The Gabelli Dividend & Income Trust, et al.; Notice of Application, 8208-8210 [2014-02933]
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Federal Register / Vol. 79, No. 28 / Tuesday, February 11, 2014 / Notices
Circular in 1998 63 FR 8546 (February
19, 1998) which can be found on OMB’s
Web site at https://www.whitehouse.gov/
omb/circulars_a119/.
The policies in the Circular are
intended to maximize the reliance by
agencies on voluntary consensus
standards and reduce to a minimum
agency reliance on standards other than
voluntary consensus standards,
including reliance on governmentunique standards. The Circular also
provides guidance for agencies
participating in the work of bodies that
develop voluntary consensus standards
and describes procedures for satisfying
the NTTAA’s agency-reporting
requirements. In addition, consistent
with section 12(b) of the NTTAA, the
Circular directs the Secretary of
Commerce to issue guidance to agencies
in order to coordinate conformity
assessment activities. The NIST
conformity assessment guidelines,
which were issued in 2000, are available
at https://gsi.nist.gov/global/docs/
FR_FedGuidanceCA.pdf.
OMB’s proposed revisions are meant
to provide more detailed guidance to
agencies to take into account agency
experience under the current Circular in
several areas including the
Administration’s current work in Open
Government, developments in
regulatory policy and international
trade, and changes in technology.
Howard Shelanski,
Administrator, Office of Information and
Regulatory Affairs.
[FR Doc. 2014–02891 Filed 2–10–14; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30908; File No. 812–14211]
The Gabelli Dividend & Income Trust,
et al.; Notice of Application
February 6, 2014.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 17(b) of the Investment
Company Act of 1940 (the ‘‘Act’’)
requesting an exemption from section
17(a) of the Act, and for an order under
section 17(d) of the Act and rule 17d–
1 thereunder permitting certain joint
transactions.
tkelley on DSK3SPTVN1PROD with NOTICES
AGENCY:
Applicants: The Gabelli Dividend &
Income Trust (‘‘Dividend Trust’’), The
Gabelli Global Small and Mid Cap Value
Trust (‘‘Global Trust’’) (each, a ‘‘Fund’’
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and together, the ‘‘Funds’’) and Gabelli
Funds, LLC (the ‘‘Adviser’’).
SUMMARY: Summary of Application:
Applicants seek an order to permit
Dividend 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 the
holders of Dividend Trust’s common
stock.
DATES: Filing Dates: The application
was filed on September 11, 2013 and
amended on January 28, 2014.
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 February 27, 2014 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.
ADDRESS: Elizabeth M. Murphy,
Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC, 20549–1090;
Applicants: Richard T. Prins, Esq.,
Skadden, Arps, Slate, Meagher & Flom
LLP, Four Times Square, New York,
New York 10036.
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, Chief
Counsel’s 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. Dividend Trust, a Delaware
statutory trust, is registered under the
Act as a diversified closed-end
management investment company.
Dividend Trust seeks to provide a high
level of total return on its assets with an
emphasis on dividends and income.
Under normal market conditions,
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Dividend Trust invests at least 80% of
its assets in dividend-paying securities
or other income-producing securities,
and at least 50% of its assets in
dividend-paying equity securities.
Dividend Trust has a non-fundamental
policy that limits investment in
securities of non-United States issuers
to 35% of its total assets.
2. Global Trust was organized as a
Delaware statutory trust on August 19,
2013 and is wholly-owned by Dividend
Trust. Global Trust filed a notification of
registration on Form N–8A on
September 11, 2013 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
September 11, 2013 (the ‘‘Proxy
Statement/Prospectus’’) and filed a
registration statement on Form N–2 on
December 10, 2013. Application will be
made to list Global Trust’s common
shares for trading on the New York
Stock Exchange. Global Trust seeks to
provide long-term capital growth. Under
normal market conditions, Global Trust
will invest at least 40% of its total assets
in the equity securities of companies
located outside the United States and in
at least three countries. Unlike Dividend
Trust, Global Trust may invest without
limitation in the equity securities of
companies located outside the United
States.
3. The Adviser, a New York limited
liability company, is registered under
the Investment Advisers Act of 1940.
The Adviser serves, or will serve,
respectively, as the investment adviser
to Dividend Trust and Global Trust.
Applicants represent that the
investment advisory fee structure for
Global Trust will be the same as the
advisory fee structure for Dividend
Trust.
4. The board of trustees of Dividend
Trust consists of ten trustees, five of
whom are also trustees of the six
member board of trustees of Global
Trust (each such board of trustees, a
‘‘Board’’ and collectively, the ‘‘Boards’’).
Seven trustees on the Board of Dividend
Trust are not ‘‘interested persons,’’ as
defined in section 2(a)(19) of the Act
(the ‘‘Independent Trustees’’), and five
trustees on the Board of Global Trust are
Independent Trustees. The President
and the Treasurer of Dividend Trust
hold the same offices with Global Trust.
5. The Board of Dividend Trust has
approved, subject to the issuance of the
requested relief and subsequent
shareholder approval, the contribution
of a segment of Dividend Trust’s assets
having a value of approximately $100
million to Global Trust, in exchange for
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tkelley on DSK3SPTVN1PROD with NOTICES
shares of Global Trust common stock. It
is anticipated that the contributed assets
will consist largely or exclusively of
cash and short-term fixed income
instruments. All the shares of common
stock of Global Trust will then be
distributed by Dividend Trust as a
dividend to its common shareholders at
an anticipated rate of one (1) share of
Global Trust common stock for every
ten (10) shares held of Dividend Trust
common stock.1 The contribution of the
Dividend Trust assets to Global Trust
and the subsequent distribution of
shares of Global Trust common stock to
Dividend Trust common shareholders
are referred to as the ‘‘Transaction.’’ 2
6. The Proxy Statement/Prospectus of
the Funds will be used, following the
issuance of the requested relief, to
solicit approval of the Dividend Trust
shareholders of the Transaction. Prior to
the effectiveness of the Proxy
Statement/Prospectus under the 1933
Act, Dividend Trust will purchase
shares of Global Trust’s common stock
in consideration of Dividend 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. Applicants intend that the
Seed Capital Shares will be included in
the distribution of Global Trust’s shares
of common stock to the common
shareholders of Dividend Trust, and,
accordingly, will be sold pursuant to a
registration statement under the 1933
Act.
7. The Board of Dividend Trust,
including all the Independent Trustees,
concluded that the Transaction will
result in the following benefits to
Dividend Trust common shareholders:
(a) shareholders will receive shares of
an investment company with a different
risk-return profile than Dividend Trust;
(b) shareholders 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) shareholders will be afforded the
opportunity to seek the capital growth
1 This estimate is based on the number of
Dividend Trust common shares outstanding as of
December 31, 2013 and a target initial net asset
value per share of Global Trust common stock of
$12.00.
2 No fractional shares of Global Trust common
stock will be issued as part of the Transaction. The
fractional shares to which holders of Dividend
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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opportunities presented by substantial
foreign securities exposure.
8. The Board of Dividend Trust has
been advised by counsel that the
distribution of common shares of Global
Trust to the common shareholders of
Dividend Trust likely will be a taxable
event for Dividend Trust common
shareholders to some extent and, under
certain circumstances, also will be a
taxable event for Dividend Trust.
Dividend Trust does not expect that it
will recognize significant taxable gain
on its distribution of Global Trust
common shares because it does not
expect any of the contributed short-term
debt securities to have a value at the
time of their contribution to Global
Trust significantly in excess of Dividend
Trust’s tax basis for those securities.
Further, the Transaction is not expected
to increase significantly the total
amount of taxable distributions received
by Dividend Trust common
shareholders for the year in which the
Transaction is consummated because
Dividend Trust has adopted a policy of
distributing to shareholders monthly
substantially all of its taxable income
and, accordingly, any taxable income
included in the distribution of Global
Trust common shares would be
distributed at some point during the
year. The Board of Dividend Trust,
including all of the Independent
Trustees, has considered the tax
consequences of the Transaction and
has determined that the benefits of the
Transaction outweigh any adverse tax
consequences to Dividend Trust and its
common shareholders, particularly
because such adverse tax consequences
are expected to be minimal.
9. The costs of organizing Global
Trust and effecting the distribution of
Global Trust’s shares to Dividend
Trust’s common shareholders, including
the fees and expenses of counsel and
accountants and printing, listing and
registration fees, the costs of soliciting
shareholder approval of the Transaction,
and the costs incurred in connection
with the application for relief, are
estimated to be approximately $750,000,
and will be borne by Dividend Trust.
Global Trust will incur operating
expenses on an ongoing basis, including
legal, auditing, transfer agency, and
custodian expenses that, when
aggregated with the fees payable by
Dividend Trust for similar services after
the distribution, will likely exceed the
fees and expenses currently payable by
Dividend Trust for those services. The
Board of Dividend Trust, including all
of the Independent Trustees, concluded
that it is appropriate for Dividend Trust
to bear the Transaction’s costs inasmuch
as the benefits of the Transaction will be
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for Dividend Trust’s common
shareholders and because absorption of
such expenses will eliminate any deficit
in the net asset value of Global Trust
common shares in comparison to the
amount of the distribution, which may
support the pricing of Global Trust
common shares in trading on the New
York Stock Exchange. It is not expected
that the Transaction will have a
significant effect on the annual expenses
of Dividend Trust as a percentage of its
assets.
Applicants’ Legal Analysis
1. Applicants request an order 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.
2. 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. Dividend Trust may be
viewed as an affiliated person of Global
Trust under section 2(a)(3) because
Dividend Trust will own 100 percent of
the Global Trust’s voting securities until
the consummation of the Transaction.
Dividend 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 Dividend Trust and
Global Trust, section 17(a) would
prohibit the Transaction.
3. 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.
4. Applicants assert that the terms of
the Transaction, including the
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Federal Register / Vol. 79, No. 28 / Tuesday, February 11, 2014 / Notices
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 Dividend Trust of a
portion of its assets to Global Trust in
exchange for shares of Global Trust
common stock will be based on the fair
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 Dividend Trust
(such business day, the ‘‘Valuation
Date’’), in the same manner as for
purposes of the daily net asset valuation
for Dividend 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 and short-term fixed
income instruments and thus will pose
no issues with respect to valuation.
Shares of Global Trust common stock
distributed by Dividend 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.
5. With respect to the Transaction,
each Board, including a majority of the
Independent Trustees, determined that
participation in the Transaction is in the
best interests of Dividend Trust or
Global Trust, as applicable, and that the
interests of the existing shareholders of
Dividend 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 Dividend
Trust or Global Trust, as applicable.
6. Applicants state that the
Transaction will be consistent with the
stated investment policies of Dividend
Trust and Global Trust as disclosed to
shareholders. The distribution of shares
of Global Trust common stock will not
initially change the position of Dividend
Trust’s shareholders with respect to the
underlying investments that they then
own. The Proxy Statement/Prospectus
will be used to solicit the approval of
Dividend Trust’s shareholders of the
Transaction at a vote to take place
following the issuance of the requested
order. Dividend Trust’s shareholders
will have the opportunity to vote on the
Transaction after having received
disclosure concerning the Transaction.
7. 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
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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.
8. Applicants state that the
Transaction will not place any of
Dividend Trust, Global Trust, or existing
shareholders of Dividend Trust in a
position less advantageous than that of
any other person. The value of Dividend
Trust’s assets transferred to Global Trust
(and the shares of Global Trust common
stock received in return) will be based
on the fair value of such assets
computed 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 Dividend Trust. The shares of
Global Trust common stock will be
distributed to Dividend Trust’s common
shareholders, leaving the shareholders
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.
9. Applicants assert that the
Transaction has been proposed in order
to benefit the shareholders of Dividend
Trust as well as Global Trust.
Applicants state that neither the Adviser
nor any other affiliated person of
Dividend Trust or Global Trust will
receive additional fees solely as a result
of the Transaction. In addition,
applicants state that although it is
possible that the creation of Global
Trust may benefit the Adviser by
providing it with an additional managed
fund, the Board of Dividend 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 Dividend Trust to be
contributed to Global Trust pursuant to
the Transaction represent only
approximately 5.0% of Dividend Trust’s
net assets as of December 31, 2013. In
addition, by creating Global Trust
through the Transaction, Dividend Trust
is effectively enabling its common
shareholders to receive securities
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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. 2014–02933 Filed 2–10–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Securities Act of 1933; Release No. 9546/
February 5, 2014; Securities Exchange Act
of 1934; Release No. 71494/February 5,
2014]
Order Approving Public Company
Accounting Oversight Board Budget
and Annual Accounting Support Fee
for Calendar Year 2014
The Sarbanes-Oxley Act of 2002, as
amended (the ‘‘Sarbanes-Oxley Act’’),1
established the Public Company
Accounting Oversight Board (‘‘PCAOB’’)
to oversee the audits of companies that
are subject to the securities laws, and
related matters, in order to protect the
interests of investors and further the
public interest in the preparation of
informative, accurate and independent
audit reports. The PCAOB is to
accomplish these goals through
registration of public accounting firms
and standard setting, inspection, and
disciplinary programs. The PCAOB is
subject to the comprehensive oversight
of the Securities and Exchange
Commission (the ‘‘Commission’’).
Section 109 of the Sarbanes-Oxley Act
provides that the PCAOB shall establish
a reasonable annual accounting support
fee, as may be necessary or appropriate
to establish and maintain the PCAOB.
Under Section 109(f) of the SarbanesOxley Act, the aggregate annual
accounting support fee shall not exceed
the PCAOB’s aggregate ‘‘recoverable
budget expenses,’’ which may include
operating, capital and accrued items.
The PCAOB’s annual budget and
accounting support fee is subject to
approval by the Commission.
Section 982 of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act (the ‘‘Dodd-Frank Act’’) 2 amended
the Sarbanes-Oxley Act to provide the
PCAOB with explicit authority to
oversee auditors of broker-dealers
registered with the Commission. In
addition, the PCAOB must allocate the
annual accounting support fee among
issuers and among brokers and dealers.
1 15
U.S.C. 7201 et seq.
L. No. 111–203, 124 Stat. 1376 (2010).
2 Pub.
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]]>Agencies
[Federal Register Volume 79, Number 28 (Tuesday, February 11, 2014)]
[Notices]
[Pages 8208-8210]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-02933]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30908; File No. 812-14211]
The Gabelli Dividend & Income Trust, et al.; Notice of
Application
February 6, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 17(b) of the Investment
Company Act of 1940 (the ``Act'') requesting an exemption from section
17(a) of the Act, and for an order under section 17(d) of the Act and
rule 17d-1 thereunder permitting certain joint transactions.
-----------------------------------------------------------------------
Applicants: The Gabelli Dividend & Income Trust (``Dividend
Trust''), The Gabelli Global Small and Mid Cap Value Trust (``Global
Trust'') (each, a ``Fund'' and together, the ``Funds'') and Gabelli
Funds, LLC (the ``Adviser'').
SUMMARY: Summary of Application: Applicants seek an order to permit
Dividend 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 the holders of Dividend Trust's common stock.
DATES: Filing Dates: The application was filed on September 11, 2013
and amended on January 28, 2014.
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 February 27, 2014 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.
ADDRESS: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC, 20549-1090; Applicants:
Richard T. Prins, Esq., Skadden, Arps, Slate, Meagher & Flom LLP, Four
Times Square, New York, New York 10036.
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, Chief Counsel's 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. Dividend Trust, a Delaware statutory trust, is registered under
the Act as a diversified closed-end management investment company.
Dividend Trust seeks to provide a high level of total return on its
assets with an emphasis on dividends and income. Under normal market
conditions, Dividend Trust invests at least 80% of its assets in
dividend-paying securities or other income-producing securities, and at
least 50% of its assets in dividend-paying equity securities. Dividend
Trust has a non-fundamental policy that limits investment in securities
of non-United States issuers to 35% of its total assets.
2. Global Trust was organized as a Delaware statutory trust on
August 19, 2013 and is wholly-owned by Dividend Trust. Global Trust
filed a notification of registration on Form N-8A on September 11, 2013
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 September
11, 2013 (the ``Proxy Statement/Prospectus'') and filed a registration
statement on Form N-2 on December 10, 2013. Application will be made to
list Global Trust's common shares for trading on the New York Stock
Exchange. Global Trust seeks to provide long-term capital growth. Under
normal market conditions, Global Trust will invest at least 40% of its
total assets in the equity securities of companies located outside the
United States and in at least three countries. Unlike Dividend Trust,
Global Trust may invest without limitation in the equity securities of
companies located outside the United States.
3. The Adviser, a New York limited liability company, is registered
under the Investment Advisers Act of 1940. The Adviser serves, or will
serve, respectively, as the investment adviser to Dividend Trust and
Global Trust. Applicants represent that the investment advisory fee
structure for Global Trust will be the same as the advisory fee
structure for Dividend Trust.
4. The board of trustees of Dividend Trust consists of ten
trustees, five of whom are also trustees of the six member board of
trustees of Global Trust (each such board of trustees, a ``Board'' and
collectively, the ``Boards''). Seven trustees on the Board of Dividend
Trust are not ``interested persons,'' as defined in section 2(a)(19) of
the Act (the ``Independent Trustees''), and five trustees on the Board
of Global Trust are Independent Trustees. The President and the
Treasurer of Dividend Trust hold the same offices with Global Trust.
5. The Board of Dividend Trust has approved, subject to the
issuance of the requested relief and subsequent shareholder approval,
the contribution of a segment of Dividend Trust's assets having a value
of approximately $100 million to Global Trust, in exchange for
[[Page 8209]]
shares of Global Trust common stock. It is anticipated that the
contributed assets will consist largely or exclusively of cash and
short-term fixed income instruments. All the shares of common stock of
Global Trust will then be distributed by Dividend Trust as a dividend
to its common shareholders at an anticipated rate of one (1) share of
Global Trust common stock for every ten (10) shares held of Dividend
Trust common stock.\1\ The contribution of the Dividend Trust assets to
Global Trust and the subsequent distribution of shares of Global Trust
common stock to Dividend Trust common shareholders are referred to as
the ``Transaction.'' \2\
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\1\ This estimate is based on the number of Dividend Trust
common shares outstanding as of December 31, 2013 and a target
initial net asset value per share of Global Trust common stock of
$12.00.
\2\ No fractional shares of Global Trust common stock will be
issued as part of the Transaction. The fractional shares to which
holders of Dividend 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 Dividend Trust shareholders of the Transaction. Prior to the
effectiveness of the Proxy Statement/Prospectus under the 1933 Act,
Dividend Trust will purchase shares of Global Trust's common stock in
consideration of Dividend 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.
Applicants intend that the Seed Capital Shares will be included in the
distribution of Global Trust's shares of common stock to the common
shareholders of Dividend Trust, and, accordingly, will be sold pursuant
to a registration statement under the 1933 Act.
7. The Board of Dividend Trust, including all the Independent
Trustees, concluded that the Transaction will result in the following
benefits to Dividend Trust common shareholders: (a) shareholders will
receive shares of an investment company with a different risk-return
profile than Dividend Trust; (b) shareholders 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)
shareholders will be afforded the opportunity to seek the capital
growth opportunities presented by substantial foreign securities
exposure.
8. The Board of Dividend Trust has been advised by counsel that the
distribution of common shares of Global Trust to the common
shareholders of Dividend Trust likely will be a taxable event for
Dividend Trust common shareholders to some extent and, under certain
circumstances, also will be a taxable event for Dividend Trust.
Dividend Trust does not expect that it will recognize significant
taxable gain on its distribution of Global Trust common shares because
it does not expect any of the contributed short-term debt securities to
have a value at the time of their contribution to Global Trust
significantly in excess of Dividend Trust's tax basis for those
securities. Further, the Transaction is not expected to increase
significantly the total amount of taxable distributions received by
Dividend Trust common shareholders for the year in which the
Transaction is consummated because Dividend Trust has adopted a policy
of distributing to shareholders monthly substantially all of its
taxable income and, accordingly, any taxable income included in the
distribution of Global Trust common shares would be distributed at some
point during the year. The Board of Dividend Trust, including all of
the Independent Trustees, has considered the tax consequences of the
Transaction and has determined that the benefits of the Transaction
outweigh any adverse tax consequences to Dividend Trust and its common
shareholders, particularly because such adverse tax consequences are
expected to be minimal.
9. The costs of organizing Global Trust and effecting the
distribution of Global Trust's shares to Dividend Trust's common
shareholders, including the fees and expenses of counsel and
accountants and printing, listing and registration fees, the costs of
soliciting shareholder approval of the Transaction, and the costs
incurred in connection with the application for relief, are estimated
to be approximately $750,000, and will be borne by Dividend Trust.
Global Trust will incur operating expenses on an ongoing basis,
including legal, auditing, transfer agency, and custodian expenses
that, when aggregated with the fees payable by Dividend Trust for
similar services after the distribution, will likely exceed the fees
and expenses currently payable by Dividend Trust for those services.
The Board of Dividend Trust, including all of the Independent Trustees,
concluded that it is appropriate for Dividend Trust to bear the
Transaction's costs inasmuch as the benefits of the Transaction will be
for Dividend Trust's common shareholders and because absorption of such
expenses will eliminate any deficit in the net asset value of Global
Trust common shares in comparison to the amount of the distribution,
which may support the pricing of Global Trust common shares in trading
on the New York Stock Exchange. It is not expected that the Transaction
will have a significant effect on the annual expenses of Dividend Trust
as a percentage of its assets.
Applicants' Legal Analysis
1. Applicants request an order 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.
2. 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. Dividend Trust may be viewed as
an affiliated person of Global Trust under section 2(a)(3) because
Dividend Trust will own 100 percent of the Global Trust's voting
securities until the consummation of the Transaction. Dividend 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 Dividend Trust and
Global Trust, section 17(a) would prohibit the Transaction.
3. 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.
4. Applicants assert that the terms of the Transaction, including
the
[[Page 8210]]
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 Dividend Trust of a portion of its assets
to Global Trust in exchange for shares of Global Trust common stock
will be based on the fair 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 Dividend Trust (such business day, the
``Valuation Date''), in the same manner as for purposes of the daily
net asset valuation for Dividend 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 and short-term fixed income instruments
and thus will pose no issues with respect to valuation. Shares of
Global Trust common stock distributed by Dividend 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.
5. With respect to the Transaction, each Board, including a
majority of the Independent Trustees, determined that participation in
the Transaction is in the best interests of Dividend Trust or Global
Trust, as applicable, and that the interests of the existing
shareholders of Dividend 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 Dividend Trust or Global Trust, as applicable.
6. Applicants state that the Transaction will be consistent with
the stated investment policies of Dividend Trust and Global Trust as
disclosed to shareholders. The distribution of shares of Global Trust
common stock will not initially change the position of Dividend Trust's
shareholders with respect to the underlying investments that they then
own. The Proxy Statement/Prospectus will be used to solicit the
approval of Dividend Trust's shareholders of the Transaction at a vote
to take place following the issuance of the requested order. Dividend
Trust's shareholders will have the opportunity to vote on the
Transaction after having received disclosure concerning the
Transaction.
7. 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.
8. Applicants state that the Transaction will not place any of
Dividend Trust, Global Trust, or existing shareholders of Dividend
Trust in a position less advantageous than that of any other person.
The value of Dividend Trust's assets transferred to Global Trust (and
the shares of Global Trust common stock received in return) will be
based on the fair value of such assets computed 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 Dividend Trust. The shares of Global
Trust common stock will be distributed to Dividend Trust's common
shareholders, leaving the shareholders 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.
9. Applicants assert that the Transaction has been proposed in
order to benefit the shareholders of Dividend Trust as well as Global
Trust. Applicants state that neither the Adviser nor any other
affiliated person of Dividend Trust or Global Trust will receive
additional fees solely as a result of the Transaction. In addition,
applicants state that although it is possible that the creation of
Global Trust may benefit the Adviser by providing it with an additional
managed fund, the Board of Dividend 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 Dividend Trust to be contributed to Global Trust
pursuant to the Transaction represent only approximately 5.0% of
Dividend Trust's net assets as of December 31, 2013. In addition, by
creating Global Trust through the Transaction, Dividend Trust is
effectively enabling its common shareholders 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. 2014-02933 Filed 2-10-14; 8:45 am]
BILLING CODE 8011-01-P
