[Federal Register Volume 59, Number 124 (Wednesday, June 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15714]


[[Page Unknown]]

[Federal Register: June 29, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20371; 812-8938]

 

New York Venture Fund, Inc., et al.; Notice of Application

June 23, 1994.
AGENCY: Securities and Exchange Commission (``SEC'').

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

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APPLICANTS: New York Venture Fund, Inc., Venture Income (+) Plus, Inc., 
Venture Muni (+) Plus, Inc., and Retirement Planning Funds of America, 
Inc. (collectively, the ``Companies''), on behalf of themselves and any 
existing or future services thereof (collectively, the ``Applicant 
Funds''); and Selected/Venture Advisers, L.P. (the ``Adviser''). 
Applicants also seek relief on behalf of any existing or future 
registered open-end management investment company or series thereof 
(collectively, with the Applicant Funds, the ``Funds'') for which the 
Adviser, or any person controlling, controlled by, or under common 
control with the Adviser, now or hereafter serves as investment adviser 
or principal underwriter1
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    \1\Existing investment companies which presently do not intend 
to rely on the requested relief are not signatories to the 
application, but may rely on any exemption granted pursuant to the 
application if they create multiple classes of shares or impose a 
contingent deferred sales charge consistent with the representations 
and conditions in the application.

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 
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the Act, and rule 22c-1 thereunder.

SUMMARY OF APPLICATION: Applicants seek a conditional order to permit 
the Funds to create multiple classes of shares and to assess and, under 
certain circumstances, waive a contingent deferred sales charge 
(``CDSC'') upon the redemption of certain shares.

FILING DATES: The application was filed on April 12, 1994, and amended 
on June 1, 1994. By supplemental letter dated June 22, 1994, counsel to 
applicants agreed to file an amendment during the notice period to make 
certain changes to its application. This notice reflects the changes to 
be made to the application by such further amendment.

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 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 July 19, 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 5th Street, N.W., Washington, D.C. 
20549. Applicants, 124 East Marcy Street, Santa Fe, New Mexico 87501.

FOR FURTHER INFORMATION CONTACT:
James J. Dwyer, Staff Attorney, at (202) 942-0581, or C. David Messman, 
Branch Chief, at (202) 942-0564 (Division of Investment Management, 
Office of Investment Company Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch.

Applicants' Representations

    1. The Companies are Maryland corporations registered under the Act 
as open-end management investment companies. New York Venture Fund, 
Venture Income Plus, and Venture Muni Plus are single series Funds, and 
Retirement Planning Funds currently has six series: Growth Fund, Bond 
Fund, Government Money Market Fund, Global Value Fund, Convertible 
Securities Fund, and Real Estate Securities Fund. The board of 
directors of each Company may create additional series from time to 
time.
    2. The Adviser, an investment adviser registered under the 
Investment Advisers of 1940 and a broker/dealer registered under the 
Securities Exchange Act of 1934, serves as each Applicant Fund's 
investment adviser and principal underwriter.2. The Adviser's sole 
general partner is Venture Advisers, Inc., a New York corporation.
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    \2\The term ``Distributor'' shall refer to the Adviser, or an 
entity controlling, controlled by, or under common control with the 
Adviser, in its capacity as the Funds' principal underwriter.
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    3. New York Venture Fund, Venture Income Plus, and Retirement 
Planning Fund's Global Value Fund, Convertible Securities Fund, and 
Real Estate Securities Fund currently offer shares to the public at net 
asset value plus a front-end sales charge (``FESC''), and have adopted 
rule 12b-1 distribution plans providing for payment to the Distributor 
at an annual rate of up to .25% of such Fund's average daily net 
assets.
    4. Venture Muni Plus and Retirement Planning Fund's Growth Fund and 
Bond Fund are authorized, pursuant to their rule 12b-1 distribution 
plans, to pay the Distributor at an annual rate of up to .75% of such 
Fund's average daily net assets, and to pay service fees, as defined in 
article III, section 26 of the Rules of Fair Practice of the National 
Association of Securities Dealers, Inc. (the ``NASD''). These Funds 
also impose a CDSC upon certain redemptions of shares, pursuant to 
existing SEC exemptive orders (the ``Prior Orders'').3
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    \3\Retirement Planning Funds of America, Investment Company Act 
Release Nos. 14387 (Feb. 20, 1985) (notice) and 14424 (Mar. 19, 
1985) (order), amending Investment Company Act Release Nos. 13873 
(Apr. 9, 1984) (notice) and 13926 (May 4, 1984) (order). Venture 
Muni (+) Plus, Investment Company Act Release Nos. 14353 (Feb. 4, 
1985) (notice) and 14398 (Mar. 4, 1985) (order).
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    5. Applicants seek relief to permit the Funds to offer multiple 
classes of shares, each class of shares representing a selection from 
an array of distribution options mixing different FESCs, CDSCs, asset-
backed sales charges, shareholder services fees, and transfer agency 
fees. Each class of shares of a Fund would represent interests in the 
same portfolio of investments, and would be identical in all respects, 
except as set forth in condition 1 below. The sum of any FESC, CDSC, 
and asset-based sales charge will not exceed the maximum sales charge 
provided for in article III, section 26(d) of the NASD's Rules of Fair 
Practice.
    6. Applicants initially contemplate that the non-money market Funds 
would offer four different classes of shares. ``Class A'' shares of a 
Fund would require payment of a FESC and impose a rule 12b-1 fee. The 
FESC may be subject to reductions for larger purchases and under rights 
of accumulation and letter of intent. ``Class B'' shares of a Fund 
would be subject to rule 12b-1 fees and a CDSC. ``Class C'' shares of a 
Fund would be subject to relatively high rule 12b-1 fees, and a CDSC 
may be imposed on shares redeemed within one year of purchase. ``Class 
D'' shares of a Fund would be subject to relatively low rule 12b-1 
fees. Class D shares typically would be available only to owners of 
separate commingled accounts, certain institutional investors, or 
similar investors.
    7. Applicants further contemplate that the money market Funds would 
offer two different distribution options. ``Regular Class'' shares 
would be offered without a FESC or CDSC, and would be subject to 
relatively low rule 12b-1 fees, if any. Shares of the Regular Class 
would be substantially similar to Class C shares of non-money market 
Funds. ``Class B Exchange'' shares would be identifical to the Class B 
shares of a non-money market Fund, and it is anticipated that they 
would be issued only upon the exchange of Class B shares for shares of 
a money market Fund.
    8. Applicants contemplate that any class of shares of a Fund may be 
exchanged for shares of the same class of another Fund, or for shares 
of another Fund's class with a similar pricing structure or rule 12b-1 
fees. Under certain circumstances, shares may be exchanged for a class 
of shares of another Fund with different pricing characteristics. 
Shares of a money market Fund are exchangeable for shares of any of the 
available classes in the Funds. All exchanges made at other than net 
asset value will comply with rule 11a-3 under the Act.
    9. Shares of one or more classes (the ``Higher 12b-1 Classes'') 
automatically will convert to shares of another class with a lower rule 
12b-1 fee. The conversion will occur after the shareholder has the 
Higher 12b-1 Class shares for a period of time,4 approximately one 
to eight years. Such conversion will occur without the imposition of 
any additional sales charge. Shares of a Higher 12b-1 Class purchased 
through the reinvestment of dividends and other distributions will be 
considered held in a separate sub-account. Each time any shares of a 
Higher 12b-1 Class convert to shares of another class, all of the 
shares of the Higher 12b-1 Class held in the sub-account will convert 
to shares of that other class. Applicants may suspend this feature if 
an expert's opinion or Internal Revenue Service ruling that the 
conversion does not constitute a taxable event under Federal income tax 
law is not available.
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    \4\For purposes of calculating the holding period, the shares 
will be deemed to have been purchased on the last day of the month 
in which the purchase order for the shares was accepted. Shares 
acquired in an exchange or series of exchanges will be deemed to be 
purchased on the last day of the month in which the purchase order 
for the original shares was accepted.
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    10. Expenses properly attributable to a particular class of shares 
may be recorded separately and charged to the particular class. All 
other expenses incurred by a Fund will be borne pro rata by each class 
of shares of the Fund. Because of the differing class expense, rule 
12b-1 fees, and shareholder services fees, the net income attributable 
to and the dividends payable on one class of shares of a Fund may be 
higher or lower than those of the other classes of shares of the same 
Fund. To the extent that a Fund has undistributed net income or net 
operating losses, the net asset value of the various classes of shares 
of the Fund may differ.
    11. Applicants also seek exemptive relief to permit the Funds to 
impose a CDSC on redemptions of Class B and Class C shares of a non-
money market Fund, Class B Exchange shares of a money market Fund, and 
possibly other classes of shares of any Fund. The CDSC will be assessed 
on an amount equal to the lesser of the then current market value or 
the cost of the shares being redeemed. The amount of the CDSC will 
depend on the number of years, set forth in the applicable prospectus, 
since the shareholder purchased the shares being redeemed. It is 
expected that the CDSC schedule and CDSC period will vary in part on 
the FESCs paid on certain classes of shares of a Fund and the 
compensation paid to representatives selling various classes of shares 
of a Fund.
    12. No CDSC will be imposed on amounts representing capital 
appreciation, shares or amounts representing shares purchased through 
the reinvestment of dividends or other distributions (including capital 
gains distributions), or shares held for longer than the CDSC period. 
In determining whether a CDSC is applicable, it will be assumed that a 
redemption of shares not subject to a CDSC will be made first, followed 
by shares subject to a CDSC in the order in which such shares were 
purchased. No CDSC will be imposed on shares purchased prior to the 
date that the requested order is granted, unless such shares are 
subject to a CDSC pursuant to the Prior Orders, in which event the 
Prior Orders will continue to apply.
    13. Applicants intend to waive or reduce the CDSC on redemptions of 
shares (a) held at the time of a shareholder's death or disability, as 
defined in section 72(m) of the Internal Revenue Code of 1986, as 
amended (the ``Code''), provided that the redemption is requested 
within one year of death or initial determination of disability, and 
provided that the shareholder held the shares as an individual or as a 
joint tenant with right of survivorship, (b) in connection with certain 
distributions, as described below, from individual retirement accounts, 
Keogh plans, custodial accounts maintained pursuant to section 
403(b)(7) of the Code, or pension or profit-sharing plans 
(collectively, ``Retirement Plans''), (c) sold to trustees, directors, 
and officers, and members of their immediate families, of any 
registered investment company supervised and distributed by the 
Adviser, or to directors and officers of the Adviser's general partner 
(in both cases including former directors, trustees, and officers) and 
to full-time employees of the foregoing (and members of their immediate 
families) who have been employed at least 90 days, (d) made as tax-free 
returns of contributions to avoid tax penalty, (e) by shareholders who 
have invested more than a stated minimum dollar amount in a Fund or 
across the Funds and for purchases involving accumulation rights or 
letters of intent in the same way that the FESCs of other classes are 
subject to such discounts; (f) pursuant to a Fund's systematic 
withdrawal plan, (g) pursuant to the right of a Fund to liquidate a 
shareholder's account if the aggregate net asset value of the shares 
held in such account is less than the designated account size described 
in the Fund's prospectus; and (h) acquired by any state, county, or 
city, or any instrumentality, department, authority, or agency thereof, 
which is prohibited by applicable law from paying a sales charge or 
commission in connection with the acquisition or redemption of shares 
of any investment company.
    14. With respect to waiver category (b) above, the Funds may waive 
the CDSC for shares redeemed in connection with a lump-sum distribution 
or other distribution from Retirement Plans after termination of 
employment or on any distributions after retirement, or, in the case of 
an individual retirement account or a custodial account under section 
403(b) of the Code, after attaining age 59\1/2\. The CDSC also may be 
waived or reduced on any redemption resulting from the return of an 
excess contribution pursuant to section 408(d)(4) or (5) of the Code, 
the return of excess deferral amounts pursuant to sections 401(k)(8) or 
402(g)(2) of the Code, the return of excess aggregate contributions 
pursuant to section 401(m)(6) of the Code, or from the death or 
disability of the employee. The waiver or reduction will not apply in 
the case of a tax-free rollover or transfer of assets, other than one 
following a separation from service. These conditions in which the CDSC 
would be waived or reduced are designed to accommodate the majority of 
Retirement Plan distributions that are made without penalty pursuant to 
the Code.
    15. If the Funds waive or reduce the CDSC, such waiver or reduction 
will be uniformly applied to all offerees in the class specified. 
Shares are subject to the waivers, deferrals, or reductions of the CDSC 
as provided in the applicable prospectus at the time the shares were 
purchased.

Applicants' Legal Analysis

    1. Applicants request an exemptive order to the extent that the 
proposed issuance and sale of various classes of shares representing 
interests in the same Fund might be deemed to result in a ``senior 
security'' within the meaning of section 18(g) and to be prohibited by 
section 18(f)(1), and to violate the equal voting provisions of section 
18(i).
    2. Applicants believe that the proposed multi-class arrangement 
will better enable the Funds to meet the competitive demands of today's 
financial services industry. Under the multi-class arrangement, 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 their 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.
    3. Applicants further believe that the proposed allocation of 
expenses and voting rights relating to the rule 12b-1 distribution 
plans in the manner described in the application is equitable and would 
not discriminate against any group of shareholders. In addition, such 
arrangements should not give rise to any conflicts of interest because 
the rights and privileges of each class of shares are substantially 
identical.
    4. Applicants submit that the proposed multi-class arrangement does 
not present any concerns that section 18 was designed to ameliorate. 
The multi-class arrangement does not involve borrowings, does not 
affect a Fund's existing assets or reserves, and does not involve a 
complex capital structure. The multi-class arrangement will not 
increase the speculative character of the shares of the Funds. No class 
of shares will have preference or priority over any other class of 
shares in a Fund with respect to particular assets, and no class of 
shares will be protected by any reserve or other account.
    5. Applicants submit that the requested exemption to permit the 
Funds to implement the proposed CDSC is appropriate in the public 
interest, and is consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act. The 
proposed CDSC arrangements will provide shareholders the option of 
having greater investment dollars working for them from the time of 
their purchase than if a sale load had been imposed at such time.

Applicants' Conditions

    Applicants agree that any order granting the requested relief shall 
be subject to the following conditions:
    1. Each class of shares of a Fund will represent interests in the 
same portfolio of investments and will be identical in all respects, 
except as set forth below. The only differences among the classes of 
shares of a Fund will relate solely to: (a) the impact of the 
disproportionate payments made under any rule 12b-1 distribution plan 
and shareholder services plan applicable to such class of shares; (b) 
expenses that may be allocated to a particular class of shares, which 
are limited to the following: (i) the incremental transfer agency costs 
attributable to such class of shares; (ii) the cost of preparing, 
printing, and mailing materials such as shareholder reports, 
prospectuses, and proxy materials to current shareholders of the class; 
(iii) any SEC and Blue Sky registration fees incurred by such class; 
(iv) directors' fees or expenses incurred as a result of issues 
relating solely to such class; (v) legal and accounting expenses 
relating solely to such class; and (vi) any other incremental expenses 
subsequently identified that should be properly allocated to a 
particular class which shall be approved by the SEC pursuant to an 
amended order; (c) the fact that each class will vote separately with 
respect to any rule 12b-1 distribution plan, except as provided in 
condition 16 below; (d) the different exchange privileges of each class 
of shares; (e) the different conversion features of each class of 
shares; and (f) the name or designation of each class of shares.
    2. The directors of each Fund, including a majority of the 
independent directors, will approve the multi-class system. The minutes 
of the meetings of the directors of a Fund regarding the deliberations 
of the directors with respect to the approvals necessary to implement 
the multi-class system will reflect in detail the reasons for the 
directors' determination that the multi-class system is in the best 
interests of both the Fund and its shareholders.
    3. The initial determination of the class expenses that will be 
allocated to a particular class and any subsequent changes thereto will 
be reviewed and approved by a vote of the board of directors of the 
Fund including a majority of the directors who are not interested 
persons of the Fund. Any person authorized to direct the allocation and 
disposition of monies paid or payable by the Fund to meet class 
expenses shall provide to the board or directors, and the directors 
shall review, at least quarterly, a written report of the amounts so 
expended and the purposes for which such expenditures were made.
    4. On an ongoing basis, the directors of each Fund that adopts the 
multi-class system, pursuant to their fiduciary responsibilities under 
the Act and otherwise, will monitor the Fund for the existence of any 
material conflicts among the interests of the various classes of shares 
offered by that Fund. The directors, including a majority of the 
independent directors, will take such action as is reaonsably necessary 
to eliminate any such conflicts that may develop. The Adviser and 
Distributor will be responsible for reporting any potential or existing 
conflicts to the directors. If a conflict arises, the Adviser or 
Distributor, at its own cost, will remedy such conflict up to and 
including establishing a new registered management investment company.
    5. The directors of each Fund will receive quarterly and annual 
statements concerning distribution and shareholder servicing 
expenditures complying with paragraph (b)(3)(ii) of rule 12b-1, as it 
may be amended from time to time. In the statements, only expenditures 
properly attributable to the sale or servicing of a 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 directors 
to justify and fee attributable to that class. The statements, 
including the allocations upon which they are based, will be subject to 
the review and approval of the independent directors in the exercise of 
their fiduciary duties.
    6. Any shareholder services plan will be adopted and operated in 
accordance with the procedures set forth in rule 12b-1(b) through (f) 
as if the expenditures made thereunder were subject to rule 12b-1, 
except that shareholders need not enjoy the voting rights specified in 
rule 12b-1.
    7. Dividends paid by a Fund with respect to its various classes of 
shares, to the extent any dividends are so 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 class expenses relating to each class of 
shares will be borne exclusively by that class.
    8. The methodology and procedures for calculating the net asset 
value and dividends and distributions of the classes and the proper 
allocation of expenses among the classes have been reviewed by an 
expert (the ``Expert''). The Expert 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, 
subject to the conditions and limitations in that report. 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 
each Fund offering any of the proposed classes that the calculations 
and allocations are being made properly. The reports of the Expert will 
be filed as part of the periodic reports filed with the 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 a Fund (which each 
Fund agrees to make), will be available for inspection by the SEC staff 
upon written request for such work papers by a senior member of the 
Division of Investment Management, limited to the Director, an 
Associate Director, the Chief Accountant, the Chief Financial Analyst, 
an Assistant Director, and any Regional Administrators or Associate and 
Assistant Administrators. The initial report of the Expert is a 
``report on policies and procedures placed in operation'' and the 
ongoing reports will be ``reports on policies and procedures placed in 
operation and tests of operating effectiveness'' as defined and 
described in 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.
    9. 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 various classes 
of shares and the proper allocation of expenses among the various 
classes of shares, and this representation has been concurred with by 
the Expert in the initial report referred to in condition 8 above and 
will be concurred with by the Expert, or an appropriate substitute 
Expert, on an ongoing basis at least annually in the ongoing reports 
referred to in condition 8 above. Applicants will take immediate 
corrective measures if this representation is not concurred in by the 
Expert or appropriate substitute Expert.
    10. The prospectus of each Fund which issues two or more classes of 
shares will contain a statement to the effect that a salesperson and 
any other person entitled to receive compensation for selling or 
servicing Fund shares may receive different compensation with respect 
to one particular class of shares over another in the Fund.
    11. The 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 the Funds to 
agree to conform to such standards.
    12. The conditions pursuant to which the exemptive order is granted 
and the duties and responsibilities of the boards of directors of the 
Funds with respect to the multi-class system will be set forth in 
guidelines which will be furnished to the directors.
    13. 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 
of the Fund in every prospectus, regardless of whether all classes of 
shares are offered through each prospectus. Each Fund will disclose the 
respective expenses and performance data applicable to each class of 
shares of the Fund in such Fund's shareholder report. The shareholder 
reports will contain, in the statement of assets and liabilities and 
statement of operations, information related to a Fund as a whole 
generally and not on a per class basis. A 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 respective 
expenses and/or performance data applicable to all classes of shares. 
The information provided by applicants for publication in any newspaper 
or similar listing of the Fund's net asset value and public offering 
price will present each outstanding class of shares separately.
    14. Applicants acknowledge that the grant of the exemptive order 
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 their rule 12b-1 distribution plans or 
shareholder services plan in reliance on the exemptive order.
    15. 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.
    16. If a Fund implements any amendment to any rule 12b-1 
distribution plan (or, if presented to shareholders, adopts or 
implements any amendment of a shareholder services plan) that would 
increase materially the amount that may be borne by the Target Class 
shares under the plan, existing Purchase Class shares will stop 
converting into Target Class unless the Purchase Class shareholders, 
voting separately as a class, approve the proposal. The directors shall 
take such action as is necessary to ensure that existing Purchase Class 
shares are exchanged or converted into a new class of shares (``New 
Target Class''), identical in all material respects to Target Class as 
it existed prior to implementation of the proposal, no later than the 
date such shares previously scheduled to convert into Target Class. If 
deemed advisable by the directors to implement the foregoing, such 
action may include the exchange of all existing Purchase Class shares 
for a new class (``New Purchase Class''), identical to existing 
Purchase Class shares in all material respects except that New Purchase 
Class will convert into New Target Class. New Target Class or New 
Purchase Class may be formed without further exemptive relief. 
Exchanges or conversions described in this condition shall be effected 
in a manner that the directors reasonably believe will not be subject 
to Federal taxation. In accordance with condition 4, any additional 
cost associated with the creation, exchange, or conversion of New 
Target Class or New Purchase Class shall be borne solely by the Adviser 
and 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.
    17. Applicants will comply with the provisions of proposed rule 6c-
10 under the Act, Investment Company Act Release No. 16619 (Nov. 2, 
1988), as such rule is currently proposed and as it may be reproposed, 
adopted or amended.

    For the SEC, by the Division of Investment Management, pursuant 
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-15714 Filed 6-28-94; 8:45 am]
BILLING CODE 8010-01-M