[Federal Register Volume 65, Number 187 (Tuesday, September 26, 2000)]
[Notices]
[Pages 57849-57850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24610]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 24648; 812-11964]


Eaton Vance Management, et al., Notice of Application

September 19, 2000.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an 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, and pursuant to section 17(d) of the Act 
and rule 17d-1 under the Act.

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

    Summary of Application:
    Applicants request an order to permit certain registered closed-end 
management investment companies to issue multiple classes of shares and 
to amend a prior order that permits the imposition of asset-based 
distribution fees.
    Applicants: Eaton Vance Management (``EVM''), Eaton Vance 
Distributors, Inc. (``Distributor'') (collectively, ``Eaton Vance''), 
Boston Management and Research (``BMR''), Senior Debt Portfolio (the 
``Portfolio''), Eaton Vance Prime Rate Reserves (``Prime Rate''), EV 
Classic Senior Floating-Rate Fund (``EV Classic,'' and together with 
Prime Rate, the ``Fund''), Eaton Vance Advisers Senior Floating-Rate 
Fund (``EV Advisers''), and Eaton Vance Institution Senior Floating-
Rate Fund (``EV Institutional,'' and together with EV Advisers and the 
Funds, the ``Feeder Funds'').
    Filing Dates: The application was filed on February 2, 2000 and 
amended on August 4, 2000. Applicants have agreed to file an amendment 
during the 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 Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on October 13, 2000, 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 Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW., Washington, DC 
20549-0609; Applicants, c/o Eric G. Woodbury, Esq., Eaton Vance 
Management, The Eaton Vance Building, 225 State Street, Boston, MA 
02109.

FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at 
(202) 942-0574, or Christine Y. Greenless, 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 
Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, DC 20549-0102 (telephone (202) 942-8090)

Applicants' Representations

    1. The Feeder Funds and the Portfolio are business trusts organized 
under Massachusetts and New York law, respectively, and are registered 
under the Act as closed-end management investment companies. The Feeder 
Funds invest their assets in the Portfolio pursuant to a master-feeder 
structure. Eaton Vance serves as principal underwriter and 
administrator for the Feeder Funds. BMR, a wholly-owned subsidiary of 
EVM, serves as investment adviser to the Portfolio and is registered 
under the Investment Advisers Act of 1940. Applicants request that the 
order also apply to any other registered close-end investment company 
existing now or in the future for which BMR or the Distributor or any 
entity controlling, controlled by, or under common control with BMR or 
the Distributor acts as investment advisers or principal underwriter. 
Any such investment company relying on the requested relief will do so 
in a manner consistent with the terms and conditions of the 
application. Each investment company presently intending to rely on the 
requested relief is named as an applicant.
    2. The Feeder Funds continuously offer their shares to the public 
at net asset value (``NAV''). The Feeder Funds do not redeem shares 
daily and there presently is no secondary market for their shares. 
Shareholders who wish to sell their shares depend on quarterly 
repurchase offers in which the Feeder Funds offer to repurchase shares 
at NAV (less any applicable early withdrawal charges (``EWCs'')). These 
repurchase offers are made pursuant to rule 23c-3 under the Act and an 
exemptive order.\1\
---------------------------------------------------------------------------

    \1\See Eaton Vance Management, et al., Investment Company Act 
Release Nos. 22670 (May 19, 1997) (Notice) and 22709 (June 16, 1994) 
(Order).
---------------------------------------------------------------------------

    3. Each Fund, pursuant to an exemptive order, imposes an annual 
asset-based distribution fees.\2\ Applicants represent that each Fund's 
distribution fees will comply with the requirement of Conduct Rule 
2830(d) of the National Association of Securities Dealers, Inc. 
(``NASD'').
---------------------------------------------------------------------------

    \2\See Eaton Vance Management, et al., Investment Company Act 
Release Nos. 23770 (April 6, 1999) (Notice) and 23818 April 30, 
1999) (Order) (``1999 Order''). Applicants request to amend the 1999 
Order to extend the relief granted in the 1999 Order to any other 
registered closed-end investment company for which BMR or the 
Distributor of any entity controlled by, or under common control 
with BMR or the Distributor acts as investment adviser or principal 
underwriter.
---------------------------------------------------------------------------

    4. Currently, each of prime Rate and EV Classic offers a single 
class of shares (``Original Class''). Prime Rate may offer two 
additional classes of shares, Class A and Class B, and EV Classic may 
offer one additional class of shares, Class C. The Original Class of 
shares of the Funds would be closed to new investors and would only be 
available to current shareholders of the Funds. Class A shares 
initially would be made available only upon the conversion of Class B 
shares or by exchange of Class A shares of other Eaton Vance funds. 
Class B shares would be offered without a front-end sales charge but 
would be subject to an EWC in amounts declining over time. Class B 
shares would automatically convert to Class A shares after a certain 
period of time from which they were originally purchased. Shareholders 
would not incur any sales charge on the conversion of Class B shares to 
Class A shares. Class C shares would be offered with no front-end sales 
charge but Class C shares repurchased by EV Classic within a certain 
time period would be subject to an EWC. The Class B and Class C EWCs 
may be waived in certain circumstances. Class A, Class B, and Class C 
shares may be subject to an annual shareholder servicing fee.
    5. All expenses incurred by a Feeder Fund will be allocated among 
the various classes of shares based on the net assets of a Feeder fund 
attributable

[[Page 57850]]

to each class, except that the NAV and expenses of each class will 
reflect distribution fees, service fees (including transfer agency 
fees), and any other incremental expenses of that class. Expenses of a 
Feeder Fund allocated to a particular class of shares will be borne on 
a pro rata basis by each outstanding share of that class. Each Feeder 
Fund may create additional classes of shares in the future that may 
have different terms from the Original Class, Class A, Class B, and 
Class C shares. Applicants state that each Feeder Fund will comply with 
the provisions of rule 18f-3 under the Act as if it were an open-end 
investment company.

Applicants' Legal Analysis

    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 a Feeder 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 request an exemptive order to the extent that the 
proposed issuance and sale of multiple classes of shares of the Feeder 
Funds might be deemed (a) to result in the issuance of a ``senior 
security;'' within the meaning of section 18(g) of the Act and thus be 
prohibited by section 18(c) of the Act; and (b) to violate the equal 
voting provisions of section 18(i) of the Act.
    3. Section 6(c) of the Act provides that the Commission 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 Feeder Funds 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 a Feeder 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 that each Feeder fund will comply with the provisions 
of rule 18f-3 as if it were an open-end investment company.

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 12b-1, 17d-3, 
18f-3, and 22d-1 under the Act, as amended from time to time, as if 
those rules applied to closed-end investment companies, and will comply 
with NASD Conduct rule 2830(d), as amended from time to time.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-24610 Filed 9-25-00; 8:45 am]
BILLING CODE 8010-01-M