[Federal Register Volume 59, Number 46 (Wednesday, March 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-5374]


[[Page Unknown]]

[Federal Register: March 9, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20107; 812-8588]

 

Goldman Sachs Equity Portfolios, Inc. et al.; Application

March 2, 1994.
AGENCY: Securities and Exchange Commission (the ``SEC'' or the 
``Commission'').

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

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APPLICANTS: Goldman Sachs Equity Portfolios, Inc. (``Equity 
Portfolios''), Goldman Sachs Trust (``Bond Trust''), Goldman Sachs 
Institutional Liquid Assets (``Institutional Liquid Assets)'', 
Financial Square Trust (``Financial Square Trust''), Centerland Funds 
(``Centerland''), Trust for Credit Unions and Paragon Portfolio 
(``Paragon''), (collectively, the ``Funds''), Goldman, Sachs & Co. 
(``Goldman Sachs''), and Goldman Sachs Funds Management, L.P. (``Funds 
Management'').

RELEVANT ACT SECTIONS: Order requested under section 6(c) of the Act 
for an exemption from sections 2(a)(32), 2(a)(35), 18(f)(1), 18(g), 
18(i), 22(c) and 22(d) of the Act and rule 22c-1 thereunder.

SUMMARY OF APPLICATION: Applicants request an order to permit certain 
investment companies to issue multiple classes of shares and assess a 
contingent deferred sales charge (``CDSC''). The order would supersede 
four prior orders (the ``Prior Orders'') and would permit certain Funds 
to issue an unlimited number of classes and expand the types of 
expenses that may be allocated to a particular class.

FILING DATES: The application was filed on September 17, 1993, and 
amended on December 6, 1993 and February 3, 1994. Applicants have 
agreed to file an additional amendment, the substance of which is 
incorporated herein, during the notice period.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicants with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on March 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 notification by writing to the SEC's 
Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street NW., Washington, DC 20549. 
Applicants; 32 Old Slip, New York, New York 10005.

FOR FURTHER INFORMATION CONTACT:
Deepak T. Pai, Staff Attorney, at (202) 272-3809, 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 is available for a fee at the 
SEC's Public Reference Branch.

Applicants' Representations

    1. Each of the Funds is a Massachusetts business trust, except that 
Equity Portfolios is a Maryland corporation. The Funds are registered 
management investment companies under the Act that have multiple 
series. Certain series of the Funds currently offer more than one class 
of shares under the Prior Orders.\1\
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    \1\Goldman Sachs Equity Portfolios, et al., Investment Company 
Act Release Nos. 19241 (Jan. 26, 1993), (notice) and 19288 (Feb. 23, 
1993) (order). Institutional Liquid Assets, et al.,  Investment 
Company Act Release Nos. 17420 (Apr. 11, 1990) (notice) and 17479 
(May 8, 1990) (order). Financial Square Trust, et al., Invsetment 
Company Act Release Nos. 18282 (Aug. 20, 1991) (notice) and 18319 
(Sept. 17, 1991) (order). Centerland, et al., Investment Company Act 
Release Nos. 18050 (Mar. 18, 1991) (notice) and 18101 (Apr. 16, 
1991) (order).
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    2. Each Fund, other than Paragon and certain series of Centerland, 
has entered into an investment advisory contract with Goldman Sachs, 
Goldman Sachs Asset Management, a separate operating division of 
Goldman Sachs, or Funds Management. Certain series of the Funds also 
pay Goldman Sachs Asset Management International, an affiliate of 
Goldman Sachs, and certain series of Centerland also pay, or expect to 
pay in connection with new series of such Fund, Boatmen's Trust Company 
or Kleinwort Benson International Investment Limited, an advisory or 
subadvisory fee.
    3. Paragon, on behalf of Paragon Treasury Money Market Fund, has 
entered into an investment advisory contract with Goldman Sachs. 
Premier Investment Advisers, Inc. (``Premier'') acts as investment 
adviser to each of the existing series of Paragon, other than Paragon 
Treasury Money Market Fund. Boatman's Trust Company acts as investment 
adviser to certain series of Centerland. Premier acts as subadviser to 
Paragon Treasury Money Market Fund. Goldman Sachs acts as administrator 
to each of Paragon's series.
    4. Goldman Sachs Asset Management acts as administrator to all of 
the series of Equity Portfolios and Financial Square Trust, to four 
series of Bond Trust and to certain series of Centerland. Callahan 
Credit Union Financial Services Limited Partnership acts as 
administrator to all the series of Trust for Credit Unions, and 
Boatmen's Trust Company acts as administrator to certain of the series 
of Centerland. Goldman Sachs also acts as principal underwriter of each 
Fund.
    5. The Prior Orders permit certain Funds to issue multiple classes 
of shares and assess a CDSC. Applicants request an order that would 
expand the investment companies eligible to rely on the Prior Orders to 
include Trust for Credit Unions and Paragon, permit the Funds to issue 
an unlimited number of classes, and expand the types of expenses that 
may be allocated to a particular class. Applicants request that the 
exemption be extended to future funds for which Goldman Sachs or any 
entity controlling, controlled by or under common control with Goldman 
Sachs acts as investment adviser or distributor.

A. The Multiple Class Distribution System

    1. Applicants request an order to permit each Fund to issue an 
unlimited number of classes of shares. The classes would be identical 
in all respects except: Any such class (a) may be subject to a 
distribution plan adopted under rule 12b-1, a share-holder services 
plan and/or an administration plan (collectively, the ``Plans'') and 
may make different payments pursuant to such Plans (``Plan Payments'') 
and relating to obtaining shareholder approval of a distribution plan 
(or an amendment to such plan); (b) may bear different ``Class 
Expenses'' (as described below); (c) may bear a different name or 
designation; (d) will have exclusive voting rights with respect to any 
Plan adopted exclusively with respect to such class; (e) may have 
different exchange privileges; and (f) may bear any other incremental 
expenses subsequently identified that should be properly allocated to 
such class which shall be approved by the SEC pursuant to an amended 
order.
    2. Under an administration plan, a Fund (or Goldman Sachs) would 
enter into servicing agreements (``Service Agreements'') with 
affiliated and unaffiliated financial institutions, broker-dealers and 
securities professionals (``Service Organizations'') capable of 
providing support services to the customers of such Service 
Organizations who beneficially own shares of the Funds offered pursuant 
to such Plan. Under a shareholder services plan, a Fund (or Goldman 
Sachs) would enter into Service Agreements with Service Organizations 
concerning the provision of account administration services to the 
customers of such Service Organizations who beneficially own shares of 
the Funds offered pursuant to such Plan.
    3. The Funds may establish a ``Limited Institutional Class'' which 
will be offered only to one or more of the following six categories of 
investors: (a) Unaffiliated benefit plans such as qualified retirement 
plans, with respect to which a trustee is vested with investment 
discretion as to plan assets, other than individual retirement accounts 
and self-employed retirement plans; (b) tax exempt retirement plans of 
Goldman Sachs and its affiliates; (c) unit investment trusts sponsored 
by sponsors affiliated with the Fund's adviser, subadviser, 
administrator or principal underwriter; (d) banks and insurance 
companies purchasing for their own accounts; (e) investment companies 
not affiliated with the Fund's adviser, subadviser, manager, 
administrator or principal underwriter; and (f) endowment funds, 
foundations or non-profit organizations.
    4. Under the proposed multiple class system, certain expenses may 
be attributable to a Fund, but not to a particular series thereof 
(``Fund Expenses''). Fund Expenses may be allocated among the series of 
each Fund based on the relative aggregate net assets of such series. 
Expenses that are attributable to a particular series, but not a 
particular class thereof, will be allocated daily to each class based 
on relative net assets.
    5. Each class of shares may generally be exchanged only for shares 
of a class with similar characteristics in another Fund. 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. However, exchanges may, at the discretion of the trustees, be 
permitted among classes if (a) a shareholder ceases to be eligible to 
purchase shares of the original class by reason of a change in the 
shareholder's status or if another class would have been more 
appropriate for such shareholder if such class existed at the time of 
the shareholder's initial investment or (b) the terms of such exchange 
do not result in the imposition of duplicative sales charges. Exchanges 
also may be permitted from any class to certain money market funds that 
have neither a Plan nor a CDSC. The exchanges will comply with rule 
11a-3 under the Act.

B. The CDSC

    1. Applicants also request an exemption to permit the Funds to 
assess a CDSC on certain redemptions of shares and to permit the Funds 
to waive, defer, or reduce any CDSC with respect to certain types of 
redemptions. Under a CDSC arrangement, the amount of a CDSC, if any, 
charged to a shareholder of a Fund would depend on the number of months 
or years that had elapsed since the shareholder purchased the CDSC 
class shares that were being redeemed. Any CDSC would be imposed on the 
lesser of the net asset value of the redeemed shares at the time of 
purchase or the net asset value of the redeemed shares at the time of 
redemption. No CDSC would be imposed with respect to: (a) The portion 
of redemption proceeds attributable to increases in the value of an 
account above the net cost of the investment due to increases in the 
net asset value per share; (b) shares acquired through reinvestment of 
income dividends or capital gain distributions; or (c) CDSC class 
shares held for more than a specified number of months or years after 
the purchase order for such shares was accepted. Any front-end load, 
CDSC, or 12b-1 fees imposed by the Funds would comply with section 
26(d) of Article III of the Rules of Fair Practice of the NASD.
    2. Applicants request the authority to waive or reduce any CDSC in 
any of the following circumstances: (a) In connection with redemptions 
of shares purchased by (i) Goldman Sachs, its affiliates or their 
respective officers, partners, directors or employees (including 
retired employees and former partners), any partnership of which 
Goldman Sachs or any of its affiliates is a general partner, any 
investment adviser, subadviser, manager, administrator or principal 
underwriter (if other than Goldman Sachs) of the Funds (``Other 
Affiliated Parties''), their affiliates or their respective officers, 
partners, directors or employees (including retired employees and 
former partners), any trustee or officer of the Funds and designated 
family members of any of the above individuals (``designated family 
members'' means any of the following: spouses, children, parents, 
parents of spouses, spouses of parents, grandparents, grandchildren, 
siblings, spouses of siblings, siblings of spouses, spouses of 
children, children of siblings, spouses of siblings' children, aunts, 
uncles, cousins, spouses of aunts, uncles and cousins and trusts, 
estates and private foundations created by or for the benefit of the 
individual or designated family members as to which the individual acts 
as trustee or retains investment discretion); (ii) qualified retirement 
plans of Goldman Sachs, Other Affiliated Parties or any of their 
affiliates; (iii) trustees or directors of investment companies for 
which Goldman Sachs or an affiliate acts as sponsor; (iv) any employee 
or registered representative of an authorized dealer and their 
``designated family members;'' (v) institutional investors, including 
insurance companies, broker-dealers, discretionary accounts of 
investment advisers with at least $100 million under management for the 
last twelve months and business entities that have either gross assets 
of at least $100 million or publicly traded securities outstanding; 
(vi) banks, trust companies or other types of depository institutions; 
(vii) any state, county or city, or any instrumentality, department, 
authority or agency thereof, which is prohibited by applicable 
investment laws from paying a sales charge or commission in connection 
with the purchase of shares of the Funds; (viii) pension and profit 
sharing plans, pension funds or other benefit plans sponsored by state 
and municipal governments and by business entities, provided that any 
such plan (1) has total assets of at least $25 million under management 
or (2) is prohibited by law from paying a sales load or commission; 
(ix) Taft-Hartley plans, provided any such plan has a minimum of $25 
million under management; and (x) qualified nonprofit organizations, 
foundations and endowments; (b) on redemptions following the death or 
disability, as defined in section 72(m)(7) of the Internal Revenue Code 
of 1986, as amended (the ``Code''), of a shareholder if the redemption 
is made within one year of death or disability of a shareholder; (c) in 
connection with distributions from retirement plans that are not 
subject to any penalties under the Code; (d) in connection with 
redemptions of shares by shareholders with accounts in excess of a 
specified minimum dollar amount and additional reductions or waivers of 
the CDSC occurring in connection with redemptions of shares by 
shareholders with accounts in excess of certain additional break-
points; (e) pursuant to each Fund's right to liquidate or involuntarily 
redeem shares in a shareholder's account; and (f) pursuant to a 
systematic withdrawal plan.

Applicants' Legal Analysis

    1. Applicants request an exemption under section 6(c) of the Act, 
that would exempt the funds from sections 18(f)(1), 18(g) and 18(i) of 
the Act to permit the issuance of an unlimited number of classes. 
Applicants believe that the multiple class system does not raise any of 
the legislative concerns that section 18 was designed to ameliorate. 
The proposal does not involve borrowings and does not affect the 
existing assets or reserves. In addition, the proposed arrangement will 
not increase the speculative character of the shares of a Fund since 
all such shares will participate in a Fund's appreciation, income and 
expenses with the exception of the Plan Payments and Class Expenses. 
The proposed allocation of expenses and voting rights relating to the 
Plans is equitable and would not discriminate against any group of 
shareholders.
    2. Applicants also request an exemption under section 6(c), that 
would exempt the funds from sections 2(a)(32), 2(a)(35), 22(c), 22(d) 
of the Act and rule 22c-1 thereunder, to permit the Funds to assess, 
waive, reduce or defer a CDSC with respect to certain redemptions of 
shares. Applicants believe that the imposition of the CDSC on CDSC 
class shares of the Funds is fair and in the best interests of their 
shareholders.

Applicant's Conditions

    1. Each class of shares will represent interests in the same 
portfolio of investments of a Fund or a series, and be identical in all 
respects except as set forth below. The only differences among the 
classes of shares of the same Fund or series will relate solely to: (a) 
The impact of certain Class Expenses, which will be limited to any or 
all of the following expenses determined by the trustees to be 
attributable to a specific class of shares: (i) transfer agent fees 
(including the incremental cost of monitoring any CDSC) attributable to 
a specific class of shares; (ii) expenses related to preparing, 
printing, mailing and distributing materials such as shareholder 
reports, prospectuses and proxy statements to current shareholders of a 
specific class; (iii) SEC and state Blue Sky registration fees incurred 
by a specific class of shares; (iv) the expenses of administrative 
personnel and services required to support the shareholders of a 
specific class; (v) litigation or other legal expenses relating to a 
class of shares; (vi) trustees' fees or expenses incurred as a result 
of issues relating to a specific class of shares; (vii) accounting, 
audit and tax expenses relating to a specific class shares; and (viii) 
fees and other payments made, other than pursuant to a Plan, to 
entities performing services for a particular class, including account 
maintenance, dividend disbursing or subaccounting services or 
administration of a dividend reinvestment or systematic investment or 
withdrawal plan; (b) expenses payable by a class pursuant to a Plan 
with respect to such class; (c) the voting rights related to any Plan 
affecting a specific class of shares, except as provided in condition 
16 below; (d) exchange privileges; (e) the conversion features; (f) 
class designations; and (g) any additional incremental expenses 
subsequently identified that should properly be allocated to one class 
which shall be approved by the SEC pursuant to an amended order.
    2. The trustees of the Funds, including a majority of the non-
interested trustees, will approve the multiple class system. The 
minutes of the meetings of the trustees of the Funds regarding the 
deliberations of the trustees concerning, and their approval of, the 
multiple class system will reflect in detail the reasons for the 
trustees' determination that the proposed multiple class system is in 
the best interests of both the Funds and their respective shareholders.
    3. The initial determination of Class Expenses that will be 
allocated to a class and any subsequent changes thereto will be 
reviewed and approved by a vote of the trustees, including a majority 
of the non-interested trustees. Any persons authorized to direct the 
allocation and disposition of monies paid or payable by a Fund to meet 
Class Expenses shall provide to the 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. Any distributor will adopt compliance standards as to when each 
class of shares may appropriately be sold to particular investors. 
Applicants will require all persons selling shares of a Fund to agree 
to conform to such standards. Such compliance standards will require 
that all investors eligible to purchase shares of the Limited 
Institutional Class be sold only shares of the Limited Institutional 
Class, rather than any other class of shares offered by the Fund.
    5. The Shareholder services plans and administrative plans 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 12(b)-1, except that shareholders need not enjoy the 
voting rights specified in rule 12b-1.
    6. On an ongoing basis, the trustees 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 classes of shares. The trustees, including a majority 
of the non-interested trustees, will take such action as is reasonably 
necessary to eliminate any such conflicts that may develop. The 
investment adviser and distributor of the Funds will be responsible for 
reporting any potential or existing conflicts to the trustees. If a 
conflict arises, the investment adviser and distributor of the Funds, 
each at its own cost, will remedy such conflict up to and including 
establishing a new registered management investment company.
    7. The trustees will receive quarterly and annual statements 
concerning the amounts expended under each shareholder services, 
administration and distribution plan and the related Service Agreement 
complying with paragraph (b)(3)(ii) of rule 12b-1, as it may be amended 
from time to time, for their respective Funds. 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 non-interested 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 paid in the 
same amount, except that Plan Payments and any Class Expenses will be 
borne exclusively by the affected class.
    9. 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 have been reviewed by 
an expert (the ``Expert''). The Expert has rendered a report to the 
applicants filed with the application as exhibit C 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 a request by the Funds (which the Funds agree to 
provide), will be available for inspection by the SEC's staff upon the 
written request for such work papers by a senior member of the Division 
of Investment Management or of a Regional Office of the SEC limited to 
the Director, an Associate Director, the Chief Accountant, the Chief 
Financial Analyst, an Assistant Director, and any Regional 
Administrators or Associate and Assistant Administrators. The initial 
report of the Expert is a ``Special Purpose'' report on the ``Design of 
a System'' as defined and described in SAS No. 44 of the American 
Institute of Certified Public Accountants (the ``AICPA'') and the 
ongoing reports will be ``reports on policies and procedures placed in 
operations and tests of operation 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 ICPA 
from time to time.
    10. The applicants 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 the immediately preceding condition 
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 the immediately preceding condition. The applicants 
agree to take immediate corrective action if this representation is not 
concurred in by the Expert or appropriate substitute Expert.
    11. The prospectus of each Fund, or if applicable, the prospectus 
of each class of shares of a Fund, will include a statement to the 
effect that any 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 Fund.
    12. The conditions pursuant to which the exemptive order is granted 
and the duties and responsibilities of the trustees of the Funds with 
respect to the multiple class system will be set forth in guidelines 
which will be furnished to the trustees.
    13. The 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 the Limited Institutional Class, in every 
prospectus, regardless of whether all classes of shares are offered 
through each prospectus. The Limited Institutional Class will be 
offered solely pursuant to a separate prospectus. The prospectus for 
the Limited Institutional Class will disclose the existence of the 
Fund's other classes, and the prospectus for the other classes will 
disclose the existence of the Limited Institutional Class and will 
identify the persons eligible to purchase shares of such class. The 
Fund 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 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 the Limited Institutional Class. Advertising materials 
reflecting the expenses or performance data for the Limited 
Institutional Class will be available only to those persons eligible to 
purchase the Limited Institutional Class. The information provided by 
applicants for publication in any newspaper or similar listing of the 
Fund's net asset value and public offering price will present each 
class of shares, except the Limited Institutional Class, separately.
    14. The applicants acknowledge that the grant of the relief 
requested by this application will not imply SEC approval, 
authorization or acquiescence in any particular level of payments that 
the Funds may make pursuant to the distribution, administration or 
shareholder services plans in reliance on the exemptive order.
    15. Any class of shares (``Purchase Class'') with a conversion 
feature 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 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.
    16. If the Fund implements any amendment to its distribution plan 
(or, if presented to shareholder, adopts or implements any amendment of 
the non-rule 12b-1 shareholder services plan or administration 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 Purchase Class 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 existing Purchase Class shares in all 
material respects except that New Purchase Class will convert into New 
Target Class. A 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 6, any additional cost associated with the 
creation, exchange or conversion of New Target Class or New Purchase 
Class shall be borne solely by the investment adviser or 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 Plan and the relationship of 
such Plan to the Purchase Class shares are disclosed in an effective 
registration statement.
    17. Applicants will comply with the provisions of proposed rule 6c-
10 under the Act, IC-16619 (November 2, 1988), as such rule is 
currently proposed and as it may be reproposed, adopted or amended.

    For the SEC, by the Division of Investment Management, pursuant 
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-5374 Filed 3-8-94; 8:45 am]
BILLING CODE 8010-01-M