[Federal Register Volume 59, Number 105 (Thursday, June 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13343]
[[Page Unknown]]
[Federal Register: June 2, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20318; 812-8758]
Fortis Advantage Portfolios, Inc., et al.; Notice of Application
May 25, 1994.
AGENCY: Securities and Exchange Commission (the ``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Fortis Advantage Portfolios, Inc., Fortis Equity
Portfolios, Inc., Fortis Fiduciary Fund, Inc., Fortis Growth Fund,
Inc., Fortis Income Portfolios, Inc., Fortis Money Portfolios, Inc.,
Fortis Tax-Free Portfolios, Inc., and Fortis Worldwide Portfolios, Inc.
(the ``Funds''); Fortis Advisers, Inc. (the ``Adviser''), and Fortis
Investors, Inc. (the ``Underwriter'').
RELEVANT ACT SECTIONS: Order requested under section 6(c) of the Act
for 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 request an order that would permit
the Funds to issue multiple classes of shares representing interests in
the same portfolio of securities and to assess, and under certain
circumstances waive, a contingent deferred sales charge (``CDSC''). The
order would supersede a prior order (``Prior Order'') and would permit
the Funds to impose CDSC schedules that may be different from the one
described in the Prior Order.
FILING DATES: The application was filed on January 3, 1994, and amended
on April 6, 1994. Applicants have agreed to file an additional
amendment, the substance of which is incorporated herein, during the
notice period.
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 received by the SEC by 5:30 p.m. on June 20, 1994,
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 SEC's
Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Applicants, 500 Bielenberg Drive, Woodbury, Minnesota 55125.
FOR FURTHER INFORMATION CONTACT:
Deepak T. Pai, Staff Attorney, at (202) 942-0574, or Robert A.
Robertson, 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 at the
SEC's Public Reference Branch.
Applicants' Representations
1. The Funds are open-end management investment companies. Each
Fund other than Fortis Fiduciary Fund and Fortis Growth Fund is
organized as a series investment company and is authorized to issue its
shares in more than one series. Fortis Fiduciary Fund and Fortis Growth
Fund currently are authorized to issue only one series of shares. The
Adviser serves as the investment adviser of each Fund. The Underwriter
serves as the principal underwriter of the shares of each Fund.
2. The Fortis Money Fund series of Fortis Money Portfolios offers
one class of shares at net asset value without the imposition of a FESC
or CDSC. Each of the other Funds offers one class of shares at net
asset value plus a front-end sales charge (``FESC'') in connection with
investments of up to $1 million. Investments of $1 million or more are
not subject to a FESC, but rather a CDSC, which is permitted by the
Prior Order.\1\
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\1\Fortis Advantage Portfolios, Inc., et al., Investment Company
Act Release Nos. 19264 (February 11, 1993) (notice) and 19320 (March
9, 1993) (order), that permitted applicants to eliminate the FESC,
and impose a CDSC, on sales of shares in the amount of $1 million or
more. The CDSC may be in an amount of up to 1% and will be imposed
only on shares redeemed within a period of up to 24 months after
purchase.
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A. Variable Pricing System
1. Applicants, on behalf of themselves and future investment
companies for which the Adviser, or any person controlled by or under
common control with the Adviser, may serve as investment adviser, or
for which the Underwriter, or any person controlled by or under common
control with the Underwriter, may serve as principal underwriter,
request an order that would permit the Funds to issue multiple classes
of shares and to assess a CDSC. The order would supersede the Prior
Order and would permit the Funds to impose CDSC schedules that may be
different from the one described in that order.
2. Under applicants' proposal, the Funds could offer classes of
shares either: (a) Subject to a FESC (with respect to investments of
less than $1 million) or a CDSC (with respect to investments of $1
million or more) and subject to a 12b-1 distribution plan (``Class A
shares'');\2\ (b) subject to a CDSC (expected to range from 4% on
redemptions made during the first two years following purchase to 1% on
redemptions made during the sixth year), a rule 12b-1 distribution plan
with a service fee at an annual rate of up to .25% and a distribution
fee at an annual rate of up to .75% of average daily net assets, and an
automatic conversion to Class A after a certain period of time (``Class
B shares''); (c) subject to a CDSC (expected to be 1% on redemptions
made during the first two years following purchase), a rule 12b-1
service fee at an annual rate of up to .25% and a rule 12b-1
distribution fee at an annual rate of up to .75% of average daily net
assets (``Class C shares''); (d) subject to a FESC, a rule 12b-1
service fee at an annual rate of up to .25%, and a rule 12b-1
distribution fee at an annual rate of up to .75%, of average daily net
assets (``Class D shares''); (e) subject to a FESC (with respect to
investments of less than $1 million) or a CDSC (with respect to
investments of $1 million or more) but not subject to rule 12b-1 fees
(``Class E shares'');\3\ (f) without a FESC or CDSC, but subject to a
rule 12b-1 service fee at an annual rate of up to .25% of average daily
net assets, for purchase exclusively by investors meeting such minimum
investment and/or other eligibility requirements established by
applicants (``Class Y shares''); and (g) without any sales or service
charges for purchase exclusively by the Adviser, the Underwriter,
certain agents and affiliates of the Adviser and Underwriter, and
officers, directors, and employees of such entities (``Class Z
shares''). The Funds also may establish one or more additional classes
to be sold with different sales loads and service and distribution fee
structures.
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\2\Applicants contemplate that existing shares of the Funds will
be designated Class A shares upon implementation of the multi-class
structure (except that existing shares of those Funds that do not
currently have a 12b-1 plan will be designated Class E).
\3\Applicants anticipate that Class E shares would be
implemented for each of the Funds that currently have no rule 12b-1
plan. If a Fund offers Class E shares, all existing shares would
become Class E shares. Sales of Class E shares would be available
only to those investors who were holders of a Fund's shares at the
time of implementation of the multi-class structure.
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3. Class B shares of a Fund held for a specified number of years
will convert automatically to Class A shares of such Fund at the
relative net asset values of each of the classes.\4\ For purposes of
calculating the holding period, Class B shares will be deemed to have
been issued on the sooner of: (a) The date on which the issuance of
Class B shares occurred; or (b) for Class B shares obtained through an
exchange, or a series of exchanges, the date on which the issuance of
the original Class shares occurred.
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\4\Applicants currently contemplate that Class B shares will be
the only class of shares that automatically convert to another class
of shares, except that upon the initial offering of Class Y and/or
Class Z shares of any Fund, applicants may provide that shareholders
of such Fund who would qualify for investment in Class Y or Class Z
shares would automatically convert into Class Y or Class Z shares,
as applicable.
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4. Shares purchased through the reinvestment of dividends and other
distributions paid in respect of Class B shares are also Class B
shares. However, for purposes of conversion to Class A, all Class B
shares in a shareholder's Fund account that were purchased through the
reinvestment of dividends and other distributions paid in respect of
Class B shares (and which have not converted to Class A shares) will be
considered to be held in a separate sub-account. Each time any Class B
shares in the shareholder's Fund account (other than those in the sub-
account) convert to Class A, a pro rata portion of the Class B shares
then in the sub-account also will convert to Class A. The portion will
be determined by the ratio that the shareholder's Class B shares
converting to Class A bears to the shareholder's total Class B shares
not acquired through dividends and distributions.
5. A class of shares will be exchangeable only for shares of the
corresponding class of other Funds. all exchanges between Funds will
comply with rule 11a-3 under the Act.
6. The classes of a Fund will represent interests in the same
portfolio of investments, and will be identical in all respects except:
(a) Each class would have a different designation; (b) each class may
bear any rule 12b-1 plan payments related to that class (and any other
costs related to obtaining shareholder approval of the rule 12b-1 plan
for that class or an amendment to its rule 12b-1 plan); (c) each class
may bear expenses determined by the board of directors to be allocated
to that class, which are set forth in condition 1 below; (d) only
shareholders of the affected classes would be entitled to vote on
matters pertaining to the rule 12b-1 plan relating to their respective
class in accordance with the procedures set forth in rule 12b-1; (e)
each class would have different exchange privileges; and (f) classes
that impose a rule 12b-1 fee may convert into another class.
7. The sum of any FESC, service fees, distribution fees, and CDSC
will not exceed the maximum sales charge provided for in Article III,
section 26 of the Rules of Fair Practice of the National Association of
Securities Dealers (``NASD'').
8. Because of the varying levels of rule 12b-1 fees and other
class-level expenses paid by the holders of different classes of
shares, the net income attributable to and the dividends payable on
each class may differ and, consequently, different classes of shares
may have different net asset values.
B. The CDSC
1. Applicants also request an exemption that would permit the Funds
to impose a CDSC and to waive the CDSC in certain cases. With respect
to any class of shares of any Fund that charge a CDSC, the applicable
CDSC will be calculated on the lesser of the net asset value at the
time of the issuance or redemption of the shares. No CDSC will be
imposed on: (a) Shares, or amounts representing shares, purchased
through the reinvestment of dividends or capital gains distributions;
(b) an amount that represents an increase in the value of the shares
due to capital appreciation; or (c) shares held for longer than the
applicable CDSC period. Upon any request for redemption of shares that
imposes a CDSC, it will be assumed, unless otherwise requested, that
shares subject to no CDSC will be redeemed first in the order purchased
(however, if a shareholder owns more than one class of shares, then
shares not subject to a CDSC with the highest rule 12b-1 fee will be
redeemed in full prior to any redemption of shares not subject to a
CDSC with a lower rule 12b-1 fee), all remaining shares that are
subject to a CDSC will be redeemed in the order purchased.
2. Applicants request the ability to waive the CDSC in the
following instances: (1) Involuntary redemptions effected pursuant to a
Fund's right to liquidate shareholder accounts having an aggregate net
asset value of less than the minimum account balance set forth in the
Fund's then current prospectus; (b) the death or disability of a Fund
shareholder within the meaning of section 72(m)(7) of the Internal
Revenue Code; (c) in connection with redemptions of any shares held by
tax-qualified retirement plans, excluding individual retirement
accounts, simplified employee pension plans, section 403(b) plans and
section 457 plans; (d) in connection with purchases of shares funded by
the proceeds from the redemption of shares of any unrelated investment
company that charges a FESC, provided that there was no CDSC, fee, or
other charge imposed in connection with such redemption and if the
purchase is made within 60 days following the redemption; (e) in
connection with purchases of Fund shares funded by the proceeds from
the surrender of a fixed annuity contract within 60 days of the
purchase of Fund shares; (f) in connection with purchases of Fund
shares by the following categories of investors and transactions; (i)
Fortis, Inc., and its subsidiaries and specified persons associated
with such companies; (ii) Fund directors and officers and specified
persons associated with such directors and officers; (iii)
representatives or employees of the Underwriter (including agencies) or
of the other broker-dealers having a sales agreement with the
Underwriter and specified persons associated with such entities; (iv)
pension, profit-sharing and other retirement plans of the persons
referenced in clause (i), (ii) and (iii), (v) registered investment
companies; (vi) registered investment advisers, trust companies and
bank trust departments exercising discretionary authority or using a
money management/mutual fund ``wrap'' program; (vii) purchases that are
funded by the proceeds from the plans referenced in clause (iv) upon
the retirement or employment termination of such persons; (viii)
purchases by employees (including their spouses and dependent children)
of banks and other financial services firms that provide referral and
administrative services pursuant to a sales agreement with the
Underwriter or one of its affiliates; (ix) with respect to Asset
Allocation Portfolio of Advantage Portfolios only, former officers and
directors of Morison Asset Allocation Fund, and officers, directors and
employees of Morison Asset Management, Inc. and its affiliates; (x)
with respect to Government Total Return Portfolio of Advantage
Portfolios only, officers and trustees of the Olympus Funds Trust,
officers, directors and employees of Furman Selz Capital Management,
and Furman Selz Mager Dietz and Birney, members of the Xerox Employee's
Credit Union and members of their immediate family and persons owning
shareholder accounts which were in existence and entitled to purchase
shares of Olympus U.S. Government Plus Fund at net asset value, without
the imposition of a FESC, at the time that such Fund's assets were
acquired by Advantage Portfolios; (xi) with respect to Growth Fund, the
Fortis U.S. Government Securities Fund series of Income Portfolios and
each current series of Advantage Portfolios only, persons owning
shareholder accounts of the applicable series of Carnegie-Capiello
Trust or Carnegie Government Securities Trust that was acquired by the
applicable Fund if, at the time of such acquisition, such shareholder
accounts were in existence and entitled to purchase shares of the
applicable Carnegie fund at net asset value, without the imposition of
a FESC; (xii) with respect to the Fortis U.S. Government Securities
Fund series of Income Portfolios and the New York Portfolio series of
Tax Free Portfolios only, persons owning shareholder accounts of the
applicable series of The Pathfinder Heritage Funds that was acquired by
the applicable Fund if, at the time of such acquisition, such
shareholder accounts were in existence and entitled to purchase shares
of the applicable Pathfinder fund at net asset value, without the
imposition of a FESC; and (xiii) with respect to Fiduciary Fund only,
persons having a Fiduciary Fund account on April 30, 1986; and (g) for
an amount that represents, on an annual (non-cumulative) basis, up to
10% of the amount (at the time of the investment) of the shareholder's
purchases.
3. In regard to waiver category (d) above, applicants will take
such steps as may be necessary to determine that the shareholder has
not paid a deferred sales load, fee or other charge in connection with
such redemption, including, without limitation, requiring the
shareholder to provide a written representation in the shareholder's
application that no deferred sales load, fees or other charge was
imposed in connection with such redemption and, in addition, either
requiring that shareholder provide the redemption check of such
unrelated open-end investment company (or a copy of the check) or a
copy of the confirmation statement showing the redemption.
4. Applicants intend to provide a one time credit for any CDSC paid
upon redemption, the proceeds of which are reinvested in the same class
of shares of a Fund within 60 days of redemption. The Underwriter will
provide this credit from its own assets.
Applicants' Legal Analysis
1. Applicants request an exemption under section 6(c) of the Act
from sections 18(f)(1), 18(g), and (18)(i) of the Act to the extent
that the proposed issuance of various classes of shares representing
interests in the same Fund might be deemed to result in a ``senior
security'' within the meaning of section 18(g) and thus be prohibited
by section 18(f)(1), and to violate the equal voting provisions of
section 18(i). Applicants believe that the proposed multi-class
arrangement does not present the concerns that section 18 was designed
to address. The multi-class arrangement does not involve borrowing, nor
will it affect the Fund's existing assets or reserves, and does not
involve a complex capital structure.
2. Applicants also request an exemption under section 6(c) from
sections 2(a)(32), 2(a)(35), 22(c), and 22(d) of the Act and rule 22c-1
thereunder to assess and, under certain circumstances, waive a CDSC on
redemption of shares. The order would supersede the Prior Order and
would permit the Funds to impose CDSC schedules that may be different
from the one described in the Prior Order.
Applicants' Conditions
Applicants agree that any order granting the requested relief shall
be subject to the following conditions:
1. Each class of shares will represent interests in the same
portfolio of investments of a Fund and be identical in all respects,
except as set forth below. The only differences among various classes
of shares of the same Fund will relate solely to: (a) The designation
to each class of shares of the Fund; (b) expenses assessed to a class
as a result of a rule 12b-1 plan providing from a service and/or
distribution fee; (c) different expenses which the board of directors
of a Fund may in the future determine to allocate to a specific class
(``class-specific expenses''), which will be limited to: (i) Transfer
agency fees as identified by the transfer agent as being attributable
to a specific class; (ii) printing and postage expenses related to
preparing and distributing materials such as shareholder reports,
prospectuses and proxies to current shareholders; (iii) Blue Sky
registration fees incurred by a class of shares; (iv) SEC registration
fees incurred by a class of shares; (v) the expenses of administrative
personnel and services as required to support the shareholders of a
specific class; (vi) litigation or other legal expenses relating solely
to one class of shares; and (vii) director's fees incurred as a result
of issues relating to one class of shares; (d) voting rights on matters
exclusively affecting one class of shares (e.g., the adoption,
amendment, or termination of a rule 12b-1 plan) in accordance with the
procedures set forth in rule 12b-1 (except as provided in condition 15
below); (e) the different exchange privileges of the various classes of
shares as described in the prospectuses of the Funds; and (f) classes
that impose a 12b-1 fee may convert to another class. Any additional
incremental expenses not specifically identified above that are
subsequently identified and determined to be properly allocated to one
class of shares shall not be so allocated until approved by the SEC
pursuant to an amended order.
2. The directors of each the Funds, including a majority of the
independent directors, shall have approved the variable pricing system
prior to the implementation thereof by a particular Fund. The minutes
of the meetings of the directors of each of the Funds regarding the
deliberations of the directors with respect to the approvals necessary
to implement the variable pricing system will reflect in detail the
reasons for determining that the proposed variable pricing system is in
the best interest of the Fund and its shareholders.
3. The initial determination of the class-specific expenses, if
any, that will be allocated to a particular class of a Fund and any
subsequent changes thereto will be reviewed and approved by a vote of
the directors of the affected Fund, including a majority of the
independent directors. Any person authorized to direct the allocation
and disposition of monies paid or payable by a Fund to meet class-
specific expenses shall provide to the directors, and the directors
shall review, at least quarterly, a written report of the amounts so
expended and the purpose of which the expenditures were made.
4 On an ongoing basis, the directors of the Funds, pursuant to
their fiduciary responsibilities under the Act and otherwise, will
monitor each Fund for the existence of any material conflicts among the
interests of the various classes of shares. The directors, including a
majority of the independent directors, shall take such action as is
reasonably necessary to eliminate any such conflicts that may develop.
The Adviser and the Underwriter will be responsible for reporting any
potential or existing conflicts to the directors. If a conflict arises,
the Adviser and the Underwriter at their own costs will remedy such
conflict up to and including establishing a new registered management
investment company.
5. The directors of the Funds will receive quarterly and annual
statements concerning distribution and shareholder servicing
expenditures complying 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 distribution or servicing fee
charged to that class. Expenditures not related to the sale of
servicing of a particular class will not be presented to the directors
to justify any fee attributable to the class. The statements, including
the allocations upon which they are based, will be subject to the
review and approval of the independent directors in the exercise of
their fiduciary duties.
6. Dividends paid by a Fund with respect to each class of shares,
to the extent any dividends are paid, will be calculated in the same
manner, at the same time, on the same day, and will be in the same
amount, except that fee payments made under the rule 12b-1 plan
relating to a particular class will be borne exclusively by each class
and except that any class-specific expenses will be borne by the
applicable class of shares.
7. The methodology and procedures for calculating the net asset
value and dividends/distributions of the various classes and the proper
allocation of income and expenses among the classes has been reviewed
by an expert (the ``Independent Examiner''). The Independent Examiner
has rendered a report, 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 Independent Examiner, or an
appropriate substitute Independent Examiner, 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 Independent Examiner 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 Independent Examiner 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 for such work papers by a senior member of the 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 Independent Examiner is a ``report on policies and
procedures placed in operation'' and the ongoing reports will be
``reports on policies and procedures placed in operation and tests of
operating effectiveness'' as defined and described in 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.
8. Applicants have adequate facilities in place to ensure
implementation of the methodology and procedures for calculating the
net asset value and dividends/distributions among the various classes
of shares and the proper allocation of income and expenses among such
classes of shares and this representation has been concurred with by
the Independent Examiner in its initial report referred to in condition
(7) above and will be concurred with by the Independent Examiner, or
appropriate substitute Independent Examiner, on an ongoing basis at
least annually in the ongoing reports referred to in condition (7)
above. The applicants agree to take immediate corrective action if the
Independent Examiner, or an appropriate substitute Independent
Examiner, does not so concur in the ongoing reports.
9. The prospectuses of the Funds will include a statement to the
effect that a salesperson and any other person entitled to receive
compensation for selling or servicing Fund shares may receive different
levels of compensation for selling one particular class of shares over
another in a Fund.
10. The Underwriter will adopt compliance standards as to when
shares of a particular class may appropriately be sold to particular
investors. Applicants will require all persons selling shares of the
Funds to agree to conform to these standards.
11. The conditions pursuant to which the exemptive order is granted
and the duties and responsibilities of the directors of the Funds with
respect to the variable pricing system will be set forth in guidelines
which will be furnished to the directors.
12. Each Fund prospectus (regardless of whether all classes of
shares of such Fund are offered through such prospectus) will disclose
the respective expenses, performance data, distribution arrangements,
services, fees, FESC, CDSC, exchange privileges, and conversion
features applicable to each class of shares. The shareholder reports of
each Fund will disclose the respective expenses and performance data
applicable to each class of shares in every shareholder report. The
shareholder reports will contain, in the statement of assets and
liabilities and statement of operations, information related to the
Fund as a whole generally and not on a per class basis. Each Fund's per
share data and ratios, 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 expenses
and/or performance data applicable to all classes. The information
provided by applicants for publication in any newspaper or similar
listing of the Funds' net asset values and public offering prices will
separately present each class of shares.
13. The 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
the Funds may make pursuant to rule 12b-1 plans in reliance on the
exemptive order.
14. Any class of shares with a conversion feature (``Purchase
Class'') will convert into another class (``Target 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 and/or service fee (as those terms are defined in Article
III, Section 26 of the NASD's Rules of Fair Practice), if any, that in
the aggregate are 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 its rule 12b-1 plan (or,
if presented to shareholders, adopts or implements any amendment of a
non-rule 12b-1 shareholder services plan) that would increase
materially the amount that may be borne by the Target Class shares
under the plan, existing Purchase Class shares will stop converting
into Target Class shares unless the Purchase Class shareholders, voting
separately as a class, approve the proposal. The directors 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''), identical in all material respects to Target Class as
it existed prior to implementation of the proposal, no later than such
shares previously were scheduled to convert into Target Class shares.
If deemed advisable by the directors to implement the foregoing, such
actions may include the exchange of all existing Purchase Class shares
for a new class (``New Purchase Class''), identical to existing
Purchase Class shares in all material respects except that New Purchase
Class will convert into New Target Class. New Target Class or New
Purchase Class may be formed without further exemptive relief.
Exchanges or conversions described in this condition shall be effected
in any manner that the directors reasonably believe will not be subject
to federal taxation. In accordance with condition 4, any additional
cost associated with the creation, exchange, or conversion of New
Target Class or New Purchase Class shall be borne solely by the Adviser
and the Underwriter. Purchase Class shares sold after the
implementation of the proposal may convert into Target Class shares
subject to the higher maximum payments, 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. Applicants will comply with the provisions of proposed Rule 6c-
10 under the Act, Investment Company Act Release No. 16169 (Nov. 2,
1988), as currently proposed and as it may be reproposed, adopted, or
amended.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-13343 Filed 6-1-94; 8:45 am]
BILLING CODE 8010-01-M
