Royce Value Trust, Inc., et al.;, 21424-21428 [2013-08318]
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this requirement because the Depositor
will deposit more than $100,000 of
securities. Applicants assert, however,
that the Commission has interpreted
section 14(a) as requiring that the initial
capital investment in an investment
company be made without any intention
to dispose of the investment. Applicants
state that, under this interpretation, a
Series would not satisfy section 14(a)
because of the Depositor’s intention to
sell all the Units of the Series.
2. Rule 14a–3 under the Act exempts
UITs from section 14(a) if certain
conditions are met, one of which is that
the UIT invest only in ‘‘eligible trust
securities,’’ as defined in the rule.
Applicants state that they may not rely
on rule 14a–3 because certain Series
(collectively, ‘‘Equity Series’’) will
invest all or a portion of their assets in
equity securities or shares of registered
investment companies which do not
satisfy the definition of eligible trust
securities.
3. Applicants request an exemption
under section 6(c) of the Act to the
extent necessary to exempt the Equity
Series from the net worth requirement
in section 14(a). Applicants state that
the Series and the Depositor will
comply in all respects with the
requirements of rule 14a–3, except that
the Equity Series will not restrict their
portfolio investments to ‘‘eligible trust
securities.’’
D. Capital Gains Distribution
1. Section 19(b) of the Act and rule
19b–1 under the Act provide that,
except under limited circumstances, no
registered investment company may
distribute long-term gains more than
once every twelve months. Rule 19b–
1(c), under certain circumstances,
exempts a UIT investing in eligible trust
securities (as defined in rule 14a–3)
from the requirements of rule 19b–1.
Because the Equity Series do not limit
their investments to eligible trust
securities, however, the Equity Series
will not qualify for the exemption in
paragraph (c) of rule 19b–1. Applicants
therefore request an exemption under
section 6(c) from section 19(b) and rule
19b–1 to the extent necessary to permit
capital gains earned in connection with
the sale of portfolio securities to be
distributed to Unitholders along with
the Equity Series’ regular distributions.
In all other respects, applicants will
comply with section
19(b) and rule 19b–1.
2. Applicants state that their proposal
meets the standards of section 6(c).
Applicants assert that any sale of
portfolio securities would be triggered
by the need to meet Trust expenses,
Installment Payments, or by redemption
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requests, events over which the
Depositor and the Equity Series do not
have control. Applicants further state
that, because principal distributions
must be clearly indicated in
accompanying reports to Unitholders as
a return of principal and will be
relatively small in comparison to
normal dividend distributions, there is
little danger of confusion from failure to
differentiate among distributions.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
A. DSC Relief and Exchange and
Rollover Options
1. Whenever the Exchange Option or
the Rollover Option is to be terminated
or its terms are to be amended
materially, any holder of a security
subject to that privilege will be given
prominent notice of the impending
termination or amendment at least 60
days prior to the date of termination or
the effective date of the amendment,
provided that: (a) no such notice need
be given if the only material effect of an
amendment is to reduce or eliminate the
sales charge payable at the time of an
exchange, to add one or more new
Series eligible for the Exchange Option
or the Rollover Option, or to delete a
Series which has terminated; and (b) no
notice need be given if, under
extraordinary circumstances, either (i)
there is a suspension of the redemption
of Units of the Series under section
22(e) of the Act and the rules and
regulations promulgated thereunder, or
(ii) a Series temporarily delays or ceases
the sale of its Units because it is unable
to invest amounts effectively in
accordance with applicable investment
objectives, policies and restrictions.
2. An investor who purchases Units
under the Exchange Option or the
Rollover Option will pay a lower sales
charge than that which would be paid
for the Units by a new investor.
3. The prospectus of each Series
offering exchanges or rollovers and any
sales literature or advertising that
mentions the existence of the Exchange
Option or Rollover Option will disclose
that the Exchange Option and the
Rollover Option are subject to
modification, termination or suspension
without notice, except in certain limited
cases.
4. Any DSC imposed on a Series’
Units will comply with the
requirements of subparagraphs (1), (2)
and (3) of rule 6c–10(a) under the Act.
5. Each Series offering Units subject to
a DSC will include in its prospectus the
disclosure required by Form N–1A
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relating to deferred sales charges
(modified as appropriate to reflect the
differences between UITs and open-end
management investment companies)
and a schedule setting forth the number
and date of each Installment Payment.
B. Net Worth Requirement
Applicants will comply in all respects
with the requirements of rule 14a–3
under the Act, except that the Equity
Series will not restrict their portfolio
investments to ‘‘eligible trust
securities.’’
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–08319 Filed 4–9–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30448; File No. 812–13880]
Royce Value Trust, Inc., et al.; Notice
of Application
April 4, 2013.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 12(d)(1)(J) of the
Investment Company Act 1940 (the
‘‘Act’’) granting an exemption from
sections 12(d)(1)(A) and 12(d)(1)(C) of
the Act, under section 17(b) of the Act
granting an exemption from section
17(a) of the Act, and under section 17(d)
of the Act and rule 17d–1 thereunder
permitting certain joint transactions.
AGENCY:
Royce Value Trust, Inc.
(‘‘Value Trust’’), Royce Global Value
Trust, Inc. (‘‘Global Trust’’) (each a
‘‘Fund’’ and together, the ‘‘Funds’’) and
Royce & Associates, LLC (the
‘‘Adviser’’).
SUMMARY OF APPLICATION: Applicants
seek an order to permit Value Trust to
transfer a segment of its assets to Global
Trust, a newly formed, wholly-owned
subsidiary that is a registered closedend investment company, and to
distribute the shares of Global Trust
common stock to Value Trust’s common
stockholders.
FILING DATES: The application was filed
on March 17, 2011 and amended on
August 16, 2011, May 22, 2012, and
March 6, 2013.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
APPLICANTS:
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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 April 29, 2013 and
should be accompanied by proof of
service on the 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 who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Elizabeth M. Murphy,
Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090;
Applicants: c/o Frank P. Bruno, Esq.,
Sidley Austin LLP, 787 Seventh
Avenue, New York, New York 10019–
6018.
FOR FURTHER INFORMATION CONTACT:
Laura J. Riegel, Senior Counsel, at (202)
551–6873 or Mary Kay Frech, Branch
Chief, at (202) 551–6821 (Division of
Investment Management, Exemptive
Applications Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. Value Trust, a Maryland
corporation, is registered under the Act
as a diversified closed-end management
investment company. Value Trust seeks
long-term growth of capital primarily
through investment in the equity
securities of small- and micro-cap
companies. Value Trust has a nonfundamental investment policy that
limits its investment in securities of
issuers headquartered outside the
United States to 25% of the Fund’s
assets.
2. Global Trust was incorporated in
Maryland on February 14, 2011 and
filed a notification of registration on
Form N–8A on March 11, 2011 to
register under the Act as a diversified
closed-end management investment
company. Global Trust filed a
registration statement under the
Securities Act of 1933 (the ‘‘1933 Act’’)
on Form N–14 on March 16, 2011 (the
‘‘Proxy Statement/Prospectus’’) and
filed a registration statement on Form
N–2 on June 8, 2011. Application will
be made to list Global Trust’s common
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stock for trading on the New York Stock
Exchange. Global Trust seeks long-term
growth of capital by investing a
significant portion of its assets in the
equity securities of micro-cap, smallcap, and/or mid-cap companies. Unlike
Value Trust, Global Trust may invest
without limitation in securities of
foreign issuers and, under normal
market circumstances, will invest at
least 65% of its assets in equity
securities of companies located outside
of the United States.
3. The Adviser, a Delaware limited
liability company, is registered under
the Investment Advisers Act of 1940
and serves as the investment adviser to
the Funds. The investment advisory fee
structures for Value Trust and Global
Trust will be different. Value Trust’s
advisory fee consists of a base fee and
a fulcrum fee. The base advisory fee of
Value Trust is a monthly fee equal to
1/12 of 1% (1% on an annualized basis)
of the average of Value Trust’s monthend net assets, including the liquidation
value of any preferred stock issued and
outstanding, for the rolling 60-month
period ending with such month.1 The
fulcrum fee, determined by fund
performance, causes Value Trust’s
annual advisory fee to adjust up to .50%
either above or below the base advisory
fee.2 In contrast to Value Trust, Global
Trust will pay the Adviser a fee at an
annual rate of 1.25% of Global Trust’s
average daily net assets, including the
liquidation value of any preferred stock
issued and outstanding, which reflects
an advisory fee that is 0.25% higher
than the base advisory fee paid by Value
Trust to the Adviser. For this reason, the
annual advisory fee for Global Trust
may be higher or lower than that of
Value Trust.
4. The board of directors of Value
Trust consists of eight directors who are
also directors on the eight member
board of directors of Global Trust (each
such board of directors, a ‘‘Board’’ and
collectively, the ‘‘Boards’’). Six of the
eight directors on each Board are not
‘‘interested persons,’’ as defined in
section 2(a)(19) of the Act (the
‘‘Independent Directors’’). All of the
principal officers of Value Trust hold
the same offices with Global Trust.
5. The Board of Value Trust has
approved, subject to the issuance of the
1 The base fee for each month is increased or
decreased at the rate of 1/12 of .05% for each
percentage point that the investment performance
of Value Trust exceeds, or is exceeded by, the
percentage change in the investment record of the
S&P 600 SmallCap Index for the performance
period by more than two percentage points.
2 The Adviser is not entitled to receive any fee for
any month when the investment performance of
Value Trust for the rolling 36-month period ending
with such month is negative.
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requested relief and subsequent
stockholder approval, the contribution
of a segment of Value Trust’s assets
having a value of approximately $100
million to Global Trust, in exchange for
shares of Global Trust common stock. It
is anticipated that the contributed assets
will consist largely or exclusively of
cash, short-term fixed income
instruments, and/or unappreciated
common stock and unappreciated
preferred stock whose value at the time
of the Transaction (as defined below)
are less than or equal to their cost basis
for tax purposes (together, such
unappreciated common stock and
unappreciated preferred stock are
‘‘Unappreciated Equity Securities’’). All
the shares of common stock of Global
Trust will then be distributed by Value
Trust to its common stockholders at a
rate of one (1) share of Global Trust
common stock for every seven (7) shares
held of Value Trust common stock.3 The
contribution of the Value Trust assets to
Global Trust and the subsequent
distribution of shares of Global Trust
common stock to Value Trust common
stockholders are referred to as the
‘‘Transaction.’’
6. The Proxy Statement/Prospectus of
the Funds will be used, following the
issuance of the requested relief, to
solicit approval of the Value Trust
stockholders of the Transaction. Prior to
the effectiveness of the Proxy
Statement/Prospectus under the 1933
Act, Value Trust will purchase
approximately 10,000 shares of Global
Trust’s shares of common stock, par
value $0.001, in consideration of Value
Trust’s contribution to Global Trust of at
least $100,000 initial net asset value (the
‘‘Seed Capital Shares’’), in order to
satisfy the requirements of section 14(a)
of the Act. Value Trust represents that
the Seed Capital Shares will be sold
only pursuant to a registration statement
under the 1933 Act or an applicable
exemption from registration under the
1933 Act. Applicants intend that the
Seed Capital Shares will be included in
the distribution of Global Trust’s shares
of common stock to the common
stockholders of Value Trust.
7. Applicants represent that Value
Trust’s activities in the Transaction may
be deemed to be underwriting shares of
Global Trust’s common stock. Value
Trust has a fundamental investment
3 No fractional shares of Global Trust common
stock will be issued as part of the distribution. The
fractional shares to which holders of Value Trust
common stock would otherwise be entitled will be
aggregated and an attempt to sell them in the open
market will be made at then-prevailing prices on
behalf of such holders, and such holders will
receive instead a cash payment in the amount of
their pro rata share of the total sales proceeds.
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restriction that it will not underwrite
the securities of other issuers, or invest
in restricted securities unless such
securities are redeemable shares issued
by money market funds registered under
the Act (the ‘‘Underwriting
Restriction’’). Accordingly, Value
Trust’s activities in the Transaction may
be deemed to be in violation of the
Underwriting Restriction.
8. Applicants state that Value Trust’s
Underwriting Restriction cannot be
changed without the affirmative vote of
the majority of the outstanding voting
securities of Value Trust. Applicants
undertake that they will not rely on the
requested order until the amendment to
the Underwriting Restriction 4 is
approved by the affirmative vote of the
holders of a majority of Value Trust’s
outstanding voting securities.
9. The Board of Value Trust,
including the Independent Directors,
concluded that the Transaction will
result in the following benefits to Value
Trust stockholders: (a) Stockholders will
receive shares of an investment
company with a different risk-return
profile than Value Trust; (b)
stockholders will acquire the shares of
Global Trust common stock at a much
lower transaction cost than is typically
the case for a newly-organized closedend equity fund since there will be no
underwriting discounts or commissions;
and (c) stockholders will be able to seek
capital appreciation opportunities
presented by Global Trust’s ability to
invest at least 65% of its net assets in
non-U.S. securities.
10. Shortly before the date of the
Transaction, the Adviser will review
with the Boards of Global Trust and
Value Trust, including the Independent
Directors: (a) the Unappreciated
Securities, if any, it recommends
contributing in the Transaction; (b) the
methodology used by the Adviser in
selecting Unappreciated Equity
Securities to be contributed to Global
Trust and those to be retained by Value
Trust; (c) the cost basis and current fair
market value of each Unappreciated
Equity Security to be contributed; (d)
the aggregate amount of Unappreciated
Equity Securities to be contributed and
the percentage of Value Trust’s entire
portfolio and of its unappreciated
common stock and preferred stock that
the Unappreciated Equity Securities to
4 Value Trust intends to seek stockholder
approval to amend the Underwriting Restriction to
state that Value Trust may not underwrite the
securities of other issuers, except insofar as the
Fund may be deemed an underwriter under the
1933 Act in selling portfolio securities and in
connection with mergers, acquisitions, spin-off and
other reorganization transactions involving the
Fund.
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be contributed constitute; and (e) the
percentage of Global Trust’s portfolio
that the Unappreciated Equity Securities
will constitute.5 The Boards of Global
Trust and Value Trust, including a
majority of the Independent Directors,
will approve the contribution of the
Unappreciated Equity Securities by
Value Trust to Global Trust, including
the methodology of selecting
Unappreciated Equity Securities to be
contributed, and the deliberations of the
Boards will be set forth in the minutes
of the Funds.
11. Global Trust has been advised by
counsel that the distribution of shares of
Global Trust to the common
stockholders of Value Trust likely will
be a taxable event for Value Trust
stockholders to some extent and a
taxable event for Value Trust, but only
to the extent that the value of Global
Trust shares distributed exceeds Value
Trust’s cost of such shares. Specifically,
the value of Global Trust shares will
exceed Value Trust’s cost of those
shares only to the extent that the value
of the short-term fixed income
instruments and Unappreciated Equity
Securities, if any, contributed to Global
Trust exceeds Value Trust’s cost of such
short-term fixed income instruments
and Unappreciated Equity Securities.
Applicants state that no significant
excess is expected. Further, the
Transaction is not expected to increase
significantly the total amount of taxable
distributions received by Value Trust
common stockholders for the year in
which the Transaction is consummated
because Value Trust distributes to
stockholders each year substantially all
of its taxable income and accordingly,
any taxable income included in the
distribution of Global Trust shares
would be distributed at some point
during the year in any event. The Board
of Value Trust, including all of the
Independent Directors, has considered
the tax consequences of the Transaction
and has determined that the benefits of
the Transaction outweigh any adverse
tax consequences to Value Trust and its
common stockholders, particularly
because such adverse tax consequences
are expected to be minimal.
12. The costs of organizing Global
Trust and effecting the distribution of
Global Trust’s shares to Value Trust’s
common stockholders, including the
fees and expenses of counsel and
accountants and printing, listing, and
registration fees, the costs of soliciting
Value Trust’s stockholders’ approval of
5 In selecting Unappreciated Equity Securities to
be contributed to Global Trust in the Transaction,
the Adviser will select only Unappreciated Equity
Securities that are consistent with Global Trust’s
investment goal, policies and restrictions.
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the Transaction, and the costs incurred
in connection with the application for
relief, are estimated to be approximately
$700,000, and will be borne by the
Adviser. Global Trust will incur
operating expenses on an ongoing basis,
including investment advisory fees, and
legal, auditing, transfer agency, and
custodian expenses that, when
aggregated with the fees payable by
Value Trust for similar services after the
distribution, will likely exceed the fees
currently payable by Value Trust for
those services. It is not expected that the
Transaction will have a significant effect
on the annual expenses of Value Trust
as a percentage of its assets.
Applicants’ Legal Analysis
1. Applicants request an order under
section 12(d)(1)(J) of the Act granting an
exemption from sections 12(d)(1)(A) and
12(d)(1)(C) of the Act, under section
17(b) of the Act granting an exemption
from section 17(a) of the Act and under
section 17(d) of the Act and rule17d–1
thereunder permitting certain joint
transactions.
2. Section 12(d)(1)(A) of the Act
prohibits a registered investment
company from acquiring shares of an
investment company if the securities
represent more than 3% of the total
outstanding voting stock of the acquired
company, more than 5% of the total
assets of the acquiring company, or,
together with the securities of any other
investment companies, more than 10%
of the total assets of the acquiring
company. Section 12(d)(1)(C) of the Act
prohibits an investment company from
acquiring any security issued by a
registered closed-end investment
company if such acquisition would
result in the acquiring company, any
other investment companies having the
same investment adviser, and
companies controlled by such
investment companies, collectively,
owning more than 10% of the
outstanding voting stock of the
registered closed-end investment
company.
3. Applicants state that the proposed
Transaction may be viewed as violating
sections 12(d)(1)(A) and 12(d)(1)(C). At
the time of the purchase of Seed Capital
Shares and at the time of the transfer of
Value Trust’s assets in return for shares
of Global Trust common stock, Value
Trust will acquire 100% of the voting
stock of Global Trust, a closed-end
investment company, and the value of
Value Trust’s holdings of Global Trust
common stock will exceed 5% of Value
Trust’s assets for a momentary period.
4. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
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transaction, or any class or classes of
persons, securities or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Applicants request an exemption under
section 12(d)(1)(J) of the Act from the
provisions of sections 12(d)(1)(A) and
12(d)(1)(C) of the Act.
5. Applicants submit that the
structure of the Transaction adequately
addresses the concerns underlying the
limits in section 12(d)(1), which include
concerns about control by a fund of
funds over underlying funds and a
layering of costs to investors in terms of
duplication of administrative expenses,
sales charges and advisory fees.
Applicants submit that there is no
danger of control over Global Trust by
Value Trust or of a layering of costs to
stockholders of Value Trust. Applicants
note that ownership of Global Trust by
Value Trust (other than the Seed Capital
Shares) will exist for only an instant. In
addition, applicants state the
Transaction involves no layering of
costs to stockholders, since Global Trust
will not incur any advisory,
administrative, transfer agency, custody,
or similar fees until after completion of
the Transaction.
6. Section 17(a) of the Act generally
prohibits sales or purchases of securities
between a registered investment
company and an affiliated person.
Section 2(a)(3) of the Act defines an
‘‘affiliated person’’ of another person to
include (a) any person directly or
indirectly owning, controlling, or
holding with power to vote 5% or more
of the outstanding voting securities of
the other person, (b) any person 5% or
more of whose voting securities are
directly or indirectly owned controlled
or held with the power to vote by the
other person, and (c) any person directly
or indirectly controlling, controlled by,
or under common control with, the
other person. Value Trust may be
viewed as an affiliated person of Global
Trust under section 2(a)(3) because
Value Trust will own 100 percent of the
Global Trust’s voting securities until the
consummation of the Transaction. Value
Trust and Global Trust also may be
viewed as affiliated persons of each
other to the extent that they may be
deemed to be under the common control
of the Adviser. As a result of the
affiliation between Value Trust and
Global Trust, section 17(a) would
prohibit the Transaction.
7. Applicants request an exemption
pursuant to section 17(b) of the Act from
the provisions of section 17(a) in order
to permit applicants to effect the
Transaction. Section 17(b) authorizes
the Commission to issue such an
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exemptive order if the Commission
finds that the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any persons concerned, and the
proposed transaction is consistent with
the policy of each registered investment
company and the general purposes of
the Act.
8. Applicants assert that the terms of
the Transaction, including the
consideration to be paid or received, are
fair and reasonable and do not involve
overreaching by any person concerned.
Applicants state that the proposed
contribution by Value Trust of a portion
of its assets to Global Trust in exchange
for shares of Global Trust common stock
will be based on the value of such assets
computed as of the close of trading on
the New York State Exchange on a
business day to be selected by the Board
of Value Trust (such business day, the
‘‘Valuation Date’’), in the same manner
as for purposes of the daily net asset
valuation for Value Trust. The
Transaction will occur after the close of
trading on the New York Stock
Exchange on the Valuation Date.
Applicants anticipate that such assets
will consist largely or exclusively of
cash, short-term fixed income
instruments and/or Unappreciated
Equity Securities and thus will pose no
issues with respect to valuation.6 Shares
of Global Trust common stock
distributed by Value Trust in the
Transaction will be valued based on the
value of Global Trust’s assets. ‘‘Value’’
for those purposes will be determined in
accordance with the provisions of
section 2(a)(41) of the Act and rule 2a–
4 under the Act.
9. With respect to the Transaction,
each Board, including a majority of the
Independent Directors, determined that
participation in the Transaction is in the
best interests of Value Trust or Global
Trust, as applicable, and that the
interests of the existing stockholders of
Value Trust or Global Trust, as
applicable, will not be diluted as a
result of the Transaction. These
findings, and the basis upon which the
findings were made, will be recorded
fully in the minute book of Value Trust
or Global Trust, as applicable. In
addition, the Adviser, in selecting
Unappreciated Equity Securities to be
contributed to Global Trust, will, in the
exercise of its fiduciary responsibilities,
act in a manner it believes to be in the
best interests of both Funds.
6 Since market quotations will exist for the
Unappreciated Equity Securities, if any, to be
contributed by Value Trust to Global Trust, such
securities will be valued at market value.
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10. Applicants state that the
Transaction will be consistent with the
stated investment policies of Value
Trust and Global Trust as disclosed to
stockholders. The distribution of shares
of Global Trust common stock will not
initially change the position of Value
Trust’s stockholders with respect to the
underlying investments that they then
own. The Proxy Statement/Prospectus
will be used to solicit the approval of
Value Trust’s stockholders of the
Transaction at a vote to take place
following the issuance of the requested
order. Value Trust’s stockholders will
have the opportunity to vote on the
Transaction after having received
disclosure concerning the Transaction.
11. Applicants also seek an order
under section 17(d) of the Act and rule
17d–1 under the Act. Section 17(d) and
rule 17d–1 prohibit affiliated persons
from participating in joint arrangements
with a registered investment company
unless authorized by the Commission.
In passing on applications for these
orders, rule 17d–1 provides that the
Commission will consider whether the
participation of the investment
company is consistent with the
provisions, policies and purposes of the
Act, and the extent to which the
participation is on a basis different from
or less advantageous than that of the
other participants. Applicants request
an order pursuant to rule 17d–1 to the
extent that the participation of
applicants in the Transaction may be
deemed to constitute a prohibited joint
transaction.
12. Applicants state that the
Transaction will not place any of Value
Trust, Global Trust, or existing
shareholders of Value Trust in a
position less advantageous than that of
any other person. The value of Value
Trust’s assets transferred to Global Trust
(and the shares of Global Trust common
stock received in return) will be based
on their value as computed on as of the
close of trading on the New York Stock
Exchange on the Valuation Date in
accordance with the requirements of the
Act and pursuant to valuation
procedures adopted by the Board of
Value Trust. The shares of Global Trust
common stock will be distributed to
Value Trust’s common stockholders,
leaving the stockholders in the same
investment posture immediately
following the Transaction as before,
subject only to changes in market price
of the underlying assets subsequent to
the Transaction.
13. Applicants assert that the
Transaction has been proposed in order
to benefit the stockholders of Value
Trust as well as Global Trust. Although
the advisory fee for Global Trust will be
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Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Notices
different from Value Trust, and may at
times be higher than that of Value Trust,
neither the Adviser nor any other
affiliated person of Value Trust or
Global Trust will receive additional fees
solely as a result of the Transaction.
Applicants state that although it is
possible that the creation of Global
Trust may benefit the Adviser by
providing it with a higher advisory fee
in certain circumstances, the Board of
Value Trust has determined that such
result does not supply a benefit that
could not have otherwise been achieved
through an initial public offering of a
global equity securities fund and that
such benefit is both marginal and
hypothetical because the assets of Value
Trust to be contributed to Global Trust
pursuant to the Transaction represent
only approximately 9.2% of Value
Trust’s net assets as of December 30,
2012. In addition, by creating Global
Trust through the Transaction, Value
Trust is effectively enabling its common
stockholders to receive securities
without the costs associated with a
public offering.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–08318 Filed 4–9–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30447; File No. 812–14034]
Royce Focus Trust, Inc., et al.; Notice
of Application
April 4, 2013.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from section 19(b) of the Act and rule
19b–1 under the Act.
TKELLEY on DSK3SPTVN1PROD with NOTICES
AGENCY:
Applicants: Royce Focus Trust, Inc.
(‘‘RFT’’), Royce Value Trust, Inc.
(‘‘RVT’’), Royce Micro-Cap Trust, Inc.
(‘‘RMT’’) and Royce & Associates, LLC
(‘‘R&A’’).
Summary of Application: Applicants
request an order to permit certain
registered closed-end investment
companies to make periodic
distributions of long-term capital gains
with respect to their outstanding
common stock as frequently as monthly
in any one taxable year, and as
frequently as distributions are specified
VerDate Mar<15>2010
17:59 Apr 09, 2013
Jkt 229001
by or in accordance with the terms of
any outstanding preferred stock that
such investment companies may issue.
The requested order would supersede a
prior order (‘‘Prior Order’’).1
DATES: Filing Dates: The application was
filed on May 22, 2012 and amended on
March 6, 2013.
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 April 29, 2013 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 who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Elizabeth M. Murphy,
Secretary, U.S. Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090;
Applicants, Frank P. Bruno, Esq., Sidley
Austin LLP, 787 Seventh Avenue, New
York, New York 10019–6018.
FOR FURTHER INFORMATION CONTACT:
Laura J. Riegel, Senior Counsel, at (202)
551–6873, or Mary Kay Frech, Branch
Chief, at (202) 551–6821 (Division of
Investment Management, Exemptive
Applications Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm, or by
calling (202) 551–8090.
Applicants’ Representations
1. RFT, RMT, and RVT (the ‘‘Current
Funds’’) are Maryland corporations
registered under the Act as closed-end
management investment companies.2
1 Royce Global Trust, Inc., et al., Investment
Company Act Release Nos. 22665 (May 16, 1997)
(notice) and 22704 (Jun. 11, 1997) (Prior Order).
2 All exiting registered closed-end investment
companies that currently intend to rely on the order
have been named as applicants. Applicants request
that the order also apply to each other registered
closed-end investment company advised or to be
advised in the future by R&A or by an entity
controlling, controlled by, or under common
control (within the meaning of section 2(a)(9) of the
Act) with R&A (including any successor in interest)
(each such entity, including R&A, the ‘‘Adviser’’)
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
RFT’s investment goal is long-term
capital growth, which it seeks to achieve
by investing in equity securities and
non-convertible fixed income securities.
Shares of the common stock of RFT are
listed and traded on the NASDAQ
Global Select Market. RMT’s investment
goal is long-term capital growth, which
it seeks to achieve by investing in equity
securities of micro-cap companies.
Shares of RMT’s common stock are
listed and traded on the New York Stock
Exchange. RVT’s investment goal is
long-term capital growth, which it seeks
to achieve by investing in the equity
securities of small-and micro-cap
companies that are believed to be
trading significantly below their current
worth. Shares of the common stock of
RVT are listed and traded on the New
York Stock Exchange. Each Current
Fund had issued preferred stock all of
which was redeemed on November 15,
2012. Applicants believe that investors
in closed-end funds may prefer an
investment vehicle that provides regular
current income through fixed
distribution policies that would be
available through a Distribution Policy
(as defined below).
2. R&A, a Delaware limited liability
company, is registered under the
Investment Advisers Act of 1940 (the
‘‘Advisers Act’’) as an investment
adviser. R&A provides investment
advisory services to the Current Funds.
Each Adviser to a Fund will be
registered as an investment adviser
under the Advisers Act.
3. Each Current Fund relied on the
Prior Order to implement distribution
policies with respect to their common
stock and institute dividend payment
policies with respect to their preferred
stock. To maintain certainty for the
distribution policies of the Current
Funds and the distribution policies that
other Funds may adopt in the future
(each, a ‘‘Distribution Policy’’),
applicants request an order that would
supersede the Prior Order. When the
requested order is issued, it will
supersede the Prior Order and
applicants may rely solely on the order.
4. Applicants state that prior to a
Fund’s implementing a Distribution
Policy in reliance on the order, the
board of directors (the ‘‘Board’’) of each
Fund, including a majority of the
directors who are not ‘‘interested
that in the future seeks to rely on the order (such
investment companies, together with the Current
Funds, are collectively, the ‘‘Funds’’ and
individually, a ‘‘Fund’’). Any Fund that may rely
on the order in the future will comply with the
terms and conditions of the application. A
successor in interest is limited to entities that result
from a reorganization into another jurisdiction or a
change in the type of business organization.
E:\FR\FM\10APN1.SGM
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]]>Agencies
[Federal Register Volume 78, Number 69 (Wednesday, April 10, 2013)]
[Notices]
[Pages 21424-21428]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08318]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30448; File No. 812-13880]
Royce Value Trust, Inc., et al.; Notice of Application
April 4, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application for an order under section 12(d)(1)(J)
of the Investment Company Act 1940 (the ``Act'') granting an exemption
from sections 12(d)(1)(A) and 12(d)(1)(C) of the Act, under section
17(b) of the Act granting an exemption from section 17(a) of the Act,
and under section 17(d) of the Act and rule 17d-1 thereunder permitting
certain joint transactions.
-----------------------------------------------------------------------
APPLICANTS: Royce Value Trust, Inc. (``Value Trust''), Royce Global
Value Trust, Inc. (``Global Trust'') (each a ``Fund'' and together, the
``Funds'') and Royce & Associates, LLC (the ``Adviser'').
SUMMARY OF APPLICATION: Applicants seek an order to permit Value Trust
to transfer a segment of its assets to Global Trust, a newly formed,
wholly-owned subsidiary that is a registered closed-end investment
company, and to distribute the shares of Global Trust common stock to
Value Trust's common stockholders.
FILING DATES: The application was filed on March 17, 2011 and amended
on August 16, 2011, May 22, 2012, and March 6, 2013.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request
[[Page 21425]]
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 April 29,
2013 and should be accompanied by proof of service on the 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 who wish to
be notified of a hearing may request notification by writing to the
Commission's Secretary.
ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants: c/
o Frank P. Bruno, Esq., Sidley Austin LLP, 787 Seventh Avenue, New
York, New York 10019-6018.
FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, at
(202) 551-6873 or Mary Kay Frech, Branch Chief, at (202) 551-6821
(Division of Investment Management, Exemptive Applications Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. Value Trust, a Maryland corporation, is registered under the Act
as a diversified closed-end management investment company. Value Trust
seeks long-term growth of capital primarily through investment in the
equity securities of small- and micro-cap companies. Value Trust has a
non-fundamental investment policy that limits its investment in
securities of issuers headquartered outside the United States to 25% of
the Fund's assets.
2. Global Trust was incorporated in Maryland on February 14, 2011
and filed a notification of registration on Form N-8A on March 11, 2011
to register under the Act as a diversified closed-end management
investment company. Global Trust filed a registration statement under
the Securities Act of 1933 (the ``1933 Act'') on Form N-14 on March 16,
2011 (the ``Proxy Statement/Prospectus'') and filed a registration
statement on Form N-2 on June 8, 2011. Application will be made to list
Global Trust's common stock for trading on the New York Stock Exchange.
Global Trust seeks long-term growth of capital by investing a
significant portion of its assets in the equity securities of micro-
cap, small-cap, and/or mid-cap companies. Unlike Value Trust, Global
Trust may invest without limitation in securities of foreign issuers
and, under normal market circumstances, will invest at least 65% of its
assets in equity securities of companies located outside of the United
States.
3. The Adviser, a Delaware limited liability company, is registered
under the Investment Advisers Act of 1940 and serves as the investment
adviser to the Funds. The investment advisory fee structures for Value
Trust and Global Trust will be different. Value Trust's advisory fee
consists of a base fee and a fulcrum fee. The base advisory fee of
Value Trust is a monthly fee equal to 1/12 of 1% (1% on an annualized
basis) of the average of Value Trust's month-end net assets, including
the liquidation value of any preferred stock issued and outstanding,
for the rolling 60-month period ending with such month.\1\ The fulcrum
fee, determined by fund performance, causes Value Trust's annual
advisory fee to adjust up to .50% either above or below the base
advisory fee.\2\ In contrast to Value Trust, Global Trust will pay the
Adviser a fee at an annual rate of 1.25% of Global Trust's average
daily net assets, including the liquidation value of any preferred
stock issued and outstanding, which reflects an advisory fee that is
0.25% higher than the base advisory fee paid by Value Trust to the
Adviser. For this reason, the annual advisory fee for Global Trust may
be higher or lower than that of Value Trust.
---------------------------------------------------------------------------
\1\ The base fee for each month is increased or decreased at the
rate of 1/12 of .05% for each percentage point that the investment
performance of Value Trust exceeds, or is exceeded by, the
percentage change in the investment record of the S&P 600 SmallCap
Index for the performance period by more than two percentage points.
\2\ The Adviser is not entitled to receive any fee for any month
when the investment performance of Value Trust for the rolling 36-
month period ending with such month is negative.
---------------------------------------------------------------------------
4. The board of directors of Value Trust consists of eight
directors who are also directors on the eight member board of directors
of Global Trust (each such board of directors, a ``Board'' and
collectively, the ``Boards''). Six of the eight directors on each Board
are not ``interested persons,'' as defined in section 2(a)(19) of the
Act (the ``Independent Directors''). All of the principal officers of
Value Trust hold the same offices with Global Trust.
5. The Board of Value Trust has approved, subject to the issuance
of the requested relief and subsequent stockholder approval, the
contribution of a segment of Value Trust's assets having a value of
approximately $100 million to Global Trust, in exchange for shares of
Global Trust common stock. It is anticipated that the contributed
assets will consist largely or exclusively of cash, short-term fixed
income instruments, and/or unappreciated common stock and unappreciated
preferred stock whose value at the time of the Transaction (as defined
below) are less than or equal to their cost basis for tax purposes
(together, such unappreciated common stock and unappreciated preferred
stock are ``Unappreciated Equity Securities''). All the shares of
common stock of Global Trust will then be distributed by Value Trust to
its common stockholders at a rate of one (1) share of Global Trust
common stock for every seven (7) shares held of Value Trust common
stock.\3\ The contribution of the Value Trust assets to Global Trust
and the subsequent distribution of shares of Global Trust common stock
to Value Trust common stockholders are referred to as the
``Transaction.''
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\3\ No fractional shares of Global Trust common stock will be
issued as part of the distribution. The fractional shares to which
holders of Value Trust common stock would otherwise be entitled will
be aggregated and an attempt to sell them in the open market will be
made at then-prevailing prices on behalf of such holders, and such
holders will receive instead a cash payment in the amount of their
pro rata share of the total sales proceeds.
---------------------------------------------------------------------------
6. The Proxy Statement/Prospectus of the Funds will be used,
following the issuance of the requested relief, to solicit approval of
the Value Trust stockholders of the Transaction. Prior to the
effectiveness of the Proxy Statement/Prospectus under the 1933 Act,
Value Trust will purchase approximately 10,000 shares of Global Trust's
shares of common stock, par value $0.001, in consideration of Value
Trust's contribution to Global Trust of at least $100,000 initial net
asset value (the ``Seed Capital Shares''), in order to satisfy the
requirements of section 14(a) of the Act. Value Trust represents that
the Seed Capital Shares will be sold only pursuant to a registration
statement under the 1933 Act or an applicable exemption from
registration under the 1933 Act. Applicants intend that the Seed
Capital Shares will be included in the distribution of Global Trust's
shares of common stock to the common stockholders of Value Trust.
7. Applicants represent that Value Trust's activities in the
Transaction may be deemed to be underwriting shares of Global Trust's
common stock. Value Trust has a fundamental investment
[[Page 21426]]
restriction that it will not underwrite the securities of other
issuers, or invest in restricted securities unless such securities are
redeemable shares issued by money market funds registered under the Act
(the ``Underwriting Restriction''). Accordingly, Value Trust's
activities in the Transaction may be deemed to be in violation of the
Underwriting Restriction.
8. Applicants state that Value Trust's Underwriting Restriction
cannot be changed without the affirmative vote of the majority of the
outstanding voting securities of Value Trust. Applicants undertake that
they will not rely on the requested order until the amendment to the
Underwriting Restriction \4\ is approved by the affirmative vote of the
holders of a majority of Value Trust's outstanding voting securities.
---------------------------------------------------------------------------
\4\ Value Trust intends to seek stockholder approval to amend
the Underwriting Restriction to state that Value Trust may not
underwrite the securities of other issuers, except insofar as the
Fund may be deemed an underwriter under the 1933 Act in selling
portfolio securities and in connection with mergers, acquisitions,
spin-off and other reorganization transactions involving the Fund.
---------------------------------------------------------------------------
9. The Board of Value Trust, including the Independent Directors,
concluded that the Transaction will result in the following benefits to
Value Trust stockholders: (a) Stockholders will receive shares of an
investment company with a different risk-return profile than Value
Trust; (b) stockholders will acquire the shares of Global Trust common
stock at a much lower transaction cost than is typically the case for a
newly-organized closed-end equity fund since there will be no
underwriting discounts or commissions; and (c) stockholders will be
able to seek capital appreciation opportunities presented by Global
Trust's ability to invest at least 65% of its net assets in non-U.S.
securities.
10. Shortly before the date of the Transaction, the Adviser will
review with the Boards of Global Trust and Value Trust, including the
Independent Directors: (a) the Unappreciated Securities, if any, it
recommends contributing in the Transaction; (b) the methodology used by
the Adviser in selecting Unappreciated Equity Securities to be
contributed to Global Trust and those to be retained by Value Trust;
(c) the cost basis and current fair market value of each Unappreciated
Equity Security to be contributed; (d) the aggregate amount of
Unappreciated Equity Securities to be contributed and the percentage of
Value Trust's entire portfolio and of its unappreciated common stock
and preferred stock that the Unappreciated Equity Securities to be
contributed constitute; and (e) the percentage of Global Trust's
portfolio that the Unappreciated Equity Securities will constitute.\5\
The Boards of Global Trust and Value Trust, including a majority of the
Independent Directors, will approve the contribution of the
Unappreciated Equity Securities by Value Trust to Global Trust,
including the methodology of selecting Unappreciated Equity Securities
to be contributed, and the deliberations of the Boards will be set
forth in the minutes of the Funds.
---------------------------------------------------------------------------
\5\ In selecting Unappreciated Equity Securities to be
contributed to Global Trust in the Transaction, the Adviser will
select only Unappreciated Equity Securities that are consistent with
Global Trust's investment goal, policies and restrictions.
---------------------------------------------------------------------------
11. Global Trust has been advised by counsel that the distribution
of shares of Global Trust to the common stockholders of Value Trust
likely will be a taxable event for Value Trust stockholders to some
extent and a taxable event for Value Trust, but only to the extent that
the value of Global Trust shares distributed exceeds Value Trust's cost
of such shares. Specifically, the value of Global Trust shares will
exceed Value Trust's cost of those shares only to the extent that the
value of the short-term fixed income instruments and Unappreciated
Equity Securities, if any, contributed to Global Trust exceeds Value
Trust's cost of such short-term fixed income instruments and
Unappreciated Equity Securities. Applicants state that no significant
excess is expected. Further, the Transaction is not expected to
increase significantly the total amount of taxable distributions
received by Value Trust common stockholders for the year in which the
Transaction is consummated because Value Trust distributes to
stockholders each year substantially all of its taxable income and
accordingly, any taxable income included in the distribution of Global
Trust shares would be distributed at some point during the year in any
event. The Board of Value Trust, including all of the Independent
Directors, has considered the tax consequences of the Transaction and
has determined that the benefits of the Transaction outweigh any
adverse tax consequences to Value Trust and its common stockholders,
particularly because such adverse tax consequences are expected to be
minimal.
12. The costs of organizing Global Trust and effecting the
distribution of Global Trust's shares to Value Trust's common
stockholders, including the fees and expenses of counsel and
accountants and printing, listing, and registration fees, the costs of
soliciting Value Trust's stockholders' approval of the Transaction, and
the costs incurred in connection with the application for relief, are
estimated to be approximately $700,000, and will be borne by the
Adviser. Global Trust will incur operating expenses on an ongoing
basis, including investment advisory fees, and legal, auditing,
transfer agency, and custodian expenses that, when aggregated with the
fees payable by Value Trust for similar services after the
distribution, will likely exceed the fees currently payable by Value
Trust for those services. It is not expected that the Transaction will
have a significant effect on the annual expenses of Value Trust as a
percentage of its assets.
Applicants' Legal Analysis
1. Applicants request an order under section 12(d)(1)(J) of the Act
granting an exemption from sections 12(d)(1)(A) and 12(d)(1)(C) of the
Act, under section 17(b) of the Act granting an exemption from section
17(a) of the Act and under section 17(d) of the Act and rule17d-1
thereunder permitting certain joint transactions.
2. Section 12(d)(1)(A) of the Act prohibits a registered investment
company from acquiring shares of an investment company if the
securities represent more than 3% of the total outstanding voting stock
of the acquired company, more than 5% of the total assets of the
acquiring company, or, together with the securities of any other
investment companies, more than 10% of the total assets of the
acquiring company. Section 12(d)(1)(C) of the Act prohibits an
investment company from acquiring any security issued by a registered
closed-end investment company if such acquisition would result in the
acquiring company, any other investment companies having the same
investment adviser, and companies controlled by such investment
companies, collectively, owning more than 10% of the outstanding voting
stock of the registered closed-end investment company.
3. Applicants state that the proposed Transaction may be viewed as
violating sections 12(d)(1)(A) and 12(d)(1)(C). At the time of the
purchase of Seed Capital Shares and at the time of the transfer of
Value Trust's assets in return for shares of Global Trust common stock,
Value Trust will acquire 100% of the voting stock of Global Trust, a
closed-end investment company, and the value of Value Trust's holdings
of Global Trust common stock will exceed 5% of Value Trust's assets for
a momentary period.
4. Section 12(d)(1)(J) of the Act provides that the Commission may
exempt any person, security, or
[[Page 21427]]
transaction, or any class or classes of persons, securities or
transactions, from any provision of section 12(d)(1) if the exemption
is consistent with the public interest and the protection of investors.
Applicants request an exemption under section 12(d)(1)(J) of the Act
from the provisions of sections 12(d)(1)(A) and 12(d)(1)(C) of the Act.
5. Applicants submit that the structure of the Transaction
adequately addresses the concerns underlying the limits in section
12(d)(1), which include concerns about control by a fund of funds over
underlying funds and a layering of costs to investors in terms of
duplication of administrative expenses, sales charges and advisory
fees. Applicants submit that there is no danger of control over Global
Trust by Value Trust or of a layering of costs to stockholders of Value
Trust. Applicants note that ownership of Global Trust by Value Trust
(other than the Seed Capital Shares) will exist for only an instant. In
addition, applicants state the Transaction involves no layering of
costs to stockholders, since Global Trust will not incur any advisory,
administrative, transfer agency, custody, or similar fees until after
completion of the Transaction.
6. Section 17(a) of the Act generally prohibits sales or purchases
of securities between a registered investment company and an affiliated
person. Section 2(a)(3) of the Act defines an ``affiliated person'' of
another person to include (a) any person directly or indirectly owning,
controlling, or holding with power to vote 5% or more of the
outstanding voting securities of the other person, (b) any person 5% or
more of whose voting securities are directly or indirectly owned
controlled or held with the power to vote by the other person, and (c)
any person directly or indirectly controlling, controlled by, or under
common control with, the other person. Value Trust may be viewed as an
affiliated person of Global Trust under section 2(a)(3) because Value
Trust will own 100 percent of the Global Trust's voting securities
until the consummation of the Transaction. Value Trust and Global Trust
also may be viewed as affiliated persons of each other to the extent
that they may be deemed to be under the common control of the Adviser.
As a result of the affiliation between Value Trust and Global Trust,
section 17(a) would prohibit the Transaction.
7. Applicants request an exemption pursuant to section 17(b) of the
Act from the provisions of section 17(a) in order to permit applicants
to effect the Transaction. Section 17(b) authorizes the Commission to
issue such an exemptive order if the Commission finds that the terms of
the proposed transaction are fair and reasonable and do not involve
overreaching on the part of any persons concerned, and the proposed
transaction is consistent with the policy of each registered investment
company and the general purposes of the Act.
8. Applicants assert that the terms of the Transaction, including
the consideration to be paid or received, are fair and reasonable and
do not involve overreaching by any person concerned. Applicants state
that the proposed contribution by Value Trust of a portion of its
assets to Global Trust in exchange for shares of Global Trust common
stock will be based on the value of such assets computed as of the
close of trading on the New York State Exchange on a business day to be
selected by the Board of Value Trust (such business day, the
``Valuation Date''), in the same manner as for purposes of the daily
net asset valuation for Value Trust. The Transaction will occur after
the close of trading on the New York Stock Exchange on the Valuation
Date. Applicants anticipate that such assets will consist largely or
exclusively of cash, short-term fixed income instruments and/or
Unappreciated Equity Securities and thus will pose no issues with
respect to valuation.\6\ Shares of Global Trust common stock
distributed by Value Trust in the Transaction will be valued based on
the value of Global Trust's assets. ``Value'' for those purposes will
be determined in accordance with the provisions of section 2(a)(41) of
the Act and rule 2a-4 under the Act.
---------------------------------------------------------------------------
\6\ Since market quotations will exist for the Unappreciated
Equity Securities, if any, to be contributed by Value Trust to
Global Trust, such securities will be valued at market value.
---------------------------------------------------------------------------
9. With respect to the Transaction, each Board, including a
majority of the Independent Directors, determined that participation in
the Transaction is in the best interests of Value Trust or Global
Trust, as applicable, and that the interests of the existing
stockholders of Value Trust or Global Trust, as applicable, will not be
diluted as a result of the Transaction. These findings, and the basis
upon which the findings were made, will be recorded fully in the minute
book of Value Trust or Global Trust, as applicable. In addition, the
Adviser, in selecting Unappreciated Equity Securities to be contributed
to Global Trust, will, in the exercise of its fiduciary
responsibilities, act in a manner it believes to be in the best
interests of both Funds.
10. Applicants state that the Transaction will be consistent with
the stated investment policies of Value Trust and Global Trust as
disclosed to stockholders. The distribution of shares of Global Trust
common stock will not initially change the position of Value Trust's
stockholders with respect to the underlying investments that they then
own. The Proxy Statement/Prospectus will be used to solicit the
approval of Value Trust's stockholders of the Transaction at a vote to
take place following the issuance of the requested order. Value Trust's
stockholders will have the opportunity to vote on the Transaction after
having received disclosure concerning the Transaction.
11. Applicants also seek an order under section 17(d) of the Act
and rule 17d-1 under the Act. Section 17(d) and rule 17d-1 prohibit
affiliated persons from participating in joint arrangements with a
registered investment company unless authorized by the Commission. In
passing on applications for these orders, rule 17d-1 provides that the
Commission will consider whether the participation of the investment
company is consistent with the provisions, policies and purposes of the
Act, and the extent to which the participation is on a basis different
from or less advantageous than that of the other participants.
Applicants request an order pursuant to rule 17d-1 to the extent that
the participation of applicants in the Transaction may be deemed to
constitute a prohibited joint transaction.
12. Applicants state that the Transaction will not place any of
Value Trust, Global Trust, or existing shareholders of Value Trust in a
position less advantageous than that of any other person. The value of
Value Trust's assets transferred to Global Trust (and the shares of
Global Trust common stock received in return) will be based on their
value as computed on as of the close of trading on the New York Stock
Exchange on the Valuation Date in accordance with the requirements of
the Act and pursuant to valuation procedures adopted by the Board of
Value Trust. The shares of Global Trust common stock will be
distributed to Value Trust's common stockholders, leaving the
stockholders in the same investment posture immediately following the
Transaction as before, subject only to changes in market price of the
underlying assets subsequent to the Transaction.
13. Applicants assert that the Transaction has been proposed in
order to benefit the stockholders of Value Trust as well as Global
Trust. Although the advisory fee for Global Trust will be
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different from Value Trust, and may at times be higher than that of
Value Trust, neither the Adviser nor any other affiliated person of
Value Trust or Global Trust will receive additional fees solely as a
result of the Transaction. Applicants state that although it is
possible that the creation of Global Trust may benefit the Adviser by
providing it with a higher advisory fee in certain circumstances, the
Board of Value Trust has determined that such result does not supply a
benefit that could not have otherwise been achieved through an initial
public offering of a global equity securities fund and that such
benefit is both marginal and hypothetical because the assets of Value
Trust to be contributed to Global Trust pursuant to the Transaction
represent only approximately 9.2% of Value Trust's net assets as of
December 30, 2012. In addition, by creating Global Trust through the
Transaction, Value Trust is effectively enabling its common
stockholders to receive securities without the costs associated with a
public offering.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08318 Filed 4-9-13; 8:45 am]
BILLING CODE 8011-01-P
