38680 Federal Register / Vol. 63, No. 137 / Friday, July 17, 1998 / Notices

1Any such investment company relying on this

relief will do so in a manner consistent with the

terms and conditions of this application. Applicants

represent that each investment company presently

intending to rely on the relief requested in this

application is listed as an applicant.

2CypressTree Asset Management Corporation et

al., Investment Company Act Release Nos. 23020

(February 4, 1998) and 23055 (March 3, 1998)

(order). Applicants request to amend the Prior

Order to extend the relief granted in the Prior Order

to any other registered closed-end investment

company for which CAM or CypressTree or any

entity controlling, controlled by or under common

control with CAM or CypressTree acts as

administrator or sub-investment adviser.

3Class B Shares will be subject to EWCs that

decline over time to 0% after the end of the fourth

year that a shareholder owns Class B Shares. Class

C Shares will be subject to early withdrawal charges

of 1% during the first year that a shareholder owns

Class C Shares.

Commission Review of LBP–97–20

Location: ACRS Conference Room—

Tentative)

(Two White Flint North, Room T2B3)

*The schedule for Commission meetings is

subject to change on short notice. To verify

the status of meetings call (recording)—(301)

415–1292. Contact person for more

information: Bill Hill (301) 415–1661.

The NRC Commission Meeting

Schedule can be found on the Internet

at: http:/www.nrc. gov/SECY/smj/

schedule.htm

* * * * *

This notice is distributed by mail to

several hundred subscribers; if you no

longer wish to receive it, or would like

to be added to it, please contact the

Office of the Secretary, Attn: Operations

Branch, Washington, D.C. 20555 (301–

415–1661). In addition, distribution of

this meeting notice over the Internet

system is available. If you are interested

in receiving this Commission meeting

schedule electronically, please send an

electronic message to wmh@nrc.gov or

dkw@nrc.gov.

* * * * *

Dated: July 14, 1998.

William M. Hill, Jr.,

SECY Tracking Officer, Office of the

Secretary.

[FR Doc. 98–19214 Filed 7–15–98; 11:39 am]

BILLING CODE 7590–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Rel. No. 23312;

812–10824]

CypressTree Asset Management

Corporation, Inc., North American

Floating Income Fund, Inc.,

CypressTree Investment Management

Company, Inc., and CypressTree

Funds Distributors, Inc.; Notice of

Application

July 10, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

SUMMARY OF APPLICATION: Applicants

request an order under Section 6(c)

granting an exemption from Sections

18(c) and 18(i) of the Act and rule 23c–

3 under the Act, and under Section

17(d) of the Act and rule 17d–1 under

the Act, to permit certain registered

closed-end investment companies to

issue multiple classes of shares, impose

distribution and service fees, and early

withdrawal charges. Applicants also

request an amendment to a prior order.

APPLICANTS: CypressTree Asset

Management Corporation, Inc. (‘‘CAM’’),

North American Senior Floating Rate

Fund, Inc. (the ‘‘Fund’’), and

CypressTree Investment Management

Company (‘‘CypressTree’’), and

CypressTree Funds Distributors, Inc.

(‘‘Distributors’’).

FILING DATES: The application was filed

on October 22, 1997. 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 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 request should be

received by the SEC by 5:30 p.m. on

August 4, 1998, 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 of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 5th

Street, N.W., Washington, D.C. 20549.

Applicants: 125 High Street, Boston,

Massachusetts 02110.

FOR FURTHER INFORMATION CONTACT:

Deepak T. Pai, Staff Attorney, at (202)

942–0574, or Edward P. Macdonald,

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 few at the SEC’s Public

Reference Branch, 450 Fifth Street,

N.W., Washington, D.C. 20549 (tel. 202–

942–8090).

Applicant’s Representations

1. The Fund is a closed end

management investment company

registered under the Act and organized

as a Maryland corporation. CAM, an

investment adviser registered under the

Investment Advisers Act of 1940

(‘‘Advisers Act’’), will serve as

investment adviser to the Fund. CAM

will enter into a sub-advisory agreement

with CypressTree, an investment

adviser registered under the Advisers

Act, pursuant to which CypressTree will

select the investments made by the

Fund. Distributors, a broker-dealer

registered under the Securities

Exchange Act of 1934 (the ‘‘Exchange

Act’’), will distribute the Fund’s shares.

Applicants request that the order also

apply to any other registered closed-end

management investment company for

which CAM or CypressTree or any

entity controlling, controlled by, or

under control with CAM or CypressTree

acts as investment adviser, subinvestment adviser, principal

underwriter, or administrator.1

2. The Fund’s investment objective

will be to provide as high a level of

current income as is consistent with the

preservation of capital. The Fund will

invest primarily in senior secured

floating rate loans made by commercial

banks, investment banks, and finance

companies to commercial and industrial

borrowers (‘‘Loans’’). Under normal

market conditions, the Fund will invest

at least 80% of its total assets in Loans.

Up to 20 percent of the Funds’s total

assets may be held in cash, invested in

investment grade short-term and

medium-term debt obligations, or

invested in unsecured senior floating

rate loans determined by CypressTree to

have a credit quality at least equal to the

loans.

3. The Fund will continuously offer

its shares to the public at net asset value

(plus a sales load in certain cases as

discussed below). Applicants were

granted an order permitting the Fund

and certain other registered closed-end

investment companies to make monthly

repurchase offers in reliance on rule

23c–3 under the Act (‘‘Prior Order’’).2

4. The Fund expects to offer three

classes of shares. Class A Shares may be

subject to a front-end sales charge. Class

B Shares and Class C Shares will be

offered without a front-end sales charge,

but Shares accepted for repurchase that

have been held for less than a certain

period of time will be subject to early

withdrawal charges (‘‘EWCs’’) payable

to Distributors.3 After ten years, Class B

Shares will automatically convert to
Federal Register / Vol. 63, No. 137 / Friday, July 17, 1998 / Notices 38681

Class A Shares, and after eight years,

Class C Shares will automatically

convert to Class A Shares. Class A, Class

B, and Class C Shares will be subject to

an annual service fee of up to .25% of

net assets. Class B and Class C Shares

also will be subject to an annual

distribution fee of up to .50% of net

assets. Applicants represent that all of

these fees will comply with the

requirements of Rule2830(d) of the

NASD Conduct Rules as if the Fund

were an open-end investment company.

Applicants also represent that the Fund

intends to disclose in its prospectus the

fees, expenses, and other characteristics

of each class of shares offered for sale,

as is required for open-end multi-class

funds under Form N1–A.

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.

Distribution fees, service fees, and

incremental expenses that may be

attributable to a particular class of

shares, including transfer agent fees,

printing and postage expenses, state and

federal registration fees, administrative

fees, legal fees, will be charged directly

to the net assets of a particular 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 crate

additional classes of shares in the future

that may have different terms from Class

B, Class C, and Class A Shares.

6. The Fund may waive the EWCs for

certain categories of shareholders or

transactions to be established in the

future. 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 the Fund

were an open-end investment company.

7. The Fund may offer its

shareholders an exchange feature under

which shareholders of the Fund may

exchange their shares for shares of the

same class of other funds in the North

American Group of investment

companies. 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 EWCs imposed on

Class B Shares and Class C Shares as if

they were contingent deferred sales

charges (‘‘CDSCs’’).

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 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 company shall

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) because each

class would be entitled to exclusive

voting rights with respect to matters

solely related to that class.

3. 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. Applicants state that the

imposition of an EWC on shares

tendered for repurchase that have been

held for less than a specified period may

violate rule 23c–3(b)(1).

4. 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.

5. Applicants request an exemption

under section 6(c) of the Act from

sections 18(c) and 18(i) of the Act and

rule 23c–3(b)(1) to permit multiple

classes of shares of the Fund and the

imposition of EWCs.

6. Applicants believe that the

proposed allocation of expenses and

voting rights among multiple classes in

equitable and would not discriminate

against any group of Fund 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 to any greater degree than

open-end investment companies’

multiple class systems that are

permitted by rule 18f–3 under the Act.

Applicants state that the Fund will

comply with rule 18f–3 as if it were an

open-end fund.

7. Applicants further state that EWCs

are functionally similar to CDSCs that

open-end investment companies may

charge under rule 6c–10 under the Act.

Applicants believe that EWCs may be

necessary for Distributors to recover

distribution costs and that EWCs may

discourage shareholders from engaging

in frequent trading, a practice that

applicants believe imposes costs on

other shareholders. Applicants will

comply with rule 6c–10 under the Act

as if the Fund were an open-end

investment company.

8. Section 17(d) of the Act and rule

17d–1 under the Act prohibit an

affiliated person of a registered

investment company, 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 to the extent to which the

participation is on basis different from

or less advantageous than that of other

participants.

9. Rule 17d–3 under the Act provides

an exemption from section 17(d) and

rule 17d–1 to permit open-end funds to

enter into distribution arrangements

pursuant to rule 12b–1. Applicants also

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 rule 12b–1

as if the Fund were an open-end

investment company.

Applicants’ Condition

Applicants agree that any order

granting the requested relief shall be

subject to the following condition:

1. Applicants will comply with rules

18f–3, 12b–1, 6c–10, and 22d–1 under

the Act and NASD Conduct Rule

2830(d), as amended from time to time,

as if those rules apply to closed-end

investment companies.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–19049 Filed 7–16–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–23311; 812–9982]

Morgan Stanley & Co. Incorporated;

Notice of Application

July 10, 1998.

AGENCY: Securities and Exchange

Commission (‘‘Commission’’ or ‘‘SEC’’).