[Federal Register Volume 59, Number 142 (Tuesday, July 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18075]
[[Page Unknown]]
[Federal Register: July 26, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20413; 812-8404]
Cambridge Series Trust, et al.; Notice of Application
July 18, 1994
AGENCY: Securities and Exchange Commission (the ``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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SUMMARY: Cambridge Series Trust, Cash Resource Trust, and Mentor Series
Trust (collectively, the ``Trusts''), Cambridge Investment Advisors,
Inc. (``Cambridge Advisors''), Cambridge Distributors, Inc.
(``Cambridge Distributors''), Charter Asset Management, Inc.
(``Charter''), Commonwealth Investment Counsel, Inc.
(``Commonwealth''), Wellesley Advisors, Inc. (``Wellesley''), and
Wheat, First Securities, Inc. (``Wheat First'').
RELEVANT ACT SECTIONS: Order requested under section 6(c) granting a
conditional 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 seek an order permitting certain
open-end management investment companies to issue multiple classes of
shares representing interests in the same portfolio of securities, and
assess and, under certain circumstances, waive a contingent deferred
sales charge (``CDSC'') on certain redemptions of the shares.
FILING DATES: The application was filed on May 14, 1993, and amended on
December 5, 1993, April 18, 1994 and July 15, 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 August 12, 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 NW., Washington, DC 20549.
Applicants, 901 East Byrd Street, Richmond, Virginia 23219.
FOR FURTHER INFORMATION CONTACT:
Felice R. Foundos, Senior Attorney, at (202) 942-0571, or Robert A.
Robertson, 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. Each of the Trusts is an open-end management investment company
registered under the Act and each is a series company. Each existing or
future series of the Trusts are referred to herein as the ``Funds.''
2. Cambridge Distributors, a wholly-owned subsidiary of WFS
Financial Corporation, Inc. (``WFSC''), serves as principal underwriter
for Cambridge Series Trust and Cash Resource Trust. Wheat First, a
wholly-owned subsidiary of WFSC, serves as principal underwriter to
Mentor Series Trust. Cambridge Advisors, a wholly-owned subsidiary of
Investment Management Group, Inc. (``Investment Management''), which in
turn is a wholly-owned subsidiary of WFSC, serves as investment manager
to Cambridge Series Trust and Cash Resource Trust. Charter, a wholly-
owned subsidiary of Investment Management, serves as investment adviser
and administrator to Mentor Growth Fund, a series of Mentor Series
Trust. Commonwealth, a wholly-owned subsidiary of Investment
Management, serves as a sub-adviser to each of the series in the Cash
Resource Trust. Lastly, Wellesley, a wholly-owned subsidiary of
Investment Management, serves as investment adviser to the Mentor
Strategy Fund, a series of the Mentor Series Trust.
3. Applicants request that any order also apply to shares of any
future open-end investment company advised by Cambridge Advisors,
Charter, Commonwealth, or Wellesley or an entity controlled by, or
under common control with any of them, or for which Cambridge
Distributors or Wheat First or any entity controlled by or under common
control with either of them serves as principal underwriter and that
(a) hereafter becomes part of the same group of investment companies as
that term is defined in rule 11a-3 under the Act, and (b) issues
classes of shares that are identical in all material respects to the
shares described in this application.\1\
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\1\Certain existing investment companies within the same group
of investment companies, as defined in rule 11a-3, have not signed
the application and currently do not intend to rely on the requested
relief. In the future, such investment companies may rely on any
order granted pursuant to this application if they determine to
create multiple classes of shares in compliance with the
requirements and conditions therein.
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4. Pursuant to a prior order, the Cambridge Series Trust Funds
currently offer two classes of shares, Class A and Class B, which have
the same characteristics as the corresponding Classes A and B described
below.\2\ Pursuant to another order, the Funds of the Mentor Series
Trust (other than the Mentor Short-Duration Income Fund) currently
offer their shares subject to a CDSL.\3\ Each of those Funds will rely
on the exemptive order granted pursuant to this application. The Funds
of the Cash Resources Trust are money market funds and offer their
shares at net asset value.
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\2\See Federated Securities Corp., Investment Company Act
Release Nos. 17645 (Aug. 2, 1990) (notice) and 17715 (Aug. 30, 1990)
(order). Applicants represent that the Cambridge Series Trust had
assessed a 1% redemption fee in reliance on a staff no-action
position expressed in Flag Investors Fund, Inc. (pub. avail. Oct. 1,
1984). Applicants acknowledge that they may not rely on Flag after
March 22, 1994 and that any fee charged upon redemption to cover
distribution expenses after such date must be provided for in an
exemptive order.
\3\See Southeastern Growth Fund, Inc., Investment Company Act
Release Nos. 14480 (Apr. 22, 1985) (notice) and 14550 (May 31, 1985)
(order). Mentor Short-Duration Income Fund shares are offered
without any sales loads.
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5. Applicants seek an order to permit each of the Funds to offer
multiple classes of shares (the ``Multiple Class System''). The Funds
initially will issue four classes of shares (``Class A,'' ``Class B,''
``Class C,'' and ``Class D'').
6. Class A shares will be offered at net asset value plus a front-
end sales load. Class A shares also will be subject to a CDSC of up to
1% under certain circumstances described below. In addition, Class A
shares would be subject to a non-rule 12b-1 shareholder servicing
expense of up to .25% of the average daily net assets of the class
annually.
7. Class B shares will be offered without a front-end sales load,
but subject to a CDSC at an expected rate of up to 1% on redemptions
within the first year after purchase. In addition, the shares will bear
rule 12b-1 distribution fees of up to .75% (.50% in the case of some
Funds) and a non-rule 12b-1 shareholder servicing expense of up to .25%
of the average daily net assets of the class annually.
8. Class C shares would be sold subject to a CDSC, as described
below. In addition, Class C shares will bear rule 12b-1 distribution
fees of up to .75%, and a non-rule 12b-1 shareholder servicing expense
of up to .25% of the average daily net assets of the class annually.
Class C will automatically convert into Class A shares after a
specified period (currently expected to be six years) from the date of
purchase.
9. Class D shares will be offered without any sales loads or rule
12b-1 fees. Class D shares also will bear certain other expenses that
may be lower than the comparable expenses borne by Class A, Class B,
and Class C shares. These expenses are of three types: (a)
administrative services fees, (b) transfer agency fees, and (c) Blue
Sky and prospectus costs. Class D shares will be offered only to
certain qualified institutional investors that wish to make very large
investments. Investors eligible to purchase Class D shares include tax
qualified employee benefit plans, endowments, foundations, and other
tax-exempt organizations and certain insurance company separate
accounts.\4\
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\4\The minimum initial investment amount is $1,000 for Class A,
Class B and Class C shares and $1,000,000 for Class D shares. These
amounts may be changed from time to time, but it is anticipated
that, even if the specific amounts change, the Class A, Class B, and
Class C shares would continue to have a low minimum investment,
while Class D shares would have a much higher minimum investment.
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10. In the case of certain Funds, the administrative service fee
may be charged at a higher annual percentage rate of the average daily
net assets of the Class A, Class B, Class C shares than of the Class D
shares. This fee will be payable to an administrator approved by the
Trustees pursuant to an administrative services agreement with each
Fund, in consideration of certain administrative personnel, facilities,
and services furnished by the administrator, including (among others)
shareholder relations services and oversight and supervision of the
activities of the Fund's transfer agent. These services do not include
investment advisory services or distribution services, which are
provided separately under the Fund's investment advisory and
distribution agreements with its principal underwriter or investment
adviser. Class A, Class B, and Class C shareholders will be offered an
array of services that are not likely to be available to all Class D
shareholders, such as automatic investment plans, systematic withdrawal
plans, rights of accumulation, sales load discounts for quantity
purchases, and letter of intent purchase arrangements.
11. Applicants also seek to issue additional classes of shares. The
terms of these classes may differ from the Class A, Class B, Class C,
and Class D shares only in the following respects: (a) the impact of
the disproportionate payments made under the rule 12b-1 distribution
plan and the shareholder services plan, and any ``Identifiable Class
Expenses'' which are limited to (i) transfer agency fees attributable
to a specific class of shares; (ii) printing and postage expenses
related to preparing and distributing materials such as shareholder
reports, prospectuses, and proxies to current shareholders of a
specific class; (iii) Blue Sky registration fees incurred by a class of
shares; (iv) SEC registration fees incurred by a class of shares; (v)
administrative services fees payable under each class's respective
administration services agreement, if any, and (vi) any other
incremental expenses subsequently identified that should be properly
allocated to one class which shall be approved by the Commission
pursuant to an amended order; (b) voting rights on matters which
pertain to rule 12b-1 plans except as provided in condition 2 below;
(c) the different exchange privileges of the classes of shares; (d) the
designation of each class of shares of a Fund; and (e) the fact that
only certain classes will have a conversion feature. Shares of
different classes also may be sold under different sales arrangements
and have different minimum investment amounts.
12. The net asset value of all outstanding shares of all classes of
a Fund will be computed by allocating gross income and expenses to each
class based on the net assets attributable to each class, except for
rule 12b-1 fees, shareholder servicing expenses, and Identifiable Class
Expenses.
13. Class C shares and shares of classes created in the future
which are identical in all material respects to the Class C shares,
will automatically convert into Class A shares or shares or classes
created in the future which are identical in all material respects to
the Class A shares, after a specified period (not to exceed six years)
following the purchase date as provided below. Class C shares acquired
by exchange from Class C shares of another Fund will convert into Class
A shares based on the time of the initial purchase. Class C shares
purchased through the reinvestment of dividends and other distributions
paid in respect of Class C shares will convert into Class A shares at
the same time as the shares with respect to which they were purchased
are converted. The conversion of Class C shares to Class A shares is
subject to the continuing availability of a ruling from the Internal
Revenue Service or an opinion of counsel that such conversions will not
constitute taxable events for federal tax purposes. There can be no
assurance that such ruling or opinion will be available, and the
conversion of Class C shares to Class A shares will not occur if such
ruling or opinion is not available. In such event, Class C shares would
continue to be subject to higher expenses than Class A shares for an
indefinite period.
14. Applicants expect that shares of each Fund may be exchanged for
shares of the same respective class in any other Fund, without payment
of an additional sales charge. In addition, shares of each class may in
the future be exchangeable for shares of money market funds in the
Wheat First/Cambridge fund group which are not covered by this
application. All exchange privileges applicable to each class will
comply with rule 11a-3 under the Act.
15. Applicants also seek an order to permit the Funds to assess a
CDSC on redemptions of certain classes of shares, and to permit the
Funds to waive the CDSC on redemptions of certain shares.
16. Class A shares purchased in an amount greater than a specified
amount (currently expected to be $1 million) would be subject to a CDSC
1% for redemptions made within four years from the date of purchase. In
addition, Class A shares would be subject to a CDSC at an expected rate
of up to 1% on shares purchased without a sales charge with the
proceeds from the redemption or sale of shares of another investment
company (which redemption did not result in the payment by the investor
of a CDSC), and redeemed within a specified period (currently expected
to be four years) from the date of purchase. Applicants will take such
steps as may be necessary to determine that the shareholder has not
paid a deferred sales load, fee, or other charge in connection with the
redemption of shares of such other open-end investment company,
including, without limitation, requiring the shareholder to provide a
written representation that neither a deferred sales load, fee, nor
other charge was imposed upon the redemption, and, in addition, either
(a) requiring such shareholder to provide an activity statement
reflecting the redemption that supports the shareholder's
representation or (b) reviewing a copy of the current prospectus of the
other open-end investment company and determining that such company
does not impose a deferred sales load, fee, or other charge in
connection with the redemption of shares.
17. Class B shares will be subject to a CDSC at a fixed rate
(currently expected to be 1%) on shares redeemed during the first year
after purchase. Class C shares will be subject to a variable rate CDSC
(declining over time) for a period of several years after purchase.
Applicants currently expect that the percentage of the CDSC generally
will vary from 6% for redemptions made during the first year from
initial purchase to 1% for redemptions made during the sixth year from
purchase.
18. No CDSC would be imposed with respect to: (a) redemptions of
shares that were purchased more than a specified number of years prior
to the redemptions; (b) shares derived from reinvestment of dividends
or capital gain distributions; or (c) the amount that represents an
increase in the value of the shareholder's account resulting from
capital appreciation. The amount of the CDSC will be calculated as the
lesser of the amount that represents a specified percentage of the net
asset value of the shares at the time of purchase, or the amount that
represents such percentage of the net asset value of the shares at the
time of redemption.
19. In determining the applicability and rate of any CDSC, it will
be assumed that a redemption is made first of shares representing
reinvestment of dividends and capital gain distributions and then of
other shares held by the shareholder for the longest period of time.
This will result in the charge, if any, being imposed at the lowest
possible rate. In addition, redemption requests placed by shareholders
who own shares of more than one class will be satisfied first by
redeeming the shareholder's shares of the class or classes not subject
to a CDSC, unless the shareholder has specifically elected to redeem
shares which are subject to a CDSC.
20. The CDSC would be waived for the following redemptions: (a)
Following the death or disability, as defined in section 72(m) (7) of
the Internal Revenue Code of 1986, of a shareholder if redemption is
made within one year of death or disability of a shareholder, (b) in
connection with distributions pursuant to a systematic withdrawal plan
established by a Fund, (c) in connection with a lump-sum or other
distributions following retirement, separation of service (except in
the case of an IRA) or, in the case of an IRA of Keogh Plan or a
custodial account purchase to section 403(b) (7) of the Code, after
attaining age 59\1/2\, (d) in connection with involuntary redemptions
of shares in accounts with low balances, (e) resulting from a tax-free
return of an excess contribution pursuant to section 408(d) (4) or (5)
of the Code or from the death or disability of the employee, and (f) of
shares bought by (i) a Fund's Trustees or retired Trustees (or their
family members), current and retired employees (and their families) of
a Fund's investment adviser or principal underwriter and their
affiliates, partnerships or trusts in which any of the foregoing has an
interest, (ii) registered representatives and other employees (and
their families) of broker-dealers having sales agreements with a
principal underwriter of a Fund or its affiliates, (iii) employees (and
their families) of financial institutions having sales or servicing
agreements with a principal underwriter of a Fund or its affiliates,
(iv) financial institution trust departments investing a minimum
amount, as specified in the fund's prospectus, in a Fund or in funds
within the same family of funds (as such term is defined in rule 11a-3
under the Act), (v) clients of administrators of tax-qualified plans
having purchase agreements with the principal underwriter of a Fund or
its affiliates, (vi) employee benefit plans of companies with a minimum
number of employees as specified in the applicable Fund's prospectus,
(vii) pension or profit-sharing plans sponsored by a Fund's principal
underwriter or an affiliate or of which the principal underwriter or an
affiliate serves as plan fiduciary, (viii) wrap accounts for the
benefit of clients of financial planners offering shares of the Fund
pursuant to written agreements between such financial planners and a
Fund's principal underwriter or an affiliate, and (ix) tax-qualified
plans when proceeds from repayments of loans to participants are
invested (or reinvested) in Funds within the same family of funds. If
the Funds waive or reduce a CDSC, such waiver or reduction will be
uniformly applied to all offerees in the category specified.
Applicants' Legal Analysis
1. Applicants request an exemption under section 6(c) from sections
18(f), 18(g), and 18(i) to issue multiple classes of shares
representing interests in the same portfolio of securities. Applicants
believe that, by implementing the multiple class distribution system,
the Funds would be able to facilitate the distribution of their shares
and provide a broad array of services without assuming excessive
accounting and bookkeeping costs. Applicants also believe that the
proposed allocation of expenses and voting rights is equitable and
would not discriminate against any group of shareholders. The proposed
arrangement does not involve borrowings, affect the Funds' existing
assets or reserves, or increase the speculative character of the shares
of a Fund.
2. Applicants also request an exemption under section 6(c) from
sections 2(a)(32), 2(a)(35), 22(c), and 22(d), and rule 22c-1, to
assess and, under certain circumstances, waive a CDSC on redemptions of
shares. Applicants believe that the CDSC arrangement would place the
purchaser in a better position than if a sales load were imposed at the
time of sale, since the shareholder may have to pay only a reduced
sales charge, or no sales charge at all.
Applicants' Conditions
Applicants agree that the order granting the requested relief shall
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) The
impact of the disproportionate payments made under the rule 12b-1
distribution plan and the shareholder services plan, and any
Identifiable Class Expenses which are limited to (i) transfer agency
fees attributable to a specific class of shares; (ii) printing and
postage expenses related to preparing and distributing materials such
as shareholder reports, prospectuses, and proxies to current
shareholders of a specific class; (iii) Blue Sky registration fees
incurred by a class of shares; (iv) SEC registration fees incurred by a
class of shares; (v) administrative services fees payable under each
class's respective administrative services agreement, if any, and (vi)
any other incremental expenses subsequently identified that should be
properly allocated to one class which shall be approved by the
Commission pursuant to an amended order; (b) voting rights on matters
which pertain to rule 12b-1 plans except as provided in condition 2
below; (c) the different exchange privileges of the classes of shares;
(d) the designation of each class of shares of a Fund; and (e) the fact
that only certain classes will have a conversion feature.
2. If a Fund implements any amendments to its rule 12b-1 plan (or,
if presented to shareholders, adopts or implements any amendment of a
non-rule 12b-1 shareholder services plan) that would increase
materially the amount that may be borne by a class of shares under the
plan into which another class will convert (the ``Target Class''),
shares of the class that will convert (the ``Purchase Class'') will
stop converting into the 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 (the ``New Target Class''), identical in all material respects
to the Target Class as it existed prior to implementation of the
proposal, no later than the date such shares previously were scheduled
to convert into the Target Class. If deemed advisable by the Trustees
to implement the foregoing, such action may include the exchange of all
existing Purchase Class shares for a new class (the ``New Purchase
Class''), identical to 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 or the 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 the New Target Class or the New
Purchase Class shall be borne solely by the investment adviser or
principal underwriter of the Trust in question. The Purchase Class
shares sold after the implementation of the proposal may convert into
the Target Class shares subject to the higher maximum payment, provided
that the material features of the Target Class plan and the
relationship of such plan to the Purchase Class shares are disclosed in
an effective registration statement.
3. Any class of shares with a conversion feature will convert into
another 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.
4. The Trustees of the Trusts, including a majority of the
independent Trustees, shall have approved the Multiple Class System
prior to the implementation of the Multiple Class System by a
particular Fund. The minutes of the meetings of the Trustees regarding
their deliberations with respect to the approvals necessary to
implement the Multiple Class System will reflect in detail the reasons
for determining that the Multiple Class System is in the best interests
of both the Funds and their respective shareholders.
5. The initial determination of the Identifiable Class Expenses
that will be allocated to a particular class of a Fund and any
subsequent changes thereto will be reviewed and approved by a vote of
the Trustees, including a majority of the independent Trustees. Any
person authorized to direct the allocation and disposition of monies
paid or payable by the Fund to meet Identifiable Class Expenses, rule
12b-1 fees and shareholder servicing fees 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.
6. On an ongoing basis, the Trustees, pursuant to their fiduciary
responsibilities under the Act and otherwise, will monitor each Fund
for the existence of any material conflicts among the interests of the
various classes of shares. The Trustees, including a majority of the
independent Trustees, shall take such action as is reasonably necessary
to eliminate any such conflicts that may develop. Each Trust's
investment adviser and principal underwriter will be responsible for
reporting any potential or existing conflicts to the Trustees. If a
conflict arises, the investment adviser and the principal underwriter
at their own costs will remedy the conflict up to and including
establishing a new registered management investment company.
7. The Trustees of the Trusts 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 class of shares
will be used to support any distribution or servicing fee charged to
shareholders of such class of shares. Expenditures not related to the
sale or servicing of a particular class of shares will not be presented
to the Trustees to justify any fee attributable to that class. The
statements, including the allocations upon which they are based, will
be subject to the review and approval of the independent Trustees in
the exercise of their fiduciary duties.
8. Each 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.
9. Dividends paid by a Fund with respect to each class of shares,
to the extent any dividends are paid, will be calculated in the same
manner, at the same time, and on the same day and will be in the same
amount, except that fee payments made under the rule 12b-1 plans
relating to a particular class of shares will be borne exclusively by
such class and except that any Identifiable Class Expense and
shareholder servicing expenses will be borne exclusively by the
applicable class of shares.
10. 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 the various classes have been
reviewed by an expert (the ``Expert''). The Expert has rendered a
report to the applicants (and such report has been filed with the SEC
as an exhibit to the application) 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 Commission pursuant to sections 30(a) and 30(b)(1) of the Act. The
work papers of the Expert with respect to such reports, following
request by the Funds which the Funds agree to make, will be available
for inspection by the Commission staff upon the written request for
these work papers by a senior member of the Division of Investment
Management or of a Regional Office of the Commission, limited to the
Director, an Associate Director, the Chief Accountant, the Chief
Financial Analyst, any Assistant Director, and any Regional
Administrator or Associate and Assistant Administrator. 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.
11. 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 will be concurred with by the
Expert in the initial report referred to in condition 10 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 10 above. The applicants agree to take immediate
corrective action if the Expert, or appropriate substitute Expert, does
not so concur in the ongoing reports.
12. The prospectuses of the Funds will contain a statement to the
effect that a salesperson and any other person entitled to receive any
compensation for selling or servicing Fund shares may receive different
compensation with respect to one particular class of shares over
another in the Fund.
13. Each Trust's principal underwriter 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 these standards.
14. 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.
15. 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 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 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 the 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. The information provided by applicants for
publication in any newspaper or similar listing of the Funds' net asset
values and public offering prices will present each class of shares
separately.
16. Applicants acknowledge that the grant of the requested
exemptive order will not imply Commission approval or authorization of
or acquiescence in any particular level of payments that the Funds may
make pursuant to rule 12b-1 plans or shareholder services plans in
reliance on the order.
17. Applicants will comply with the provisions of proposed rule 6c-
10 under the Act, Investment Company Act Release No. 16619 (November 2,
1988), as the 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. 94-18075 Filed 7-25-94; 8:45 am]
BILLING CODE 8010-01-M