[Federal Register Volume 59, Number 157 (Tuesday, August 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19968]
[[Page Unknown]]
[Federal Register: August 16, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-20453; 812-8844]
Thomson Fund Group et al.; Notice of Application
August 9, 1994.
AGENCY: Securities and Exchange Commission (the ``SEC'' or the
``Commission'').
ACTION: Notice of application for an order under the Investment Company
Act of 1940 (the ``Act'').
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APPLICANTS: Thomson Fund Group (the ``Trust''); Thomson Investors
Services Inc. (the ``Distributor''); Thomson Advisory Group L.P. (the
``Manager''); any future registered open-end investment company whose
principal underwriter is the Distributor or an entity controlling,
controlled by, or under common control with the Distributor or whose
investment adviser is the Manager or an entity controlling, controlled
by, or under common control with the Manager; and any other registered
open-end investment company whose investment adviser is a successor-in-
interest to the Manager if such successor-in-interest is created as
part of a restructuring of the Manager because of the lapse of the
grandfather provision of the Internal Revenue Code (currently expiring
on January 1, 1998) allowing the Manager to be taxed as a partnership.
RELEVANT ACT SECTIONS: Exemption requested pursuant to section 6(c) of
the Act for an order exempting applicants from sections 18(f)(1),
18(g), 18(i), 2(a)(32), 2(a)(35), 22(c) and 22(d) of the Act and rule
22c-1 thereunder.
SUMMARY OF APPLICATION: Applicants seek an order permitting the Trust
to issue an unlimited number of classes of each of its now existing or
hereafter created series (``Funds'') and to assess and, under certain
circumstances, waive a contingent deferred sales charge (``CDSC'') on
certain redemptions of the shares.
FILING DATE: The application was filed on February 22, 1994 and amended
on June 17, 1994 and August 8, 1994.
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 September 6,
1994, 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
reasons for the request, and the issues contested. Persons who wish to
be notified of a hearing may request such notification by writing to
the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Applicants, c/o J.B. Kittredge, Ropes & Gray, One International
Place, Boston, Massachusetts 02110.
FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Special Counsel, at
(202) 942-0582, or Barry D. Miller, Senior Special Counsel, 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 may be obtained for a fee from
the SEC's Public Reference Branch.
Applicants' Representations
1. The Trust is a diversified open-end management investment
company organized as a Massachusetts business trust. It currently
offers for sale to investors shares of eleven separate series
representing interests in eleven corresponding Funds. Each Fund has its
own investment objective and policies. The Distributor serves as the
Trust's principal underwriter and the Manager serves as the Trust's
investment adviser.
2. The Trust currently is permitted to offer two classes of shares
for each of its Funds under an alternative purchase plan pursuant to a
prior order\1\ and to impose a contingent deferred sales load on one of
its classes of shares and to waive the contingent deferred sales load
in connection with certain redemptions pursuant to prior exemptive
orders (the ``Prior CDSC Orders'').\2\
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\1\See Thomson McKinnon Investment Trust, Investment Company Act
Release Nos. 17608 (July 19, 1990) (notice) and 17680 (Aug. 16,
1990) (order).
\2\See Thomson McKinnon Investment Trust, Investment Company Act
Release Nos. 13825 (Mar. 15, 1984) (notice) and 13877 (Apr. 10,
1984) (order); Thomson McKinnon Global Trust, Investment Company Act
Release Nos. 15138 (June 6, 1986) (notice) and 15187 (June 30, 1986)
(order); Thomson McKinnon Investment Trust, Investment Company Act
Release Nos. 16574 (Sept. 27, 1988) (notice) and 16609 (Oct. 25,
1988) (order); Thomson Fund Group, Investment Company Act Release
Nos. 19363 (Mar. 29, 1993) (notice) and 19430 (Apr. 22, 1993)
(order). A reduction in the CDSC with respect to purchase payments
made on or after July 1, 1991 was implemented pursuant to no-action
relief granted to the Trust. Thomson Fund Group (pub. avail. Apr.
29, 1991).
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3. Applicants seek an order, which will supersede the prior orders,
to allow the Trust to issue and sell an unlimited number of classes of
shares of each of its Funds pursuant to an alternative purchase plan
(the ``Alternative Purchase Plan''). Existing classes now will be sold
under the Alternative Purchase Plan in reliance upon any order issued
on this application. 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 the
classes of shares of the same Fund will relate solely to: (a) the
impact of any rule 12b-1 plan payments (which may include servicing
fees or distribution fees, or both) or non-rule 12b-1 shareholder
servicing plan (``Shareholder Servicing Plan'') payments made by a
class and any other expenses that may be imposed upon a particular
class of shares and which are limited to (i) transfer agency fees
attributable to a specific class of shares, (ii) printing and postage
expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders
of a specific class, (iii) blue sky registration fees incurred by a
class of shares, (iv) Commission 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, (viii) Trustees' fees incurred as a result of issues relating
to one class of shares, and (viii) any other incremental expenses
subsequently identified that should be properly allocated to one class
which shall be approved by the Commission pursuant to an amended order
(all of the foregoing expenses are collectively referred to herein as
``Class Expenses''); (b) the fact that the classes will vote separately
with respect to a Fund's rule 12b-1 plans, except as provided in
condition 16; (c) the different exchange privileges of the various
classes of shares as may be described from time to time in any
prospectus of the Trust; (d) the fact that only certain classes will
have a conversion feature; and (e) the designation of each class of
shares of a Fund.
4. Under the Alternative Purchase Plan, shares of different classes
would be sold under different sales arrangements including, for
example, sales at net asset value, subject to a front-end sales charge,
or subject to a CDSC. Different classes of shares could be subject to
different rule 12b-1 plans. For any class, the sum of any initial sales
charges, asset-based sales charges, and CDSCs 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.
5. The Trustees of the Trust may determine that any of the Class
Expenses listed above are to be borne by the class to which they are
attributable. The Manager and/or the Distributor may choose to
reimburse or agree not to impose Class Expenses on certain classes on a
voluntary, temporary basis. The amount of Class Expenses reimbursed or
not imposed by the Manager and/or the Distributor may vary from class
to class. Class Expenses are by their nature specific to a given class
and obviously expected to vary from one class to another. Applicants
thus believe that it is acceptable and consistent with shareholder
expectations to reimburse or agree not to impose Class Expenses at
different levels for different classes of the same Fund or series.
6. In addition, the Manager and/or Distributor may waive or
reimburse expenses attributable to a particular Fund (``Fund
Expenses'') (with or without a waiver or reimbursement of Class
Expenses for such Fund) but only if the same proportionate amount of
Fund Expenses are waived or reimbursed for each class of that Fund.
Thus, any Fund expenses that are waived or reimbursed would be credited
to each class of a Fund based on the relative net assets of the
classes. The amount of Fund Expenses reimbursed or not imposed by the
Manager and/or the Distributor may vary from Fund to Fund, however.
Fund expenses apply equally to all classes of a Fund. Accordingly, it
may not be appropriate to waive or reimburse Fund expenses at different
levels for different classes of the same Fund. Fund expenses will be
allocated among the classes of a Fund on the basis of the relative net
assets of each class of that Fund. The income of a Fund will be
allocated among the classes of that Fund on the basis of the relative
net assets of such class.
7. Under the Alternative Purchase Plan, any class may be given
exchange privileges. Shares of such a class generally will be permitted
to be exchanged only for shares of a class with similar characteristics
in another Fund. All such exchanges will be allowed only between funds
that are within the same ``group of investment companies'' as that term
is defined in rule 11a-3 under the Act. At the discretion of the
Trustees, exchanges may also be permitted among dissimilar classes. All
permitted exchanges will comply with the provisions of rule 11a-3.
8. Any class of shares may offer a conversion feature. A conversion
feature will automatically convert shares of one class (``Purchase
Class'') to shares of another class with different features (``Target
Class'') after the expiration of a specified period, subject to terms
fully disclosed in the Fund's then-current prospectus. For purposes of
the conversion, all Purchase Class shares in a shareholder's account
that were acquired through the reinvestment of dividends and other
distributions paid in respect of such shares (and which had not yet
converted) will be considered to be held in a separate sub-account
(``Dividend Purchase Shares''). Each time any Purchase Class shares in
the shareholder's account convert, an equal portion of Dividend
Purchase Shares then in the sub-account will also convert and will no
longer be considered held in the sub-account. The portion will be
determined by the ratio that the shareholder's converting Purchase
Class shares bears to the shareholder's total Purchase Class shares,
subject to the conversion feature, but excluding Dividend Purchase
Shares. Any conversion will be subject to the continuing availability
of an opinion of counsel or a private letter ruling from the Internal
Revenue Service to the effect that the conversion does not constitute a
taxable event under federal income tax law. Conversions might be
suspended if such an opinion or ruling were no longer available.
9. Any Fund or class may be subject to a Shareholder Servicing Plan
whereby the Trust may enter into agreements on behalf of a Fund with
certain financial institutions, securities dealers, and other industry
professionals providing for the performance of services such as
answering client inquiries, servicing client accounts, and other
services to existing shareholders.
10. Under the Alternative Purchase Plan, applicants expect to offer
at least four classes of shares: Class A shares; Class B shares; Class
C shares; and Class Y shares. The Funds may create additional classes
of shares, which will differ only with respect to attributes described
above. No Fund, however, will be required to offer all or any number of
the classes.
11. Class A shares are offered at net asset value plus a front-end
sales load, and are assessed an ongoing service fee under a servicing
plan adopted by the Trust pursuant to rule 12b-1. Certain Class A
shares that are offered without a front-end sales load to certain
classes of purchases may be subject to a 1% CDSC if such shares are
redeemed within eighteen months of purchase.
12. Class B shares will be offered at net asset value per share
without the imposition of a sales load at the time of purchase.
Pursuant to a distribution and servicing plan adopted pursuant to rule
12b-1, the Trust would pay to the Distributor with respect to each Fund
a service fee of up to 0.25% per annum and a distribution fee of up to
0.75% per annum of the average daily net asset value of that Fund's
Class B shares. In addition, an investor's proceeds from a redemption
of Class B shares made within five years of his or her purchase may be
subject to a CDSC which is paid to the Distributor. The rate of the
CDSC is expected to be approximately 5% on shares redeemed in the first
year after purchase, 4% on shares redeemed in the second year, 3% on
shares redeemed in the third year, and 2% on shares redeemed in the
fourth and fifth years. Class B shares may also be subject to a
conversion feature whereby such shares automatically would convert to
Class A shares after a specified number of years from the date the
Class B shares were purchased.
13. Class A shares are offered at net asset value and will be
identical in all respects to the Class B shares except that the Class C
shares will be subject to a lower CDSC and will never convert to Class
A shares. The Class C shares are designed as a so-called ``level load''
series. The Class C shares will be subject to a 1% CDSC if the shares
are redeemed within one year of purchase.\3\
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\3\The Class C shares described here are currently offered by
the Trust as ``Class B'' shares. This existing class of shares
converted from a declining CDSC class to a level load class pursuant
to no-action relief obtained by the Trust. See Thomson Fund Group
(pub. avail. Apr. 29, 1991). Shares purchased before July 1, 1991
are subject to the previous CDSC structure.
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14. The Trust may also offer Class Y shares, which will not be
subject to any servicing fees under any rule 12b-1 plan, will not be
subject to any front-end sales load or CDSC, and may bear lower
transfer agency fees and other operating expenses than some other
classes. The Class Y may be designated as a class of shares
(``Institutional Shares'') which will be offered only to
``Institutional Investors''.\4\ Only Institutional Investors will be
eligible to purchase any class of Institutional Shares, if created. All
other investors will be permitted to purchase only non-institutional
classes of shares. No Institutional Investor that is eligible to
purchase any class of Institutional Shares, if any, will be permitted
to invest in any class of non-institutional shares. Accordingly, there
will be no overlap between the investors eligible to purchase any class
of Institutional Shares and investors eligible to purchase any class of
non-institutional shares.
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\4\``Institutional Investors'' will include only (a)
unaffiliated benefit plans, such as qualified retirement plans,
other than individual retirement accounts and self-employed
retirement plans, with total assets in excess of $10,000,000 or such
other amounts as the Funds may establish and with such other
characteristics as the Funds may establish; provided, that any such
unaffiliated benefit plans will have a separate trustee who is
vested with investment discretion as to plan assets, will have
limitations on the ability of plan beneficiaries to access their
plan investments without incurring adverse tax consequences, and
will not include self-directed plans; (b) tax-exempt retirement
plans of the Manager or the Distributor and their affiliates; (c)
banks and insurance companies that are not affiliated with the
Manager purchasing for their own accounts; (d) investment companies
not affiliated with the Manager or the Distributor; and (e)
endowment funds or non-profit organizations that are not affiliated
with the Manager.
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15. Applicants seek an order of the Commission to allow the Trust
to impose a CDSC on any appropriate class of shares subject to the
terms and in the circumstances appropriate to that class and to waive
such a CDSC in certain circumstances. Under the proposed CDSC
arrangement, some or all shares of certain classes of a Fund may be
subject to a CDSC if such shares are redeemed or repurchased within a
prescribed period of time after their purchase. No CDSC will be imposed
with respect to: (a) The portion of redemption or repurchase proceeds
attributable to increases in the value of the shares due to capital
appreciation; (b) shares acquired through the reinvestment of income
dividends or capital gain distributions; or (c) shares held for more
than a certain time after their purchase. Any CDSC would be imposed on
the lesser of (a) the net asset value of the shares at the time of
purchase, and (b) the net asset value of the shares at the time of
repurchase or redemption. In determining whether a CDSC will be
payable, it will be assumed that shares, or amounts representing
shares, that are not subject to a CDSC are redeemed or repurchased
first and for other shares it will be assumed that a redemption is made
of shares held by the investor for the longest period of time. This
will result in any such charge being imposed on the fewest number of
shares and at the lowest possible rate. The amount of the CDSC and the
circumstances and timing of its imposition may vary among classes and
may be changed with respect to any class. Any change in the terms of a
CDSC will be reflected in the affected shares' prospectus. In addition,
any such change will not affect the shares that have already been
issued unless such change would result in terms more favorable to the
holders of such shares, in which case the change may, but need not,
apply to already-issued shares. No CDSC will be imposed on any shares
purchased prior to the effective date of the order requested by this
application, except as permitted under the Prior CDSC Orders.
16. Applicants propose to vary or waive the CDSC in connection with
certain categories of transactions. The conditions in paragraphs (a)
through (d) of rule 22d-1 will be satisfied with respect to any
category of transaction for which a CDSC is waived.
17. If the Funds waive or reduce a CDSC, such waiver or reduction
will be applied uniformly to all shares in the specified category. If a
Fund which has been waiving or reducing a CDSC determines not to waive
or reduce such CDSC any longer, the disclosure in the Fund's prospectus
will be appropriately revised. Any such change will not affect shares
that have already been issued. A CDSC imposed on any given class of
shares may be waived in all or any number of the circumstances listed
above and the waivers applicable to the CDSC on one class may differ
from the waivers applicable to another class.
Applicants' Legal Analysis
1. Applicants seek exemption from (a) sections 18(f)(1) and 18(g)
of the Act to the extent that the issuance and sales of multiple
classes of shares may result in a ``senior security'' prohibited by
section 18(f) and (b) section 18(i) of the Act to the extent that the
different voting rights associated with such classes may be deemed to
result in one or more classes of shares having unequal voting rights
with other classes of shares. In addition, applicants request an
exemption from sections 2(a)(32), 2(a)(35), 22(c), and 22(d) of the Act
and rule 22c-1 thererunder to the extent necessary to permit the
proposed CDSC arrangement.
2. Applicants believe that the proposed allocation of expenses and
voting rights is equitable and would not discriminate against any group
of shareholders. The proposed arrangement will not involve borrowing
and will not affect the Funds' existing assets or reserves; it also
will not increase the speculative character of the shares in a Fund,
since all shares will participate pro rata in all of the Fund's income
and all of the Fund's expenses (with the exception of the Class
Expenses).
3. Under the Alternative Purchase Plan, mutuality of risk will be
preserved with respect to all classes of shares in a Fund, as the
classes will represent interests in a single pool of assets presenting
the same investment risk to all shareholders of the Fund, regardless of
class. Further, since all classes of shares will be redeemable at all
times, no class of shares will have any preference or priority over the
other class of shares of the particular Fund in the usual sense (that
is, no class will have a distribution or liquidation preference with
respect to particular assets of a Fund and no class will be protected
by any reserve or other account).
Applicants' Conditions
Applicants agree that the order granting the requested exemptions
will be subject to the following conditions:
1. 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 and as it may be reproposed,
adopted or amended.
2. 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 the classes of
shares of the same Fund will relate solely to: (a) the impact of any
rule 12b-1 plan payments (which may include servicing fees or
distribution fees, or both) or Shareholder Servicing Plan payments made
by a class and any other expenses that may be imposed upon a particular
class of shares and which are limited to (i) transfer agency fees
attributable to a specific class of shares, (ii) printing and postage
expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders
of a specific class, (iii) blue sky registration fees incurred by a
class of shares, (iv) Commission 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, (vii) Trustees' fees incurred as a result of issues relating to
one class of shares, and (viii) any other incremental expenses
subsequently identified that should be properly allocated to one class
which shall be approved by the Commission pursuant to an amended order;
(b) the fact that the classes will vote separately with respect to a
Fund's rule 12b-1 plans, except as provided in condition 16 below; (c)
the different exchange privileges of the various classes of shares as
may be described from time to time in any prospectus of the Trust; (d)
the fact that only certain classes will have a conversion feature; and
(e) the designation of each class of shares of a Fund.
3. The Trustees of the Trust, including a majority of the
independent Trustees, shall have approved each Alternative Purchase
Plan prior to its implementation by any Fund. The minutes of the
meetings of the Trustees regarding the deliberations of the Trustees
with respect to the approvals necessary to implement each Alternative
Purchase Plan will reflect in detail the reasons for determining that
the Alternative Purchase Plan is in the best interests of the relevant
Fund and its shareholders.
4. The initial determination of the Class 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
Trustees, including a majority of the independent Trustees. Any person
authorized to direct the allocation and disposition of the monies paid
or payable by a Fund to meet Class Expenses shall provide to the
Trustees of the Trust, and such Trustees shall review, at least
quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
5. On an ongoing basis, the Trustees of the Trust, 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 Trustee, including a
majority of the independent Trustees, shall take such action as is
reasonably necessary to eliminate any such conflicts that may develop.
The Manager and the Distributor will be responsible for reporting any
potential or existing conflicts to the Trustees. If a conflict arises,
the Manager and the Distributor at their own cost will remedy such
conflict up to and including establishing a new registered management
investment company.
6. The Trustees will receive quarterly and annual statements
concerning distribution and 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 class of shares will be used to support any
distribution or servicing fee charged to shareholders of such class of
shares. Expenditures not related to the sale or servicing of a specific
class of shares will not be presented to the Trustees to support any
fee attributable 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 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 payments made under the rule 12b-1 plan or
Shareholder Servicing Plan relating to a particular class of shares
will be borne exclusively by such class and except that any Class
Expenses will be borne by the applicable class of shares.
8. The methodology and procedures for calculating the net asset
value and dividends/distributions of the various classes and the proper
allocation of expenses among such classes has been reviewed by an
expert (the ``Independent Examiner'') who has rendered a report to the
applicants, which has been provided to the staff of the SEC, 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 Trust 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 Commission 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 Trust which the Trust agrees to
make, will be available for inspection by the Commission staff upon the
written request for such work papers by a senior member of the Division
of Investment Management, 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 the 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 the Statement on Auditing Standards No. 70
of the American Institute of Certified Public Accountants, 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/distributions among the various classes
of shares and the proper allocation of expenses among such classes of
shares and this representation has been concurred with by the
Independent Examiner in the initial report referred to in condition (8)
above and will be concurred with by the Independent Examiner, or an
appropriate substitute Independent Examiner, on an ongoing basis at
least annually in the ongoing reports referred to in condition (8)
above. Applicants agree to take immediate corrective action if the
Independent Examiner does not so concur in the ongoing reports.
10. The prospectus of the Trust that implements each revised
Alternative Purchase Plan will include a statement to the effect that
any person entitled to receive compensation for selling shares of a
Fund of the Trust may receive different levels of compensation for
selling or servicing one particular class of shares over another of
such Fund.
11. The Distributor 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. Such compliance standards
will require that all investors eligible to purchase shares of any
class of Institutional Shares be sold only shares of a class of
Institutional Shares, rather than any other class of shares offered by
a Fund.
12. The conditions pursuant to which the exemptive order is granted
and the duties and responsibilities of the Trustees of the Trust with
respect to the Alternative Purchase Plan will be set forth in
guidelines which will be furnished to the Trustees as part of the
materials setting forth the duties and responsibilities of the
Trustees.
13. The Funds will disclose their respective expenses, performance
data, distribution arrangements, services, fees, sales loads, deferred
sales loads, and exchange privileges applicable to each class of
shares, other than a class of Institutional Shares, in every
prospectus, regardless of whether all classes of shares are offered
through each prospectus. If the Trust offers a class of Institutional
Shares, it may offer such shares solely pursuant to a separate
prospectus. Any prospectus for Institutional Shares will disclose the
existence of the Fund's other classes, and the prospectus for the
Fund's other classes will disclose the existence of Institutional
Shares, if any, and will identify the persons eligible to purchase
Institutional Shares. The Funds will disclose their 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 statement of operations,
information related to the Fund as a whole generally and not on a per
class basis, whereas each Fund's per share data 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 also
disclose the respective expenses and/or performance data applicable to
all classes of shares, except Institutional Shares, if any. Advertising
materials reflecting the expenses or performance data for Institutional
Shares will be available only to those persons eligible to purchase
Institutional Shares. Information provided by the Applicants for
publication in any newspaper or similar listing of the Funds' net asset
values and public offering prices will present each class of shares,
except Institutional Shares, separately.
14. Applicants acknowledge that the grant of the exemptive order
requested by this application will not imply Commission approval,
authorization or acquiescence in any particular level of payments that
the Funds may make pursuant to rule 12b-1 plans or Shareholder
Servicing Plans in reliance on the exemptive order.
15. If any class of shares is created with a conversion feature,
such class (``Purchase Class'') will convert into another class of
shares (``Target Class'') 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
maximum 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 maximum
asset-based sales charge and service fee which they were subject prior
to the conversion.
16. If a Fund implements any amendment to any of its 12b-1 Plans
(or, if presented to shareholders, adopts or implements any amendment
to a Shareholder Servicing Plan) that would increase materially the
amount that may be borne by Target Class shares subject to the plan,
existing Purchase Class shares will stop converting into Target Class
shares unless the holders of the Purchase Class shares, voting
separately as a class, approve the proposal. The Trustees of the Trust
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 shares as they 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 Trustees of the Trust
to implement the foregoing, such action 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 shares will convert into New
Target Class shares. New Target Class shares or 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 of the Trust reasonably believe will not be subject
to federal taxation. In accordance with condition 5 above, any
additional cost associated with the creation, exchange, or conversion
of New Target Class shares or New Purchase Class shares shall be borne
solely by the Manager and the Distributor. Purchase Class shares sold
after the implementation of the proposal may convert into Target Class
shares subject to the higher maximum payment, provided that the
material features of the Target Class shares plan and the relationship
of such plan to the Purchase Class shares are disclosed in an effective
registration statement.
17. The Shareholder Servicing 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.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-19968 Filed 8-15-94; 8:45 am]
BILLING CODE 8010-01-M
