[Federal Register Volume 62, Number 175 (Wednesday, September 10, 1997)]
[Notices]
[Pages 47709-47711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23952]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-22807; 812-10714]


Style Select Series, Inc., et al.; Notice of Application

September 3, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for an exemption under section 17(b) of 
the Investment Company Act of 1940 (the ``Act'') from section 17(a) of 
the Act.

-----------------------------------------------------------------------

SUMMARY OF APPLICATION: Applicants request an order to permit a series 
of the

[[Page 47710]]

Style Select Series, Inc. to acquire all of the assets and assume all 
of the liabilities of a series of SunAmerica Equity Funds.

APPLICANTS: Style Select Series, Inc. (the ``Company''), on behalf of 
International Equity Portfolio (the ``Acquiring Fund''), and SunAmerica 
Equity Funds (the ``Trust''), on behalf of SunAmerica Global Balanced 
Fund (the ``Acquired Fund'').

FILING DATES: The application was filed on July 3, 1997, and amended on 
August 28, 1997.

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 September 24, 
1997, and should be accompanied by proof of service on applicants, in 
the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549. 
Applicants, The SunAmerica Center, 733 Third Avenue, New York, New York 
10017-3204.

FOR FURTHER INFORMATION CONTACT: Lawrence W. Pisto, Senior Counsel, at 
(202) 942-0527, or Christine Y. Greenlees, Branch Chief, at (202) 942-
0564 (Office of Investment Company Regulation, Division of Investment 
Management).

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, 450 Fifth Street, NW., Washington, DC 
20549 (tel. (202) 942-8090).

Applicants' Representations

    1. The Company, a Maryland corporation, is registered under the Act 
as an open-end management investment company. The Acquiring Fund is one 
of four series of the Company. The Trust, a Massachusetts business 
trust, is registered under the Act as an open-end management investment 
company. The Acquired is one of six series of the Trust. The Acquiring 
Fund and the Acquired Fund may be referred to individually as a 
``Fund'' and collectively as the ``Funds.'' SunAmerica Asset Management 
Corp. (``SAAMCo''), an investment adviser registered under the 
Investment Advisers Act of 1940 and indirect wholly-owned subsidiary of 
SunAmerica Inc., serves as investment adviser to both Funds.
    2. Each Fund offers Class A and Class B shares.\1\ Class A and 
Class B shares of the Acquiring Fund are subject to sales charges and 
distribution fees on identical terms as Class A and Class B shares, 
respectively, of the Acquired Fund. Class A shares of each Fund are 
sold at the respective net asset value plus a sales charge imposed at 
the time of purchase, and Class B shares of each Fund are sold at the 
respective net asset value subject to a contingent deferred sales 
charge (``CDSC'') if redeemed within six years of the date of purchase.
---------------------------------------------------------------------------

    \1\ The Acquiring Fund also offers Class C shares, but they will 
not be issued in connection with the Reorganization (as defined 
below).
---------------------------------------------------------------------------

    3. On the Effective Date (as defined below) of the proposed 
reorganization (the ``Reorganization''), all of the assets and 
liabilities of the Acquired Fund will be transferred to the Acquiring 
Fund in exchange for Class A and Class B shares of the Acquiring Fund 
(the ``Issued Shares'') on the basis of relative net asset value. The 
Funds are seeking to consummate the Reorganization on or about 
September 12, 1997, and in any event no later than September 30, 1997, 
the fiscal year end of the Acquired Fund (the ``Effective Date'').
    4. No sales charge will be imposed on the Issued Shares. Class B 
shares of each Fund automatically convert to Class A shares 
approximately seven years after purchase. A shareholder's holding 
period for Class B shares of the Acquiring Fund received in the 
Reorganization will include the shareholder's holding period for the 
Class B shares of the Acquired Fund exchanged therefor in the 
Reorganization, for purposes of determining any applicable CDSC upon 
redemption of such shares as well as when such shares convert to Class 
A shares.
    5. SunAmerica Capital Services, Inc. (``SACS'' or the 
``Distributor''), an affiliated person of SAAMCo, serves as distributor 
of both Funds. Each Fund has adopted distribution plans with respect to 
Class A and Class B shares (hereinafter referred to as the ``Class A 
Plans'' and the ``Class B Plans,'' and collectively, the ``Distribution 
Plans''). Under the Class A Plans, the Distributor may receive payments 
from a Fund at an annul rate of up to 0.10% of average daily net assets 
of such Fund's Class A shares. Under the Class B Plans, the Distributor 
may receive payments from a Fund at the annual rate of up to 0.75% of 
the average daily net assets of such Fund's Class B shares. It is 
possible that in any given year, the amount paid to the Distributor 
under the Class A plans or Class B Plans May exceed the Distributor's 
distribution costs as described above. The Distribution Plans provide 
that each class of shares of each Fund may also pay the Distributor an 
account maintenance and service fee of up to 0.25% of the aggregate 
average daily net assets of such class of shares.
    6. The Acquiring Fund seeks long-term growth of capital by 
investing in equity securities of issuers in countries other than the 
United States. The Acquiring Fund will invest, under normal 
circumstances, at least 65% of its total assets in equity securities of 
issuers in at least three countries other than the United States. The 
Acquired Fund seeks capital appreciation while conserving principal by 
maintaining at all times a balanced portfolio of domestic and foreign 
stocks and bonds. Under normal circumstances, the Acquired Fund will 
invest at least: (a) 25% of its assets in global fixed-income senior 
securities; (b) 10% of its assets in domestic equity securities; and 
(c) 45% of its assets in foreign equity securities. In addition, it is 
anticipated that, under normal circumstances, the Acquired Fund will 
invest its assets in at least 10 countries at any time, although it is 
only required, under such circumstances, to maintain investments in at 
least three countries (one of which may be the United States).
    7. Immediately after the Effective Date, (a) the Issued Shares 
received by the Acquired Fund pursuant to the Agreement and Plan of 
Reorganization (the ``Agreement'') will be distributed to the 
shareholders of the Acquired Fund in exchange for their Class A and 
Class B shares (``Exchange Shares'') in the Acquired Fund, such that 
each shareholder of the Acquired Fund will receive a number of full and 
fractional Issued Shares of the same class as, and having, at the 
Effective Date, an aggregate net asset value equal to the aggregate net 
asset value of the Exchanged Shares held by such shareholder on 
Effective Date at the time at which the Acquiring Fund ordinarily 
determines its net asset value (computed as of close of regular trading 
on the New York Stock Exchange), and (b) the Exchanged Shares will 
thereupon be canceled on the books of the Trust. The net asset value of 
the Issued Shares and of the Exchanged Shares will be calculated in 
accordance with the description of the net asset value in the then-
current prospectus of the

[[Page 47711]]

Acquiring Fund and Acquired Fund, respectively.
    8. The distribution of the Issued Shares to the shareholders of the 
Acquired Fund will be accomplished by the establishment of an open 
account on the share records of the Acquiring Fund in the name of each 
shareholder of the Acquired Fund and representing the respective pro 
rata number of Issued Shares of the same class as, and equal in value 
to the value of, the Exchanged Shares held by such shareholder at the 
Effective Date. Exchanged Shares held in an open account with the 
transfer agent of the Acquired Fund will automatically become the 
number of Issued Shares provided for above and be held in an open 
account with the transfer agent of the Acquiring Fund.
    9. The Agreement provides that the Acquired Fund will make one or 
more distributions to shareholders prior to the Effective Date which, 
together with all previous distributions, will have the effect of 
distributing to its Class A and B shareholders all of its net 
investment income and capital gains for the period from the close of 
its last fiscal year to the close of business on the Effective Date and 
any undistributed amounts thereof from the last fiscal year.
    10. On May 22, 1997, the board of directors of the Company and the 
board of trustees of the Trust (collectively, the ``Boards''), 
including their disinterested directors and trustees, respectively, 
unanimously approved the Agreement. In deciding to approve the 
Agreement, the Boards concluded that the Reorganization would operate 
in the best interests of the relevant Fund and its shareholders and 
that the interests of the shareholders of each Fund would not be 
diluted as a result of the Reorganization.
    11. In deciding to approve the Agreement and recommend it to the 
shareholders of the Acquired Fund, the Board of the Trust reviewed 
information related to the following factors: (1) Performance of the 
Funds; (2) Funds' fees and expenses; (3) Funds' growth rate and 
economies of scale; (4) the similarities of the Funds; (5) the tax-free 
nature of the transaction; and (6) lack of dilution of the interests of 
the Acquired Fund shareholders.
    12. All costs of the Reorganization, including the costs of 
printing and mailing the prospectus/proxy statement and the costs of 
the special meeting of shareholders of the Acquired Fund scheduled for 
September 5, 1997 (the ``Meeting''), will be borne by SAAMCo and not by 
either Fund.
    13. A definitive prospectus/proxy statement relating to the Meeting 
was filed with the SEC on July 8, 1997. Applicants sent the prospectus/
proxy statement to shareholders of the Acquired Fund on July 8, 1997, 
for their approval at the Meeting.
    14. The Agreement sets forth certain conditions to the consummation 
of the Reorganization, including the approval of the Reorganization by 
shareholders of the Acquired Fund, receipt of an opinion of counsel as 
to tax matters, and receipt of the SEC order requested in the 
application.
    15. The Agreement and the Reorganization may be terminated by 
either Board notwithstanding approval by the shareholders of the 
Acquired Fund at any time prior to the Effective Date if circumstances 
should develop that, in the opinion of either Board, make proceeding 
with the Agreement inadvisable. Applicants agree not to make any 
material changes to the Agreement without prior SEC approval.

Applicants' Legal Analysis

    1. Section 17(a) generally prohibits an affiliated person of a 
registered investment company, or any affiliated person of such person, 
from selling any security to or purchasing any security from the 
company. Section 2(a)(3)(C) defines the term ``affiliated person'' of 
another person to include any person controlling, controlled by, or 
under common control with such person.
    2. Rule 17a-8 exempts from the prohibitions of section 17(a) 
mergers, consolidations, or purchases or sales of substantially all of 
the assets of registered investment companies that are affiliated 
persons solely by reason of having a common investment adviser, common 
directors/trustees, and/or common officers, provided that certain 
conditions are satisfied.
    3. Applicants believe that they may not rely on rule 17a-8 in 
connection with the Reorganization because the Acquiring Fund and the 
Acquired Fund may be affiliated for reasons other than those set forth 
in the rule. Specifically, SunAmerica Inc. indirectly owns 100% of the 
outstanding voting securities of each of SAAMCo and SACS, the adviser 
to and distributor of, respectively, both Funds. As of June 30, 1997, 
the record date for the Meeting, SunAmerica Inc. also owns with the 
power to vote approximately 32% of the outstanding shares of the 
Acquiring Fund.\2\ Because of this ownership, applicants believe that 
the Acquiring Fund may be deemed an affiliated person of an affiliated 
person of the Acquired Fund, and vice versa, for reasons not based 
solely on their common adviser.
---------------------------------------------------------------------------

    \2\ SunAmerica Inc. does not own any of the outstanding shares 
of the Acquired Fund as of June 30, 1997.
---------------------------------------------------------------------------

    4. Section 17(b) authorizes the SEC to exempt a proposed 
transaction from section 17(a) if the terms of the proposed 
transaction, including the consideration to be paid or received, are 
reasonable and fair and do not involve overreaching on the part of any 
person concerned; the proposed transaction is consistent with the 
policies of each registered investment company concerned and the 
general purposes of the Act.
    5. Applicants submit that the terms of the Reorganization satisfy 
the standards set forth in section 17(b), in that the terms are fair 
and reasonable and do not involve overreaching on the part of any 
person concerned. Applicants note that each Board, including the non-
interested trustees and directors, as applicable, reviewed the terms of 
the Reorganization as set forth in the Agreement, including the 
consideration to be paid or received, and found that participation in 
the Reorganization as contemplated by the Agreement is in the best 
interests of the Company, the Trust, and each Fund, and that the 
interests of existing shareholders of each Fund will not be diluted as 
a result of the Reorganization. Applicants also note that the exchange 
of the Acquired Fund's assets and liabilities for the shares of the 
Acquiring Fund will be based on the Funds' relative net asset values.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-23952 Filed 9-9-97; 8:45 am]
BILLIING CODE 8010-01-M