[Federal Register Volume 59, Number 25 (Monday, February 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2645]


[[Page Unknown]]

[Federal Register: February 7, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20042; 812-8510]

 

Smith Barney Shearson Appreciation Fund Inc. et al.; Notice of 
Application

January 28, 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: Smith Barney Shearson Appreciation Fund Inc., Smith Barney 
Shearson Fundamental Value Fund Inc., Smith Barney Shearson Aggressive 
Growth Fund Inc., Smith Barney Shearson Telecommunications Trust 
(Telecommunications Growth Fund), Smith Barney Shearson Global 
Opportunities Fund, Smith Barney Shearson Precious Metals and Minerals 
Fund Inc., Smith Barney Shearson Managed Governments Fund Inc., Smith 
Barney Shearson Managed Municipals Fund Inc., Smith Barney Shearson 
Short-Term World Income Fund, the Advisors Fund L.P., Smith Barney 
Shearson Arizona Municipals Fund Inc., Smith Barney Shearson California 
Municipals Fund Inc., Smith Barney Shearson Florida Municipals Fund, 
Smith Barney Shearson Massachusetts Municipals Fund, Smith Barney 
Shearson New Jersey Municipals Fund Inc., Smith Barney Shearson New 
York Municipals Fund Inc., Smith Barney Shearson Worldwide Prime Assets 
Fund, Smith Barney Shearson Income Trust, Smith Barney Shearson 
Adjustable Rate Government Income Fund, Smith Barney Shearson 
Investment Funds Inc., Smith Barney Shearson Income Funds, Smith Barney 
Shearson Equity Funds, Smith Barney Shearson Daily Dividend Inc. Smith 
Barney Shearson Government and Agencies Inc., Smith Barney Shearson 
Daily Tax-Free Dividend Inc., Smith Barney Shearson New York Municipal 
Money Market Fund, Smith Barney Shearson California Municipal Money 
Market Fund (collectively, the ``Shearson Funds''); Smith Barney 
Shearson Equity Funds, Inc., Smith Barney Shearson Funds, Inc., Smith 
Barney Shearson Money Funds, Inc., Smith Barney Shearson Muni Funds, 
Smith Barney Shearson Tax Free Money Fund, Inc., Smith Barney Shearson 
World Funds, Inc. (collectively, the ``Smith Barney Funds''); Lehman 
Brothers Institutional Funds Group Trust, Lehman Brothers Funds Inc. 
(collectively, the ``Lehman Funds,'' the Shearson Funds, Smith Barney 
Funds, and Lehman Funds are collectively the ``Funds''); Lehman 
Brothers Inc. (``Lehman Brothers''), Lehman Brothers Global Asset 
Management Limited, Panagora Asset Management Limited, The Boston 
Company Advisors, Inc., Salomon Brothers Asset Management Inc., and 
BlackRock Financial Management L.P. (collectively, the ``Advisers''); 
and Lehman Brothers Global Asset Management Inc. (``LBGAMI''), Smith 
Barney Shearson Inc. (``Smith Barney''), Smith Barney Shearson 
Advisers, Inc. (``SBA''), Smith Barney Shearson Strategy Advisers, Inc. 
(``Strategy Advisers''), and Mutual Management Corp. (``MMC'') 
(collectively, the ``Smith Barney Advisers'').

relevant act sections: Exemption requested under section 6(c) from 
sections 2(a)(32), 2(a)(35), 18(f), 18(g), 18(i), 22(c), and 22(d) of 
the Act and rule 22c-1 thereunder.

SUMMARY OF APPLICATION: Applicants request an order to amend previous 
orders (the ``Prior Orders'') that permitted the Shearson Funds to (a) 
issue multiple classes of shares representing interests in the same 
portfolio of securities and (b) assess and, under certain 
circumstances, waive a contingent deferred sales charge (``CDSC'') on 
redemptions of shares. The present order is necessary because of the 
sale of the assets of Shearson to Primerica Corporation and Primerica's 
subsidiary, Smith Barney.

FILING DATE: The application was filed on July 29, 1993 and amended on 
December 9, 1993. Applicants have agreed to file an addition 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 22, 
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 to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 5th Street NW., Washington, DC 20549. 
Applicants, the Shearson Funds, Two World Trade Center, New York, New 
York 10048; the Smith Barney Funds and the Smith Barney Advisers 
(except LBGAMI), 1345 Avenue of the Americas, New York, New York 10105; 
the Lehman Funds and LBGAMI, American Express Tower, World Financial 
Center, New York, New York 10285; Lehman Brothers, 3 World Financial 
Center, New York, New York 10285; Lehman Brothers Global Asset 
Management Limited, American Two Broadgate, London EC2M 2PA, England; 
Pangora Asset Management Limited, 3 Finsbury Avenue, London EC2M 2PA, 
England; Boston Company Advisers, One Boston Place, Boston, 
Massachusetts 01208; Salomon Brothers Asset Management Inc., Seven 
World Trade Center, New York, New York 10048; and BlackRock Financial 
Management L.P., 345 Park Avenue, New York, New York 10154.

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. Each of the Funds is an open-end management investment company. 
Several of the Funds consist of multiple investment portfolios or 
series, each of which has separate investment objectives and policies.
    2. On March 12, 1993, Shearson Lehman Brothers (``Shearson'') 
entered into an asset purchase agreement with Primerica Corporation and 
Primerica's indirect wholly-owned subsidiary Smith Barney. The 
agreement provided for the sale to Smith Barney and its designated 
affiliates of substantially all the assets of Shearson and the SLB 
Asset Management Divisions of Shearson (the ``Transaction''). Upon the 
closing of the Transaction on July 31, 1993, Smith Barney became the 
sponsor and distributor or underwriter of the Shearson Funds, which 
were formerly sponsored and distributed or underwritten by Shearson. 
Shearson's corporate successor, Lehman Brothers, continues to serve as 
the distributor of the Lehman Funds. (Smith Barney, Shearson, and 
Lehman Brothers are referred to as the ``Distributors.'')
    3. The investment advisory services that had formerly been provided 
to the Shearson Funds by Shearson or its subsidiaries is now provided 
by Smith Barney or one of its investment advisory affiliates. Prior to 
the Transaction, Shearson served as investment adviser to the Shearson 
Funds through Shearson Asset Management and Shearson Lehman Advisors, 
which were investment advisory groups of the Asset Management Group of 
Shearson. Shearson Lehman Investment Strategy Advisors Inc. was a 
wholly-owned subsidiary of Shearson. Upon the closing of the 
Transaction, Shearson Asset Management became a separate division of 
SBA called the Smith Barney Shearson Asset Management Division, and 
Shearson Lehman Investment Strategy Advisors Inc. became the Strategy 
Advisers, a wholly-owned subsidiary of SBA. Also, upon the closing of 
the Transaction, Shearson Lehman Advisors became a separate division of 
MMC called the Greenwich Street Advisors Division. SBA and MMC are 
subsidiaries of Smith Barney.
    4. The Prior Orders permitted the Shearson Funds to issue multiple 
classes of shares representing interests in the same portfolio of 
securities and assess and, under certain circumstances, waive a CDSC on 
redemptions of shares.\1\ At the request of Shearson and Smith Barney, 
the Commission's Division of Investment Management informed Shearson 
and Smith Barney that the Division would not recommend that the 
Commission take any enforcement action against them if the Shearson 
Funds operate under the terms of the Prior Orders until the earlier of 
(a) the date the Prior Orders are renewed by the Commission pursuant to 
a renewal order specifying Smith Barney and its subsidiaries or 
affiliates as applicants or (b) June 8, 1994.\2\ Accordingly, 
applicants request an order that would continue and renew the exemption 
granted to the Shearson Funds and grant the same exemptions to the 
other applicants.
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    \1\Investment Company Act Release Nos. 18565 (Feb. 24, 1992) 
(notice) and 18832 (July 7, 1992) (order); Investment Company Act 
Release Nos. 18770 (June 11, 1992) (notice) and 18832 (July 7, 1992) 
(order); and Investment Company Act Release Nos. 19176 (Dec. 22, 
1992) (notice) and 19216 (Jan. 19, 1993) (order).
    \2\Shearson Lehman Brothers Inc. (Pub. avail. June 8, 1993).
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    5. Applicants request that relief be extended to any other 
investment company, or portfolio thereof, that is principally 
underwritten by Smith Barney or Lehman Brothers that (a) is or becomes 
part of the same ``group of investment companies,'' and (b) offers 
shares that are identical in all material respects to the shares 
described in the application. (Such funds are also the ``Funds.'')

A. The Variable Pricing System

    1. Pursuant to the Prior Orders, applicants (other than the Smith 
Barney Fund, Smith Barney, Smith Barney Advisers, and LBGAMI) 
implemented multiple distribution arrangements (the ``Variable Pricing 
System'') and amended arrangements (the ``Amended Variable Pricing 
System''). Under the Amended Variable Pricing System, each of the 
Shearson Funds could (a) Sell shares with a front-end sales load and a 
plan of distribution adopted pursuant to rule 12b-1 under the Act 
(``Rule 12b-1 Plan'') (``Class A shares''), (b) sell shares subject to 
a CDSC and a Rule 12b-1 Plan (``Class B shares''), (c) sell shares 
without either a sales charge or a distribution or service fee for 
purchase by investors specified below (``Class C shares''), (d) sell 
shares without a front-end load or CDSC but subject to a Rule 12b-1 
Plan (``Class D shares''), and (e) establish one or more additional 
classes to be sold with different specified sales load and service and 
distribution fee structures (``Additional Classes''). In addition, the 
Prior Orders permitted the various classes to bear specified expenses 
(``Class Expenses'') that are directly attributable only to a specific 
class.
    2. Class C shares may be purchased by (a) Employee benefit and 
retirement plans of a Fund's distributor and its subsidiaries or 
affiliates, (b) certain unit investment trusts (``UITs'') sponsored by 
a Fund's distributor and its subsidiaries and affiliates,\3\ and (c) if 
authorized by a Fund's board (i) employees of a Fund's distributor and 
its subsidiaries and affiliates and (ii) directors, general partners, 
or trustees of any investment company for which the distributor, its 
subsidiaries and/or affiliates serve as distributor and, in each (i) 
and (ii), their spouses and minor children.
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    \3\This category is restricted to UITs that could be created 
only upon receipt of a second order of exemption pursuant to section 
6(c) of the Act. The UITs would invest their assets in fixed pools 
of securities, which would include both Class C shares of a Fund or 
portfolio and other securities such as zero-coupon government 
securities.
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    3. Applicants may offer an Additional Class subject to a non-rule 
12b-1 administrative support services plan between a Fund or the Fund's 
distributor and an organization in which the organization agrees to 
provide services to their clients who may beneficially own shares of 
the Fund (such agreements are ``Plan Agreements''). The provision of 
services under the Plan Agreements would augment or replace (and not be 
duplicative of) the services provided by a Fund's investment adviser, 
transfer agent, and administrator.
    4. Under the Amended Variable Pricing System, all expenses incurred 
by a Shearson Fund are allocated among the various classes of shares 
based on the net assets of the Shearson Fund attributable to each 
class, except that each class' net asset value and expenses reflect the 
expenses associated with that class's Rule 12b-1 Plan or Plan Agreement 
(if any), including any costs associated with obtaining shareholder 
approval of the Rule 12b-1 Plan and any Class Expenses. Expenses of a 
Shearson Fund allocated to a particular class are borne on a pro rata 
basis by each outstanding share of that class. Applicants request an 
exemption to permit the Funds to allocate expenses among the classes 
subject to the terms and conditions of the order permitting the Amended 
Variable Pricing System.

B. The CDSC

    1. The Prior Orders permit the imposition of a CDSC in connection 
with the redemption of Class B shares of the Shearson Funds and on 
certain redemptions of Class A shares sold pursuant to a complete 
waiver of the front-end sales load applicable to large purchases, if 
the shares are redeemed within one year of the date of purchase. 
Applicants request a renewal and continuation of the Prior Orders to 
permit the Funds to impose a CDSC.

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 permit the Funds 
to issue multiple classes of shares representing interests in the same 
portfolio of securities. The proposed arrangement does not involve 
borrowings, and does not affect the Funds' existing assets or reserves. 
The proposed arrangement will not increase the speculative character of 
the shares of a Fund, since all such shares will participate in all of 
the Fund's appreciation, income, and expenses in the manner described 
above.
    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 
redemptions of shares. Applicants submit that the reasons set forth in 
the Prior Orders with respect to the CDSC similarly apply with the 
present request.

Applicants' Conditions

A. The Variable Pricing System

    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 
of each class of shares of a Fund; (b) expenses assessed to a class as 
a result of a Rule 12b-1 Plan or non-rule 12b-1 plan agreement 
providing for a service and/or distribution fee and any other costs 
relating to obtaining shareholder approval of the Rule 12b-1 Plan for 
that class or an amendment to its Rule 12b-1 Plan; (c) different Class 
Expenses for each class of shares which are 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) 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; and (vii) fees of 
members of the governing boards incurred as a result of issues relating 
to one class of shares; (d) except as described in condition 6 below, 
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; (e) the 
different exchange privileges of the various classes of shares; and (f) 
the fact that certain classes will have a conversion feature. 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 
Commission.
    2. Any Plan Agreement 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 
the holders of shares issued pursuant to a Plan Agreement will not 
receive the voting rights specified in rule 12b-1.
    3. The members of the governing boards of each Fund, including a 
majority of the independent board members, shall have approved the 
Amended Variable Pricing System prior to the implementation of the 
Amended Variable Pricing System by that particular Fund. The minutes of 
the meetings of the members of the governing boards of each of the 
Funds regarding the deliberations of their members with respect to the 
approvals necessary to implement the Amended Variable Pricing System 
will reflect in detail the reasons for determining that the Amended 
Variable Pricing System is in the best interests of both the Funds and 
their respective 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 
governing board of the affected Fund, including a majority of the 
independent board members. Any person authorized to direct the 
allocation and disposition of monies paid or payable by a Fund to meet 
Class Expenses shall provide to the governing board, and the governing 
board shall review, at least quarterly, a written report of the amounts 
so expended and the purpose for which the expenditures were made.
    5. On an ongoing basis, the members of the governing boards 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 
members of the governing boards of each Fund, including a majority of 
the independent board members, shall take such action as is reasonably 
necessary to eliminate any conflicts that may develop. The Advisers, 
Smith Barney Advisers, LBGAMI, and the Distributors will be responsible 
for reporting any potential or existing conflicts to the members of the 
governing boards. If a conflict arises, the Advisers, Smith Barney 
Advisers, LBGAMI, and the Distributors at its own costs will remedy the 
conflict up to and including establishing a new registered management 
investment company.
    6. 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 class of shares 
(``Target Class'') into which the class of shares with a conversion 
feature (``Purchase Class'') will convert 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 members of the governing board 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 the date such shares previously were scheduled to convert 
into Target Class shares. If deemed advisable by the members of the 
governing board 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 shares. New Target Class 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 
members of the governing board 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 or New Purchase Class shares shall be borne solely 
by the Advisers and Smith Barney Advisors and the Distributors. 
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.
    7. The members of the governing boards of the Funds will receive 
quarterly and annual statements of distribution and shareholder 
servicing revenues and expenditures for each respective class of shares 
(``Statements'') 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 one 
class of shares will be used to support the rule 12b-1 or servicing fee 
charged to shareholders of that class of shares. Expenditures not 
related to the sale or servicing of a specific class of shares will not 
be presented to the members of the governing boards to support any fee 
charged to shareholders of that class of shares. The Statements, 
including the allocations upon which they are based, will be subject to 
the review and approval of the independent board members 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, and on the same day and will be in the 
same amount, except that fee payments made under the Rule 12b-1 Plans 
or non-rule 12b-1 shareholder services plans relating to a particular 
class will be borne exclusively by each respective class and except 
that any Class Expenses will be borne by the applicable class of 
shares.
    9. The methodology and procedures for calculating the net asset 
value and dividends/distributions of the various classes and the proper 
allocation of expenses among the various classes has been reviewed by 
an expert (the ``Independent Examiner''). The Independent Examiner has 
rendered a report to applicants, which has been provided to the staff 
of the Commission, stating that the methodology and procedures are 
adequate to ensure that the 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 this 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 Commission pursuant to 
sections 30(a) and 30(b)(1) of the Act. The work papers of the 
Independent Examiner with respect to these reports, following a request 
by the Funds that the Funds agree to make, will be available for 
inspection by the Commission's staff upon the written request for these 
work papers by a senior member of the Division of Investment Management 
or of a Regional Office of the Commission, 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 ``special purpose'' report on the ``design of a system,'' 
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.
    10. 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 several classes 
of shares and the proper allocation of expenses among the several 
classes of shares and this representation will be concurred with by the 
Independent Examiner in the initial report referred to in condition (9) 
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 (9) 
above. Applicants agree to take immediate corrective measures if the 
Independent Examiner or appropriate substitute Independent Examiner, 
does not so concur in the ongoing reports.
    11. The prospectuses of the Funds will include a statement to the 
effect that a financial consultant and any other person entitled to 
receive compensation for selling or servicing shares of the Funds may 
receive different levels of compensation for selling one particular 
class of shares over another in a Fund.
    12. The Distributors 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. Applicants' compliance 
standards will require all investors eligible to purchase Class C 
shares of a Fund offering such shares to invest in Class C, rather than 
in shares of any other class of the Fund.
    13. The conditions pursuant to which the exemptive order is granted 
and the duties and responsibilities of the members of the governing 
boards of the Funds with respect to the Amended Variable Pricing System 
will be set forth in guidelines which will be furnished to the members 
of the governing boards as part of the materials setting forth the 
duties and responsibilities of the members of the governing boards.
    14. Each Fund 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 
other than Class C shares in every prospectus, regardless of whether 
all classes of shares are offered through each prospectus. Class C 
shares will be offered solely pursuant to a separate prospectus. The 
prospectus for Class C 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 Class C shares and will identify the persons 
eligible to purchase shares of such class. Each Fund will disclose the 
respective expense and performance data applicable to all classes of 
shares in each 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 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 Class C. 
Advertising materials reflecting the expenses or performance data for 
Class C will be available only to those persons eligible to purchase 
Class C shares. The information provided by 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 Class 
C shares, separately.
    15. Applicants acknowledge that the grant of the exemptive order 
requested by the 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 non-rule 12b-1 
shareholder services plans in reliance on the exemptive order.
    16. Purchase Class shares will convert to Target Class shares on 
the basis of the relative net asset value 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 conversion.

B. The CDSC

    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 the rule is currently proposed and as it may be reproposed, 
adopted or amended.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-2645 Filed 2-4-94; 8:45 am]
BILLING CODE 8010-01-M