[Federal Register Volume 60, Number 21 (Wednesday, February 1, 1995)]
[Notices]
[Pages 6338-6343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2429]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20864; 812-9168]
Heritage Cash Trust, et al.; Notice of Application
January 26, 1995.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Heritage Cash Trust (``HCT''), Heritage Capital
Appreciation Trust (``HCAT''), Heritage Income-Growth Trust (``HIGT''),
Heritage Income Trust (``HIT''), Heritage Series Trust (``HST''),
Heritage Asset Management, Inc. (the ``Adviser''), and Raymond James &
Associates, Inc. (the ``Distributor''), and any other open-end
management investment companies created in the future, for which the
Adviser, or any person directly or indirectly controlling, controlled
by, or under common control with the Adviser, serves as investment
adviser, and/or for which the Distributor, or any person controlled by
or under common control with the Distributor, serves as principal
underwriter (collectively, the ``Funds'').
RELEVANT ACT SECTIONS: Order requested pursuant to section 6(c)
granting an exemption from sections 2(a)(32), 2(a)(35), 18(f)(1),
18(g), 18(i), 22(c), and 22(d) of the Act, and rule 22c-1 thereunder.
SUMMARY OF APPLICATION: Applicants seek an order to permit certain
open-end management investment companies to issue and sell multiple
classes of shares representing interests in the same portfolios of
securities, assess a contingent deferred sales charge (``CDSC'') on
certain redemptions, defer, and waive the CDSC in certain instances.
FILING DATES: The application was filed on August 15, 1994 and amended
on November 29, 1994, December 19, 1994 and January 25, 1995.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be [[Page 6339]] received by the SEC by 5:30 p.m. on
February 21, 1995, 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 the date of a hearing may request
notification by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Applicants, 880 Carillon Parkway, St. Petersburg, Florida 33176.
FOR FURTHER INFORMATION CONTACT:
Marianne H. Khawley, Staff Attorney, at (202) 942-0562, or C. David
Messman, Branch Chief, at (202) 942-0564 (Division of Investment
Management, Office of Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application is available for a fee from the
SEC's Public Reference Branch.
Applicants' Representations
1. HCT, HCAT, HIGT, HIT, and HST are Massachusetts business trusts
registered under the Act as open-end diversified management investment
companies. HCAT and HIGT each have a single investment portfolio. HCT
currently offers shares in two investment portfolios: the Money Market
Fund and the Municipal Money Market Fund. HIT currently offers shares
of three investment portfolios: the Diversified Portfolio, the
Institutional Government Portfolio, and the Limited Maturity Government
Portfolio. HST currently offers shares in three investment portfolios:
Small Cap Stock Fund, Value Equity Fund, and Eagle International Equity
Portfolio.
2. The Adivser, a wholly-owned subsidiary of Raymond James
Financial, Inc. (``RJF''), serves as investment adviser for each Fund,
except HST-Eagle International Equity Portfolio. Eagle Asset
Management, Inc., also a wholly-owned subsidiary of RJF, serves as
investment adviser for HST-Eagle International Equity Portfolio and as
subadviser for HCAT, HIGT, HIT-Diversified Portfolio, and HST-Value
Equity Fund. Two separate divisions of the Distributor, the Research
Division and Awad & Associates, serve as subadvisers to HST-Small Cap
Stock Fund. Martin Currie Inc. serves as subadviser to HST-Eagle
International Equity Portfolio. The Adviser serves as fund accountant
and transfer agent for each Fund. State Street Bank and Trust Company
serves as custodian for the Funds. The Distributor serves as the
principal underwriter.
3. Each Fund pays advisory and administration fees to the Adviser
at annualized rates ranging from .50% to 1.00% of average daily net
assets. Each Fund also pays transfer agency fees and fund accounting
fees. The fees of the subadvisers are paid by the Adviser. Shares of
the Funds are available for sale to the public through the Distributor
or participating dealers and participating banks that have entered into
agreements with the Distributor to sell shares. Shares also may be
acquired through the Adviser in its capacity as transfer agent. Shares
of each Fund, except HCT, HIT-Institutional Government Portfolio, HIT-
Limited Maturity Government Portfolio, and HST-Eagle International
Equity Portfolio, are presently offered with a front-end sales charge
ranging from 2.00% to 4.75%. HCT, HIT-Institutional Government
Portfolio, and HST-Eagle International Equity Portfolio do not charge a
front-end or deferred sales charge. HIT-Limited Maturity Government
Portfolio currently waives its front-end sales charge. The Distributor
retains the sales charges imposed on sales of shares and re-allows all
or a portion of such charges to certain dealers and banks that effect
such sales. Based on distributor plans adopted pursuant to rule 12b-1
under the Act (the ``12b-1 plan(s)'', the Funds pay the Distributor
fees at annualized rates ranging from .15% to 1.00% of average daily
net assets.
4. The net asset value of each fund share, other than the shares of
HCT, is computed by dividing the value of the Fund's assets, less its
liabilities, by the number of the Fund's shares outstanding. The net
asset value of each share of HCT-Money Market Fund and HCT-Municipal
Money Market Fund is calculated in accordance with the amortized cost
method which is designed to enable these Funds to maintain a constant
$1.00 per share net asset value.
5. Applicants request an order pursuant to section 6(c) exempting
the Funds and each of their investment portfolios from the provisions
of sections 2(a)(32), 2(a)(35), 18(f)(1), 18(g), 18(i), 22(c), and
22(d) of the Act, and rule 22c-1 thereunder, to the extent necessary
to: (a) Create, issue, and sell multiple classes of securities for the
purpose of establishing a multiple class system (``multi-class
system''); and (b) permit the imposition of a CDSC on the redemption of
certain shares purchased at net asset value and to waive or reduce the
CDSC with respect to certain redemptions.
6. The Funds currently propose to offer three classes of shares.
Class A shares will be subject to a front-end sales charge, if any, and
a rule 12b-1 fee at a rate of approximately .25% per annum of the
average daily net asset value of such shares. Class A shares of a Fund,
such as Class A shares of HCT- Money Market Fund, HCT-Municipal Money
Market Fund, and HIT-Institutional Government Portfolio, may be offered
without a front-end sales charge. In addition, the Adviser may choose
to waive the front-end sales charge for Class A shares of a Fund, such
as the waiver in effect for the HIT-Limited Maturity Government
Portfolio.
7. Class C shares will be subject to a CDSC, if any, ranging from
.75% to 1.00% of the aggregate purchase payments made by an investor
for such shares of a Fund, and a rule 12b-1 fee ranging from, depending
on the Fund, approximately .60% to 1.00% per annum of the average daily
net asset value of the shares. The 12b-1 fee of the Class C shares will
consist of a combination of up to a .75% distribution fee and up to a
.25% service fee.
8. Class D shares will not be subject to a sales charge, will have
a low 12b-1 fee, if any, and will be offered only to institutional
investors. Existing shares of the Funds generally will be classified as
Class A shares. If such shares are held by investors eligible to
purchase Class D shares, however, the shares may be classified as Class
D shares.
9. Although there is no current intention to do so, applicants may
in the future establish such other classes of shares as applicants deem
in the best interest of each Fund and its shareholders. All classes of
shares issued by the funds in connection with any order granted in
response to this application will be issued on a basis identical in all
material respects to the classes described and will comply with all
conditions set forth below. These classes might be offered: (a) in
connection with a 12b-1 plan or plans; (b) in connection with a non-
rule 12b-1 shareholder services plan or plans (the ``shareholder
services plan(s)''); (c) in connection with the allocation of certain
expenses that are directly attributable only to certain classes
(``class expenses''); (d) without any 12b-1 plan or shareholder
services plan; (e) subject to the imposition of varying front-end sales
charges; and/or (f) subject to the imposition of varying CDSCs.
10. With respect to each new class, each Fund may enter into one or
more 12b-1 plan agreements and/or [[Page 6340]] shareholder services
plan agreements with the Distributor and/or other groups,
organizations, or institutions concerning the provision of certain
services to shareholders of a particular class. The provision of
distribution services and shareholder servicing under the plans will
complement (and not duplicate) the services to be provided to each Fund
by its manager, investment adviser(s), and/or distributor, and by the
parties that provide custody, transfer agency, and administrative
services to each Fund. In all cases, the Funds shall comply with
article III, section 26 of the National Association of Securities
Dealers' (``NASD'') Rules of Fair Practice as it relates to the maximum
amount of asset-based sales charges that may be imposed by an
investment company.
11. The expenses of the Funds that cannot be attributed directly to
any one Fund (``trust expenses'') generally will be allocated to each
Fund based on the relative net assets of those Funds.\1\ Trust expenses
could include, for example, trustees' fees and expenses, unallocated
audit and legal fees, certain insurance premiums, expenses relating to
shareholder reports and meetings, and printing expenses not
attributable to a single Fund or class.
\1\From time to time, a Fund may allocate expenses among its
series using an alternative method, including allocation based on
the number of shareholders of each series or the number of series in
such Fund, as may be appropriate.
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12. Certain expenses may be attributable to a particular Fund, but
not a particular class (``Fund expenses''). All such Fund expenses
incurred by a Fund will be allocated to each class of its shares based
upon the relative net assets of the class, at the beginning of the day,
as determined daily. Fund expenses could include, for example, advisory
fees, accounting fees, custodian fees, and fees related to the
preparation of separate documents of a particular Fund, such as an
annual report for such Fund.
13. Class expenses will be charged directly to the net assets of
the particular class and thus will be borne on a pro rata basis by the
outstanding shares of such class. All allocations of class expenses
will be limited to the extent necessary to preserve a Fund's
qualification as a regulated investment company pursuant to the
Internal Revenue Code of 1986, as amended.
14. Shares of one or more classes (``Purchase Class shares'') may
automatically convert to another class (``Target Class shares'') after
a prescribed period of time. Target Class shares thereafter would be
subject to lower 12b-1 plan payments, if any, than Purchase Class
shares. Purchase Class shares are currently expected to convert to
Target Class shares following the expiration of approximately six years
from the purchase date. Target Class shares in all cases will be
subject to lower aggregate 12b-1 plan payments, if any, and ongoing
class expenses, than Purchase Class shares. The conversion will be on
the basis of the relative net asset values of the two classes, without
the imposition of any sales or other charge except that any asset-based
sales or other charge applicable to the Target Class shares would
thereafter be applied to such converted shares. Purchase Class shares
in a shareholder's Fund account that were purchased through the
reinvestment of dividends and other distributions paid in respect of
Purchase Class shares will be considered to be held in a separate sub-
account. Each time any Purchase Class shares in a shareholder's Fund
account convert to Target Class shares, a pro rata share of the
Purchase Class shares then in the sub-account also will convert to
Target Class shares. The conversion would be subject to the
availability of any opinion by counsel or an Internal Revenue Service
private letter ruling to the effect that the conversion does not
constitute a taxable event under federal income tax law.
15. Applicants request relief to permit each Fund to waive, defer,
or reduce the CDSC in certain circumstances. Any waiver, deferral, or
reduction will comply with the conditions in paragraphs (a) through (d)
of rule 22d-1 under the Act.
16. The CDSC will not be imposed on redemptions of shares which
were purchased more than six years prior to the redemptions (the ``CDSC
period'') or on those shares derived from the reinvestment of dividends
and/or distributions. No CDSC will be imposed on an amount which
represents an increase in the value of a shareholder's account
resulting from capital appreciation above the amount paid for shares
purchased in the CDSC period. The amount of the CDSC will be calculated
as the lesser of the amount that represents a specified percentage of
the net asset value of the shares at the time of purchase, or the
amount that represents such percentage of the net asset value of the
shares at the time of redemption.
17. In determining the applicability of any CDSC, it will be
assumed that a redemption is made first of shares representing
reinvestment of the dividends and capital gain distributions, second of
shares held by the shareholder for a period equal to or greater than
the CDSC period, and finally of other shares held by the shareholder
for the longest period of time. This will result in a charge, if any,
imposed at the lowest possible rate.
18. No CDSC will be imposed on any shares issued by the Funds prior
to the date of any order granting the exemptive relief requested.
19. Applicants also request the ability to provide a pro rata
credit for any CDSC paid in connection with a redemption of shares
followed by a reinvestment effected within a specified period not
exceeding 365 days of redemption. Such credit will be paid by the
Distributor rather than the Fund.
20. The shares in different classes within a Fund will also have
different exchange privileges. Shares may be exchanged at net asset
value for shares of the corresponding class of other Funds. Applicants
anticipate that shares of each class of a Fund will be exchangeable for
the corresponding class of one or more other Funds. The Adviser retains
the right to disallow exchanges of existing and future classes into
HCT. All exchange privileges will comply with rule 11a-3 under the Act.
Applicants' Legal Analysis
1. Applicants request an order pursuant to section 6(c) providing
an exemption from the Act to the extent that the proposed creation,
issuance, and sale of new classes of shares representing interests in
the existing and future Funds, including the allocation of voting
rights thereto and the payment of dividends thereon, might be deemed:
(a) to result in a ``senior security'' within the meaning of section
18(g) of the Act and to be prohibited by section 18(f)(1) of the Act;
and (b) to violate the requirement of section 18(i) of the Act that
every share of stock issued by a registered management investment
company shall have equal voting rights with every other outstanding
voting stock.
2. Applicants believe the proposed allocation of expenses and
voting rights in the manner described is equitable and would not
discriminate against any group of shareholders. Although investors
purchasing shares offered in connection with a 12b-1 plan and/or
bearing particular class expenses would bear the costs associated with
the related services, they also would enjoy the benefits of those
services and the exclusive shareholder voting rights with respect to
matters affecting the applicable 12b-1 plan. Conversely, investors
purchasing shares that are not covered by a plan or not bearing class
expenses would not be burdened with such expenses or enjoy such voting
rights. [[Page 6341]]
3. Applicants assert that because the rights and privileges of
shares would be substantially identical, the possibility that their
interests would ever conflict is remote. The interests of each class of
shareholders would be protected adequately because the 12b-1 plans and
the payments thereunder will conform to the requirements of rule 12b-1,
including the requirement that the 12b-1 plans be approved by the
boards of trustees (the ``trustees'') of the respective Funds,
including the independent trustees.
4. Applicants believe that the creation, issuance, and sale of new
classes of shares by the Funds may assist the Funds in meeting the
competitive demands of today's financial services industry. The
proposed arrangement would permit the Funds to both facilitate the
distribution of their securities and provide investors with a broader
choice as to the method of purchasing shares without assuming excessive
accounting and bookkeeping costs or unnecessary investment risks. Under
the proposed arrangement, investors will be able to choose the method
of purchasing shares that is most beneficial given the amount of their
purchase and the length of time the investor expects to hold his
shares. The proposed arrangement does not involve borrowed money and
does not affect the Funds' existing assets or reserves. The proposed
arrangement will not increase the speculative character of the new
classes of shares in a Fund because all shares will participate in all
of the Fund's appreciation, income, and expenses.
5. Applicants also are requesting an exemption from the provisions
of sections 2(a)(32), 2(a)(35), 22(c), and 22(d) of the Act, and rule
22c-1 thereunder, to the extent necessary to allow the Funds the
ability to assess a CDSC on certain classes of shares and any future
classes of shares which may impose a CDSC, and to waive or reduce the
CDSC with respect to certain types of redemptions. Applicants believe
that the imposition of a CDSC on certain classes of shares is fair and
in the best interests of their shareholders. The proposed sales
structure permits Fund shareholders to have the advantage of greater
investment dollars working for them from the time of their purchase of
CDSC class shares than if a sales charge were imposed at the time of
purchase.
Applicants' Conditions
Applicants agree that any order granting the requested relief shall
be subject to the following conditions:
1. Each class of shares of a Fund will represent interests in the
same portfolio of investments, and be identical in all respects, except
as set forth below. The only differences between the classes of shares
of a Fund will relate solely to one or more of the following: (a)
Expenses assessed to a class pursuant to a 12b-1 plan or shareholder
services plan, if any, with respect to such class; (b) the impact of
class expenses, which are limited to any or all of the following: (i)
Transfer agent fees identified as being attributable to a specific
class of shares, (ii) stationary, printing, postage, and delivery
expenses related to preparing and distributing materials such as
shareholder reports, prospectuses, statements of additional
information, and proxy statements to current shareholders of a specific
class, (iii) Blue Sky registration fees incurred by a class of shares,
(iv) SEC registration fees incurred by a class of shares, (v) expenses
of administrative personnel and services as required to support the
shareholders of a specific class, (vi) trustees' fees or expenses
incurred as a result of issues relating to one class of shares, (vii)
accounting expenses relating solely to one class of shares, (viii)
auditors' fees, litigation expenses, legal fees, and expenses relating
to a class of shares, and (ix) expenses incurred in connection with
shareholders' meetings as a result of issues relating to one class of
shares; (c) the fact that the classes will vote separately with respect
to matters relating to a Fund's 12b-1 plan applicable to each class, if
any, except as provided in condition 15; (d) the different exchange
privileges of the classes of shares, if any; (e) certain classes may
have a conversion feature; and (f) the designation of each class of
shares of a Fund. Any additional incremental expenses not specifically
identified which are subsequently identified and determined to be
properly allocated to one class of shares shall not be so applied
unless and until approved by the SEC.
2. The trustees, including a majority of the independent trustees,
will have approved the multi-class system, with respect to a particular
Fund prior to the implementation of the system by that Fund. The
minutes of the meetings of the trustees regarding the deliberations of
the trustees with respect to the approvals necessary to implement the
multi-class system will reflect in detail the reasons for the trustees'
determination that the proposed multi-class system is in the best
interests of each Fund and its shareholders.
3. The initial determination of the class expenses that will be
allocated to a particular class and any subsequent changes thereto will
be reviewed and approved by a vote of the trustees, including a
majority of the independent trustees. Any person authorized to direct
the allocation and disposition of monies paid or payable by a Fund to
meet class expenses shall provide to the trustees, and the trustees
shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
4. If any class will be subject to a shareholder services plan, the
plan will be adopted and operated in accordance with the procedures set
forth in rule 12b-1(b) through (f) as if the expenditures made
thereunder were subject to rule 12b-1, except that shareholders need
not enjoy the voting rights specified in rule 12b-1.
5. On an ongoing basis, each Fund's board of trustees, pursuant to
their fiduciary responsibilities under the Act and otherwise, will
monitor that Fund, for the existence of any material conflicts among
the interests of the classes of its shares. The trustees, including a
majority of the independent trustees, shall take such action as is
reasonably necessary to eliminate any such conflicts that may develop.
The Adviser and the Distributor will be responsible for reporting any
potential or existing conflicts to the trustees. If a conflict arises,
the Adviser and the Distributor, at their own expense will take such
actions as are necessary to remedy such conflict including establishing
a new registered management investment company, if necessary.
6. The trustees will receive quarterly and annual statements
concerning distribution and shareholder servicing expenditures in
compliance with paragraph (b)(3)(ii) of rule 12b-1, as it may be
amended from time to time. In the statements, only expenditures
properly attributable to the sale or servicing of a particular class of
shares will be used to justify any fees charged to that class.
Expenditures not related to the sale or servicing of a particular class
of shares will not be presented to the trustees to justify any fees
charged to that class. The statements, including the allocations upon
which they are based, will be subject to the review and approval of the
independent trustees in the exercise of their fiduciary duties.
7. Dividends and other distributions paid by a Fund with respect to
each class of its shares, to the extent any dividends or other
distributions are paid, will be declared and paid on the same day and
at the same time, and will be determined in the same manner and will be
in the same amount, except that the amount of the dividends and other
[[Page 6342]] distributions declared and paid by a particular class may
be different from that of another class because plan payments made by a
class pursuant to a 12b-1 plan or shareholder services plan and other
class expenses will be borne exclusively by that class.
8. The methodology and procedures for calculating the net asset
value and dividends and other distributions of the classes and the
proper allocation of expenses among the classes have been reviewed by
an Expert (the ``Expert''), who has rendered a report to the trustees
of the Funds, which has been provided to the staff of the SEC, stating
that such methodology and procedures are adequate to ensure that such
calculations and allocations will be made in an appropriate manner. On
an ongoing basis, the Expert, or an appropriate substitute Expert, will
monitor the manner in which the calculations and allocations are being
made, and based upon such review, will render at least annually a
report to the Funds that the calculations and allocations are being
made properly. The reports of the Expert shall be filed as part of the
periodic reports filed with the SEC pursuant to sections 30(a) and
30(b)(1) of the Act. The work papers of the Expert with respect to such
reports, following request by the Funds which the Funds agree to make,
will be available for inspection by the SEC staff upon the written
request to a Fund for such work papers by a senior member of the SEC's
Division of Investment Management or of a Regional Office of the SEC,
limited to the Director, an Associate Director, the Chief Accountant,
the Chief Financial Analyst, an Assistant Director, and any Regional
Administrators or Associate and Assistant Administrators. The initial
report of the Expert is a ``Special Purpose'' report on ``policies and
procedures placed in operation'' in accordance with Statements on
Auditing Standards (``SAS'') No. 70, ``Reports on the Processing of
Transactions by Service Organizations,'' of the American Institute of
Certified Public Accountants (``AICPA''). Ongoing reports will be
reports on ``policies and procedures placed in operation and tests of
operating effectiveness'' prepared in accordance with SAS No. 70 of the
AICPA, as it may be amended from time to time, or in similar auditing
standards as may be adopted by the AICPA from time to time.
9. Applicants have adequate facilities in place to ensure
implementation of the methodology and procedures for calculating the
net asset value and dividends and other distributions of the classes of
shares and the proper allocation of income and expenses among the
classes of shares and this representation has been concurred with by
the Expert in the initial report referred to in condition 8 above and
has been concurred with by the Expert, or appropriate substitute
Expert, on an ongoing basis at least annually in the ongoing reports
referred to in condition 8 above. Applicants will take immediate
corrective measures if the Expert, or appropriate substitute Expert,
does not so concur in the ongoing reports.
10. The conditions pursuant to which the exemptive order is granted
and the duties and responsibilities of the trustees with respect to the
multi-class system will be set forth in the guidelines that will be
furnished to the trustees.
11. Each Fund will disclose the respective expenses, performance
data, distribution arrangement, services, fees, sales loads, CDSCs, and
exchange privileges applicable to each class of shares in every
prospectus, regardless of whether all classes of shares are offered
through each prospectus. Each Fund will disclose the respective
expenses and performance data applicable to all classes of shares in
every shareholder report. The shareholder reports will contain, in the
statement of assets and liabilities and statements of operations,
information related to the Fund as a whole generally and not on a per
class basis. Each Fund's per share data, however, will be prepared on a
per class basis with respect to all classes of shares of such Fund. To
the extent any advertisement or sales literature describes the expenses
or performance data applicable to any class of shares, it will disclose
the expense or performance data applicable to all classes of shares.
The information provided by applicants for publication in any newspaper
or similar listing of a Fund's net asset a value or public offering
price will present each class of shares separately.
12. The prospectus of each Fund will include a statement to the
effect that a salesperson and any other person entitled to receive
compensation for selling or servicing shares of a Fund may receive
different levels of compensation with respect to one particular class
of shares over another in a Fund.
13. Applicants acknowledge that the grant of the exemptive order
requested by this application will not imply SEC approval,
authorization, or acquiescence in any particular level of payments that
a Fund may make pursuant to its 12b-1 plan or shareholder services plan
in reliance on the exemptive order.
14. Any class of shares with a conversion feature will convert into
another class of shares on the basis of the relative net asset values
of the two classes, without the imposition of any sales load, fee, or
other charge, After conversion,the converted shares will be subject to
an asset-based sales charge (as the term is defined in Article III,
Section 26 of the NASA's Rules of Fair Practice), if any, that in the
aggregate is lower than the asset-based sales charge and service fee to
which they were subject prior to the conversion.
15. If a Fund implements any amendment to a 12b-1 plan (or, if
presented to sharesholders, adopts or implements any amendment to a
shareholder services plan) that would increase materially the amount
that may be borne by the Target Class shares under the plan, then
existing Purchase Class shares will stop converting into the Target
Class shares unless the holders of a majority of Purchase Class shares,
voting separately as a class, approve the amendment. The trustees shall
take such action as is necessary to ensure that existing Purchase class
shares are exchanged or converted into a new class of shares (``New
Target Class shares''), identical in all material respects to Target
Class shares as they existed prior to implementation of the amendment,
no later than the date such shares previously were scheduled to convert
into Target Class shares. If deemed advisable by the trustees to
implement the foregoing, such action may include the exchange of all
existing Purchase Class shares for a new class of shares (``New
Purchase Class shares''), identical to existing Purchase Class shares
in all material respects except that the New Purchase Class shares will
convert into New Target Class shares. The New Target Class shares and
New Purchase Class shares may be formed without further exemptive
relief. Exchanges or conversions described in this condition shall be
effected in a manner that the trustees reasonably believe will not be
subject to federal taxation. In accordance with condition 5, any
additional cost associated with the creation, exchange, or conversion
of the New Target Class shares or New Purchase Class shares will be
borne solely by the Adviser and/or the Distributor. Purchase Class
shares sold after the implementation of this proposed arrangement may
convert into Target Class shares subject to the higher maximum payment,
provided that the material features of the target Class plan and the
relationship of such plan to the Purchase class shares are disclosed in
an effective registration statement.
16. The Distributor will adopt compliance standards as to when each
class of shares may appropriately be [[Page 6343]] sold to particular
investors. Applicants will require all persons selling shares of the
Funds to agree to conform to such standards.
17. Applicants will comply with the provisions of proposed rule 6c-
10 under the Act, Investment Company Act Release No. 16619 (Nov. 2,
1988), as such rule is currently proposed, or if it is reproposed or
adopted, as it may be reproposed, adopted, or amended.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margeret H. McFarland,
Deputy Secretary.
[FR Doc. 95-2429 Filed 1-31-95; 8:45 am]
BILLING CODE 8010-01-M
