[Federal Register Volume 64, Number 209 (Friday, October 29, 1999)]
[Notices]
[Pages 58462-58464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-28356]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-24110, 812-11754]


AIM Advisors, Inc., et al., Notice of Application

October 25, 1999.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for an order under section 6(c) of the 
Investment Company Act of 1940 (``Act'') for an exemption from sections 
18(c) and 18(i) of the Act, under sections 6(c) and 23(c)(3) of the Act 
for an exemption from rule 23c-3 under the Act, and pursuant to section 
17(d) of the Act and rule 17d-1 under the Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit certain 
registered closed-end management investment companies to issue multiple 
classes of shares, and impose asset-based distribution fees and early 
withdrawal charges.

APPLICANTS: AIM Advisors, Inc. (``Advisers''), GT Global Floating Rate 
Fund, Inc., d/b/a/ AIM Floating Rate Fund (``Fund''), and AIM 
Distributors, Inc. (``Distributor'').

FILING DATES: The application was filed on August 19, 1999. Applicants 
have agreed to file an amendment during the

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notice period, the substance of which is reflected in this notice.

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 November 19, 
1999, 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, N.W., Washington, DC 
20549-0609; Applicants, 11 Greenway Plaza, Suite 100, Houston, TX, 
77046.

FOR FURTHER INFORMATION CONTACT: Paula L. Kashtan, Senior Counsel, at 
(202) 942-0615, or Mary Kay Frech, 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, 450 Fifth Street, N.W., Washington, DC 
20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. The Fund is a closed-end management investment company 
registered under the Act and organized as a Maryland corporation. The 
Adviser is registered under the Investment Advisers Act of 1940 and 
will serve as investment adviser to the Fund. The Distributor, a 
broker-dealer registered under the Securities Exchange Act of 1934, 
will distribute the Fund's shares. Applicants request that the order 
also apply to any other registered closed-end investment company 
established in the future for which the Adviser, or any entity 
controlling, controlled by, or under common control (as the term 
``control'' is defined in section 2(a)(9) of the Act) with the Adviser, 
acts as principal underwriter, investment adviser, or administrator.\1\
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    \1\ Any registered closed-end investment company relying on this 
relief in the future will do so in a manner consistent with the 
terms and conditions of the application.
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    2. The Fund's investment objective is to provide a high level of 
current income and preservation of capital. The Fund invests primarily 
in senior secured floating and adjustable rate loans made by commercial 
banks, investment banks, finance companies and other lenders to 
commercial and industrial borrowers (``Loans''). Under normal 
circumstances, at least 80% of the Fund's total assets are invested in 
Loans. Up to 20% of the Fund's assets may be held in cash or cash 
equivalents, or invested grade, short-term debt obligations, or 
invested in unsecured loans.
    3. The Fund continuously offers its shares to the public at net 
asset value. The Fund's shares are not offered or traded in the 
secondary market and are not listed on any exchange or quoted on any 
quotation medium. The Fund intends to operate as an ``interval fund'' 
pursuant to rule 23c-3 under the Act and make periodic repurchase 
offers to its shareholders.\2\
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    \2\ Since it commenced operations in May, 1997, the Fund has 
been the sole feeder fund in a master-feeder structure and has 
invested all of its investable assets in the Floating Rate 
Portfolio, a master fund with the same investment objective as the 
Fund. Pursuant to a planned restructuring of the Fund, the master 
feeder structure will be collapsed and the Fund will own its 
portfolio securities directly. As part of the restructuring, the 
Fund intends to operate as an ``interval fund,'' following receipt 
of shareholder approval.
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    4. The Fund seeks the flexibility to be structured as multiple-
class fund and currently intends to offer two classes of shares. The 
Fund will offer Class B shares with no front-end sales charge but 
subject to an early withdrawal charge (``EWC'') on shares that are 
repurchased by the Fund within four years from when they were 
purchased. The Fund will offer Class C shares with no front-end sales 
charge but subject to an EWC on shares that are repurchased by the Fund 
within one year from when they were purchased. Class B and Class C 
shares will be subject to an annual asset-based distribution fee of up 
to .25% and .75%, respectively, of average daily net assets. The Fund 
may in the future offer other classes of shares with different 
distribution structures, including Class A shares with a front-end 
sales charge but with no EWC. Applicants represent that the 
distribution fees will comply with the provisions of rule 2830(d) of 
the Conduct Rules of the National Association of Securities Dealers, 
Inc. (``NASD'') as if the Fund was an open-end investment company. 
Applicants also represent that the Fund will disclose in its prospectus 
the fees, expenses and other characteristics of each class of shares 
offered for sale by the prospectus, as is required for open-end multi-
class funds under Form       N-1A.
    5. All expenses incurred by the Fund will be allocated among the 
various classes of shares based on the net assets of the Fund 
attributable to each class, except that the net asset value and 
expenses of each class will reflect distribution fees, service fees, 
and any other incremental expenses of that class. Expenses of the Fund 
allocated to a particular class of shares will be borne on a pro rata 
basis by each outstanding share of that class. The Fund may create 
additional classes of shares in the future that may have different 
terms from Class B and Class C shares. Applicants state that the Fund 
will comply with the provisions of rule 18f-3 under the Act as if it 
were an open-end investment company.
    6. The Fund may waive the EWC for certain categories of 
shareholders or transactions to be established from time to time. With 
respect to any waiver of, scheduled variation in, or elimination of the 
EWC, the Fund will comply with rule 22d-1 under the Act as if it were 
an open-end investment company.
    7. The Fund will offer its shareholders an exchange feature under 
which shareholders of the Fund may, during the Fund's quarterly 
repurchase periods, exchange their shares for shares of the same class 
of other funds in the AIM group of investment companies. Fund shares so 
exchanged will be counted as part of the repurchase offer amount as 
specified in rule 23c-3 under the Act. Any exchange option will comply 
with rule 11a-3 under the Act as if the Fund were an open-end 
investment company subject to that rule. In complying with rule 11a-3, 
the Fund will treat the EWC as if it were a contingent deferred sales 
charge (``CDSC'').

Applicants' Legal Analysis

Multiple Classes of Shares

    1. Section 18(c) of the Act provides, in relevant part, that a 
closed-end investment company may not issue or sell any senior security 
if, immediately thereafter, the company has outstanding more than one 
class of senior security. Applicants state that the creation of 
multiple classes of shares of the Fund may be prohibited by section 
18(c).
    2. Section 18(i) of the Act provides that each share of stock 
issued by a registered management investment company will be a voting 
stock and have equal voting rights with every other outstanding voting 
stock. Applicants state that multiple classes of shares of the Fund may 
violate section 18(i) of the Act because each class would be entitled 
to exclusive voting

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rights with respect to matters solely related to that class.
    3. Section 6(c) of the Act provides that the SEC may exempt any 
person, security or transaction from any provision of the Act, if and 
to the extent that such exemption is necessary or appropriate in the 
public interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act. 
Applicants request an exemption under section 6(c) of the Act from 
sections 18(c) and 18(i) of the Act to permit the Fund to issue 
multiple classes of shares.
    4. Applicants submit that the proposed allocation of expenses and 
voting rights among multiple classes is equitable and will not 
discriminate against any group or class of shareholders. Applicants 
submit that the proposed arrangements would permit the Fund to 
facilitate the distribution of its securities and provide investors 
with a broader choice of shareholder services. Applicants assert that 
their proposal does not raise the concerns underlying section 18 of the 
Act to any greater degree than open-end investment companies' multiple 
class structures that are permitted by rule 18f-3 under the Act. 
Applicants state the Fund will comply with the provisions of rule 18f-3 
as if it were an open-end investment company.

Early Withdrawal Charges

    5. Section 23(c) of the Act provides, in relevant part, that no 
registered closed-end investment company will purchase any securities 
of which it is the issuer, except: (i) on a securities exchange or 
other open market; (ii) pursuant to tenders, after reasonable 
opportunity to submit tenders given to all holders of securities of the 
class to be purchased; or (iii) under other circumstances as the SEC 
may permit by rules and regulations or orders for the protection of 
investors.
    6. Rule 23c-3 under the Act permits a registered closed-end 
investment company (an ``interval fund'') to make repurchase offers of 
between five and twenty-five percent of its outstanding shares at net 
asset value at periodic intervals pursuant to a fundamental policy of 
the interval fund. Rule 23c-3(b)(1) under the Act provides that an 
interval fund may deduct from repurchase proceeds only a repurchase 
fee, not to exceed two percent of the proceeds, that is reasonably 
intended to compensate the fund for expenses directly related to the 
repurchase.
    7. Section 23(c)(3) provides that the SEC may issue an order that 
would permit a closed-end investment company to repurchase its shares 
in circumstances in which the repurchase is made in a manner or on a 
basis which does not unfairly discriminate against any holders of the 
class or classes of securities to be purchased. As noted above, section 
6(c) provides that the SEC may exempt any person, security or 
transaction from any provision of the Act, if and to the extent that 
the exemption is necessary or appropriate in the public interest and 
consistent with the protection of investors and the purposes fairly 
intended by the policy and provisions of the Act. Applicants request 
relief under sections 6(c) and 23(c) from rule 23c-3 to permit them to 
impose EWCs on shares submitted for repurchase that have been held for 
less than a specified period.
    8. Applicants believe that the requested relief meets the standards 
of sections 6(c) and 23(c)(3). Rule 6c-10 under the Act permits open-
end investment companies to impose CDSCs, subject to certain 
conditions. Applicants state that EWCs are functionally similar to 
CDSCs imposed by open-end investment companies under rule 6c-10 under 
the Act. Applicants state that EWCs may be necessary for the 
Distributor to recover distribution costs and that EWCs may discourage 
investors from moving their money quickly in and out of the Fund, a 
practice that applicants submit imposes costs on all shareholders. 
Applicants will comply with rule 6c-10 under the Act as if that rule 
applied to closed-end investment companies. The Fund also will disclose 
EWCs in accordance with the requirements of form N-1A concerning CDSCs. 
Applicants further state that the Fund will apply the EWC (and any 
waivers or scheduled variations of the EWC) uniformly to all 
shareholders in a given class and consistent with the requirements of 
rule 22d-1 under the Act.

Asset-Based Distribution Fees

    9. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
an affiliated person of a registered investment company or an 
affiliated person of such person, acting as principal, from 
participating in or effecting any transaction in connection with any 
joint enterprise or joint arrangement in which the investment company 
participates unless the SEC issues an order permitting the transaction. 
In reviewing applications submitted under section 17(d) and rule 17d-1, 
the SEC considers whether the participation of the investment company 
in a joint enterprise or joint arrangement is consistent with the 
provisions, policies and purposes of the Act, and the extent to which 
the participation is on a basis different from or less advantageous 
than that of other participants.
    10. Rule 17d-3 under the Act provides an exemption from section 
17(d) and rule 17d-1 to permit open-end investment companies to enter 
into distribution arrangements pursuant to rule 12b-1 under the Act. 
Applicants request an order under section 17(d) and rule 17d-1 to 
permit the Fund to impose asset-based distribution fees. Applicants 
have agreed to comply with rules 12b-1 and 17d-3 as if those rules 
applied to closed-end investment companies.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Applicants will comply with the provisions of rules 6c-10, 11a-3, 
12b-1, 17d-3, and 22d-1 under the Act and NASD conduct Rule 2830(d), as 
amended from time to time, as if those rules applied to closed-end 
investment companies.

    For the SEC, by the Division of Investment Management, pursuant 
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-28356 Filed 10-28-99; 8:45 am]
BILLING CODE 8010-01-M