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 to 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 any
person, transaction, or class of transactions 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
provision 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) to permit a Strategic Five Series to invest up to
approximately 20%, but in no event more than 20.5%, of the value of its
total assets in securities of a securities related issuer, and to
permit a Strategic Ten Series to invest up to 10%, but in no event more
than 10.5%, of the value of its total assets in securities of a
securities related issuer. Each Series will comply with all of the
conditions of rule 12d3-1, except the condition prohibiting an
investment company from investing more than 5% of the value of its
total assets in securities of a securities related issuer.
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 interest, 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 the
Series nor the Sponsor has discretion in choosing the portfolio
securities or amount purchased. The security must first be included in
the appropriate Index, each of which is unaffiliated with the Sponsor
and the applicant. In addition, with respect to the Strategic Five
Series, each security must also qualify as one of the five stocks with
the second through the sixth lowest dollar per share stock price of the
ten highest dividend yielding stocks in the relevant Strategic Five
Index. With respect to the Strategic Ten Series, the securities must
also qualify as one of the ten highest dividend yielding securities in
the relevant Strategic Ten Index.
5. Applicant also believes that the effect of a Series' purchase on
the stock of parents of broker-dealers would be de minimis. The common
stocks of securities related issuers represented in the Indexes are
widely held, have active markets, and that potential purchases by any
Series would represent an insignificant amount of the outstanding
common stock and trading volume of any of these issues. Accordingly,
applicant believes it is highly unlikely that purchases of these
securities by a Series would have any significant impact on the market
value of such securities.
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 profitability of the broker-dealer
or to assist it during financial difficulty, even though that broker-
dealer may not offer the best price and execution. To preclude this
type of conflict, applicant agrees, as a condition of this application,
that no company held in the portfolio of a Series, nor any affiliate
thereof, will act as a broker for any Series in the purchase or sale of
any security in its portfolio. In light of the above, applicant
believes that its proposal meets the section 6(c) standards.
Applicant's Condition
Applicant agrees that the requested exemptive order may be
conditioned upon no company held in the portfolio of a Series, nor any
affiliate thereof, acting as broker for any Series in the purchase or
sale of any security for the Series' portfolio.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-18994 Filed 7-25-96; 8:45 am]
BILLING CODE 8010-01-M
