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’’).
38682 Federal Register / Vol. 63, No. 137 / Friday, July 17, 1998 / Notices

1 Morgan Stanley & Co. Incorporated, Investment

Company Act Release Nos. 2235 (Sept. 20, 1996)

(notice) and 22284 (Oct. 16, 1996) (order).

ACTION: Notice of application for an

order under section 12(d)(1)(J) of the

Investment Company Act of 1940 (the

‘‘Act’’) for an exemption from section

12(d)(1) of the Act.

SUMMARY OF APPLICATION: Morgan

Stanley & Co. Incorporated (‘‘Morgan

Stanley’’) requests an order to amend a

prior order that, among other things,

permits registered investment

companies to own a greater percentage

of the total outstanding voting stock of

the AJL PEPS Trusts for which Morgan

Stanley serves, or will serve, as a

principal underwriter (collectively, the

‘‘Trusts’’) than that permitted by section

12(d)(1) of the Act (‘‘Prior Order’’).1 The

requested order would permit

companies that are excepted from the

defintion of investment company under

section 3(c)(1) or 3(c)(7) of the Act to

own a greater percentage of the total

outstanding voting stock of a Trust than

that permitted by section 12(d)(1)(A) of

the Act.

FILING DATES: The application was filed

on May 5, 1998. Applicant has agreed to

file an amendment, the substance of

which is incorporated in this notice,

during the notice period.

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

August 3, 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 may request notification of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicant, 1585 Broadway, New York,

New York 10036.

FOR FURTHER INFORMATION CONTACT:

Brian T. Hourihan, Senior Counsel, at

(202) 942–0526, 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 from the SEC’s

Public Reference Branch, 450 Fifth

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

(tel. (202) 942–8090).

Applicant’s Representations

1. The Trusts are limited-life, grantor

trusts registered under the Act as

nondiversified, closed-end management

investment companies. Morgan Stanley

serves, or will serve, as the principal

underwriter for each Trust.

2. On October 16, 1996, the

Commission issued the Prior Order. The

Prior Order, among other things, permits

registered investment companies to own

a greater percentage of the total

outstanding voting stock of the Trusts

than that permitted by section 12(d)(1)

of the Act.

Applicant’s Legal Analysis

1. Section 12(d)(1)(A)(i) of the Act

prohibits any registered investment

company from owning more than 3

percent of the total outstanding voting

stock of any other investment company,

and any investment company from

owning in the aggregate more than 3

percent of the total outstanding voting

stock of any registered investment

company. A company that is excepted

from the definition of investment

company under section 3(c)(1) or 3(c)(7)

of the Act is deemed to be an

investment company for purposes of

section 12(d)(1)(A)(i) of the Act under

sections 3(c)(1) and 3(c)(7)(D) of the Act.

2. Section 12(d)(1)(J) of the Act

provides that the Commission may

exempt persons or transactions from any

provision of section 12(d)(1), if, and to

the extend that, the exemption is

consistent with the public interest and

the protection of investors. Applicant

requests that the Prior Order be

amended to permit companies excepted

from the definition of investment

company under section 3(c)(1) and

3(c)(7) of the Act to rely on the

exemption from section 12(d)(1)(A) of

the Act provided by the Prior Order.

3. Applicant asserts that investment

in the Trusts by companies relying on

section 3(c)(1) or 3(c)(7) of the Act will

not raise concerns under section

12(d)(1) of the Act for the same reasons

as those given in the application for the

Prior Order with respect to registered

fund’s investment in the Trusts.

Applicant agrees that any company

relying on section 3(c)(1) or 3(c)(7) of

the Act that invests in the Trusts may

not rely on this order unless it complies

with the terms and conditions of the

Prior Order. For these reasons, applicant

believes that the requested relief meets

the standards of section 12(d)(1)(J).

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–19051 Filed 7–16–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–26895; 70–9189]

Entergy Corporation; Order

Authorizing the Issuance and Sale of

Common Stock in Connection With the

Adoption of the 1998 Equity Ownership

Plan

July 10, 1998.

Entergy Corporation (‘‘Entergy’’), a

registered holding company, located in

New Orleans, Louisiana, has filed with

this Commission an applicationdeclaration under sections 6(a), 7 and

12(e) of the Public Utility Holding

Company Act of 1935, as amended

(‘‘Act’’), and rules 54, 62 and 65 under

the Act. The Commission issued a

notice of the filing on March 27, 1998

(HCAR No. 26852).

The Entergy Board of Directors

(‘‘Board’’) has adopted the 1998 Equity

Ownership Plan of Entergy Corporation

and Subsidiaries (‘‘Equity Plan’’),

subject to shareholder approval. The

Equity Plan will be an amendment and

restatement of Entergy’s current Equity

Ownership Plan which was approved by

its stockholders in 1991. Awards

granted under the Equity Plan are

intended to qualify as performance

based compensation under section

162(m) of the Internal Revenue Code of

1986, as amended.

Entergy proposes, through December

31, 2008, to grant Options, Restricted

Shares, Performance Shares and Equity

Awards, all as defined in the Equity

Plan, and to issue or sell up to 12

million shares of its common stock,

$0.01 par value (‘‘Common’’), under the

Equity Plan. The purpose of the Equity

Plan is to give certain designated

officers and executive personnel (‘‘Key

Employees’’) and outside directors an

opportunity to acquire shares of

Common to tie more closely their

interests with those of Entergy’s

shareholders and to reward effective

corporate leadership.

The Common will be available for

awards under the Equity Plan, subject to

adjustment for stock dividends, stock

splits, recapitalizations, mergers,

consolidations or other reorganizations.

Shares of Common awarded under the

Equity Plan may be either authorized

but unissued shares or shares acquired