Document ID: SEC-2017-0497-0001
Agency: sec
Document Type: Notice
Title: Exemptions: Advent/Claymore Enhanced Growth and Income Fund
Posted Date: 2017-03-24T04:00Z

[Federal Register Volume 82, Number 56 (Friday, March 24, 2017)]
[Notices]
[Pages 15091-15093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05850]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32537; 812-14686]

Advent/Claymore Enhanced Growth & Income Fund

March 20, 2017.
AGENCY:  Securities and Exchange Commission (``Commission'').

ACTION:  Notice.

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[[Page 15092]]

    Notice of application for an order under section 17(b) of the 
Investment Company Act of 1940 (the ``Act'') for an exemption from 
section 17(a) of the Act.

Summary of Application:  Applicant seeks an order that would permit in-
kind repurchases of shares of the Fund held by certain affiliated 
shareholders of the Fund.

Applicant:  Advent/Claymore Enhanced Growth & Income Fund (the 
``Fund'').

Filing Dates:  The application was filed on August 10, 2016, and 
amended on December 19, 2016, March 10, 2017 and March 15, 2017. 
Applicants have agreed to file an amendment during the notice period, 
the substance of which is reflected in this notice.

Hearing or Notification of Hearing:  An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicant with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on April 14, 2017, and should be accompanied by proof of 
service on applicant, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, 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:  Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090. Applicant, 1271 Avenue of the 
Americas, 45th Floor, New York, NY 10020.

FOR FURTHER INFORMATION CONTACT:  Robert Shapiro, Branch Chief, at 
(202) 551-6821 (Chief Counsel's Office, Division of Investment 
Management).

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 http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicant's Representations

    1. The Fund is Delaware statutory trust registered as a closed-end 
management investment company under the Act. The Fund's investment 
objective is to seek current income and current gains from trading in 
securities, with a secondary objective of long-term capital 
appreciation. The Fund states that, under normal market conditions, it 
invests at least 40% of its Managed Assets \1\ in a portfolio of equity 
securities and convertible securities of U.S. and non-U.S. issuers, and 
may invest up to 60% of its Managed Assets in non-convertible high-
yield securities.\2\ Shares of the Fund are listed and trade on the New 
York Stock Exchange. Guggenheim Funds Investment Advisors, LLC 
(``GFIA''), an investment adviser registered under the Investment 
Advisers Act of 1940 (the ``Advisers Act''), serves as investment 
adviser to the Fund. Advent Capital Management, LLC (``Advent''), an 
investment adviser registered under the Advisers Act, serves as the 
investment manager to the Fund.
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    \1\ ``Managed Assets'' means the total assets of the Fund 
(including any assets attributable to the use of financial leverage, 
if any) minus the sum of accrued liabilities (other than debt 
representing financial leverage, if any).
    \2\ Applicant states that, as of January 31, 2017, its portfolio 
consisted of the following investments (as a percentage of Managed 
Assets): 52.3% convertible bonds; 26.0% corporate bonds; 8.4% cash 
and cash equivalents; 6.5% common stocks; 6.3% convertible preferred 
stocks; 0.5% senior floating rate interests.
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    2. The Fund proposes to conduct a tender offer for up to 32.5% of 
its outstanding shares at a price equal to 98% of net asset value per 
share (``NAV'') as of the business day immediately after the day such 
tender offer expires (the ``In-Kind Repurchase Offer''). Payment for 
any shares repurchased during the In-Kind Repurchase Offer would be 
made in-kind through a pro rata distribution of the Fund's 
Distributable Securities (as defined below). The In-Kind Repurchase 
Offer will be made pursuant to section 23(c)(2) of the Act and 
conducted in accordance with rule 13e-4 under the Securities Exchange 
Act of 1934.
    3. Applicant states that the pro rata distribution of the Fund's 
portfolio securities would not include: (i) Securities that, if 
distributed, would be required to be registered under the Securities 
Act of 1933 (the ``1933 Act''); (ii) securities issued by entities in 
countries that restrict or prohibit the holdings of securities by non-
residents other than through qualified investment vehicles, or whose 
distribution would otherwise be contrary to applicable local laws, 
rules or regulations; (iii) certain portfolio assets, such as 
derivative instruments or repurchase agreements, that involve the 
assumption of contractual obligations, require special trading 
facilities, or can only be traded with the counterparty to the 
transaction; and (iv) portfolio securities held by the Fund which are 
not eligible for clearance and trade settlement through the Depository 
Trust Company (``DTC''). Applicant's portfolio securities eligible to 
be distributed in the In-Kind Repurchase Offer, excluding securities 
set forth in clauses (i)-(iv) above, are referred to as ``Distributable 
Securities.'' Applicant represents that, as of January 31, 2017, 
approximately 65% of its Managed Assets were Distributable Securities.
    4. Applicant states that the In-Kind Repurchase Offer is designed 
to accommodate the needs of shareholders who wish to participate in the 
In-Kind Repurchase Offer and long-term shareholders who would prefer to 
remain invested in a closed-end investment vehicle. Applicant further 
states that, under the In-Kind Repurchase Offer, the Fund will not have 
to incur substantial brokerage commissions and other and legal costs 
that would be incurred in a cash tender offer. Applicant also states 
that the In-Kind Repurchase Offer will minimize disruption to the 
investment management of Fund, while providing enhanced liquidity for 
the Fund's shareholders.
    5. Applicant requests relief to permit any common shareholders of 
the Fund who are ``affiliated persons'' of the Fund within the meaning 
of section 2(a)(3) of the Act solely by reason of owning, controlling, 
or holding with the power to vote, 5% or more of the Fund's outstanding 
voting securities (each, an ``Affiliated Shareholder'') to participate 
in the proposed In-Kind Repurchase Offer.

Applicant's Legal Analysis

    1. Section 17(a) of the Act prohibits an affiliated person of a 
registered investment company, or any affiliated person of the person, 
acting as principal, from knowingly purchasing or selling any security 
or other property from or to the company. Section 2(a)(3) of the Act 
defines an ``affiliated person'' of another person to include any 
person who directly or indirectly owns, controls, or holds with power 
to vote 5% or more of the outstanding voting securities of the other 
person. Applicant states that to the extent that the In-Kind Repurchase 
Offer could be deemed the purchase or sale of securities by an 
Affiliated Shareholder, the transactions would be prohibited by section 
17(a). Accordingly, applicant requests an exemption from section 17(a) 
of the Act to the extent necessary to permit the participation of 
Affiliated Shareholders in the In-Kind Repurchase Offer.
    2. Section 17(b) of the Act authorizes the Commission to exempt any 
transaction from the provisions of

[[Page 15093]]

section 17(a) if the terms of the transaction, including the 
consideration to be paid or received, are reasonable and fair and do 
not involve overreaching on the part of any person concerned, and the 
transaction is consistent with the policy of each registered investment 
company and with the general purposes of the Act.
    3. Applicant asserts that the terms of the In-Kind Repurchase Offer 
meet the requirements of sections 17(b) of the Act. Applicant asserts 
that neither the Fund nor an Affiliated Shareholder has any choice as 
to the Distributable Securities to be received as proceeds from the In-
Kind Repurchase Offer. Instead, each participating shareholder will 
receive their pro rata portion of each of the Fund's Distributable 
Securities. Moreover, applicant states that the portfolio securities to 
be distributed in the In-Kind Repurchase Offer will be valued in 
accordance with section 2(a)(41) of the Act, which will be an 
objective, verifiable standard that removes any discretion of an 
Affiliated Shareholder, Advent or GFIA to conduct the In-Kind 
Repurchase Offer at a price that would be beneficial or detrimental to 
the interests of any particular shareholder. Applicant further states 
that the In-Kind Repurchase Offer is consistent with the Fund's 
investment policies and limitations. Applicant represents that the In-
Kind Repurchase Offer is consistent with the general purposes of the 
Act because the interests of all shareholders are equally protected and 
no Affiliated Shareholder would receive an advantage or special benefit 
not available to any other shareholder participating in the In-Kind 
Repurchase Offer.

Applicant's Conditions

    Applicant agrees that any order granting the requested relief will 
be subject to the following conditions:
    1. Applicant will distribute to shareholders participating in the 
In-Kind Repurchase Offer an in-kind pro rata distribution of portfolio 
securities of Applicant. The pro rata distribution will not include: 
(a) Securities that, if distributed, would be required to be registered 
under the 1933 Act; (b) securities issued by entities in countries that 
restrict or prohibit the holdings of securities by non-residents other 
than through qualified investment vehicles, or whose distribution would 
otherwise be contrary to applicable local laws, rules or regulations; 
and (c) certain portfolio assets, such as derivative instruments or 
repurchase agreements, that involve the assumption of contractual 
obligations, require special trading facilities, or can only be traded 
with the counterparty to the transaction. In addition, Applicant will 
exclude from the distribution portfolio securities held by the Fund 
which are not eligible for clearance and trade settlement through the 
DTC. Cash will be paid for that portion of Applicant's assets 
represented by cash and cash equivalents (such as certificates of 
deposit, commercial paper and repurchase agreements) and other assets 
which are not readily distributable (including receivables and prepaid 
expenses), net of all liabilities (including accounts payable). 
Applicant will round down or up the aggregate amount of each portfolio 
security eligible to be distributed to ensure that the Fund will 
continue to hold the nearest round lot amount of each portfolio 
security. In lieu of distributing fractional securities (i.e. less than 
a full share in the case of stocks and less than the par amount 
denomination in which a single bond trades in the case of bonds) and 
accruals on portfolio securities, Applicant will distribute a higher 
pro-rata percentage of other portfolio securities, selected by lot, to 
represent such fractional securities. With respect to any amount that 
cannot be represented by a whole security, Applicant will distribute 
cash in lieu of such fractional securities. Such proration calculations 
will be made in accordance with written proration policies and 
procedures that will be approved by the Board of Trustees, including a 
majority of the Independent Trustees.
    2. The securities distributed to shareholders pursuant to the In-
Kind Repurchase Offer will be limited to securities that are traded on 
a public securities market or for which quoted bid and asked prices are 
available.
    3. The securities distributed to shareholders pursuant to the In-
Kind Repurchase Offer will be valued in the same manner as they would 
be valued for purposes of computing Applicant's net asset value, 
consistent with the requirements of section 2(a)(41) of the Act.
    4. Applicant will maintain and preserve for a period of not less 
than six years from the end of the fiscal year in which the In-Kind 
Repurchase Offer occurs, the first two years in an easily accessible 
place, a written record of the In-Kind Repurchase Offer, that includes 
the identity of each shareholder of record that participated in the In-
Kind Repurchase Offer, whether that shareholder was an Affiliated 
Shareholder, a description of each security distributed, the terms of 
the distribution, and the information or materials upon which the 
valuation was made.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05850 Filed 3-23-17; 8:45 am]
 BILLING CODE 8011-01-P