[Federal Register Volume 60, Number 21 (Wednesday, February 1, 1995)]
[Notices]
[Pages 6338-6343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2429]



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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20864; 812-9168]


Heritage Cash Trust, et al.; Notice of Application

January 26, 1995.
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: Heritage Cash Trust (``HCT''), Heritage Capital 
Appreciation Trust (``HCAT''), Heritage Income-Growth Trust (``HIGT''), 
Heritage Income Trust (``HIT''), Heritage Series Trust (``HST''), 
Heritage Asset Management, Inc. (the ``Adviser''), and Raymond James & 
Associates, Inc. (the ``Distributor''), and any other open-end 
management investment companies created in the future, for which the 
Adviser, or any person directly or indirectly controlling, controlled 
by, or under common control with the Adviser, serves as investment 
adviser, and/or for which the Distributor, or any person controlled by 
or under common control with the Distributor, serves as principal 
underwriter (collectively, the ``Funds'').

RELEVANT ACT SECTIONS: Order requested pursuant to section 6(c) 
granting 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 seek an order to permit certain 
open-end management investment companies to issue and sell multiple 
classes of shares representing interests in the same portfolios of 
securities, assess a contingent deferred sales charge (``CDSC'') on 
certain redemptions, defer, and waive the CDSC in certain instances.

FILING DATES: The application was filed on August 15, 1994 and amended 
on November 29, 1994, December 19, 1994 and January 25, 1995.

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 [[Page 6339]] received by the SEC by 5:30 p.m. on 
February 21, 1995, 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 the date of a hearing may request 
notification by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549. 
Applicants, 880 Carillon Parkway, St. Petersburg, Florida 33176.

FOR FURTHER INFORMATION CONTACT:
Marianne H. Khawley, Staff Attorney, at (202) 942-0562, 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 is available for a fee from the 
SEC's Public Reference Branch.

Applicants' Representations

    1. HCT, HCAT, HIGT, HIT, and HST are Massachusetts business trusts 
registered under the Act as open-end diversified management investment 
companies. HCAT and HIGT each have a single investment portfolio. HCT 
currently offers shares in two investment portfolios: the Money Market 
Fund and the Municipal Money Market Fund. HIT currently offers shares 
of three investment portfolios: the Diversified Portfolio, the 
Institutional Government Portfolio, and the Limited Maturity Government 
Portfolio. HST currently offers shares in three investment portfolios: 
Small Cap Stock Fund, Value Equity Fund, and Eagle International Equity 
Portfolio.
    2. The Adivser, a wholly-owned subsidiary of Raymond James 
Financial, Inc. (``RJF''), serves as investment adviser for each Fund, 
except HST-Eagle International Equity Portfolio. Eagle Asset 
Management, Inc., also a wholly-owned subsidiary of RJF, serves as 
investment adviser for HST-Eagle International Equity Portfolio and as 
subadviser for HCAT, HIGT, HIT-Diversified Portfolio, and HST-Value 
Equity Fund. Two separate divisions of the Distributor, the Research 
Division and Awad & Associates, serve as subadvisers to HST-Small Cap 
Stock Fund. Martin Currie Inc. serves as subadviser to HST-Eagle 
International Equity Portfolio. The Adviser serves as fund accountant 
and transfer agent for each Fund. State Street Bank and Trust Company 
serves as custodian for the Funds. The Distributor serves as the 
principal underwriter.
    3. Each Fund pays advisory and administration fees to the Adviser 
at annualized rates ranging from .50% to 1.00% of average daily net 
assets. Each Fund also pays transfer agency fees and fund accounting 
fees. The fees of the subadvisers are paid by the Adviser. Shares of 
the Funds are available for sale to the public through the Distributor 
or participating dealers and participating banks that have entered into 
agreements with the Distributor to sell shares. Shares also may be 
acquired through the Adviser in its capacity as transfer agent. Shares 
of each Fund, except HCT, HIT-Institutional Government Portfolio, HIT-
Limited Maturity Government Portfolio, and HST-Eagle International 
Equity Portfolio, are presently offered with a front-end sales charge 
ranging from 2.00% to 4.75%. HCT, HIT-Institutional Government 
Portfolio, and HST-Eagle International Equity Portfolio do not charge a 
front-end or deferred sales charge. HIT-Limited Maturity Government 
Portfolio currently waives its front-end sales charge. The Distributor 
retains the sales charges imposed on sales of shares and re-allows all 
or a portion of such charges to certain dealers and banks that effect 
such sales. Based on distributor plans adopted pursuant to rule 12b-1 
under the Act (the ``12b-1 plan(s)'', the Funds pay the Distributor 
fees at annualized rates ranging from .15% to 1.00% of average daily 
net assets.
    4. The net asset value of each fund share, other than the shares of 
HCT, is computed by dividing the value of the Fund's assets, less its 
liabilities, by the number of the Fund's shares outstanding. The net 
asset value of each share of HCT-Money Market Fund and HCT-Municipal 
Money Market Fund is calculated in accordance with the amortized cost 
method which is designed to enable these Funds to maintain a constant 
$1.00 per share net asset value.
    5. Applicants request an order pursuant to section 6(c) exempting 
the Funds and each of their investment portfolios from the provisions 
of 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, to the extent necessary 
to: (a) Create, issue, and sell multiple classes of securities for the 
purpose of establishing a multiple class system (``multi-class 
system''); and (b) permit the imposition of a CDSC on the redemption of 
certain shares purchased at net asset value and to waive or reduce the 
CDSC with respect to certain redemptions.
    6. The Funds currently propose to offer three classes of shares. 
Class A shares will be subject to a front-end sales charge, if any, and 
a rule 12b-1 fee at a rate of approximately .25% per annum of the 
average daily net asset value of such shares. Class A shares of a Fund, 
such as Class A shares of HCT- Money Market Fund, HCT-Municipal Money 
Market Fund, and HIT-Institutional Government Portfolio, may be offered 
without a front-end sales charge. In addition, the Adviser may choose 
to waive the front-end sales charge for Class A shares of a Fund, such 
as the waiver in effect for the HIT-Limited Maturity Government 
Portfolio.
    7. Class C shares will be subject to a CDSC, if any, ranging from 
.75% to 1.00% of the aggregate purchase payments made by an investor 
for such shares of a Fund, and a rule 12b-1 fee ranging from, depending 
on the Fund, approximately .60% to 1.00% per annum of the average daily 
net asset value of the shares. The 12b-1 fee of the Class C shares will 
consist of a combination of up to a .75% distribution fee and up to a 
.25% service fee.
    8. Class D shares will not be subject to a sales charge, will have 
a low 12b-1 fee, if any, and will be offered only to institutional 
investors. Existing shares of the Funds generally will be classified as 
Class A shares. If such shares are held by investors eligible to 
purchase Class D shares, however, the shares may be classified as Class 
D shares.
    9. Although there is no current intention to do so, applicants may 
in the future establish such other classes of shares as applicants deem 
in the best interest of each Fund and its shareholders. All classes of 
shares issued by the funds in connection with any order granted in 
response to this application will be issued on a basis identical in all 
material respects to the classes described and will comply with all 
conditions set forth below. These classes might be offered: (a) in 
connection with a 12b-1 plan or plans; (b) in connection with a non-
rule 12b-1 shareholder services plan or plans (the ``shareholder 
services plan(s)''); (c) in connection with the allocation of certain 
expenses that are directly attributable only to certain classes 
(``class expenses''); (d) without any 12b-1 plan or shareholder 
services plan; (e) subject to the imposition of varying front-end sales 
charges; and/or (f) subject to the imposition of varying CDSCs.
    10. With respect to each new class, each Fund may enter into one or 
more 12b-1 plan agreements and/or [[Page 6340]] shareholder services 
plan agreements with the Distributor and/or other groups, 
organizations, or institutions concerning the provision of certain 
services to shareholders of a particular class. The provision of 
distribution services and shareholder servicing under the plans will 
complement (and not duplicate) the services to be provided to each Fund 
by its manager, investment adviser(s), and/or distributor, and by the 
parties that provide custody, transfer agency, and administrative 
services to each Fund. In all cases, the Funds shall comply with 
article III, section 26 of the National Association of Securities 
Dealers' (``NASD'') Rules of Fair Practice as it relates to the maximum 
amount of asset-based sales charges that may be imposed by an 
investment company.
    11. The expenses of the Funds that cannot be attributed directly to 
any one Fund (``trust expenses'') generally will be allocated to each 
Fund based on the relative net assets of those Funds.\1\ Trust expenses 
could include, for example, trustees' fees and expenses, unallocated 
audit and legal fees, certain insurance premiums, expenses relating to 
shareholder reports and meetings, and printing expenses not 
attributable to a single Fund or class.

    \1\From time to time, a Fund may allocate expenses among its 
series using an alternative method, including allocation based on 
the number of shareholders of each series or the number of series in 
such Fund, as may be appropriate.
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    12. Certain expenses may be attributable to a particular Fund, but 
not a particular class (``Fund expenses''). All such Fund expenses 
incurred by a Fund will be allocated to each class of its shares based 
upon the relative net assets of the class, at the beginning of the day, 
as determined daily. Fund expenses could include, for example, advisory 
fees, accounting fees, custodian fees, and fees related to the 
preparation of separate documents of a particular Fund, such as an 
annual report for such Fund.
    13. Class expenses will be charged directly to the net assets of 
the particular class and thus will be borne on a pro rata basis by the 
outstanding shares of such class. All allocations of class expenses 
will be limited to the extent necessary to preserve a Fund's 
qualification as a regulated investment company pursuant to the 
Internal Revenue Code of 1986, as amended.
    14. Shares of one or more classes (``Purchase Class shares'') may 
automatically convert to another class (``Target Class shares'') after 
a prescribed period of time. Target Class shares thereafter would be 
subject to lower 12b-1 plan payments, if any, than Purchase Class 
shares. Purchase Class shares are currently expected to convert to 
Target Class shares following the expiration of approximately six years 
from the purchase date. Target Class shares in all cases will be 
subject to lower aggregate 12b-1 plan payments, if any, and ongoing 
class expenses, than Purchase Class shares. The conversion will be on 
the basis of the relative net asset values of the two classes, without 
the imposition of any sales or other charge except that any asset-based 
sales or other charge applicable to the Target Class shares would 
thereafter be applied to such converted shares. Purchase Class shares 
in a shareholder's Fund account that were purchased through the 
reinvestment of dividends and other distributions paid in respect of 
Purchase Class shares will be considered to be held in a separate sub-
account. Each time any Purchase Class shares in a shareholder's Fund 
account convert to Target Class shares, a pro rata share of the 
Purchase Class shares then in the sub-account also will convert to 
Target Class shares. The conversion would be subject to the 
availability of any opinion by counsel or an Internal Revenue Service 
private letter ruling to the effect that the conversion does not 
constitute a taxable event under federal income tax law.
    15. Applicants request relief to permit each Fund to waive, defer, 
or reduce the CDSC in certain circumstances. Any waiver, deferral, or 
reduction will comply with the conditions in paragraphs (a) through (d) 
of rule 22d-1 under the Act.
    16. The CDSC will not be imposed on redemptions of shares which 
were purchased more than six years prior to the redemptions (the ``CDSC 
period'') or on those shares derived from the reinvestment of dividends 
and/or distributions. No CDSC will be imposed on an amount which 
represents an increase in the value of a shareholder's account 
resulting from capital appreciation above the amount paid for shares 
purchased in the CDSC period. 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.
    17. In determining the applicability of any CDSC, it will be 
assumed that a redemption is made first of shares representing 
reinvestment of the dividends and capital gain distributions, second of 
shares held by the shareholder for a period equal to or greater than 
the CDSC period, and finally of other shares held by the shareholder 
for the longest period of time. This will result in a charge, if any, 
imposed at the lowest possible rate.
    18. No CDSC will be imposed on any shares issued by the Funds prior 
to the date of any order granting the exemptive relief requested.
    19. Applicants also request the ability to provide a pro rata 
credit for any CDSC paid in connection with a redemption of shares 
followed by a reinvestment effected within a specified period not 
exceeding 365 days of redemption. Such credit will be paid by the 
Distributor rather than the Fund.
    20. The shares in different classes within a Fund will also have 
different exchange privileges. Shares may be exchanged at net asset 
value for shares of the corresponding class of other Funds. Applicants 
anticipate that shares of each class of a Fund will be exchangeable for 
the corresponding class of one or more other Funds. The Adviser retains 
the right to disallow exchanges of existing and future classes into 
HCT. All exchange privileges will comply with rule 11a-3 under the Act.

Applicants' Legal Analysis

    1. Applicants request an order pursuant to section 6(c) providing 
an exemption from the Act to the extent that the proposed creation, 
issuance, and sale of new classes of shares representing interests in 
the existing and future Funds, including the allocation of voting 
rights thereto and the payment of dividends thereon, might be deemed: 
(a) to result in a ``senior security'' within the meaning of section 
18(g) of the Act and to be prohibited by section 18(f)(1) of the Act; 
and (b) to violate the requirement of section 18(i) of the Act that 
every share of stock issued by a registered management investment 
company shall have equal voting rights with every other outstanding 
voting stock.
    2. Applicants believe the proposed allocation of expenses and 
voting rights in the manner described is equitable and would not 
discriminate against any group of shareholders. Although investors 
purchasing shares offered in connection with a 12b-1 plan and/or 
bearing particular class expenses would bear the costs associated with 
the related services, they also would enjoy the benefits of those 
services and the exclusive shareholder voting rights with respect to 
matters affecting the applicable 12b-1 plan. Conversely, investors 
purchasing shares that are not covered by a plan or not bearing class 
expenses would not be burdened with such expenses or enjoy such voting 
rights. [[Page 6341]] 
    3. Applicants assert that because the rights and privileges of 
shares would be substantially identical, the possibility that their 
interests would ever conflict is remote. The interests of each class of 
shareholders would be protected adequately because the 12b-1 plans and 
the payments thereunder will conform to the requirements of rule 12b-1, 
including the requirement that the 12b-1 plans be approved by the 
boards of trustees (the ``trustees'') of the respective Funds, 
including the independent trustees.
    4. Applicants believe that the creation, issuance, and sale of new 
classes of shares by the Funds may assist the Funds in meeting the 
competitive demands of today's financial services industry. The 
proposed arrangement would permit the Funds to both facilitate 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. Under 
the proposed arrangement, investors will be able to choose the method 
of purchasing shares that is most beneficial given the amount of their 
purchase and the length of time the investor expects to hold his 
shares. The proposed arrangement does not involve borrowed money and 
does not affect the Funds' existing assets or reserves. The proposed 
arrangement will not increase the speculative character of the new 
classes of shares in a Fund because all shares will participate in all 
of the Fund's appreciation, income, and expenses.
    5. Applicants also are requesting an exemption from the provisions 
of sections 2(a)(32), 2(a)(35), 22(c), and 22(d) of the Act, and rule 
22c-1 thereunder, to the extent necessary to allow the Funds the 
ability to assess a CDSC on certain classes of shares and any future 
classes of shares which may impose a CDSC, and to waive or reduce the 
CDSC with respect to certain types of redemptions. Applicants believe 
that the imposition of a CDSC on certain classes of shares is fair and 
in the best interests of their shareholders. The proposed sales 
structure permits Fund shareholders to have the advantage of greater 
investment dollars working for them from the time of their purchase of 
CDSC class shares than if a sales charge were imposed at the time of 
purchase.

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 be identical in all respects, except 
as set forth below. The only differences between the classes of shares 
of a Fund will relate solely to one or more of the following: (a) 
Expenses assessed to a class pursuant to a 12b-1 plan or shareholder 
services plan, if any, with respect to such class; (b) the impact of 
class expenses, which are limited to any or all of the following: (i) 
Transfer agent fees identified as being attributable to a specific 
class of shares, (ii) stationary, printing, postage, and delivery 
expenses related to preparing and distributing materials such as 
shareholder reports, prospectuses, statements of additional 
information, and proxy statements 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) expenses 
of administrative personnel and services as required to support the 
shareholders of a specific class, (vi) trustees' fees or expenses 
incurred as a result of issues relating to one class of shares, (vii) 
accounting expenses relating solely to one class of shares, (viii) 
auditors' fees, litigation expenses, legal fees, and expenses relating 
to a class of shares, and (ix) expenses incurred in connection with 
shareholders' meetings as a result of issues relating to one class of 
shares; (c) the fact that the classes will vote separately with respect 
to matters relating to a Fund's 12b-1 plan applicable to each class, if 
any, except as provided in condition 15; (d) the different exchange 
privileges of the classes of shares, if any; (e) certain classes may 
have a conversion feature; and (f) the designation of each class of 
shares of a Fund. Any additional incremental expenses not specifically 
identified which are subsequently identified and determined to be 
properly allocated to one class of shares shall not be so applied 
unless and until approved by the SEC.
    2. The trustees, including a majority of the independent trustees, 
will have approved the multi-class system, with respect to a particular 
Fund prior to the implementation of the system by that Fund. The 
minutes of the meetings of the trustees regarding the deliberations of 
the trustees with respect to the approvals necessary to implement the 
multi-class system will reflect in detail the reasons for the trustees' 
determination that the proposed multi-class system is in the best 
interests of each 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 trustees, including a 
majority of the independent trustees. Any person authorized to direct 
the allocation and disposition of monies paid or payable by a Fund to 
meet class expenses shall provide to the 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. If any class will be subject to a shareholder services plan, the 
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.
    5. On an ongoing basis, each Fund's board of trustees, pursuant to 
their fiduciary responsibilities under the Act and otherwise, will 
monitor that Fund, for the existence of any material conflicts among 
the interests of the classes of its 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. 
The Adviser and the Distributor will be responsible for reporting any 
potential or existing conflicts to the trustees. If a conflict arises, 
the Adviser and the Distributor, at their own expense will take such 
actions as are necessary to remedy such conflict including establishing 
a new registered management investment company, if necessary.
    6. The trustees will receive quarterly and annual statements 
concerning distribution and shareholder servicing expenditures in 
compliance 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 fees charged to that class. 
Expenditures not related to the sale or servicing of a particular class 
of shares will not be presented to the trustees to justify any fees 
charged 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.
    7. Dividends and other distributions paid by a Fund with respect to 
each class of its shares, to the extent any dividends or other 
distributions are paid, will be declared and paid on the same day and 
at the same time, and will be determined in the same manner and will be 
in the same amount, except that the amount of the dividends and other 
[[Page 6342]] distributions declared and paid by a particular class may 
be different from that of another class because plan payments made by a 
class pursuant to a 12b-1 plan or shareholder services plan and other 
class expenses will be borne exclusively by that class.
    8. The methodology and procedures for calculating the net asset 
value and dividends and other distributions of the classes and the 
proper allocation of expenses among the classes have been reviewed by 
an Expert (the ``Expert''), who has rendered a report to the trustees 
of the Funds, which has been provided to the staff of the SEC, stating 
that such methodology and procedures are adequate to ensure that such 
calculations and allocations will be made in an appropriate manner. On 
an ongoing basis, the Expert, or an appropriate substitute Expert, will 
monitor the manner in which the calculations and allocations are being 
made, and based upon such review, will render at least annually a 
report to the Funds that the calculations and allocations are being 
made properly. The reports of the Expert shall be filed as part of the 
periodic reports filed with the SEC pursuant to sections 30(a) and 
30(b)(1) of the Act. The work papers of the Expert with respect to such 
reports, following request by the Funds which the Funds agree to make, 
will be available for inspection by the SEC staff upon the written 
request to a Fund for such work papers by a senior member of the SEC's 
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 ``policies and 
procedures placed in operation'' in accordance with Statements on 
Auditing Standards (``SAS'') No. 70, ``Reports on the Processing of 
Transactions by Service Organizations,'' of the American Institute of 
Certified Public Accountants (``AICPA''). Ongoing reports will be 
reports on ``policies and procedures placed in operation and tests of 
operating effectiveness'' prepared in accordance with 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 other distributions of the classes of 
shares and the proper allocation of income and expenses among the 
classes of shares and this representation has been concurred with by 
the Expert in the initial report referred to in condition 8 above and 
has been concurred with by the Expert, or 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 the Expert, or appropriate substitute Expert, 
does not so concur in the ongoing reports.
    10. The conditions pursuant to which the exemptive order is granted 
and the duties and responsibilities of the trustees with respect to the 
multi-class system will be set forth in the guidelines that will be 
furnished to the trustees.
    11. Each Fund will disclose the respective expenses, performance 
data, distribution arrangement, services, fees, sales loads, CDSCs, 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 statements 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 disclose 
the expense or performance data applicable to all classes of shares. 
The information provided by applicants for publication in any newspaper 
or similar listing of a Fund's net asset a value or public offering 
price will present each class of shares separately.
    12. The prospectus of each Fund will include a statement to the 
effect that a salesperson and any other person entitled to receive 
compensation for selling or servicing shares of a Fund may receive 
different levels of compensation with respect to one particular class 
of shares over another in a Fund.
    13. 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 
a Fund may make pursuant to its 12b-1 plan or shareholder services plan 
in reliance on the exemptive order.
    14. 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 (as the term is defined in Article III, 
Section 26 of the NASA's Rules of Fair Practice), if any, that in the 
aggregate is lower than the asset-based sales charge and service fee to 
which they were subject prior to the conversion.
    15. If a Fund implements any amendment to a 12b-1 plan (or, if 
presented to sharesholders, adopts or implements any amendment to a 
shareholder services plan) that would increase materially the amount 
that may be borne by the Target Class shares under the plan, then 
existing Purchase Class shares will stop converting into the Target 
Class shares unless the holders of a majority of Purchase Class shares, 
voting separately as a class, approve the amendment. The trustees shall 
take such action as is necessary to ensure that existing Purchase class 
shares are exchanged or converted into a new class of shares (``New 
Target Class shares''), identical in all material respects to Target 
Class shares as they existed prior to implementation of the amendment, 
no later than the date such shares previously were scheduled to convert 
into Target Class shares. If deemed advisable by the trustees to 
implement the foregoing, such action may include the exchange of all 
existing Purchase Class shares for a new class of shares (``New 
Purchase Class shares''), identical to existing Purchase Class shares 
in all material respects except that the New Purchase Class shares will 
convert into New Target Class shares. The New Target Class shares and 
New Purchase Class shares may be formed without further exemptive 
relief. Exchanges or conversions described in this condition shall be 
effected in a manner that the trustees reasonably believe will not be 
subject to federal taxation. In accordance with condition 5, any 
additional cost associated with the creation, exchange, or conversion 
of the New Target Class shares or New Purchase Class shares will be 
borne solely by the Adviser and/or the Distributor. Purchase Class 
shares sold after the implementation of this proposed arrangement may 
convert into Target Class shares subject to the higher maximum payment, 
provided that the material features of the target Class plan and the 
relationship of such plan to the Purchase class shares are disclosed in 
an effective registration statement.
    16. The Distributor will adopt compliance standards as to when each 
class of shares may appropriately be [[Page 6343]] sold to particular 
investors. Applicants will require all persons selling shares of the 
Funds to agree to conform to such standards.
    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, or if it is reproposed or 
adopted, as it may be reproposed, adopted, or amended.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margeret H. McFarland,
Deputy Secretary.
[FR Doc. 95-2429 Filed 1-31-95; 8:45 am]
BILLING CODE 8010-01-M