[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: 94-2719]


[[Page Unknown]]

[Federal Register: February 7, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Rel. No. 20045; 812-8638]

 

Common Sense Trust, et al.; Application

January 31, 1994.
AGENCY: Securities and Exchange Commission (``SEC'').

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

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APPLICANTS: Common Sense Trust (the ``Trust''); Common Sense Investment 
Advisers (the ``Adviser''); Common Sense Distributors (the 
``Distributor''); American Capital Asset Management, Inc. (the 
``Subadviser''); and Smith Barney Shearson Strategy Advisers Inc. 
(``Smith Barney''); on behalf each existing and future portfolio of the 
Trust and any other open-end management investment companies 
established or acquired in the future that are in the same ``group of 
investment companies'' as that term is defined in rule 11a-3 under the 
Act (the ``Funds'').

RELEVANT ACT SECTIONS: Exemption requested under section 6(c) from the 
provisions of 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 seek a conditional order that would 
permit the Funds to issue multiple classes of shares representing 
interests in the same portfolio of securities, assess a contingent 
deferred sales charge (``CDSC'') on certain redemptions, and waive the 
CDSC in certain circumstances.

FILING DATE: The application was filed on October 15, 1993, and amended 
on December 22, 1993 and January 27, 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 February 28, 
1994, and should be accompanied by proof of service on applicants, in 
the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request such notification by writing to 
the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549. 
Applicants, 2800 Post Oak Boulevard, Houston, Texas 77056.

FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Attorney, 
at (202) 272-5287, or C. David Messman, Branch Chief, at (202) 272-3018 
(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 Massachusetts business trust registered under the 
Act as a diversified, open-end management investment company. The Trust 
currently offers five separate investment portfolios, none of which 
have adopted plans of distribution under rule 12b-1. The Trust offers 
shares of four of these portfolios to investors at their net asset 
value plus a sales charge at the time of purchase. Shares of the other 
portfolio, a money market portfolio, are offered to investors at net 
asset value without a sales charge. The Trust intends to offer shares 
in four additional portfolios in the near future, each of which has 
adopted plans of distribution under rule 12b-1.
    2. The Adviser is a partnership owned equally by American Capital 
Partner, Inc., a wholly-owned subsidiary of the Subadviser, and PFS 
Asset Management, Inc., an affiliate of Primerica Financial Services, 
Inc. (``Primerica Financial''). The Subadviser and Primerica Financial 
are indirect wholly-owned subsidiaries of The Travelers Inc. The 
Adviser provides investment advisory, administrative and management 
services to the Trust.
    3. Pursuant to a sub-advisory agreement with the Adviser, the 
Subadviser provides investment advisory services to the Adviser and 
day-to-day management of the assets of the five existing portfolios of 
the Trust. The Subadviser also will provide day-to-day management 
services for three of the four new portfolios of the Trust. Smith 
Barney will provide investment advisory services to the Adviser and 
day-to-day management services for the other new portfolio of the Trust 
pursuant to a sub-advisory agreement with the Adviser.
    4. The Distributor is a partnership owned equally by American 
Capital Marketing, Inc., a wholly owned subsidiary of American Capital 
Management & Research, Inc. (``ACMR''), and PFS Distributors, Inc., an 
affiliate of Primerica Financial. ACMR and PFS Distributors, Inc. are 
indirect wholly-owned subsidiaries of The Travelers Inc. The 
Distributor, which is registered as a broker dealer under the 
Securities Exchange Act of 1934, acts as principal underwriter to the 
Funds.
    5. Applicants propose to establish a multiple pricing system (the 
``Multiple Pricing System''), which would provide investors with three 
alternative means of purchasing shares in the Funds: (a) With a 
conventional front-end sales load and subject to a service fee (``Class 
A shares''); (b) subject to the CDSC for a specified period of time, a 
distribution fee, and a service fee (``Class B shares''), with or 
without a conversion feature; or (c) either with a front-end sales load 
or a net asset value and subject, in either case, to a CDSC for a 
specified period of time, a distribution fee, and a service fee 
(``Class C shares''), with or without a conversion feature.\1\
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    \1\Applicants presently have no plans for the existing 
portfolios of the Trust to implement the Multiple Pricing System. 
The Trustees of the Trust have approved the implementation of the 
Multiple Pricing System for the four new portfolios of the Trust 
that will be formed in the near future.
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    6. From time to time, the Funds may create additional classes of 
shares. These additional classes may differ from the classes 
specifically described herein only in the following respects: (i) Any 
such class may be subject to different rule 12b-1 distribution and 
service fees; (ii) any such class may bear different identifying 
designations; (iii) any such class will have exclusive voting rights 
with respect to any rule 12b-1 plan adopted exclusively with respect to 
such class, except as provided in condition 15; (iv) any such class may 
have different exchange privileges; (v) any such class may be subject 
to incremental transfer agency costs attributable to such class; and 
(vi) any such class may or may not have a conversion feature.
    7. The distribution structure for all classes of shares of the 
Funds will comply with any applicable limitations of the National 
Association of Securities Dealers, Inc. (``NASD'') on asset-based sales 
charges, including rule 12b-1 plan distribution and service fees, which 
are contained in the NASD's Rules of Fair Practice, as they may be 
amended or modified from time to time.
    8. On a daily basis, the investment income of a Fund will be 
allocated pro rata to each class on the basis of the relative net asset 
value of the respective classes. All expenses incurred by a Fund not 
attributable to a specific class will be allocated pro rata to each 
class on the basis of the relative net asset value of the respective 
classes, except for the expenses of the rule 12b-1 plans and 
incremental transfer agency costs, if any, which will be borne by the 
class that incurred such expenses.
    9. Investors may purchase Class A shares at their net asset value 
plus a front-end sales load, which may be reduced for larger purchases, 
under a cumulative purchase discount, or under a letter of intent. The 
sales loads also will be subject to certain other reductions permitted 
by rule 22d-1 under the Act and as provided in the registration 
statement of the Funds. Class A shares will be subject to a service fee 
under a plan adopted pursuant to rule 12b-1, based upon a percentage of 
the average daily net assets of the Class A shares.
    10. Investors may purchase Class B shares at their net asset value 
per share without the imposition of a sales load at the time of 
purchase. Class B shares will be subject to a distribution fee, payable 
to the Distributor, at an annual rate of .75% of the average daily net 
assets of the class, and a service fee at an annual rate of .25% of the 
average daily net assets of the class. In addition, an investor's 
proceeds from a redemption of Class B shares made within a specified 
period of purchase (the ``CDSC Period'') (which could be at least three 
years, but would not exceed eight years) may be subject to a CDSC, 
which is paid to the Distributor. The CDSC is expected to range from 3% 
to 5% (but can be higher or lower) on shares redeemed during the first 
year after purchase, and will be reduced at a rate of 1% (but can be 
higher or lower) per year over the applicable CDSC Period.
    11. Class C shares will be subject to a distribution fee and a 
service fee at an annual rate of 0.75% and 0.25%, respectively, of the 
average daily net assets of the Class C shares pursuant to a rule 12b-1 
plan. In addition, an investor's proceeds from a redemption of Class C 
shares made within the CDSC Period (expected to be not more than five 
years) generally will be subject to a CDSC imposed by the Distributor. 
The CDSC is expected to be up to 4% (but may be higher or lower) on 
shares redeemed during the first year after purchase and will be 
reduced at a rate of 1% (but can be higher or lower) per year over the 
applicable CDSC Period, so that redemptions of shares held after that 
period will not be subject to a CDSC.
    12. No CDSC will be imposed on redemptions of shares that were 
purchased more than a fixed number of years prior to their redemption, 
or on shares derived from the reinvestment of distributions. 
Furthermore, no CDSC will be imposed on an amount that represents an 
increase in the value of a shareholder's account resulting from capital 
appreciation above the amount paid for shares purchased during the CDSC 
Period. The amount of the CDSC to be imposed will depend on the number 
of years since the investor made the purchase payment from which an 
amount is being redeemed and the lesser of the shares' cost or the net 
asset value of the shares at the time of redemption.
    13. Applicants also request the ability to waive the CDSC on 
redemptions: (a) Following the death or disability, as defined in 
section 72(m)(7) of the Internal Revenue Code (the ``Code''), of a 
shareholder; (b) in connection with certain distributions, described in 
the following paragraph, from an individual retirement account, a 
deferred compensation plan under the section 457 of the Code, a 
custodial account maintained pursuant to section 403(b)(7) of the Code, 
or a qualified pension or profit sharing plan (collectively, 
``Retirement Plans''); (c) pursuant to a Fund's systematic withdrawal 
plan, but limited to 12% of the value of the account annually; (d) 
effective pursuant to the right of a Fund to liquidate a shareholder's 
account if the aggregate net asset values of shares held in the account 
is less than the designated minimum account size described in the 
Fund's prospectus; and (e) by the Adviser of its investment in a Fund. 
If a Fund waives or reduces the CDSC, such waiver or reduction will be 
uniformly applied to all offerees in the class specified.
    14. The CDSC may be waived for a total or partial redemption in 
connection with certain redemptions from Retirement Plans. The CDSC 
charge may be waived for any redemption in connection with (a) a 
distribution from a Retirement Plan after attainment of age 59\1/2\ (or 
such other age as may be provided in section 72(t)(2)(A)(i) of the 
Code), (b) in the case of a tax sheltered custodial account maintained 
under section 403(b)(7) of the Code or a qualified pension or profit 
sharing plan after separation from service after attainment of age 55 
(or such other age as may be provided in section 72(t)(2)(A)(v) of the 
Code, (c) in the case of an eligible deferred compensation plan 
established and maintained pursuant to section 457 of the Code, after 
separation from service, or (d) a loan, from a qualified employer plan 
to a participant, that is intended to meet the requirements of section 
72(q)(2) of the Code. In addition, the CDSC may be waived upon the tax-
free rollover or transfer of assets to another Retirement Plan invested 
in one or more of the Funds. In such instances, a Fund will tack the 
period for which the original shares were held on to the holding period 
of the shares acquired in the transfer or rollover for purposes of 
determining what, if any, CDSC is applicable in the event that such 
acquired shares are redeemed following the transfer or rollover. The 
CDSC also may be waived on any redemption that results from the tax-
free return of an excess contribution pursuant to section 408(d)(4) or 
(5) of the Code, the return of excess deferral amounts pursuant to 
section 401(k)(8) or 402(g)(2) of the Code, or from the death or 
disability of the employee.
    15. Class B shares and Class C shares may automatically convert to 
Class A shares a certain number of years after the end of the calendar 
month in which the shareholder's order to purchase was accepted. For 
Class B shares, the conversion period will be between four and ten 
years; for Class C shares, the conversion period will be a maximum of 
twelve years. For purposes of conversion to Class A, all shares in a 
shareholder's account that were purchased through the reinvestment of 
dividends and distributions paid in respect of Class B shares or Class 
C shares will be considered held in a separate sub-account. Each time 
any Class B shares or Class C shares in the shareholder's account 
convert to Class A, an equal proportion of the Class B shares or Class 
C shares in the sub-account will also convert to Class A.
    16. The Trust will have obtained an opinion of counsel that the 
conversion of Class B shares and Class C shares to Class A shares does 
not constitute a taxable event under current federal income tax law. 
The conversion of Class B shares and Class C shares to Class A shares 
may be suspended if such an opinion is no longer available at the time 
such conversion is to occur. In that event, no further conversions of 
Class B shares or Class C shares would occur, and shares might continue 
to be subject to the additional distribution fee for an indefinite 
period.
    17. No CDSC will be imposed in connection with the exercise of an 
exchange privilege whereby an investor exchanges Class B shares or 
Class C shares for Class B or Class C shares of another Fund or for 
shares of the money market portfolio of the Trust. In the case of the 
exercise of an exchange privilege between the Funds, a Fund will tack 
the period for which the original shares of a class of the Fund were 
held on to the holding period of the shares acquired in the exchange 
for purposes of determining what, if any CDSC is applicable in the 
event that such acquired shares are redeemed following the exchange. In 
the event of redemptions of shares after exchanges, an investor will be 
subject to the CDSC schedule imposed by the original Fund. All such 
exchanges will comply with rule 11a-3 under the Act.

Applicants' Legal Conclusions

    1. Applicants are requesting an exemptive order to the extent that 
the proposed issuance and sale of an unlimited number of classes of 
shares representing interests in the Funds might be deemed (a) to 
result in the issuance of a ``senior security'' within the meaning of 
section 18(g) of the Act and thus be prohibited by section 18(f)(1) of 
the Act, and (b) to violate the equal voting provisions of section 
18(i) of the Act.
    2. Applicants believe that the proposed Multiple Pricing System 
does not present the concerns that section 18 of the Act is intended to 
redress. The Multiple Pricing System does not involve borrowings and 
will not affect a Fund's assets or reserves. The proposed arrangement 
will not increase the speculative character of the shares of the Funds, 
since all such shares will participate pro rata in all of each Fund's 
income and all of each Fund's expenses, with the exception of the 
differing distribution fees and incremental agency costs, if any. 
Moreover, the capital structures of the Funds will not facilitate 
control without equity or other investment, nor will they make it 
difficult for investors to value the securities of the Funds.
    3. Applicants believe that the issuance and sale by the Funds of an 
unlimited number of classes will better enable the Funds to meet the 
competitive demands of today's financial services industry. Under the 
Multiple Pricing System, an investor will be able to choose the method 
of purchasing shares that is most beneficial, given the amount of his 
or her purchase, the length of time the investor expects to hold his or 
her shares, and other relevant circumstances. The proposed arrangement 
would permit the Funds to facilitate both the distribution of its 
securities and provide investors with a broader choice as to the method 
of purchasing shares without assuming excessive accounting and 
bookkeeping costs or unnecessary investment risks.
    4. Applicants believe that the proposed allocation of expenses and 
voting rights relating to the rule 12b-1 distribution plans is 
equitable and would not discriminate against any group of shareholders. 
With respect to any Fund, the rights and privileges of each class of 
shares are substantially identical, and consequently the possibility 
that their interests would ever conflict would be remote. In any event, 
the interests of the Class A, Class B, and Class C shareholders with 
respect to the service fee and/or distribution fee would be adequately 
protected, since the rule 12b-1 plans for each of those classes will 
conform to the requirements of rule 12b-1, including the requirement 
that their implementation and continuance be approved on an annual 
basis by both the full board and the disinterested directors of the 
Funds.
    5. Applicants believe that the implementation of the CDSC in the 
manner and under the circumstances described above would be fair and in 
the best interests of shareholders of the Funds. Thus, the granting of 
the order requested herein would be appropriate in the public interest 
and consistent with the protection of investors and the purposes fairly 
intended by the policy and provisions of the Act.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Each class of shares will represent interests in the same 
portfolio of investments of a Fund, and be identical in all respects, 
except as set forth below. The only differences among the various 
classes of shares of the same Fund will relate solely to (a) class-
specific expenses consisting of (i) rule 12b-1 plan distribution and 
service fees, (ii) incremental transfer agency costs, and (iii) any 
other incremental expenses subsequently identified that should be 
properly allocated to one class, which shall be approved by the SEC 
pursuant to an amended order, (b) each class will vote separately as a 
class with respect to its rule 12b-1 plan, except as provided in 
condition 15, (c) any class may have different exchange privileges, (d) 
each class of shares, other than Class A shares, may have a conversion 
feature, and (e) any class may bear different identifying designations.
    2. The trustees of the Funds (the ``Trustees''), including a 
majority of the disinterested Trustees, shall have approved the 
Multiple Pricing System prior to the implementation of the Multiple 
Pricing System by the Funds. The minutes of the meetings of the 
Trustees regarding the deliberations of the Trustees with respect to 
the approvals necessary to implement the Multiple Pricing System will 
reflect in detail the reasons for the Trustees' determination that the 
Multiple Pricing System is in the best interests of both the Trust and 
its respective shareholders.
    3. On an ongoing basis, the Trustees, pursuant to their fiduciary 
responsibilities under the Act and otherwise, will monitor the Funds 
for the existence of any material conflicts between the interests of 
the various classes of shares. The Trustees, including a majority of 
the disinterested Trustees, shall take such action as is reasonably 
necessary to eliminate any such conflicts that may develop.The Adviser 
and the Distributor will be responsible for reporting any potential or 
existing conflicts to the Trustees. If a conflict arises, the Adviser 
and the Distributor at their own cost will remedy such conflict up to 
and including establishing a new registered management investment 
company.
    4. The initial determination of the class expenses that will be 
allocated to a particular class and any subsequent changes thereto will 
be reviewed and approved by a vote of the Trustees, including a 
majority of the Trustees who are not interested persons of the Trust. 
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 Trustee, and the Trustees shall review, at least quarterly, a 
written report of the amount so expended and the purposes for which 
such expenditures were made.
    5. The Trustees will receive quarterly and annual statements 
concerning distribution expenditures complying with paragraph 
(b)(3)(ii) of rule 12b-1, as it may be amended from time to time. In 
the statements, only distribution expenditures properly attributable to 
the sale of a particular class of shares will be used to support the 
distribution fee and service fee charged to shareholders of such class 
of shares. The statements, including the allocations upon which they 
are based, will be subject to the review and approval of the 
disinterested Trustees in the exercise of their fiduciary duties.
    6. 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 distribution fee and service fee payments relating 
to each respective class of shares will be borne exclusively by that 
class, and any incremental transfer agency costs relating to a 
particular class of shares will be borne exclusively by that class.
    7. The methodology and procedures for calculating the net asset 
value and dividends and distributions of the various classes and the 
proper allocation of expenses among such 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 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 Expert, or an appropriate substitute Expert, will monitor the 
manner in which the calculations and allocations are being made and, 
based upon such review, will render at least annually a report to the 
Funds that the calculations and allocations are being made properly. 
The reports of the Expert shall be filed as part of the periodic 
reports filed with the SEC pursuant to sections 30(a) and 30(b)(1) of 
the Act. The work papers of the Expert with respect to such reports, 
following request by the Funds (which the Funds agree to provide), will 
be available for inspection by the SEC staff upon the written request 
to the Trust for such work papers by a senior member of the Division of 
Investment Management or of a regional office of the SEC, limited to 
the Director, an Associate Director, the Chief Accountant, the Chief 
Financial Analyst, an Assistant Director, and any Regional 
Administrators or Associate and Assistant Administrators. The initial 
report of the Expert will be a ``report on policies and procedures 
placed in operation and tests of operating effectiveness'' as defined 
and described in Statement of Auditing Standards No. 70 of the American 
Institute of Certified Public Accountants (the ``AICPA''), as it may be 
amended from time to time, or in similar auditing standards as may be 
adopted by the AICPA from time to time.
    8. Applicants have adequate facilities in place to ensure 
implementation of the methodology and procedures for calculating the 
net asset value and dividends and 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 Export in the initial report referred to in condition 7 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 7. Applicants will take immediate corrective measures if 
this representation is not concurred in by the Expert or appropriate 
substitute Expert.
    9. The prospectus of each Fund that offers multiple classes will 
contain a statement to the effect that a salesperson and any other 
person entitled to receive compensation for selling Fund shares may 
receive different compensation for selling one particular class of 
shares over another in a Fund.
    10. The Distributor will adopt compliance standards as to when a 
particular class of shares may appropriately be sold to particular 
investors. Applicants will require all persons selling shares of the 
Funds to agree to conform to such standards.
    11. The conditions pursuant to which the exemptive order is granted 
and the duties and responsibilities of the Trustees with respect to the 
Multiple Pricing System will be set forth in guidelines, which will be 
furnished to the Trustees.
    12. 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 
in its prospectus, regardless of whether all classes of shares are 
offered through the prospectus. The shareholder reports will disclose 
the respective expenses and performance data applicable to each class 
of shares. The shareholder reports will contain, in the statement of 
assets and liabilities and statement of operations, information related 
to each 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 a particular class of shares, it will also disclose 
the expenses and/or performance data applicable to all classes of 
shares offered by such Fund. The information provided by applicants for 
publication in any newspaper or similar listing of the Funds' net asset 
values and public offering prices will separately present each class of 
shares.
    13. 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 their rule 12b-1 distribution plans in 
reliance on the exemptive order.
    14. Any class of shares with a conversion feature (``Purchase 
Class'') will convert into another class (``Target Class'') of shares 
on the basis of the relative net asset values of the two classes, 
without the imposition of any sales load, fee, or other charge. After 
conversion, the converted shares will be subject to an asset-based 
sales charge and/or service fee (as those terms are defined in Article 
III, Section 26 of the NASD's Rules of Fair Practice), if any, that in 
the aggregate are lower than the asset-based sales charge and service 
fee to which they were subject prior to the conversion.
    15. If a Fund implements any amendment to a 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, 
Purchase Class shares will stop converting into Target Class shares 
unless shareholders of the Purchase Class, voting separately as a 
class, approve the amendment. The Trustees shall take such action as is 
necessary to ensure that existing Purchase Class shares are exchanged 
or converted into a new class of shares (``New Target Class''), 
identical in all material respects to the Target Class as it existed 
prior to implementation of the amendment, no later than the date such 
shares previously were scheduled to convert into Target Class shares. 
If deemed advisable by the Trustees to implement the foregoing, such 
action may include the exchange of all existing Purchase Class shares 
for a new class (``New Purchase Class''), identical to such existing 
Purchase Class shares in all material respects except that the New 
Purchase Class will convert into the New Target Class. The New Target 
Class and 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 3, any 
additional cost associated with the creation, exchange, or conversion 
of the New Target Class or New Purchase Class shall be borne solely by 
the Adviser 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 plan and the relationship of such plan to 
the Purchase Class are disclosed in an effective registration 
statement.
    16. Applicants will comply with the provisions of proposed rule 6c-
10 under the Act, as such rule is currently proposed, and as it may be 
reproposed, adopted, or amended.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-2719 Filed 2-4-94; 8:45 am]
BILLING CODE 8010-01-M