65716 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Notices

4Section 2(a)(3)(C) of the Act defines the term

‘‘affiliated person’’ of another person to include any

person directly or indirectly controlling, controlled

by, or under common control with such other

person.

5Section 17(b) may permit only a single

transaction, rather than a series of on-going

transactions, to be exempted from section 17(a). See

Keystone Custodian Funds, Inc., 21 S.E.C. 295

(1945).

issued by open-end investment

companies. Applicants state that such

restrictions are set forth in the Plan,

which would be included primarily to

benefit the Eligible Trustees and would

not adversely affect the interests of the

trustees or of any shareholder.

4. Section 22(g) prohibits registered

open-end investment companies from

issuing any of their securities for

services or for property other than cash

or securities. This provision prevents

the dilution of equity and voting power

that may result when securities are

issued for consideration that is not

readily valued. Applicants believe that

the Plan would merely provide for

deferral of payment of such fees and

thus should be viewed as being issued

not in return for services but in return

for a Fund not being required to pay

such fees on a current basis.

5. Section 13(a)(3) provides that no

registered investment company shall,

unless authorized by the vote of a

majority of its outstanding voting

securities, deviate from any investment

policy that is changeable only if

authorized by shareholder vote. The

relief requested from section 13(a)(3)

would extend only to existing

Investment Companies. Applicants

believe that relief from section 13(a)(3)

is appropriate to enable the affected

Investment Companies to invest in

Designated Shares without a

shareholder vote. Applicants will

provide notice to shareholders in the

prospectus of each affected Investment

Company of the Deferred Fees under the

Plan. The value of the Designated

Shares will be de minimis in relation to

the total net assets of the respective

Investment Company, and will at all

times equal the value of the Investment

Company’s obligations to pay deferred

fees.

6. Rule 2a–7 imposes certain

restrictions on the investments of

‘‘money market funds,’’ as defined

under the rule, that would prohibit a

Fund that is a money market Fund from

investing in the shares of any other

Fund. Applicants believe that the

requested exemption would permit the

Funds to achieve an exact matching of

Designated Shares with the deemed

investments of the Deferral Accounts,

thereby ensuring that the deferred fees

would not affect net asset value.

7. Section 6(c) provides, in relevant

part, that the SEC may, conditionally or

unconditionally, by order, exempt any

person or class of persons from any

provision of the Act or from any rule

thereunder, if such exemption is

necessary or appropriate in the public

interest, consistent with the protection

of investors, and consistent with the

purposes fairly intended by the policy

and provisions of the Act. Applicants

submit that the relief requested from the

above provisions satisfies this standard.

8. Section 17(a)(1) generally prohibits

an affiliated person, or an affiliated

person of an affiliated person, of a

registered investment company from

selling any security to such registered

investment company. The Adviser is an

affiliated person of each of the Fund’s

portfolios pursuant to section 2(a)(3)(E)

of the Act. Each portfolio may be treated

as an affiliated person of each other

portfolio by reason of being under the

common control of the Adviser.4 The

sale by a portfolio of any security to any

other portfolio of any Fund would

therefore be subject to the prohibitions

of section 17(a)(1). Applicants assert

that section 17(a)(1) was designed to

prevent, among other things, sponsors of

investment companies from using

investment company assets as capital

for enterprises with which they were

associated or to acquire controlling

interest in such enterprises. Applicants

submit that the sale of securities issued

by the Funds pursuant to the Plan does

not implicate the concerns of Congress

in enacting this section, but merely

would facilitate the matching of each

Fund’s liability for deferred trustees’

fees with the Designated Shares that

would determine the amount of such

Fund’s liability.

9. Section 17(b) authorizes the SEC to

exempt a proposed transaction from

section 217(a) if evidence establishes

that the terms of the 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 transaction

is consistent with the policies of the

registered investment company, and the

general purposes of the Act. Applicants

assert that the proposed transaction

satisfies the criteria of section 17(b). The

finding that the terms of the transaction

are consistent with the policies of the

registered investment company is

predicated on the assumption that relief

is granted from section 13(a)(3).

Applicants also request relief from

section 17(a)(1) under section 6(c) to the

extent necessary to implement the

Deferred Fees under the Plan on an

ongoing basis.5

10. Section 17(d) and rule 17d–1

generally prohibit a registered

investment company’s joint or joint and

several participation with an affiliated

person in a transaction in connection

with any joint enterprise or other joint

arrangement or profit-sharing plan ‘‘on

a basis different from or less

advantageous than that of’’ the affiliated

person. Eligible Trustees will not

receive a benefit, directly or indirectly,

that would otherwise inure to a Fund or

its shareholders. Eligible Trustees will

receive tax deferral but the Plan

otherwise will maintain the parties,

viewed both separately and in their

relationship to one another, in the same

position as if the deferred fees were paid

on a current basis. When all payments

have been made to a Eligible Trustee,

the Eligible Trustee will be no better off,

relative to the Funds, than if he or she

had received trustee fees on a current

basis and invested them in Designated

Shares.

Applicants’ Conditions

Applicants agree that the order

granting the requested relief shall be

subject to the following conditions:

1. With respect to the relief requested

from rule 2a–7, any money market Fund

that values its assets by the amortized

cost method will buy and hold

Designated Shares that determine the

value of Deferral Accounts to achieve an

exact match between the liability of any

such Fund to pay compensation

deferrals and the assets that offset that

liability.

2. If a Fund purchases Designated

Shares issued by an affiliated Fund, the

Fund will vote such shares in

proportion to the votes of all other

shareholders of such affiliated Fund.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–30908 Filed 12–19–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21598; 812–9762]

The One Hundred Fund, Inc., et al.;

Notice of Application

December 13, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: The One Hundred Fund,

Inc., dba Berger 100 Fund (the ‘‘100

Fund’’), Berger One Hundred and One
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Notices 65717

Fund, Inc. (the ‘‘101 Fund’’), and Berger

Investment Portfolio Trust (the ‘‘Trust’’)

(collectively, the ‘‘Funds’’), and Berger

Associates, Inc. (‘‘BAI’’).

RELEVANT ACTION SECTIONS: Order

requested under section 6(c) of the Act

for an exemption from sections 13(a)(2),

13(a)(3), 18(f)(1), 22(f), and 22(g) of the

Act; and under sections 6(c) and 17(b)

of the Act for an exemption from section

17(a)(1) of the Act; and pursuant to

section 17(d) of the Act and rule 17d–

1 thereunder.

SUMMARY OF APPLICATION: Applicants

request an order that would permit the

applicant investment companies to

enter into deferred compensation

arrangements with their independent

directors.

FILING DATES: The application was filed

on September 13, 1995 and amended on

November 30, 1995. Applicant’s counsel

has stated in a letter dated December 12,

1995 that an amendment, the substance

of which is incorporated herein, will be

filed 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

January 8, 1996 and should be

accompanied by proof of service on the

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, D.C. 20549.

Applicants, 210 University Boulevard,

Denver, Colorado 80206.

FOR FURTHER INFORMATION CONTACT:

David W. Grim, Law Clerk, at (202) 942–

0571, or Robert A. Robertson, 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.

Applicants’ Representations

1. Each of the Funds is a registered

open-end management investment

company. BAI serves as the investment

adviser to each of the Funds. Applicants

request that the exemption also apply to

any registered open-end investment

company for which BAI, or any entity

under common control with or

controlled by BAI, subsequently serves

as investment adviser.

2. Each Fund has a board of trustees

or board of directors. Each board has ten

members, eight of whom are not

‘‘interested persons’’ within the

meaning of section 2(a)(19) of the Act

(‘‘independent directors’’). Each

independent director receives an annual

fee plus a meeting attendance fee. No

director who is an interested person of

a Fund receives any remuneration from

such Fund.

3. Applicants request relief so that the

Funds may offer their independent

directors deferred compensation plans

(each, a ‘‘Plan’’). Each Fund’s Plan will

be administered by its board or by such

person or persons as the board may

designate to carry out administrative

functions under the Plan (the

‘‘Administrator’’). Each Plan would

permit independent directors of a Fund

annually to elect to defer receipt of all

or a portion of their fees. This election

would enable the independent directors

to defer payment of income taxes on

such fees.

4. Under the Plans, the Administrator

shall maintain a book entry account (an

‘‘Account’’) with respect to each deferral

election by an independent director and

shall credit to that Account an amount

equal to all compensation deferred by

the independent director under such

election, as of the date such fees would

have been paid to such independent

director absent such deferral. The value

of an Account will be equal to the value

such account would have had if the

amount credited to it had been invested

and reinvested in certain designated

securities (the ‘‘Designated Shares’’).

The Designated Shares for an Account

will be shares of one or more of the

Funds or a money market fund

approved by the board of the Fund on

which such independent director serves

(the ‘‘Investment Funds’’), as designated

by the participating independent

director. The money market fund

currently proposed to be included as an

Investment Fund is the Cash Account

Trust, for which Kemper Financial

Services, Inc. acts as investment adviser,

and for which BAI provides subadministration services. The Cash

Account Trust is not an ‘‘affiliated

person’’ of the Funds, as such term is

defined in section 2(a)(3) of the Act.

Each Account shall be credited or

charged with book adjustments

representing all interest, dividends, and

other earnings and all gains and losses

that would have been realized had such

account been invested in the Underlying

Shares.

5. The amounts paid to the

independent directors under the Plans

are expected to be insignificant in

comparison to the total net assets of the

Funds. Each Plan provides that a Fund’s

obligation to make payments from an

Account will be a general obligation of

the Fund and payments made pursuant

to each Plan will be made from the

Fund’s general assets and property.

With respect to the obligations created

under the Plans, the relationship of an

independent director to a Fund will be

that of a general unsecured creditor.

6. The Plans do not create an

obligation of a Fund to any independent

director of a Fund to purchase, hold, or

dispose of any investments. if a Fund

should choose to purchase investments

in order to cover its obligations under a

proposed Plan, any and all such

investments will continue to be part of

the general assets and property of such

Fund. In this regard, a Fund may

purchase its own shares or the shares of

any other Investment Fund to cover its

obligations.

7. Under the Plans, an independent

director may specify that his or her

deferred fees be distributed in whole or

in part commencing on (a) a date at least

five years following the deferral

election, or (b) the date on which the

independent director ceases to be a

member of the board, but not later than

such cessation date. Deferred payments

will be made in a lump sum or in

monthly or quarterly installments over a

period not to exceed ten years, as

elected by the independent director. In

the event of the independent director’s

death, amounts payable under a Plan

will be payable to his or her designated

beneficiary, or, in the absence of such a

beneficiary, to his or her estate. In all

other events, the independent director’s

right to receive payments cannot be

transferred, assigned, pledged, subjected

to garnishment or otherwise alienated.

8. The Plans will not obligate any

Fund to retain the services of an

independent director, nor will they

obligate any Fund to pay any (or any

particular level of) director’s fees to any

director.

Applicants’ Legal Analysis

1. Applicants request an order under

section 6(c) of the Act for an exemption

from sections 13(a)(2), 13(a)(3), 18(f)(1),

22(f), and 22(g) of the Act to permit the

Funds to enter into deferred fee

arrangements with their independent

directors; under sections 6(c) and 17(b)

of the Act for an exemption from section

17(a)(1) to permit the Investment Funds

to sell securities issued by them to
65718 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Notices

participating Funds; and pursuant to

section 17(d) of the Act and rule 17d–

1 thereunder to permit the Funds to

engage in certain joint transactions

incident to such deferred fee

arrangements.

2. 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 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.

3. Section 18(f)(1) generally prohibits

a registered open-end investment

company from issuing senior securities.

Section 13(a)(2) requires that a

registered investment company obtain

shareholder authorization before issuing

any senior security not contemplated by

the recitals of policy in its registration

statement. The Plans would result in the

issuance of a senior security only if it

was an obligation or instrument

‘‘similar’’ to a bond, debenture or note,

and it evidenced indebtedness. In any

event, applicants state that the Plans

possess none of the characteristics of

senior securities that led Congress to

enact these sections. The Plans would

not confused investors, make it difficult

for them to value their shares or convey

a false impression of safety. Further, the

Plans would not be inconsistent with

the theory of mutuality of risk.

4. Section 22(f) prohibits undisclosed

restrictions on the transferability or

negotiability of redeemable securities

issued by open-end investment

companies. The Plans would set forth

any restrictions on transferability or

negotiability, and such restrictions are

primarily to benefit the participating

directors and would not adversely affect

the interests of the independent

directors or of any Fund shareholder.

5. Section 22(g) prohibits registered

open-end investment companies from

issuing any of their securities for

services or for property other than cash

or securities. These provisions prevent

the dilution of equity and voting power

that may result when securities are

issued for consideration that is not

readily valued. Applicants believe that

the Plans would provide for deferral of

payment of fees and thus should be

viewed as being issued not in return for

services but in return for a Fund not

being required to pay such fees on a

current basis.

6. Section 13(a)(3) provides that no

registered investment company shall,

unless authorized by the vote of a

majority of its outstanding voting

securities, deviate from any investment

policy that is changeable only if

authorized by shareholder vote. Each of

the existing Funds has limitations on its

ability to purchase securities issued by

other investment companies. Any relief

granted from section 13(a)(3) would

extend only to the existing Funds.

Applicants believe that an exemption is

appropriate to enable the existing Funds

to invest in Designated Shares without

a shareholder vote. Applicants will

provide notice to shareholders of the

deferred fee arrangements with the

independent directors in their

registration statements. The value of the

Designated Shares will be de minimis in

relation to the total net assets of the

respective Fund. Changes in the value of

the Designated Shares will not affect the

value of shareholders’ investments.

Applicants believe that permitting the

Funds to invest in Designated Shares

without shareholder approval, therefore,

would result in no harm to

shareholders.

7. Section 17(a)(1) generally prohibits

an affiliated person of a registered

investment company from selling any

security to such registered investment

company, except in limited

circumstances. Funds that are advised

by the same entity may be ‘‘affiliated

persons’’ of one another by reason of

being under the common control of their

adviser. Applicants believe that an

exemption from this provision would

not implicate Congress’ concerns in

enacting the section, but would

facilitate the matching of each Fund’s

liability for deferred directors’ fees with

the Designated Shares that would

determine the amount of such Fund’s

liability.

8. Section 17(b) authorizes the SEC to

exempt a proposed transaction from

section 17(a) if evidence establishes

that: (a) The terms of the transaction,

including the consideration to be paid

or received, are reasonable and fair and

do not involve overreaching; (b) the

transaction is consistent with the policy

of each registered investment company

concerned; and (c) the transaction is

consistent with the general purposes of

the Act. Because section 17(b) may

apply only to a specific proposed

transaction, applicants also request an

order under section 6(c) so that relief

will apply to a class of transactions.

Applicants believe that the proposed

transactions satisfy the criteria of

sections 6(c) and 17(b).

9. Section 17(d) of the Act prohibits

affiliated persons from participating in

joint transactions with a registered

investment company in contravention of

rules and regulations prescribed by the

SEC. Rule 17d–1 under the Act

prohibits affiliated persons of a

registered investment company from

entering into joint transactions with the

investment company unless the SEC has

granted an order permitting the

transaction after considering whether

the participation of such investment

company is consistent with the

provisions, policies, and purposes of the

Act and the extent to which such

participation is on a basis different from

or less advantageous than that of other

participants. Under the Plans,

participating independent directors

would not receive a benefit that

otherwise would inure to a Fund or its

shareholders. The effect of the Plans is

to defer the payment of compensation

that a Fund otherwise would be

obligated to pay on a current basis as

services are performed by its

independent directors. Applicants also

believe that the Funds’ ability to recruit

and retain highly qualified independent

directors would be enhanced if they

were able to offer their independent

directors the option of deferred payment

of their directors’ fees.

Applicants’ Condition

Applicants agree that the order

granting the requested relief shall be

subject to the following condition:

1. If a Fund purchases Designated

Shares issued by itself, an affiliated

Fund, or any other fund which has been

approved as an Investment Fund, the

purchasing Fund will vote such shares

in proportion to the votes of all other

holders of shares of such Fund,

affiliated Fund, or other Investment

Fund.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 95–30859 Filed 12–19–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 35–26432]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

December 15, 1995.

Notice is hereby given that the

following filing(s) has/have been made

with the Commission pursuant to

provisions of the Act and rules

promulgated thereunder. All interested

persons are referred to the application(s)

and/or declaration(s) for complete

statements of the proposed

transaction(s) summarized below. The

application(s) and/or declaration(s) and

any amendments thereto is/are available

for public inspection through the