[Federal Register Volume 59, Number 18 (Thursday, January 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1718]


[[Page Unknown]]

[Federal Register: January 27, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20027; 812-8456]

 

Daily Money Fund, et al. Notice of Application

January 19, 1994.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of Application for Exemption under the Investment 
Company Act of 1940 (the ``Act'').

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APPLICANTS: Daily Money Fund, Daily Tax-Exempt Money Fund, Fidelity 
Special Situations Fund, Fidelity Advisor Series I, Fidelity Advisor 
Series II, Fidelity Advisor Series III, Fidelity Advisor Series IV, 
Fidelity Advisor Series V, Fidelity Advisor Series VI, Fidelity Advisor 
Series VII, Fidelity Beacon Street Trust, Fidelity California Municipal 
Trust, Fidelity California Municipal Trust II, Fidelity Capital Trust, 
Fidelity Charles Street Trust, Fidelity Commonwealth Trust, Fidelity 
Congress Street Fund, Fidelity Contrafund, Fidelity Corporate Recovery 
Fund, Fidelity Corporate Trust, Fidelity Court Street Trust, Fidelity 
Court Street Trust II, Fidelity Deutsche Mark Performance Portfolio, 
L.P., Fidelity Destiny Portfolios, Fidelity Devonshire Trust, Fidelity 
Exchange Fund, Fidelity Financial Trust, Fidelity Fixed-Income Trust, 
Fidelity Government Securities Fund, Fidelity Hastings Street Trust, 
Fidelity Income Fund, Fidelity Institutional Cash Portfolios, Fidelity 
Institutional Tax-Exempt Cash Portfolios, Fidelity Institutional Trust, 
Fidelity Institutional Investors Trust, Fidelity Investment Trust, 
Fidelity Limited Term Municipals, Fidelity Magellan Fund, Fidelity 
Massachusetts Municipal Trust, Fidelity Money Market Trust, Fidelity 
Mt. Vernon Street Trust, Fidelity Municipal Trust, Fidelity Municipal 
Trust II, Fidelity New York Municipal Trust, Fidelity New York 
Municipal Trust II, Fidelity Phillips Street Trust, Fidelity Puritan 
Trust, Fidelity Securities Fund, Fidelity Select Portfolios, Fidelity 
Sterling Performance Portfolio, L.P., Fidelity Summer Street Trust, 
Fidelity Trend Fund, Fidelity Union Street Trust, Fidelity Union Street 
Trust II, Fidelity U.S. Investments-Bond Fund, L.P., Fidelity U.S. 
Investments-Government Securities Fund, L.P., Fidelity Yen Performance 
Portfolio, L.P., Spartan U.S. Treasury Money Market Fund, Tax-Exempt 
Portfolios, Variable Insurance Products Fund, Variable Insurance 
Products Fund II, and Zero Coupon Bond Fund (collectively, the 
``Trusts''); Fidelity Management & Research Co. (``FMR''); Fidelity 
Distributors Corporation (``FDC''); and National Financial Services 
Corporation (``NFSC'').

RELEVANT ACT SECTIONS: Exemption requested 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, and under section 6(c) to amend a previous order granting 
an exemption from sections 18(f)(1), 18(g), and 18(i) of the Act.

SUMMARY OF APPLICATION: Applicants request an order that would permit 
them to (a) assess and, under certain circumstances, waive a contingent 
deferred sales load (``CDSC'') on certain redemptions of shares and (b) 
amend a prior order by adding a conversion feature to an existing 
multiple class distribution arrangement.

FILING DATE: The application was filed on June 17, 1993, and amended on 
September 14, 1993 and December 17, 1993. 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 February 14, 
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 may request 
notification of a hearing by writing the SEC's Secretary.

ADDRESSES: Secretary. SEC, 450 5th Street NW., Washington, DC 20549. 
Applicants, 82 Devonshire Street, Boston, Massachusetts 02109.

FOR FURTHER INFORMATION CONTACT: Elaine M. Boggs, Staff Attorney, at 
(202) 272-3026, or Robert A. Robertson, Branch Chief, at (202) 272-3030 
(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 at the 
SEC's Public Reference Branch.

Applicants' Representations

    1. Most of the Trusts are series companies that may issue one or 
more series. Applicants request that relief be extended to (a) each 
Trust and each of its series and (b) all other investment companies or 
series thereof that are, or in the future will be, (i) advised by FMR 
(or a person controlling, controlled by, or under common control with 
FMR) or are, or in the future will be, distributed by FDC or NFSC (or a 
person controlling, controlled by, or under common control with FDC or 
NFSC) and that (ii) have or will have the ability to issue classes of 
shares that are identical in all material respects to those described 
in the application (collectively with the Trusts and series thereof, 
the ``Funds'').
    2. FMR acts as each Fund's investment manager and also provides the 
Funds with administrative services. FDC acts as the distributor of all 
the Funds, other than the Funds for which NFSC services as distributor. 
NFSC currently acts as the distributor to three Funds, each a series of 
the Daily Money Fund. FMR, FDC, and NFSC are all subsidiaries of FMC 
Corp.
    3. Applicants previously requested an order under section 6(c) of 
the Act to permit the issuance and sale of an unlimited number of 
classes of securities by the Funds (the ``Existing Order'').\1\ The 
Existing Order contained the following permissible class differences: 
(a) The impact of certain Class Expenses, as Class Expenses are defined 
in the Existing Order; (b) the fact that classes will vote separately 
with respect to the classes' Rule 12b-1 Plan and/or Shareholder 
Services Plan, as both plans are defined in the Existing Order; (c) 
exchange privileges of the classes of shares; and (d) the designation 
of each class of shares.
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    \1\Investment Company Act Release Nos. 18874 (July 30, 1992) 
(notice) and 18907 (August 25, 1992) (order).
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    4. The Funds' existing classes of shares are sold subject to a 
front-end sales load and/or a rule 12b-1 fee. Applicants now request 
the ability to offer shares that carry a standard or level load CDSC. 
The standard CDSC shares will not be subject to a front-end sales load 
but will be subject to a CDSC and an annual rule 12b-1 and/or service 
fee. The level load shares will have the same features as the standard 
CDSC shares except that the rule 12b-1 and/or service fee could be 
different. Applicants also request the ability to have a conversion 
feature in connections with the shares that carry a standard or level 
load CDSC. With this feature, these shares may, after a period of time, 
automatically convert to shares of another class without the imposition 
of any additional sales charges and will be subject to the lower rule 
12b-1 fee and/or service fee applicable to that class. Applicants also 
request the ability to impose a CDSC on the proceeds of certain 
redemptions of shares ordinarily subject to a front-end sales charge 
initially sold without a sales charge.
    5. 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. As a result, no CDSC will be imposed on an amount which 
represents an increase in the value of the shareholder's account 
resulting from capital appreciation above the amount paid for the 
shares when purchased. In determining the applicability and rate 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.
    6. In accordance with rule 11a-3 under the Act, no CDSC will be 
imposed on any exchange by an investor of shares with a CDSC for shares 
of another Fund. The sum of any front-end sales charge, asset based 
sales and CDSC paid by any individual shareholder on a single 
investment will not exceed the maximum sales charge provided in article 
III, section 26 of the National Association of Securities Dealers 
(``NASD'') Rules of Fair Practice.
    7. The Funds request the ability to waive or reduce the CDSC in 
connection with the following redemptions of shares: (a) Following 
death or disability, as defined in section 72(m)(7) of the Internal 
Code of 1986, as amended (the ``Code''), of a shareholder if redemption 
is made within one year after death or disability of a shareholder, as 
relevant; (b) of retirement plan distributions which are permitted to 
be made without penalty pursuant to the Code, other than tax-free 
rollovers or transfers of assets; (c) by current or former trustees or 
officers of a Fund, or current or retired officers, directors or 
Fidelity trustees or employees, and by the spouse of such persons, or 
by a Fidelity trustee or employee acting as custodian for a minor 
child, or a person acting as trustee of a trust for the sole benefit of 
the minor child of a Fidelity trustee or employee; (d) by registered 
representatives, bank trust officers, and employees (and their 
immediate families) of investment professionals that have entered into 
distribution-related agreements with FDC or NFSC, (e) of shares made 
pursuant to a shareholder's participation in any systematic withdrawal 
plan adopted by a Fund; (f) by large accountholders holding specified 
minimums of a Funds' shares; (g) those affected by advisory accounts 
managed by FMR or any affiliated company, or by FMR or any such 
affiliated company itself; (h) those effected tax-exempt employee 
benefit plans as a result of the enactment or promulgation of any law 
or regulation pursuant to which continuation of the investment in the 
Funds would be improper; (i) those effected pursuant to each Fund's 
right to liquidate a shareholder's account if the aggregate net asset 
value of shares held in the account is less than the effective minimum 
account size; (j) by trust institutions investing on behalf of their 
clients; (k) by a charitable organization (as defined in section 
501(c)(3) of the Code); (l) by a charitable remainder trust or life 
income pool established for the benefit of a charitable organization 
(as defined in section 501(c)(3) of the Code); (m) by any state, 
county, or city, or any governmental instrumentality, department, 
authority, or agency; (n) of shares purchased with redemption proceeds 
from other mutual fund complexes on which the investor has paid a 
front-end sales charge only;\2\ (o) of shares purchased by an insurance 
company separate account used to fund annuity contracts purchased by 
employee benefit plans; (p) by investors participating in the Fidelity 
trust portfolios program; (q) of shares purchased through Portfolio 
Advisory Services;\3\ (r) of new or subsequent shares purchased in a 
Uniform Gifts to Minors/Uniform Transfers to Minors account; (s) 
redemptions of shares purchased by contributions and exchanges to 
prototype or prototype-like retirement plans sponsored by FMR Corp. or 
FMR and that are marketed and distributed directly to plan sponsors 
(the Fidelity IRA, the Fidelity Rollover IRA, the Fidelity SEP-IRA and 
SARSEP, the Fidelity Retirement Plan, the Fidelity Defined Benefit 
Plan, the Fidelity Group IRA, the Fidelity 403(b) Program, the Fidelity 
Investments 401(a) Prototype Plan for Tax-Exempt Employers, and the 
CORPORATEplan for Retirement);\4\ (t) in accounts to which banks or 
broker-dealers which have agreements with FDC or NFSC charge an 
investment management fee; (u) of shares purchased as part of an 
employee benefit plan maintained by an employer whose employee benefit 
plan is either subject to the requirements of the Employee Retirement 
Income Security Act of 1974 or would be except for specific statutory 
exemptions (``U.S. Employer''); (v) of shares purchased as part of an 
employee benefit plan maintained by a US. Employer that is a member of 
a parent-subsidiary group of corporations (within the meaning of 
section 1563(a)(1) of the Code); (w) of shares purchased in a Fidelity 
IRA account purchased with the proceeds of a distribution from an 
employee benefit plan, provided that at the time of the distribution, 
the employer or its affiliate had an account of a specified size 
maintained with Fidelity; and (x) of shares purchased by a registered 
investment adviser purchasing for its discretionary accounts, provided 
it has executed a Fidelity registered investment adviser agreement.
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    \2\The Funds will take such steps as may be necessary to 
determine that a shareholder has not paid a CDSC or redemption fee 
in connection with the redemption of shares of an unrelated open-end 
investment company, including, without limitation, requiring a 
shareholder to provide a written representation that neither a CDSC 
nor redemption fee was imposed upon the redemption and, in addition, 
either (a) requiring such shareholder to provide an activity 
statement reflecting the redemption that supports the shareholder's 
representation, or (b) reviewing a copy of the current prospectus of 
the unrelated open-end investment company and determining that such 
company does not impose a CDSC or redemption fee.
    \3\Portfolio Advisory Services is a division of Strategic 
Advisors, Inc., a registered investment adviser.
    \4\A prototype retirement plan is a qualified pension or profit-
sharing plan that can be separately adopted by an unlimited number 
of employers, the form of which plan has been reviewed and approved 
by the Internal Revenue Service. A prototype-like plan is a tax-
deferred retirement savings vehicle, other than a qualified pension 
or profit-sharing plan for which the Internal Revenue Service does 
not maintain the same type of review procedures as it does for 
qualified pension or profit-sharing plans.
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Applicants' Legal Analysis

    1. Applicants 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 permit the Funds to assess a CDSC on certain redemptions 
of the shares as described above and to permit the Funds to waive the 
CDSC with respect to certain types of redemptions. Applicants believe 
that the contingent nature of the proposed charge places the purchaser 
in a better position than if a sales load were imposed at the time of 
sale, since in the case of the CDSC the shareholder enjoys the 
possibility that he or she will have to pay only a reduced sales 
charge, or no sales charge at all. Applicants further believe that the 
imposition of the CDSC permits the Funds' shareholders to have the 
advantage of greater investment dollars working for them from the time 
of their purchase of shares of the Funds than if a sales load were 
imposed at the time of purchase.
    2. Applicants also request an amendment to the Existing Order, 
which granted an exemption under section 6(c) from sections 18(f)(1), 
18(g), 18(i), to permit applicants to issue multiple classes of shares 
representing interests in the same portfolio of securities. The 
amendment to the Existing Order would permit applicants to add a 
conversion feature as a difference between classes of shares. 
Applicants believe that the conversion feature is equitable and will 
not discriminate against any group of shareholders.

Applicants' Conditions

    Applicants agree that the order of the Commission granting the 
requested relief will be subject to the following conditions:\5\
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    \5\All capitalized terms have the same meaning as in the 
Existing Order.
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    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) The 
impact of certain Class Expenses, which are limited to any or all of 
the following (i) transfer agent fee identified by applicants as being 
attributable to a specific class of shares; (ii) printing and postage 
expenses related to preparing and distributing materials such as 
shareholder reports, prospectuses, and proxy statements 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 expense 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; and (vii) accounting expenses 
relating solely to one class of shares; (b) expenses assessed to a 
class pursuant to a Shareholder Services Plan and/or Rule 12b-1 Plan 
with respect to such class; (c) the fact that classes will vote 
separately with respect to the Fund's Shareholder Services Plan and/or 
Rule 12b-1 Plan, except as provided in conditions 16 and 17; (d) the 
different exchange privileges of the classes of shares; (e) the 
designation of each class of shares of a Fund; and (f) the fact that 
certain classes will have a conversion feature. Any additional 
incremental expenses not specifically identified above which are 
subsequently identified and determined to be properly allocated to one 
class of shares shall not be so allocated until approved by the 
Commission pursuant to an amended order.
    2. The trustees of the Funds, including a majority of the 
independent trustees, will approve the offering of different classes of 
shares (the ``Multi-Class System'') prior to the implementation of that 
system by a particular Fund. The minutes of the meetings of the 
trustees of the Funds 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 both the 
Funds and their 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 board of trustees of the 
Trusts including a majority of the trustees who are not interested 
persons of the Trusts. Any person authorized to direct the allocation 
and disposition of monies paid or payable by the Funds to meet Class 
Expenses shall provide to the board of 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. On an ongoing basis, the trustees of the Trusts, pursuant to 
their fiduciary responsibilities under the Act and otherwise, will 
monitor the Funds for the existence of any material conflicts among the 
interests of the classes of 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. Each Fund's 
distributor and adviser will be responsible for reporting any potential 
or existing conflicts to the trustees. If a material conflict arises 
that the trustees determine cannot be eliminated, the Fund's 
distributor and adviser, at their own cost, will remedy such conflict 
up to and including establishing a new registered management investment 
company.
    5. The distributor of each Fund will adopt compliance standards as 
to when each class of shares may be sold to particular investors. 
Applicants will require all persons selling shares of the Funds to 
agree to conform to such standards.
    6. The Shareholder Services 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 to enjoy the voting rights specified in 
rule 12b-1.
    7. The trustees will receive quarterly and annual statements 
concerning the amounts expended under the Shareholder Services Plans 
and Rule 12b-1 Plans and the related Service Agreements 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 or servicing of a particular class 
will not be presented to the trustees to justify 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.
    8. Dividends paid by a Fund with respect to each class of its 
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 Service Payments made by a class under a Plan and 
any Class Expenses will be borne exclusively by that class.
    9. The methodology and procedures for calculating the net asset 
value and dividends and distributions of the classes and the proper 
allocation of expenses among the classes has been reviewed by an expert 
(the ``Expert'') who has rendered a report to applicants, which has 
been provided to the staff of the Commission, 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 will 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 Expert with respect to such reports, 
following request by the Funds (which the Funds agree to provide), will 
be available for inspection by the Commission staff upon written 
request to the Funds 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, 
and Assistant Director, and any Regional Administrators or Associate 
and Assistant Administrators. The initial report of the Expert is a 
``Special Purpose'' report on the ``Design of a System'' as defined and 
described in SAS No. 44 of the AICPA. 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.
    10. Applications have adequate facilities in place to ensure 
implementation of the methodology and procedures for calculating the 
net asset value and dividends and distributions of the classes of 
shares and the proper allocation of expenses among the classes of 
shares and this representation has been concurred with by the Expert in 
the initial report referred to in condition 9 above and will be 
concurred with by the Expert, or an appropriate substitute Expert, on 
an ongoing basis at least annually in the ongoing reports referred to 
in condition 9 above. Applicants will take immediate corrective 
measures if this representation is not concurred in by the Expert or 
appropriate substitute Expert.
    11. The prospectus of each class of shares will contain 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 compensation with respect to one particular class of shares 
over another in the Funds.
    12. The conditions pursuant to which the exemptive order is granted 
and the duties and responsibilities of the trustees of the Trusts with 
respect to the Multi-Class System will be set forth in guidelines which 
will be furnished to the trustees.
    13. The Funds will disclose the respective expenses, performance 
data, distribution arrangements, services, fees, sales loads, deferred 
sales loads, and exchange privileges applicable to each class of shares 
in every prospectus, regardless of whether all classes of shares are 
offered through each prospectus. The Funds 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 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, however, will be prepared on a 
per class basis with respect to all classes of shares of such Fund. To 
the extent that 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. The information provided by 
applicants for publication in any newspaper or similar listing of the 
Funds' net asset value or public offering price will present each class 
of shares separately.
    14. Applicants acknowledge that the grant of the exemptive order 
requested by the application will not imply Commission approval, 
authorization of or acquiescence in any particular level of payments 
that any Fund may make pursuant to its Rule 12b-1 Plan or Shareholder 
Services Plan in reliance on the exemptive order.
    15. 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.
    16. 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.
    17. 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 unless the Purchase Class shareholders, voting 
separately as a class, approve the proposal. 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''), identical in all material respects to Target Class as 
it existed prior to implementation of the proposal, no later than the 
date such shares previously were scheduled to convert into Target 
Class. 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 (``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 a manner that the trustees reasonably believe will not be subject to 
federal taxation. In accordance with condition 4 above, any additional 
cost associated with the creation, exchange, or conversion of New 
Target Class or New Purchase Class shall be borne solely by FMR, and 
FDC or NFSC. 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 plan and the relationship of such plan to the Purchase Class 
shares are disclosed in an effective registration statement.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-1718 Filed 1-26-94; 8:45 am]
BILLING CODE 8010-01-M