Invesco Advisers, Inc., et al.; Notice of Application, 39784-39789 [2013-15842]
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39784
Federal Register / Vol. 78, No. 127 / Tuesday, July 2, 2013 / Notices
filings can be accessed via the
Commission’s Web site (https://
www.prc.gov).
The Commission appoints Curtis E.
Kidd to serve as Public Representative
in these dockets.
https://www.prc.gov, Docket Nos.
MC2013–53 and CP2013–69.
Stanley F. Mires,
Attorney, Legal Policy & Legislative Advice.
[FR Doc. 2013–15767 Filed 7–1–13; 8:45 am]
BILLING CODE 7710–12–P
III. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket
Nos. MC2013–54 and CP2013–70 to
consider the matters raised in each
docket.
2. Pursuant to 39 U.S.C. 505, Curtis E.
Kidd is appointed to serve as an officer
of the Commission (Public
Representative) to represent the
interests of the general public in these
proceedings.
3. Comments by interested persons in
these proceedings are due no later than
July 5, 2013.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2013–15852 Filed 7–1–13; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL SERVICE
International Product Change—Priority
Mail International Regional Rate
Boxes—Non-Published Rates
Postal ServiceTM.
Notice.
AGENCY:
ACTION:
The Postal Service hereby
gives notice that it has filed a request
with the Postal Regulatory Commission
to add Priority Mail International®
Regional Rate Boxes—Non-Published
Rates to the Competitive Products List.
SUMMARY:
DATES:
As of: July 2, 2013.
FOR FURTHER INFORMATION CONTACT:
Patricia Fortin, (202) 268–8785.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 39 CFR 3020.30, on June 25,
2013, it filed with the Postal Regulatory
Commission: (1) A request to add
Priority Mail International Regional Rate
Boxes—Non-Published Rates to the
Competitive Product List and, (2) a
Notice of Filing Priority Mail
International Regional Rate Boxes—
Non-Published Rates Model Contract
and Application for Non-Public
Treatment of Materials Filed Under
Seal. The documents are available at
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SUPPLEMENTARY INFORMATION:
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SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30581; 813–180–09]
Invesco Advisers, Inc., et al.; Notice of
Application
June 26, 2013.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order under sections 6(b) and 6(e) of the
Investment Company Act of 1940
(‘‘Act’’) granting an exemption from all
provisions of the Act, except sections 9,
17, 30 and 36 through 53, and the rules
and regulations under the Act (the
‘‘Rules and Regulations’’). With respect
to sections 17(a), (d), (e), (f), (g), and (j)
of the Act, sections 30(a), (b), (e), and (h)
of the Act and the Rules and
Regulations, and rule 38a–1 under the
Act, applicants request a limited
exemption as set forth in the
application.
AGENCY:
Applicants
request an order to exempt certain
limited partnerships and other entities
formed for the benefit of eligible
employees of Invesco Ltd. and its
affiliates from certain provisions of the
Act. Each such entity will be an
‘‘employees’ securities company’’
within the meaning of section 2(a)(13) of
the Act.
APPLICANTS: Invesco Advisers, Inc.
(‘‘Invesco’’), Chancellor Employees’
Direct Fund I, L.P., Chancellor
Employees’ Partnership Fund I, L.P. (the
‘‘Initial Partnerships’’), INVESCO ESC
Real Estate Fund I, L.P., INVESCO ESC
Real Estate Fund II, L.P., WLR IV
Parallel ESC, L.P., INVESCO Employees’
Partnership Fund II, L.P., INVESCO
Employees’ Direct Fund V, L.P.,
INVESCO Employees’ Partnership Fund
III, L.P., INVESCO Employees’
Partnership Fund IV, L.P., IPC
Employees Partnership Fund III, L.L.C.,
IPC Employees’ Direct Fund V, L.L.C.,
INVESCO ESC Partnership Fund II,
L.L.C. (the ‘‘Additional Funds,’’ together
with the Initial Partnerships, the
‘‘Existing Funds’’), and Invesco Ltd.
FILING DATES: The application was filed
on December 11, 1997, and amended on
March 17, 1998, July 16, 1998, January
SUMMARY OF APPLICATION:
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6, 1999, June 1, 1999, January 7, 2004,
July 22, 2011, August 8, 2012, June 24,
2013, and June 25, 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 July 22, 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, 1555 Peachtree Street NE.,
Atlanta, GA 30309.
FOR FURTHER INFORMATION CONTACT:
Bruce R. MacNeil, Senior Counsel, at
(202) 551–6817, or Daniele Marchesani,
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. Invesco Ltd. is a global money
management company organized under
the laws of Bermuda. Invesco, a
Delaware corporation, provides
investment management and
distribution services to pension plans,
foundations, financial institutions and
other global clients and is a whollyowned subsidiary of Invesco Ltd.
Invesco is registered as an investment
adviser under the Investment Advisers
Act of 1940 (‘‘Advisers Act’’). Invesco
Ltd. and its affiliates, as defined in rule
12b–2 under the Securities Exchange
Act of 1934 (the ‘‘1934 Act’’), are
referred to collectively as the ‘‘Invesco
Group’’ and individually as an ‘‘Invesco
Group entity.’’
2. The Invesco Group has formed the
Existing Funds and may from time to
time organize additional entities
(together with the Existing Funds, the
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‘‘Funds’’). Each Fund will be a limited
partnership, business trust, limited
liability company or any other entity,
formed or organized under the laws of
the State of Delaware or another
jurisdiction, including outside the
United States.
3. The Funds have been or will be
established primarily for the benefit of
certain current or former employees and
current persons on retainer, including
but not limited to, Consultants 1 of the
Invesco Group, as part of a program
designed to create capital building
opportunities that are competitive with
those at other financial service firms
and to facilitate its recruitment and
retention of high caliber professionals.
Each Fund will be an ‘‘employees’
securities company’’ within the
meaning of section 2(a)(13) of the Act.
Each of the Funds will operate as a
diversified or non-diversified closedend management investment company
within the meaning of the Act. All
members or limited partners of a Fund,
other than the Manager (defined below)
are ‘‘Participants’’ and any partner of a
partnership or member of a limited
liability company a ‘‘Unitholder.’’ The
Invesco Group will control the Funds
within the meaning of section 2(a)(9) of
the Act.
4. Each Fund will have a manager that
is an Invesco Group entity
(‘‘Manager’’).2 The Manager will
manage, operate and control each of the
Funds. The Manager will be authorized
to delegate to another Invesco Group
entity or to a committee of Invesco
Group employees (including, without
limitation, the managers of the Funds)
such management responsibility. The
Manager of the Initial Partnerships is
registered as an investment adviser
under the Advisers Act and any other
Manager will register as an investment
adviser if required under applicable
law. Applicants represent and concede
that the Manager in managing a Fund is
1 A ‘‘Consultant’’ is a person who Invesco Group
has engaged on retainer to provide services and
professional expertise on an ongoing basis as a
regular consultant or as a business or legal adviser
and who shares a community of interest with
Invesco Group and its employers.
2 Invesco Private Capital Investments, Inc. is the
Manager of Chancellor Employees’ Direct Fund I,
L.P., Chancellor Employees’ Partnership Fund I,
L.P., INVESCO Employees’ Direct Fund V, L.P.,
INVESCO Employees’ Partnership Fund III, L.P. and
INVESCO Employees’ Partnership Fund IV, L.P.; IRI
Fund I, L.P. is the Manager of INVESCO ESC Real
Estate Fund I, L.P.; IRI Fund II, L.P. is the Manager
of INVESCO ESC Real Estate Fund II, L.P.; Invesco
WLR IV Associates LLC is the Manager of WLR
Parallel ESC IV, L.P.; Invesco ESC Partnership Fund
II, L.L.C. is the Manager of INVESCO Employees’
Partnership Fund II, L.P.; Invesco Private Capital,
Inc. is the Manager of IPC Employees’ Partnership
Fund III, L.L.C., INVESCO ESC Partnership Fund II,
L.L.C. and IPC Employees’ Direct Fund V, L.L.C.
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an ‘‘investment adviser’’ within the
meaning of sections 9 and 36 of the Act
and is subject to those sections.
5. The Manager, the Invesco Group or
any employees of the Manager or the
Invesco Group may be entitled to
receive compensation or a performancebased fee (a ‘‘carried interest’’) 3 based
on the gains and losses of the
investment program or of the Fund’s
investment portfolio or, if applicable, of
the Client Funds (as defined below) in
which the Fund may hold an interest.
6. Interests in a Fund (‘‘Units’’) will
be offered without registration in
reliance on section 4(2) of the Securities
Act of 1933 (the ‘‘Securities Act’’), or
Regulation D under the Securities Act,
and will be sold only to Eligible
Employees, Qualified Participants (each
as defined below) or Invesco Group
entities. Prior to offering Units to an
Eligible Employee or Eligible Family
Member (as defined below), the
Manager must reasonably believe that
such individual will be a sophisticated
investor capable of understanding and
evaluating the risks of participating in
the Fund without the benefit of
regulatory safeguards and can afford a
complete loss of such investment.
Participation in a Fund will be
voluntary. No sales load or similar fee
of any kind will be charged in
connection with the sale of Units.
7. An ‘‘Eligible Employee’’ is an
individual who is a current or former
officer, director, employee or current
person on retainer, including, but not
limited to, Consultants of the Invesco
Group and (a) meets the standard of an
‘‘accredited investor’’ under rule
501(a)(5) or rule 501(a)(6) of Regulation
D, or (b) qualifies as an ‘‘Other
Investor.’’ To qualify as an Other
Investor, an individual must meet the
conditions of Rule 506(b)(2) of
Regulation D and be a ‘‘knowledgeable
employee,’’ as defined in Rule 3c–5
under the Act, of such Fund (with the
Fund treated as though it were a
‘‘covered company’’ for purposes of
such rule). A maximum of 35
individuals may become Participants in
a Fund as an Other Investor.
8. In the discretion of the Manager of
a Fund and at the request of an Eligible
carried interest is an allocation to the Manager
based on the net gains of an investment program
and is in addition to the amount that is allocable
to the Manager in proportion to its capital
contributions. A Manager that is registered under
the Advisers Act may charge a carried interest only
if permitted by rule 205–3 under the Advisers Act.
Any carried interest paid to a Manager that is not
registered under the Advisers Act will be structured
to comply with section 205(b)(3) of the Advisers
Act (with the Fund treated as though it were a
business development company solely for purposes
of that section).
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Employee, Units may be assigned by
such Eligible Employee, or sold directly
by the Fund, to a Qualified Participant
of an Eligible Employee. In order to
qualify as a ‘‘Qualified Participant,’’ an
individual or entity must be an Eligible
Family Member or Qualified Entity,
respectively, of an Eligible Employee.
An ‘‘Eligible Family Member’’ is a
spouse, parent, child, spouse of child,
brother, sister or grandchild, including
step or adoptive relationships, of an
Eligible Employee. If an Eligible Family
Member is purchasing a Unit from a
Unitholder or directly from the Fund,
such Eligible Family Member must be
an accredited investor. Eligible
Employees may transfer their Units
without consideration to Eligible Family
Members who may not be accredited
investors. A ‘‘Qualified Entity’’ is (a) a
trust of which the trustee, grantor and/
or beneficiary is an Eligible Employee;
(b) a partnership, corporation or other
entity controlled by an Eligible
Employee; 4 or (c) a trust or other entity
established solely for the benefit of
Eligible Family Members of an Eligible
Employee. A Qualified Entity must be
either an accredited investor or an entity
for which an Eligible Employee or an
Eligible Family Member is a settlor and
principal investment decision-maker.
9. The terms of a Fund will be fully
disclosed to each Eligible Employee
and, if applicable, to a Qualified
Participant of such Eligible Employee, at
the time they are invited to participate
in the Fund. Each Eligible Employee
and Qualified Participant will be
furnished with a private placement
memorandum and limited partnership
agreement or limited liability company
operating agreement (‘‘Fund
Agreement’’). Any private placement
memorandum of a particular Fund will
set forth the specific investment
objectives and strategies for such Fund.
Each Fund will send its Unitholders
audited financial statements within 120
days after the end of the fiscal year or
as soon as practicable thereafter.5 In
addition, as soon as practicable after the
end of each tax year of a Fund, a report
will be sent to each Participant setting
forth the information with respect to the
4 The inclusion of partnerships, corporations or
other entities that are controlled by Eligible
Employees in the definition of ‘‘Qualified Entity’’
is to enable such Eligible Employees to make
investments in the Funds through personal
investment vehicles for the purpose of
implementing their personal and family investment
and estate planning objectives. Eligible Employees
will exercise investment discretion or control over
these investment vehicles, thereby creating a close
nexus between the Invesco Group and these
investment vehicles.
5 ‘‘Audit’’ will have the meaning defined in rule
1–02(d) of Regulation S–X.
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Investor’s share of income, gains, losses,
credits, and other items for federal and
state income tax purposes, resulting
from the operation of the Fund during
that year.
10. Units in each Fund will be nontransferable except with the prior
written consent of the Manager, and in
any event, no person or entity will be
admitted into the Fund as a Unitholder
unless such person is an Eligible
Employee, a Qualified Participant, or an
Invesco Group entity.
11. Units in the Initial Partnerships
will not be subject to repurchase,
cancellation or redemption, but one or
more Funds may offer Units with
certain repurchase rights. Upon
termination of an Eligible Employee’s
employment, such Eligible Employee or
his or her Qualified Participant will
retain his or her limited partnership
interest or limited liability company
interest, as applicable, for the Existing
Funds unless the Manager exercises its
option to purchase his or her limited
partnership interest or limited liability
company interest, as applicable, and
will be permitted to make additional
capital contributions in fulfillment of
such Eligible Employee’s or Qualified
Participant’s capital commitment made
prior to the termination of employment,
but such Eligible Employee or Qualified
Participant will not be permitted to
make new capital commitments or
investments or participate in other
Funds.
12. Subject to the terms of the
applicable Fund Agreement, a Fund will
be permitted to enter into transactions
involving (a) an Invesco Group entity,
(b) a portfolio company, (c) any
Unitholder or person or entity affiliated
with a Unitholder, (d) an investment
fund or separate account that is
organized for the benefit of investors or
clients who are not affiliated with
Invesco Group and over which an
Invesco Group entity exercises
investment discretion (a ‘‘Third-Party
Fund’’), or any partnership in which a
Third-Party Fund is a limited partner, or
(e) any partner or other investor in a
Third-Party Fund that is not affiliated
with the Invesco Group (a ‘‘Third-Party
Investor’’). These transactions may
include a Fund’s purchase or sale of an
investment or an interest from or to any
Invesco Group entity (including certain
entities formed to make investments and
managed by Invesco Group employees,
as described in the application (a
‘‘Client Fund’’)) or Third-Party Fund,
acting as principal. Prior to entering
these transactions, the Manager must
determine that the terms are fair to the
Unitholders and the Fund, in addition
to satisfying any requirements in the
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organizational document of the ThirdParty Fund.
13. A Fund will not acquire any
security issued by a registered
investment company if, immediately
after such acquisition, the Fund will
own more than 3% of the outstanding
voting stock of the registered investment
company.
Applicants’ Legal Analysis
1. Section 6(b) of the Act provides, in
part, that the Commission will exempt
employees’ securities companies from
the provisions of the Act to the extent
that the exemption is consistent with
the protection of investors. Section 6(b)
provides that the Commission will
consider, in determining the provisions
of the Act from which the company
should be exempt, the company’s form
of organization and capital structure, the
persons owning and controlling its
securities, the price of the company’s
securities and the amount of any sales
load, how the company’s funds are
invested, and the relationship between
the company and the issuers of the
securities in which it invests. Section
2(a)(13) defines an employees’ securities
company, in relevant part, as any
investment company all of whose
securities (other than short-term paper)
are beneficially owned (a) by current or
former employees, or persons on
retainer, of one or more affiliated
employers, (b) by immediate family
members of such persons, or (c) by such
employer or employers together with
any of the persons in (a) or (b).
2. Section 7 of the Act generally
prohibits investment companies that are
not registered under section 8 of the Act
from selling or redeeming their
securities. Section 6(e) of the Act
provides that, in connection with any
order exempting an investment
company from any provision of section
7, certain provisions of the Act, as
specified by the Commission, will be
applicable to the company and other
persons dealing with the company as
though the company were registered
under the Act. Applicants request an
order under sections 6(b) and 6(e) of the
Act exempting the Funds from all the
provisions of the Act, except sections 9,
17, 30, 36 through 53, and the Rules and
Regulations. With respect to sections
17(a), (d), (e), (f), (g), and (j) and 30(a),
(b), (e), and (h) of the Act and the Rules
and Regulations thereunder, and rule
38a–1 under the Act, the exemption is
limited as set forth in the application.
3. Section 17(a) generally prohibits
any affiliated person of a registered
investment company, or any affiliated
person of an affiliated person, acting as
principal, from knowingly selling or
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purchasing any security or other
property to or from the company.
Applicants request an exemption from
section 17(a) of the Act to permit (a) an
Invesco Group entity (including,
without limitation, a Client Fund) or a
Third-Party Fund, acting as principal, to
engage in any transaction directly or
indirectly with any Fund or any
company controlled by such Fund; (b) a
Fund to invest in or engage in any
transaction with any Invesco Group
entity (including, without limitation, a
Client Fund) or a Third-Party Fund,
acting as principal, (i) in which the
Fund, any company controlled by the
Fund or any Invesco Group entity or a
Third-Party Fund has invested or will
invest, or (ii) with which such Fund,
any company controlled by such Fund
or any Invesco Group entity or ThirdParty Fund is or will become otherwise
affiliated; and (c) a Third-Party Investor,
acting as principal, to engage in any
transaction directly or indirectly with a
Fund or any company controlled by the
Fund.
4. Applicants state that the relief is
requested to ensure that each Fund will
be able to invest in entities in which the
Invesco Group, or its employees,
officers, directors, members, managers,
or partners may make or have already
made an investment. Applicants further
state that the relief is also requested to
permit each Fund the flexibility to deal
with its portfolio investments in the
manner the Manager deems most
advantageous to all Participants in the
Fund, or as required by the Invesco
Group or the Fund’s other co-investors,
including, without limitation,
restructuring its investments, having its
investments redeemed, tendering such
Fund’s securities or negotiating options
or implementing exit strategies with
respect to its investments.
5. Applicants believe an exemption
from section 17(a) is consistent with the
policy of each Fund and the protection
of investors and necessary to promote
the basic purpose of such Fund.
Applicants state that the Participants in
each Fund will have been fully
informed of the possible extent of such
Fund’s dealings with the Invesco Group,
and as successful professionals
employed in the investment
management or financial services
businesses, will be able to understand
and evaluate the attendant risks.
Applicants assert that the community of
interest among the Participants in each
Fund, on the one hand, and the Invesco
Group, on the other hand, is the best
insurance against any risk of abuse.
Applicants, on behalf of the Funds,
represent that any transactions
otherwise subject to section 17(a) of the
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Act, for which exemptive relief has not
been requested, would require approval
of the Commission.
6. Section 17(d) of the Act and rule
17d–1 under the Act prohibit any
affiliated person of a registered
investment company, or any affiliated
person of such person, acting as
principal, from participating in any joint
arrangement with the company unless
authorized by the Commission.
Applicants request an order to permit
affiliated persons of each Fund, or
affiliated persons of any of these
persons, to participate in, or effect any
transaction in connection with, any
joint enterprise or other joint
arrangement or profit-sharing plan in
which the Fund or a company
controlled by the Fund is a participant.
The exemption requested would permit,
among other things, co-investments by
each Fund, the Manager, the Client
Funds, the Co-Investors 6 and individual
employees, officers, or directors of the
Invesco Group making their own
individual investment decisions apart
from the Invesco Group.
7. Applicants assert that compliance
with section 17(d) would cause a Fund
to forego investment opportunities
simply because a Participant in such
Fund or other affiliated person of such
Fund (or any affiliate of such a person)
also had, or contemplated making, a
similar investment. Applicants further
assert that attractive investment
opportunities of the types considered by
a Fund often require each participant in
the transaction to make funds available
in an amount that may be substantially
greater than may be available to such
Fund alone. Applicants contend that, as
a result, the only way in which a Fund
may be able to participate in such
opportunities may be to co-invest with
other persons, including its affiliates.
Applicants assert that the flexibility to
structure co-investments and joint
investments will not involve abuses of
the type section 17(d) and rule 17d–1
were designed to prevent.
8. Applicants state that side-by-side
investments held by a Third-Party Fund,
or by an Invesco Group entity in a
transaction in which an Invesco Group
investment was made pursuant to a
contractual obligation to a Third-Party
Fund, will not be subject to condition 3
below. Applicants assert that in
structuring a Third-Party Fund, it is
6 ‘‘Co-Investors’’ means co-investing funds or
separate accounts, other than the Funds or the
Client Funds, that are organized or managed by an
Invesco Group entity, are not affiliated with the
Invesco Group (such as by having Invesco Group
employees, officers or directors invested in them)
and that will co-invest with the Client Funds on a
pari passu basis.
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common for the unaffiliated investors of
such fund to require that the Invesco
Group invest its own capital in ThirdParty Fund investments, either through
the Third-Party Fund or on a side-byside basis, and that the Invesco Group
investments be subject to substantially
the same terms as those applicable to
the Third-Party Fund’s investments.
Applicants state that it is important that
the interests of the Third-Party Fund
take priority over the interests of the
Funds, and that the activities of the
Third-Party Fund not be burdened or
otherwise affected by activities of the
Funds. Applicants also state that the
relationship of a Fund to a Third-Party
Fund is fundamentally different from a
Fund’s relationship to the Invesco
Group. Applicants contend that the
focus of, and the rationale for, the
protections contained in the application
are to protect the Funds from any
overreaching by the Invesco Group in
the employer/employee context,
whereas the same concerns are not
`
present with respect to the Funds vis-avis the investors of a Third-Party Fund.
9. Section 17(e) of the Act and rule
17e–1 under the Act limit the
compensation an affiliated person may
receive when acting as agent or broker
for a registered investment company.
Applicants request an exemption from
section 17(e) to permit an Invesco Group
entity (including the Manager), acting as
agent or broker, to receive placement
fees, advisory fees or other
compensation from a Fund in
connection with the purchase or sale by
the Fund of securities, provided that the
fees or other compensation can be
deemed ‘‘usual and customary.’’
Applicants state that for purposes of the
application, fees or other compensation
will be deemed ‘‘usual and customary’’
only if (a) the Fund is purchasing or
selling securities with other unaffiliated
third parties (including Third-Party
Funds) who are also similarly
purchasing or selling securities, (b) the
fees or compensation being charged to
the Fund are also being charged to the
unaffiliated third parties (including
Third-Party Funds), and (c) the amount
of securities being purchased or sold by
the Fund does not exceed 50% of the
total amount of securities being
purchased or sold by the Fund and the
unaffiliated third parties (including
Third-Party Funds). Applicants assert
that, because the Invesco Group does
not wish to appear be favoring the
Funds, compliance with section 17(e)
would prevent a Fund from
participating in transactions where the
Fund would be charged lower fees than
unaffiliated third parties. Applicants
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39787
assert that the fees or other
compensation paid by a Fund to an
Invesco Group entity will be the same
as those negotiated at arm’s length with
unaffiliated third parties.
10. Rule 17e–1(b) under the Act
requires that a majority of directors who
are not ‘‘interested persons’’ (as defined
in section 2(a)(19) of the Act) take
actions and make approvals regarding
commissions, fees or other
remuneration. Rule 17e–1(c) under the
Act requires each Fund to comply with
the fund governance standards defined
in rule 0–1(a)(7) under the Act.
Applicants request an exemption from
rule 17e–1 to the extent necessary to
permit each Fund to comply with the
rule without having a majority of the
board of directors of Invesco
(‘‘Designated Board of Directors’’) who
are not interested persons take actions
and make determinations as set forth in
paragraph (b) of the rule, and without
having to satisfy the standards as
required by paragraph (c) of the rule.
Applicants state that because the
Designated Board of Directors will be
interested persons of the Funds, without
the relief requested, a Fund could not
comply with rule 17e–1(b) and (c).
Applicants state that each Fund will
satisfy rule 17e–1(b) by having a
majority of the Designated Board of
Directors take actions and make
approvals as set forth in rule 17e–1.
Applicants state that each Fund will
otherwise comply with rule 17e–1.
11. Section 17(f) of the Act designates
the entities that may act as investment
company custodians, and rule 17f–1
under the Act imposes certain
requirements when the custodian is a
member of a national securities
exchange. Applicants request an
exemption from section 17(f) of the Act
and the rule 17f–1(c) requirement that a
copy of the executed custodian contract
be transmitted to the Commission.
Applicants believe that, because of the
community of interest of all parties
involved, and by maintaining such
records themselves and making them
available for examination by the
Commission and its staff, compliance
with this requirement would pose an
unnecessary burden. Applicants also
request an exemption from the rule 17f–
1(b)(4) requirement that an independent
accountant periodically verify the assets
held by the custodian. Applicants state
that, because of the community of
interest of the parties involved, and the
existing requirement for an independent
audit, compliance with this requirement
would be an unnecessary expense.
Applicants will comply with all other
requirements of rule 17f–1.
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12. Rule 17f–2 under the Act specifies
requirements that must be satisfied for
a registered management investment
company to act as custodian of its own
investments. Applicants request an
exemption from section 17(f) and rule
17f–2 to permit the following exceptions
from the requirements of rule 17f–2: (a)
A Fund’s investments may be kept in
the locked files of the Manager; (b) for
purposes of paragraph (d) of the rule, (i)
employees of the Manager (or an
Invesco Group entity) will be deemed to
be employees of the Funds, (ii) officers
or managers of the Manager of a Fund
(or an Invesco Group entity) will be
deemed to be officers of the Fund and
(iii) the Designated Board of Directors
will be deemed to be the board of
directors of the Fund; and (c) in place
of the verification procedure under
paragraph (f) of the rule, verification
will be effected quarterly by two
employees of the Manager (or an
Invesco Group entity). Applicants
expect that many of the Funds’
investments may be evidenced only by
partnership agreements, participation
agreements or similar documents, rather
than by negotiable certificates that could
be misappropriated. Applicants believe
that these instruments are most suitably
kept in the files of the Manager, where
they can be referred to as necessary.
13. Section 17(g) of the Act and rule
17g–1 under the Act generally require
the bonding of officers and employees of
a registered investment company who
have access to its securities or funds.
Rule 17g–1 requires that a majority of
directors who are not interested persons
take certain actions and give certain
approvals relating to fidelity bonding.
The rule also requires that the board of
directors of an investment company
relying on the rule satisfy the fund
governance standards, as defined in rule
0–1(a)(7). Applicants request relief to
permit the Designated Board of
Directors, who may be deemed
interested persons, to take actions and
make determinations as set forth in the
rule. Applicants state that, because all
directors of the Designated Board of
Directors will be affiliated persons, a
Fund could not comply with rule 17g–
1 without the requested relief.
Applicants state that each Fund will
comply with rule 17g–1 by having a
majority of the Designated Board of
Directors take actions and make
determinations as set forth in rule 17g–
1. Applicants also request an exemption
from the requirements of rule 17g–1(g)
and (h) relating to the filing of copies of
fidelity bonds and related information
with the Commission and the provision
of notices to the board of directors and
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an exemption from the requirements of
rule 17g–1(j)(3) relating to compliance
with the fund governance standards.
Applicants state that the Funds will
comply with all other requirements of
rule 17g–1.
14. Section 17(j) of the Act and
paragraph (b) of rule 17j–1 under the
Act make it unlawful for certain
enumerated persons to engage in
fraudulent or deceptive practices in
connection with the purchase or sale of
a security held or to be acquired by a
registered investment company. Rule
17j–1 also requires that every registered
investment company adopt a written
code of ethics and that every access
person of a registered investment
company report personal securities
transactions. Applicants request an
exemption from the provisions of rule
17j–1, except for the anti-fraud
provisions of paragraph (b), because
they are burdensome and unnecessary
as applied to the Funds.
15. Applicants request an exemption
from the requirements in sections 30(a),
30(b), and 30(e) of the Act, and the rules
under those sections, that registered
investment companies prepare and file
with the Commission and mail to their
shareholders certain periodic reports
and financial statements. Applicants
contend that the forms prescribed by the
Commission for periodic reports have
little relevance to a Fund and would
entail administrative and legal costs that
outweigh any benefit to the Participants
in such Fund. Applicants request relief
to the extent necessary to permit each
Fund to report annually to its
Participants. Applicants also request
relief from the requirements of section
30(h) to the extent necessary to exempt
the Manager of each Fund, directors of
the Manager, members of the Designated
Board of Directors and any officer or
other person who may be deemed
members of an advisory board of a
Fund, from filing Forms 3, 4, and 5
under section 16(a) of the 1934 Act with
respect to their ownership of Units in
such Fund. Applicants believe that,
because there will be no trading market
and the transfers of Units will be
severely restricted, these filings are
unnecessary for the protection of
investors and burdensome to those
required to make them.
16. Rule 38a–1 requires investment
companies to adopt, implement and
periodically review written policies
reasonably designed to prevent violation
of the federal securities laws and to
appoint a chief compliance officer.
Applicants state that each Fund will
comply with rule 38a–1(a), (c) and (d),
except that (a) since the Fund does not
have a board of directors, the Designated
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Board of Directors will fulfill the
responsibilities assigned to the Fund’s
board of directors under the rule, (b)
since the Designated Board of Directors
does not have any disinterested
members, approval by a majority of the
disinterested board members required
by rule 38a–1 will not be obtained, and
(c) since the Designated Board of
Directors does not have any
disinterested members, the Funds will
comply with the requirement in rule
38a–1(a)(4)(iv) that the chief compliance
officer meet with the independent
directors by having the chief
compliance officer meet with the
Designated Board of Directors as
constituted.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. Each proposed transaction
otherwise prohibited by section 17(a) or
section 17(d) and rule 17d–1 to which
a Fund is a party (the ‘‘Section 17
Transactions’’) will be effected only if
the Manager determines that:
(a) The terms of the transaction,
including the consideration to be paid
or received, are fair and reasonable to
the Unitholders of such Fund and do
not involve overreaching of such Fund
or its Unitholders on the part of any
person concerned; and
(b) the transaction is consistent with
the interests of the Unitholders of such
Fund, such Fund’s organizational
documents and such Fund’s reports to
its Participants.
In addition, the Manager of each Fund
will record and preserve a description of
Section 17 Transactions, the Manager’s
findings, the information or materials
upon which the Manager’s findings are
based and the basis therefor. All such
records will be maintained for the life
of each Fund and at least six years
thereafter, and will be subject to
examination by the Commission and its
staff. Each Fund will preserve the
accounts, books and other documents
required to be maintained in an easily
accessible place for at least the first two
years.
2. The Manager of each Fund will
adopt, and periodically review and
update, procedures designed to ensure
that reasonable inquiry is made, prior to
the consummation of any Section 17
Transaction, with respect to the possible
involvement in the transaction of any
affiliated person or promoter of or
principal underwriter for such Fund, or
any affiliated person of such a person,
promoter or principal underwriter.
3. The Manager of each Fund will not
invest the funds of such Fund in any
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investment in which an ‘‘Affiliated CoInvestor’’ (as defined below) has
acquired or proposes to acquire the
same class of securities of the same
issuer, where the investment involves a
joint enterprise or other joint
arrangement within the meaning of rule
17d–1 in which such Fund and an
Affiliated Co-Investor are participants,
unless any such Affiliated Co-Investor,
prior to disposing of all or part of its
investment (a) gives such Manager
sufficient, but not less than one day’s,
notice of its intent to dispose of its
investment; and (b) refrains from
disposing of its investment unless such
Fund has the opportunity to dispose of
such Fund’s investment prior to or
concurrently with, and on the same
terms as, and pro rata with the Affiliated
Co-Investor. The term ‘‘Affiliated CoInvestor’’ with respect to any Fund
means any person who is: (a) An
‘‘affiliated person’’ (as such term is
defined in section 2(a)(3) of the Act) of
the Fund (other than a Third-Party Fund
or Third-Party Investor); (b) the Invesco
Group; (c) an officer or director of the
Invesco Group; or (d) an entity (other
than a Third-Party Fund) in which the
Manager acts as a general partner or has
a similar capacity to control the sale or
disposition of the entity’s securities.
The restrictions contained in this
condition, however, shall not be
deemed to limit or prevent the
disposition of an investment by an
Affiliated Co-Investor: (a) To its direct
or indirect wholly-owned subsidiary, to
any company (a ‘‘Parent’’) of which
such Affiliated Co-Investor is a direct or
indirect wholly-owned subsidiary or to
a direct or indirect wholly-owned
subsidiary of its Parent; (b) to immediate
family members, including step and
adoptive relationships, of such
Affiliated Co-Investor or a trust or other
investment vehicle established for any
Affiliated Co-Investor or any such
family member; (c) when the investment
is comprised of securities that are listed
on any national securities exchange
registered under section 6 of the 1934
Act, (d) when the investment is
comprised of securities that are national
market system securities pursuant to
section 11A(a)(2) of the 1934 Act and
rule 11A(a)(2)–1 under the 1934 Act; or
(e) when the investment is comprised of
government securities as defined in
section 2(a)(16) of the Act.
4. Each Fund and its Manager will
maintain and preserve, for the life of
such Fund and at least six years
thereafter, such accounts, books and
other documents as constitute the
record forming the basis for the audited
financial statements that are to be
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provided to the Participants in such
Fund, and each annual report of such
Fund required to be sent to such
Participants, and agree that all such
records will be subject to examination
by the Commission and its staff. Each
Fund will preserve the accounts, books
and other documents required to be
maintained in an easily accessible place
for at least the first two years.
5. The Manager of each Fund will
send to each Participant who had an
interest in any capital account of such
Fund, at any time during the fiscal year
then ended, Fund financial statements
audited by such Fund’s independent
accountants within 120 days after the
end of the fiscal year of each of the
Funds or as soon as practicable
thereafter. At the end of each fiscal year,
the Manager will make a valuation or
have a valuation made of all of the
assets of the Fund as of such fiscal year
end in a manner consistent with
customary practice with respect to the
valuation of assets of the kind held by
the Fund. In addition, as soon as
practicable after the end of each fiscal
year, the Manager of such Fund will
send a report to each person who was
a Participant in such Fund at any time
during the fiscal year then ended,
setting forth such tax information as
shall be necessary for the preparation by
the Participant of his, her or its federal
and state income tax returns and a
report of the investment activities of the
Fund during such year.
6. In any case where purchases or
sales are made by a Fund from or to an
entity affiliated with the Fund by reason
of a director, officer or employee of
Invesco Group (a) serving as an officer,
director, general partner or investment
adviser of the entity, or (b) having a 5%
or more investment in the entity, such
individual will not participate in such
Fund’s determination of whether or not
to effect such purchase or sale.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–15842 Filed 7–1–13; 8:45 am]
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30580; File No. 812–13637]
The Dreyfus Corporation, et al.; Notice
of Application
June 26, 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 15(a) of the Act and rule
18f–2 under the Act, as well as from
certain disclosure requirements.
AGENCY:
Summary of Application:
Applicants request an order that would
amend and supersede a prior order (the
‘‘Non-Affiliated Sub-Adviser Order’’) 1
that permits them to enter into and
materially amend subadvisory
agreements for certain multi-managed
funds with non-affiliated sub-advisers
without shareholder approval and
grants relief from certain disclosure
requirements. The requested order
would permit applicants to enter into,
and amend, such agreements with
Wholly-Owned Sub-Advisers (as
defined below) and non-affiliated subadvisers without shareholder approval.
APPLICANTS: BNY Mellon Funds Trust
(‘‘BNY Mellon Funds’’), Strategic Funds,
Inc. (‘‘Strategic Funds’’), The Dreyfus/
Laurel Funds, Inc. (‘‘Dreyfus/Laurel
Funds’’) (each, an ‘‘Investment
Company’’ and together, the
‘‘Investment Companies’’) and The
Dreyfus Corporation (‘‘Dreyfus’’).
DATES: Filing Dates: The application was
filed on March 2, 2009, and amended on
April 14, 2009, December 27, 2012, May
1, 2013 and June 21, 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 July 22, 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
SUMMARY:
1 Strategic Funds, Inc., et al., Investment
Company Act Release Nos. 29064 (Nov. 30, 2009)
(notice) and 29097 (Dec. 23, 2009) (order).
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Agencies
[Federal Register Volume 78, Number 127 (Tuesday, July 2, 2013)]
[Notices]
[Pages 39784-39789]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-15842]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30581; 813-180-09]
Invesco Advisers, Inc., et al.; Notice of Application
June 26, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order under sections 6(b) and 6(e)
of the Investment Company Act of 1940 (``Act'') granting an exemption
from all provisions of the Act, except sections 9, 17, 30 and 36
through 53, and the rules and regulations under the Act (the ``Rules
and Regulations''). With respect to sections 17(a), (d), (e), (f), (g),
and (j) of the Act, sections 30(a), (b), (e), and (h) of the Act and
the Rules and Regulations, and rule 38a-1 under the Act, applicants
request a limited exemption as set forth in the application.
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Summary of Application: Applicants request an order to exempt certain
limited partnerships and other entities formed for the benefit of
eligible employees of Invesco Ltd. and its affiliates from certain
provisions of the Act. Each such entity will be an ``employees'
securities company'' within the meaning of section 2(a)(13) of the Act.
Applicants: Invesco Advisers, Inc. (``Invesco''), Chancellor Employees'
Direct Fund I, L.P., Chancellor Employees' Partnership Fund I, L.P.
(the ``Initial Partnerships''), INVESCO ESC Real Estate Fund I, L.P.,
INVESCO ESC Real Estate Fund II, L.P., WLR IV Parallel ESC, L.P.,
INVESCO Employees' Partnership Fund II, L.P., INVESCO Employees' Direct
Fund V, L.P., INVESCO Employees' Partnership Fund III, L.P., INVESCO
Employees' Partnership Fund IV, L.P., IPC Employees Partnership Fund
III, L.L.C., IPC Employees' Direct Fund V, L.L.C., INVESCO ESC
Partnership Fund II, L.L.C. (the ``Additional Funds,'' together with
the Initial Partnerships, the ``Existing Funds''), and Invesco Ltd.
Filing Dates: The application was filed on December 11, 1997, and
amended on March 17, 1998, July 16, 1998, January 6, 1999, June 1,
1999, January 7, 2004, July 22, 2011, August 8, 2012, June 24, 2013,
and June 25, 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 July 22, 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,
1555 Peachtree Street NE., Atlanta, GA 30309.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817, or Daniele Marchesani, 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. Invesco Ltd. is a global money management company organized
under the laws of Bermuda. Invesco, a Delaware corporation, provides
investment management and distribution services to pension plans,
foundations, financial institutions and other global clients and is a
wholly-owned subsidiary of Invesco Ltd. Invesco is registered as an
investment adviser under the Investment Advisers Act of 1940
(``Advisers Act''). Invesco Ltd. and its affiliates, as defined in rule
12b-2 under the Securities Exchange Act of 1934 (the ``1934 Act''), are
referred to collectively as the ``Invesco Group'' and individually as
an ``Invesco Group entity.''
2. The Invesco Group has formed the Existing Funds and may from
time to time organize additional entities (together with the Existing
Funds, the
[[Page 39785]]
``Funds''). Each Fund will be a limited partnership, business trust,
limited liability company or any other entity, formed or organized
under the laws of the State of Delaware or another jurisdiction,
including outside the United States.
3. The Funds have been or will be established primarily for the
benefit of certain current or former employees and current persons on
retainer, including but not limited to, Consultants \1\ of the Invesco
Group, as part of a program designed to create capital building
opportunities that are competitive with those at other financial
service firms and to facilitate its recruitment and retention of high
caliber professionals. Each Fund will be an ``employees' securities
company'' within the meaning of section 2(a)(13) of the Act. Each of
the Funds will operate as a diversified or non-diversified closed-end
management investment company within the meaning of the Act. All
members or limited partners of a Fund, other than the Manager (defined
below) are ``Participants'' and any partner of a partnership or member
of a limited liability company a ``Unitholder.'' The Invesco Group will
control the Funds within the meaning of section 2(a)(9) of the Act.
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\1\ A ``Consultant'' is a person who Invesco Group has engaged
on retainer to provide services and professional expertise on an
ongoing basis as a regular consultant or as a business or legal
adviser and who shares a community of interest with Invesco Group
and its employers.
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4. Each Fund will have a manager that is an Invesco Group entity
(``Manager'').\2\ The Manager will manage, operate and control each of
the Funds. The Manager will be authorized to delegate to another
Invesco Group entity or to a committee of Invesco Group employees
(including, without limitation, the managers of the Funds) such
management responsibility. The Manager of the Initial Partnerships is
registered as an investment adviser under the Advisers Act and any
other Manager will register as an investment adviser if required under
applicable law. Applicants represent and concede that the Manager in
managing a Fund is an ``investment adviser'' within the meaning of
sections 9 and 36 of the Act and is subject to those sections.
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\2\ Invesco Private Capital Investments, Inc. is the Manager of
Chancellor Employees' Direct Fund I, L.P., Chancellor Employees'
Partnership Fund I, L.P., INVESCO Employees' Direct Fund V, L.P.,
INVESCO Employees' Partnership Fund III, L.P. and INVESCO Employees'
Partnership Fund IV, L.P.; IRI Fund I, L.P. is the Manager of
INVESCO ESC Real Estate Fund I, L.P.; IRI Fund II, L.P. is the
Manager of INVESCO ESC Real Estate Fund II, L.P.; Invesco WLR IV
Associates LLC is the Manager of WLR Parallel ESC IV, L.P.; Invesco
ESC Partnership Fund II, L.L.C. is the Manager of INVESCO Employees'
Partnership Fund II, L.P.; Invesco Private Capital, Inc. is the
Manager of IPC Employees' Partnership Fund III, L.L.C., INVESCO ESC
Partnership Fund II, L.L.C. and IPC Employees' Direct Fund V, L.L.C.
---------------------------------------------------------------------------
5. The Manager, the Invesco Group or any employees of the Manager
or the Invesco Group may be entitled to receive compensation or a
performance-based fee (a ``carried interest'') \3\ based on the gains
and losses of the investment program or of the Fund's investment
portfolio or, if applicable, of the Client Funds (as defined below) in
which the Fund may hold an interest.
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\3\ A carried interest is an allocation to the Manager based on
the net gains of an investment program and is in addition to the
amount that is allocable to the Manager in proportion to its capital
contributions. A Manager that is registered under the Advisers Act
may charge a carried interest only if permitted by rule 205-3 under
the Advisers Act. Any carried interest paid to a Manager that is not
registered under the Advisers Act will be structured to comply with
section 205(b)(3) of the Advisers Act (with the Fund treated as
though it were a business development company solely for purposes of
that section).
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6. Interests in a Fund (``Units'') will be offered without
registration in reliance on section 4(2) of the Securities Act of 1933
(the ``Securities Act''), or Regulation D under the Securities Act, and
will be sold only to Eligible Employees, Qualified Participants (each
as defined below) or Invesco Group entities. Prior to offering Units to
an Eligible Employee or Eligible Family Member (as defined below), the
Manager must reasonably believe that such individual will be a
sophisticated investor capable of understanding and evaluating the
risks of participating in the Fund without the benefit of regulatory
safeguards and can afford a complete loss of such investment.
Participation in a Fund will be voluntary. No sales load or similar fee
of any kind will be charged in connection with the sale of Units.
7. An ``Eligible Employee'' is an individual who is a current or
former officer, director, employee or current person on retainer,
including, but not limited to, Consultants of the Invesco Group and (a)
meets the standard of an ``accredited investor'' under rule 501(a)(5)
or rule 501(a)(6) of Regulation D, or (b) qualifies as an ``Other
Investor.'' To qualify as an Other Investor, an individual must meet
the conditions of Rule 506(b)(2) of Regulation D and be a
``knowledgeable employee,'' as defined in Rule 3c-5 under the Act, of
such Fund (with the Fund treated as though it were a ``covered
company'' for purposes of such rule). A maximum of 35 individuals may
become Participants in a Fund as an Other Investor.
8. In the discretion of the Manager of a Fund and at the request of
an Eligible Employee, Units may be assigned by such Eligible Employee,
or sold directly by the Fund, to a Qualified Participant of an Eligible
Employee. In order to qualify as a ``Qualified Participant,'' an
individual or entity must be an Eligible Family Member or Qualified
Entity, respectively, of an Eligible Employee. An ``Eligible Family
Member'' is a spouse, parent, child, spouse of child, brother, sister
or grandchild, including step or adoptive relationships, of an Eligible
Employee. If an Eligible Family Member is purchasing a Unit from a
Unitholder or directly from the Fund, such Eligible Family Member must
be an accredited investor. Eligible Employees may transfer their Units
without consideration to Eligible Family Members who may not be
accredited investors. A ``Qualified Entity'' is (a) a trust of which
the trustee, grantor and/or beneficiary is an Eligible Employee; (b) a
partnership, corporation or other entity controlled by an Eligible
Employee; \4\ or (c) a trust or other entity established solely for the
benefit of Eligible Family Members of an Eligible Employee. A Qualified
Entity must be either an accredited investor or an entity for which an
Eligible Employee or an Eligible Family Member is a settlor and
principal investment decision-maker.
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\4\ The inclusion of partnerships, corporations or other
entities that are controlled by Eligible Employees in the definition
of ``Qualified Entity'' is to enable such Eligible Employees to make
investments in the Funds through personal investment vehicles for
the purpose of implementing their personal and family investment and
estate planning objectives. Eligible Employees will exercise
investment discretion or control over these investment vehicles,
thereby creating a close nexus between the Invesco Group and these
investment vehicles.
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9. The terms of a Fund will be fully disclosed to each Eligible
Employee and, if applicable, to a Qualified Participant of such
Eligible Employee, at the time they are invited to participate in the
Fund. Each Eligible Employee and Qualified Participant will be
furnished with a private placement memorandum and limited partnership
agreement or limited liability company operating agreement (``Fund
Agreement''). Any private placement memorandum of a particular Fund
will set forth the specific investment objectives and strategies for
such Fund. Each Fund will send its Unitholders audited financial
statements within 120 days after the end of the fiscal year or as soon
as practicable thereafter.\5\ In addition, as soon as practicable after
the end of each tax year of a Fund, a report will be sent to each
Participant setting forth the information with respect to the
[[Page 39786]]
Investor's share of income, gains, losses, credits, and other items for
federal and state income tax purposes, resulting from the operation of
the Fund during that year.
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\5\ ``Audit'' will have the meaning defined in rule 1-02(d) of
Regulation S-X.
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10. Units in each Fund will be non-transferable except with the
prior written consent of the Manager, and in any event, no person or
entity will be admitted into the Fund as a Unitholder unless such
person is an Eligible Employee, a Qualified Participant, or an Invesco
Group entity.
11. Units in the Initial Partnerships will not be subject to
repurchase, cancellation or redemption, but one or more Funds may offer
Units with certain repurchase rights. Upon termination of an Eligible
Employee's employment, such Eligible Employee or his or her Qualified
Participant will retain his or her limited partnership interest or
limited liability company interest, as applicable, for the Existing
Funds unless the Manager exercises its option to purchase his or her
limited partnership interest or limited liability company interest, as
applicable, and will be permitted to make additional capital
contributions in fulfillment of such Eligible Employee's or Qualified
Participant's capital commitment made prior to the termination of
employment, but such Eligible Employee or Qualified Participant will
not be permitted to make new capital commitments or investments or
participate in other Funds.
12. Subject to the terms of the applicable Fund Agreement, a Fund
will be permitted to enter into transactions involving (a) an Invesco
Group entity, (b) a portfolio company, (c) any Unitholder or person or
entity affiliated with a Unitholder, (d) an investment fund or separate
account that is organized for the benefit of investors or clients who
are not affiliated with Invesco Group and over which an Invesco Group
entity exercises investment discretion (a ``Third-Party Fund''), or any
partnership in which a Third-Party Fund is a limited partner, or (e)
any partner or other investor in a Third-Party Fund that is not
affiliated with the Invesco Group (a ``Third-Party Investor''). These
transactions may include a Fund's purchase or sale of an investment or
an interest from or to any Invesco Group entity (including certain
entities formed to make investments and managed by Invesco Group
employees, as described in the application (a ``Client Fund'')) or
Third-Party Fund, acting as principal. Prior to entering these
transactions, the Manager must determine that the terms are fair to the
Unitholders and the Fund, in addition to satisfying any requirements in
the organizational document of the Third-Party Fund.
13. A Fund will not acquire any security issued by a registered
investment company if, immediately after such acquisition, the Fund
will own more than 3% of the outstanding voting stock of the registered
investment company.
Applicants' Legal Analysis
1. Section 6(b) of the Act provides, in part, that the Commission
will exempt employees' securities companies from the provisions of the
Act to the extent that the exemption is consistent with the protection
of investors. Section 6(b) provides that the Commission will consider,
in determining the provisions of the Act from which the company should
be exempt, the company's form of organization and capital structure,
the persons owning and controlling its securities, the price of the
company's securities and the amount of any sales load, how the
company's funds are invested, and the relationship between the company
and the issuers of the securities in which it invests. Section 2(a)(13)
defines an employees' securities company, in relevant part, as any
investment company all of whose securities (other than short-term
paper) are beneficially owned (a) by current or former employees, or
persons on retainer, of one or more affiliated employers, (b) by
immediate family members of such persons, or (c) by such employer or
employers together with any of the persons in (a) or (b).
2. Section 7 of the Act generally prohibits investment companies
that are not registered under section 8 of the Act from selling or
redeeming their securities. Section 6(e) of the Act provides that, in
connection with any order exempting an investment company from any
provision of section 7, certain provisions of the Act, as specified by
the Commission, will be applicable to the company and other persons
dealing with the company as though the company were registered under
the Act. Applicants request an order under sections 6(b) and 6(e) of
the Act exempting the Funds from all the provisions of the Act, except
sections 9, 17, 30, 36 through 53, and the Rules and Regulations. With
respect to sections 17(a), (d), (e), (f), (g), and (j) and 30(a), (b),
(e), and (h) of the Act and the Rules and Regulations thereunder, and
rule 38a-1 under the Act, the exemption is limited as set forth in the
application.
3. Section 17(a) generally prohibits any affiliated person of a
registered investment company, or any affiliated person of an
affiliated person, acting as principal, from knowingly selling or
purchasing any security or other property to or from the company.
Applicants request an exemption from section 17(a) of the Act to permit
(a) an Invesco Group entity (including, without limitation, a Client
Fund) or a Third-Party Fund, acting as principal, to engage in any
transaction directly or indirectly with any Fund or any company
controlled by such Fund; (b) a Fund to invest in or engage in any
transaction with any Invesco Group entity (including, without
limitation, a Client Fund) or a Third-Party Fund, acting as principal,
(i) in which the Fund, any company controlled by the Fund or any
Invesco Group entity or a Third-Party Fund has invested or will invest,
or (ii) with which such Fund, any company controlled by such Fund or
any Invesco Group entity or Third-Party Fund is or will become
otherwise affiliated; and (c) a Third-Party Investor, acting as
principal, to engage in any transaction directly or indirectly with a
Fund or any company controlled by the Fund.
4. Applicants state that the relief is requested to ensure that
each Fund will be able to invest in entities in which the Invesco
Group, or its employees, officers, directors, members, managers, or
partners may make or have already made an investment. Applicants
further state that the relief is also requested to permit each Fund the
flexibility to deal with its portfolio investments in the manner the
Manager deems most advantageous to all Participants in the Fund, or as
required by the Invesco Group or the Fund's other co-investors,
including, without limitation, restructuring its investments, having
its investments redeemed, tendering such Fund's securities or
negotiating options or implementing exit strategies with respect to its
investments.
5. Applicants believe an exemption from section 17(a) is consistent
with the policy of each Fund and the protection of investors and
necessary to promote the basic purpose of such Fund. Applicants state
that the Participants in each Fund will have been fully informed of the
possible extent of such Fund's dealings with the Invesco Group, and as
successful professionals employed in the investment management or
financial services businesses, will be able to understand and evaluate
the attendant risks. Applicants assert that the community of interest
among the Participants in each Fund, on the one hand, and the Invesco
Group, on the other hand, is the best insurance against any risk of
abuse. Applicants, on behalf of the Funds, represent that any
transactions otherwise subject to section 17(a) of the
[[Page 39787]]
Act, for which exemptive relief has not been requested, would require
approval of the Commission.
6. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
any affiliated person of a registered investment company, or any
affiliated person of such person, acting as principal, from
participating in any joint arrangement with the company unless
authorized by the Commission. Applicants request an order to permit
affiliated persons of each Fund, or affiliated persons of any of these
persons, to participate in, or effect any transaction in connection
with, any joint enterprise or other joint arrangement or profit-sharing
plan in which the Fund or a company controlled by the Fund is a
participant. The exemption requested would permit, among other things,
co-investments by each Fund, the Manager, the Client Funds, the Co-
Investors \6\ and individual employees, officers, or directors of the
Invesco Group making their own individual investment decisions apart
from the Invesco Group.
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\6\ ``Co-Investors'' means co-investing funds or separate
accounts, other than the Funds or the Client Funds, that are
organized or managed by an Invesco Group entity, are not affiliated
with the Invesco Group (such as by having Invesco Group employees,
officers or directors invested in them) and that will co-invest with
the Client Funds on a pari passu basis.
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7. Applicants assert that compliance with section 17(d) would cause
a Fund to forego investment opportunities simply because a Participant
in such Fund or other affiliated person of such Fund (or any affiliate
of such a person) also had, or contemplated making, a similar
investment. Applicants further assert that attractive investment
opportunities of the types considered by a Fund often require each
participant in the transaction to make funds available in an amount
that may be substantially greater than may be available to such Fund
alone. Applicants contend that, as a result, the only way in which a
Fund may be able to participate in such opportunities may be to co-
invest with other persons, including its affiliates. Applicants assert
that the flexibility to structure co-investments and joint investments
will not involve abuses of the type section 17(d) and rule 17d-1 were
designed to prevent.
8. Applicants state that side-by-side investments held by a Third-
Party Fund, or by an Invesco Group entity in a transaction in which an
Invesco Group investment was made pursuant to a contractual obligation
to a Third-Party Fund, will not be subject to condition 3 below.
Applicants assert that in structuring a Third-Party Fund, it is common
for the unaffiliated investors of such fund to require that the Invesco
Group invest its own capital in Third-Party Fund investments, either
through the Third-Party Fund or on a side-by-side basis, and that the
Invesco Group investments be subject to substantially the same terms as
those applicable to the Third-Party Fund's investments. Applicants
state that it is important that the interests of the Third-Party Fund
take priority over the interests of the Funds, and that the activities
of the Third-Party Fund not be burdened or otherwise affected by
activities of the Funds. Applicants also state that the relationship of
a Fund to a Third-Party Fund is fundamentally different from a Fund's
relationship to the Invesco Group. Applicants contend that the focus
of, and the rationale for, the protections contained in the application
are to protect the Funds from any overreaching by the Invesco Group in
the employer/employee context, whereas the same concerns are not
present with respect to the Funds vis-[agrave]-vis the investors of a
Third-Party Fund.
9. Section 17(e) of the Act and rule 17e-1 under the Act limit the
compensation an affiliated person may receive when acting as agent or
broker for a registered investment company. Applicants request an
exemption from section 17(e) to permit an Invesco Group entity
(including the Manager), acting as agent or broker, to receive
placement fees, advisory fees or other compensation from a Fund in
connection with the purchase or sale by the Fund of securities,
provided that the fees or other compensation can be deemed ``usual and
customary.'' Applicants state that for purposes of the application,
fees or other compensation will be deemed ``usual and customary'' only
if (a) the Fund is purchasing or selling securities with other
unaffiliated third parties (including Third-Party Funds) who are also
similarly purchasing or selling securities, (b) the fees or
compensation being charged to the Fund are also being charged to the
unaffiliated third parties (including Third-Party Funds), and (c) the
amount of securities being purchased or sold by the Fund does not
exceed 50% of the total amount of securities being purchased or sold by
the Fund and the unaffiliated third parties (including Third-Party
Funds). Applicants assert that, because the Invesco Group does not wish
to appear be favoring the Funds, compliance with section 17(e) would
prevent a Fund from participating in transactions where the Fund would
be charged lower fees than unaffiliated third parties. Applicants
assert that the fees or other compensation paid by a Fund to an Invesco
Group entity will be the same as those negotiated at arm's length with
unaffiliated third parties.
10. Rule 17e-1(b) under the Act requires that a majority of
directors who are not ``interested persons'' (as defined in section
2(a)(19) of the Act) take actions and make approvals regarding
commissions, fees or other remuneration. Rule 17e-1(c) under the Act
requires each Fund to comply with the fund governance standards defined
in rule 0-1(a)(7) under the Act. Applicants request an exemption from
rule 17e-1 to the extent necessary to permit each Fund to comply with
the rule without having a majority of the board of directors of Invesco
(``Designated Board of Directors'') who are not interested persons take
actions and make determinations as set forth in paragraph (b) of the
rule, and without having to satisfy the standards as required by
paragraph (c) of the rule. Applicants state that because the Designated
Board of Directors will be interested persons of the Funds, without the
relief requested, a Fund could not comply with rule 17e-1(b) and (c).
Applicants state that each Fund will satisfy rule 17e-1(b) by having a
majority of the Designated Board of Directors take actions and make
approvals as set forth in rule 17e-1. Applicants state that each Fund
will otherwise comply with rule 17e-1.
11. Section 17(f) of the Act designates the entities that may act
as investment company custodians, and rule 17f-1 under the Act imposes
certain requirements when the custodian is a member of a national
securities exchange. Applicants request an exemption from section 17(f)
of the Act and the rule 17f-1(c) requirement that a copy of the
executed custodian contract be transmitted to the Commission.
Applicants believe that, because of the community of interest of all
parties involved, and by maintaining such records themselves and making
them available for examination by the Commission and its staff,
compliance with this requirement would pose an unnecessary burden.
Applicants also request an exemption from the rule 17f-1(b)(4)
requirement that an independent accountant periodically verify the
assets held by the custodian. Applicants state that, because of the
community of interest of the parties involved, and the existing
requirement for an independent audit, compliance with this requirement
would be an unnecessary expense. Applicants will comply with all other
requirements of rule 17f-1.
[[Page 39788]]
12. Rule 17f-2 under the Act specifies requirements that must be
satisfied for a registered management investment company to act as
custodian of its own investments. Applicants request an exemption from
section 17(f) and rule 17f-2 to permit the following exceptions from
the requirements of rule 17f-2: (a) A Fund's investments may be kept in
the locked files of the Manager; (b) for purposes of paragraph (d) of
the rule, (i) employees of the Manager (or an Invesco Group entity)
will be deemed to be employees of the Funds, (ii) officers or managers
of the Manager of a Fund (or an Invesco Group entity) will be deemed to
be officers of the Fund and (iii) the Designated Board of Directors
will be deemed to be the board of directors of the Fund; and (c) in
place of the verification procedure under paragraph (f) of the rule,
verification will be effected quarterly by two employees of the Manager
(or an Invesco Group entity). Applicants expect that many of the Funds'
investments may be evidenced only by partnership agreements,
participation agreements or similar documents, rather than by
negotiable certificates that could be misappropriated. Applicants
believe that these instruments are most suitably kept in the files of
the Manager, where they can be referred to as necessary.
13. Section 17(g) of the Act and rule 17g-1 under the Act generally
require the bonding of officers and employees of a registered
investment company who have access to its securities or funds. Rule
17g-1 requires that a majority of directors who are not interested
persons take certain actions and give certain approvals relating to
fidelity bonding. The rule also requires that the board of directors of
an investment company relying on the rule satisfy the fund governance
standards, as defined in rule 0-1(a)(7). Applicants request relief to
permit the Designated Board of Directors, who may be deemed interested
persons, to take actions and make determinations as set forth in the
rule. Applicants state that, because all directors of the Designated
Board of Directors will be affiliated persons, a Fund could not comply
with rule 17g-1 without the requested relief. Applicants state that
each Fund will comply with rule 17g-1 by having a majority of the
Designated Board of Directors take actions and make determinations as
set forth in rule 17g-1. Applicants also request an exemption from the
requirements of rule 17g-1(g) and (h) relating to the filing of copies
of fidelity bonds and related information with the Commission and the
provision of notices to the board of directors and an exemption from
the requirements of rule 17g-1(j)(3) relating to compliance with the
fund governance standards. Applicants state that the Funds will comply
with all other requirements of rule 17g-1.
14. Section 17(j) of the Act and paragraph (b) of rule 17j-1 under
the Act make it unlawful for certain enumerated persons to engage in
fraudulent or deceptive practices in connection with the purchase or
sale of a security held or to be acquired by a registered investment
company. Rule 17j-1 also requires that every registered investment
company adopt a written code of ethics and that every access person of
a registered investment company report personal securities
transactions. Applicants request an exemption from the provisions of
rule 17j-1, except for the anti-fraud provisions of paragraph (b),
because they are burdensome and unnecessary as applied to the Funds.
15. Applicants request an exemption from the requirements in
sections 30(a), 30(b), and 30(e) of the Act, and the rules under those
sections, that registered investment companies prepare and file with
the Commission and mail to their shareholders certain periodic reports
and financial statements. Applicants contend that the forms prescribed
by the Commission for periodic reports have little relevance to a Fund
and would entail administrative and legal costs that outweigh any
benefit to the Participants in such Fund. Applicants request relief to
the extent necessary to permit each Fund to report annually to its
Participants. Applicants also request relief from the requirements of
section 30(h) to the extent necessary to exempt the Manager of each
Fund, directors of the Manager, members of the Designated Board of
Directors and any officer or other person who may be deemed members of
an advisory board of a Fund, from filing Forms 3, 4, and 5 under
section 16(a) of the 1934 Act with respect to their ownership of Units
in such Fund. Applicants believe that, because there will be no trading
market and the transfers of Units will be severely restricted, these
filings are unnecessary for the protection of investors and burdensome
to those required to make them.
16. Rule 38a-1 requires investment companies to adopt, implement
and periodically review written policies reasonably designed to prevent
violation of the federal securities laws and to appoint a chief
compliance officer. Applicants state that each Fund will comply with
rule 38a-1(a), (c) and (d), except that (a) since the Fund does not
have a board of directors, the Designated Board of Directors will
fulfill the responsibilities assigned to the Fund's board of directors
under the rule, (b) since the Designated Board of Directors does not
have any disinterested members, approval by a majority of the
disinterested board members required by rule 38a-1 will not be
obtained, and (c) since the Designated Board of Directors does not have
any disinterested members, the Funds will comply with the requirement
in rule 38a-1(a)(4)(iv) that the chief compliance officer meet with the
independent directors by having the chief compliance officer meet with
the Designated Board of Directors as constituted.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Each proposed transaction otherwise prohibited by section 17(a)
or section 17(d) and rule 17d-1 to which a Fund is a party (the
``Section 17 Transactions'') will be effected only if the Manager
determines that:
(a) The terms of the transaction, including the consideration to be
paid or received, are fair and reasonable to the Unitholders of such
Fund and do not involve overreaching of such Fund or its Unitholders on
the part of any person concerned; and
(b) the transaction is consistent with the interests of the
Unitholders of such Fund, such Fund's organizational documents and such
Fund's reports to its Participants.
In addition, the Manager of each Fund will record and preserve a
description of Section 17 Transactions, the Manager's findings, the
information or materials upon which the Manager's findings are based
and the basis therefor. All such records will be maintained for the
life of each Fund and at least six years thereafter, and will be
subject to examination by the Commission and its staff. Each Fund will
preserve the accounts, books and other documents required to be
maintained in an easily accessible place for at least the first two
years.
2. The Manager of each Fund will adopt, and periodically review and
update, procedures designed to ensure that reasonable inquiry is made,
prior to the consummation of any Section 17 Transaction, with respect
to the possible involvement in the transaction of any affiliated person
or promoter of or principal underwriter for such Fund, or any
affiliated person of such a person, promoter or principal underwriter.
3. The Manager of each Fund will not invest the funds of such Fund
in any
[[Page 39789]]
investment in which an ``Affiliated Co-Investor'' (as defined below)
has acquired or proposes to acquire the same class of securities of the
same issuer, where the investment involves a joint enterprise or other
joint arrangement within the meaning of rule 17d-1 in which such Fund
and an Affiliated Co-Investor are participants, unless any such
Affiliated Co-Investor, prior to disposing of all or part of its
investment (a) gives such Manager sufficient, but not less than one
day's, notice of its intent to dispose of its investment; and (b)
refrains from disposing of its investment unless such Fund has the
opportunity to dispose of such Fund's investment prior to or
concurrently with, and on the same terms as, and pro rata with the
Affiliated Co-Investor. The term ``Affiliated Co-Investor'' with
respect to any Fund means any person who is: (a) An ``affiliated
person'' (as such term is defined in section 2(a)(3) of the Act) of the
Fund (other than a Third-Party Fund or Third-Party Investor); (b) the
Invesco Group; (c) an officer or director of the Invesco Group; or (d)
an entity (other than a Third-Party Fund) in which the Manager acts as
a general partner or has a similar capacity to control the sale or
disposition of the entity's securities. The restrictions contained in
this condition, however, shall not be deemed to limit or prevent the
disposition of an investment by an Affiliated Co-Investor: (a) To its
direct or indirect wholly-owned subsidiary, to any company (a
``Parent'') of which such Affiliated Co-Investor is a direct or
indirect wholly-owned subsidiary or to a direct or indirect wholly-
owned subsidiary of its Parent; (b) to immediate family members,
including step and adoptive relationships, of such Affiliated Co-
Investor or a trust or other investment vehicle established for any
Affiliated Co-Investor or any such family member; (c) when the
investment is comprised of securities that are listed on any national
securities exchange registered under section 6 of the 1934 Act, (d)
when the investment is comprised of securities that are national market
system securities pursuant to section 11A(a)(2) of the 1934 Act and
rule 11A(a)(2)-1 under the 1934 Act; or (e) when the investment is
comprised of government securities as defined in section 2(a)(16) of
the Act.
4. Each Fund and its Manager will maintain and preserve, for the
life of such Fund and at least six years thereafter, such accounts,
books and other documents as constitute the record forming the basis
for the audited financial statements that are to be provided to the
Participants in such Fund, and each annual report of such Fund required
to be sent to such Participants, and agree that all such records will
be subject to examination by the Commission and its staff. Each Fund
will preserve the accounts, books and other documents required to be
maintained in an easily accessible place for at least the first two
years.
5. The Manager of each Fund will send to each Participant who had
an interest in any capital account of such Fund, at any time during the
fiscal year then ended, Fund financial statements audited by such
Fund's independent accountants within 120 days after the end of the
fiscal year of each of the Funds or as soon as practicable thereafter.
At the end of each fiscal year, the Manager will make a valuation or
have a valuation made of all of the assets of the Fund as of such
fiscal year end in a manner consistent with customary practice with
respect to the valuation of assets of the kind held by the Fund. In
addition, as soon as practicable after the end of each fiscal year, the
Manager of such Fund will send a report to each person who was a
Participant in such Fund at any time during the fiscal year then ended,
setting forth such tax information as shall be necessary for the
preparation by the Participant of his, her or its federal and state
income tax returns and a report of the investment activities of the
Fund during such year.
6. In any case where purchases or sales are made by a Fund from or
to an entity affiliated with the Fund by reason of a director, officer
or employee of Invesco Group (a) serving as an officer, director,
general partner or investment adviser of the entity, or (b) having a 5%
or more investment in the entity, such individual will not participate
in such Fund's determination of whether or not to effect such purchase
or sale.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-15842 Filed 7-1-13; 8:45 am]
BILLING CODE 8011-01-P