Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Notices 67373

sales charge will be incurred by

shareholders of the Acquired Funds in

connection with their acquisition of

Acquiring Series shares. Further,

applicants state that the Boards,

including the non-interested members,

have concluded that the reorganization

is in the best interest of the shareholders

of the Acquired Fund. In addition, the

investment objectives, policies, and

restrictions of the Acquiring Series are

substantially similar to those of the

Acquired Funds and that the differences

reflect either the desire for uniformity

among the different series of Cardinal,

to reflect more current regulations, and/

or for easier operation.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–31512 Filed 12–28–95; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Release No.

21620; 812–9798]

Voyageur Fund Managers, Inc., et al.;

Notice of Application

December 22, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Voyageur fund Managers,

Inc. (the ‘‘Sponsor’’), Voyageur Unit

Investment Trust, Voyageur Equity

Trust, Voyageur Tax-Exempt Trust, and

any future unit investment trusts

sponsored by the Sponsor (together with

the three above-named unit investment

trusts, the ‘‘Trusts’’) and their respective

series (each, a ‘‘Series’’).

RELEVANT ACT SECTIONS: Order requested

under section 6(c) granting an

exemption from sections 2(a)(32),

2(a)(35), 14(a), 19(b), 22(d), and 26(a)(2)

of the Act and rules 19b–1 and 22c–1

thereunder; under section 11(a) for an

exemption from section 11(c); and

under sections 6(c) and 17(b) for an

exemption from section 17(a).

SUMMARY OF APPLICATION: Applicants

request an order: (a) Permitting the

Trusts to impose sales charges on a

deferred basis and to waive the deferred

sales charge in certain cases; (b)

permitting certain offers of exchange

involving the Trusts; (c) exempting the

Sponsor from having to take for its own

account or place with others $100,000

worth of units in certain Trusts; (d)

permitting certain Trusts to distribute

capital gains resulting from redemptions

of portfolio securities within a

reasonable time after receipt; and (e)

permitting a terminating Series of the

Voyageur Equity trust to sell portfolio

securities to a new Series of that Trust

under the circumstances described

below.

FILING DATE: The application was filed

on October 5, 1995.

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 16, 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 reasons for

the request, and the issues contested.

Persons who wish to be notified of a

hearing may request such notification

by writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicants, c/o Voyageur Fund

Managers, Inc., 90 South Seventh Street,

Suite 4400, Minneapolis, Minnesota

55402.

FOR FURTHER INFORMATION CONTACT:

H.R. Hallock, Jr., Special Counsel, at

(202) 942–0564 or C. David Messman,

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 Trusts is or will be a

unit investment trust registered under

the Act and sponsored by the Sponsor.

The investment objectives of the Trusts

may differ. The principal underwriter

for the Trusts is or will be Voyageur

Fund Distributor, Inc. (the

‘‘Distributor’’). The Sponsor and

Distributor are each indirect whollyowned subsidiaries of Dougherty

Financial Group, Inc.

2. Each of the Trusts consists or will

consist of one or more separate Series.

Each Series is created by a trust

indenture among the Sponsor, a banking

institution or trust company as trustee,

and an evaluator. The Sponsor acquires

a portfolio of securities which it

deposits with the trustee in exchange for

certificates representing units of

fractional undivided interest in the

deposited portfolio (‘‘Units’’). The

Sponsor will deposit substantially more

than $100,000 of debt or equity

securities, depending on the objective of

the particular Series, for each Series.

3. The Units are then offered to the

public through the Distributor and

dealers at a public offering price which,

during the initial offering period, is

based upon the aggregate offering side

evaluation of the underlying securities

plus a front-end sales charge. The sales

charge is the maximum amount

applicable to a Series and is currently

approximately 4.9% of the public

offering price. The Sponsor may reduce

the sales charge under certain

circumstances, which will be disclosed

in the prospectus. Any such reduction

will be made in accordance with rule

22d–1.

4. The Distributor maintains a

secondary market for Units of

outstanding Series and continually

offers to purchase these Units at prices

based upon the bid side evaluation of

the underlying securities. If the

Distributor discontinues maintaining

such a market at any time for any Trust,

holders of Units (‘‘Unitholders’’) of such

Trust may redeem their Units through

the trustee.

5. Distribution payments of taxexempt or taxable income, depending

on the investment objective of a

particular Trust, will be made to

Unitholders on an annual, semi-annual,

quarterly or monthly basis. The Trusts

generally are permitted to distribute to

Unitholders any capital gains earned in

connection with the sale of portfolio

shares along with the Trust’s regular

distributions in reliance on paragraph

(c) of rule 19b–1.

A. The Deferred Sales Charge

1. Applicants seek an order permitting

them to impose a deferred sales charge

(‘‘DSC’’) and to reduce or waive the DSC

under certain circumstances. Under

Applicants’ proposal, the Sponsor will

determine the maximum amount of the

sales charge per Unit. The Sponsor and

Distributor will have discretion to defer

the collection of all or part of such sales

charge over a period (the ‘‘Collection

Period’’) subsequent to the settlement

date for the purchase of Units. The

Sponsor will in no event add to the

deferred amount of the sales charge any

additional amount for interest or any

similar or related charge to reflect or

adjust for such deferral.

2. The Distributor anticipates

collecting a portion of the total sales

charge immediately upon purchase of

Trust Units. The balance of the sales

charge will be collected in installments
67374 Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Notices

1 Investment Company Act Release No. 17096

(Aug. 3, 1989) (proposing amendments to rule

12d3–1). The proposed amended rule defined a

‘‘Qualified Foreign Exchange’’ to mean a stock

exchange in a country other than the United States

where: (1) Trading generally occurred at least four

days a week; (2) there were limited restrictions on

the ability of acquiring companies to trade their

holdings on the exchange; (3) the exchange had a

trading volume in stocks for the previous year of at

least U.S. $7.5 billion; and (4) the exchange had a

turnover ratio for the preceding year of a least 20%

of its market capitalization. The version of the

amended rule that was adopted did not include the

part of the proposed amendment defining the term

‘‘Qualified Foreign Exchange.’’

over the Collection Period for the

particular Trust. To the extent that

distribution income is sufficient to pay

a DSC installment, such deductions will

be collected from distributions on a

holder’s Units (‘‘Distribution

Deductions’’). If distribution income is

insufficient to pay a DSC installment,

the trustee, pursuant to the powers

granted in the trust indenture, will have

the ability to sell portfolio securities in

an amount necessary to provide the

requisite payments. If a Unitholder

redeems or sells to the Sponsor his or

her Units before the total sales charge

has been collected from installment

payments, the Sponsor intends to

deduct the remainder of any DSC from

sale or redemption proceeds.

3. For purposes of calculating the

amount of the DSC due upon

redemption or sale of Units, it will be

assumed that Units on which the sales

charge has been paid in full are

liquidated first. Any Units liquidated

over and above such amounts will be

subject to the DSC, which will be

applied on the assumption that Units

held for the longest time are redeemed

first, unless the investor directs

otherwise. The Sponsor or Distributor

may choose in the future to waive the

DSC in connection with redemption or

sales of Units under certain

circumstances. Any such waiver will be

disclosed in the prospectus for each

Trust affected and will be implemented

in accordance with rule 22d–1.

4. The Sponsor believes that the

operation and implementation of the

DSC program will be adequately

disclosed and explained to potential

investors as well as Unitholders. The

prospectus for each Trust will describe

the operation of the DSC, including the

amount and date of each Distribution

Deduction and the duration of the

Collection Period. The prospectus will

also contain disclosure pertaining to the

trustee’s ability to sell Trust securities

in the event that income generated by

the Trust portfolio is partially or wholly

insufficient to pay for DSC expenses.

The securities confirmation statement

for each Unitholder’s purchase

transaction will state both the front-end

sales charge imposed, if any, and the

amount of the DSC to be imposed. In

addition, each annual report will

provide Unitholders with information as

to the amount of annual DSC payments

made by the Trust during the previous

fiscal year on both a Series and per Unit

basis.

B. The Exchange Option

1. Applicants also seek exemptive

relief to allow certain offers of exchange

among the Series of the Trusts (the

‘‘Exchange Option’’). The Exchange

Option will extend to all exchanges of

Unites, regardless of whether such Units

are subject to a front-end sales charge or

a DSC, and includes exchanges in

connection with the termination of a

Trust. An investor who purchases Units

under the Exchange Option will pay a

lower aggregate sales charge than that

paid by a new investor, subject to the

limited exceptions described below.

While Units of an applicable Trust are

normally sold on the secondary market

with maximum sales charges of

approximately 5.5% of the public

offering price, the sales charge on Units

acquired pursuant to the proposed

Exchange Option generally will be

reduced to a flat fee of $25 per Unit ($25

per 100 Units in the case of a Series

whose Units initially cost

approximately $10 per Unit, or $25 per

1,000 Units in the case of a Series whose

Units initially cost approximately $1.00

per Unit).

2. An adjustment will be made if

Units of any Trust are exchanged within

five months of their acquisition for

Units of a Trust with a higher sales

charge (the ‘‘Five Months Adjustment’’),

or for exchanges of Units that impose

Distribution Deductions for Units of a

Trust that impose a front-end sales

charge occurring at any time before the

Distribution Deductions had at least

equaled the per Unit sales charge then

applicable (the ‘‘DSC Front-end

Adjustment’’). In such cases, the

exchange fee will be the greater of (i)

$25 per Unit (or its equivalent) or (ii) an

amount that, together with the sales

charge already paid on the Units being

exchanged, equals the normal sales

charge on the Units of a Trust being

acquired through such exchange

determined as of the date of the

exchange.

3. Under the Exchange Option, if DSC

Units are exchanged for DSC Units of

another Trust, the reduced sales charge

will be collected in connection with

such an exchange. The Distribution

Deductions will continue to be taken

from the investment income generated

by the newly acquired Units, or

proceeds from the sale of Trust portfolio

securities, as the case may be, until the

original balance of the sales charge

owed on the initial investment has been

collected. The DSC will not be collected

at the time of exchange, except in the

case of any exchange to a Trust not

having a DSC.

C. Purchase and Sale Transactions

Between Series

1. Applicants finally seek exemptive

relief to permit certain terminating

Series of the Voyageur Equity Trust to

sell their portfolio securities to new

Series in the Voyageur Equity Trust.

Certain Series of the Voyageur Equity

Trust (referred to herein individually

either as the ‘‘State Trusts’’ or the

‘‘Index Trusts’’ and, collectively, as the

‘‘Rollover Trusts’’) will have the specific

characteristics described below.

2. The State Trusts will contain equity

securities of companies paying the

highest dividends located in a particular

state or states that meet certain capital

requirements, as specified below. The

investment objective of the State Trusts

will be to provide an above-average total

return through a combination of

potential capital appreciation and

dividend income by investing in a

designated number of the highest

dividend yielding companies (‘‘Eligible

Companies’’), as of a specified day

which is one of several days before the

State Trust is created which (a) have

their principal operations located in a

specified state or states, and (b) have a

market capitalization in excess of $250

million. Applicants anticipate that

many of the securities of Eligible

companies will be traded on a national

securities exchange or on the Nasdaq

National Market System (‘‘NasdaqNMS’’).

3. The Index Trusts will contain a

portfolio of equity securities which

represents a portion of a specific

published index (and ‘‘Index’’). Each

Index Trust will consist of a portfolio

that contains equity securities (‘‘Equity

Securities’’) which are (a) actively

traded (i.e., have had an average daily

trading volume in the preceding six

months of at least 500 shares equal in

value to at least U.S. $25,000) on (i) an

exchange (an ‘‘Exchange’’) which is

either a national securities exchange

that meets the qualifications of section

6 of the Securities Exchange Act of

1934, as amended, or a foreign securities

exchange (a ‘‘Foreign Exchange’’) that

meets the qualifications set forth in a

proposed amendment to rule 12d3–

1(d)(6) under the Act 1 and which

releases daily closing prices, or (ii) the

Nasdaq-NMS and (b) included in an

Index. The investment objective of each
Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Notices 67375

2Without an exemption, a Trust selling Units

subject to a DSC could not meet the definition of

a unit investment trust under section 4(2) of the

Act. As here relevant, section 4(2) defines a unit

investment trust as an investment company that

issues only ‘‘redeemable securities.’’

Index Trust will be to seek a greater

total return than that achieved by the

stocks constituting the entire Index over

the life of the Index Trust. To achieve

this objective, each Index Trust will

consist of a specified number of the

highest dividend yielding stocks in such

trusts’ respective Index.

4. Each Rollover Trust will hold its

securities for a specified period,

generally one year. As the Rollover

Trust terminates, the Sponsor intends to

create a new Series of the same type (the

‘‘New Trust’’) for the next period. With

respect to the Index Trusts, the New

Trust will be based on the same Index,

using the same number of current top

dividend yielding stocks in the Index.

With respect to the State Trusts, the

New Trust will be based on the same

number of current top dividend yielding

companies located in the same state or

states and that meet the minimum

capital requirements. Each Rollover

Trust has a specified date upon which

Unitholders in the terminating Rollover

Trust may at their option redeem their

Units in the terminating trust and

receive in return Units in the New Trust

which is created on or about the date

such option may be exercised.

5. In connection with its termination,

each Rollover Trust will sell all of its

portfolio securities as quickly as

practicable, but over a period of time so

as to minimize any adverse impact on

the market price. Similarly, a New Trust

will acquire its portfolio securities in

purchase transactions. Because there

normally will be some overlap between

the portfolios of each Rollover Trust and

the corresponding New Trust, this

procedure will result in substantial

brokerage commissions on portfolio

securities of the same issue that are

borne by the Rollover Trust and the

New Trust and, consequently, the

Unitholders of both the Rollover Trust

and the New Trust. In light of these

costs, Applicants request an exemptive

order to allow any Index Trust to sell

Equity Securities, and the State Trusts

to sell securities of the Eligible

companies, that are listed on an

Exchange or Nasdaq-NMS and actively

traded (as described above), to their

respective New Trusts and to permit the

New Trusts to purchase such securities

at the closing sale prices of the

securities on the applicable Exchange or

on Nasdaq-NMS on the sale date. As

required by Condition C.3. and 4.,

below, these transactions must be

effected in compliance with rule 17a–7,

except for certain provisions of

paragraph (e) thereof.

6. To minimize overreaching, the

Sponsor will certify to the trustee,

within five days of each sale from a

Rollover Trust to a New Trust, (a) that

the transaction is consistent with the

policy of both the Rollover Trust and

the New Trust, as recited in their

respective registration statements and

reports filed under the Act, (b) the date

of such transaction and (c) the closing

sales price on the Exchange or NasdaqNMS for the sale date of the securities

subject to such sale. The trustee will

countersign the certificate, unless the

trustee disagrees with the price listed on

the certificate, in which event the

trustee will immediately inform the

Sponsor and return the certificate to the

Sponsor with corrections duly noted. If

the Sponsor can verify the corrected

price, the Sponsor will ensure that the

price of Units of the New Trust, and

distribution to Unitholders of the

Rollover Trust, accurately reflect the

corrected price. If the Sponsor disagrees

with the trustee’s corrected price, the

Sponsor and the trustee will jointly

determine the correct sales price by

reference to a mutually agreeable,

indepenently published list of closing

sales prices for the date of the

transaction.

Applicants’ Legal Analysis

1. Applicants request an exemption

under section 6(c) granting relief from

sections 2(a)(32), 2(a)(35), 22(d) and

26(a)(2) and rule 22c–1 to permit

Applicants to assess a DSC, and to

waive the DSC under certain

circumstances. Applicants also request

an exemption under section 11(a) for

relief from section 11(c) to enable them

to implement the Exchange Option. In

addition, Applicants request an

exemption pursuant to sections 6(c) and

17(b) granting relief from section 17(a)

to permit Rollover Trusts to sell

portfolio securities to a New Trust and

to permit the New Trusts to purchase

such securities. Finally, Applicants seek

an exemption under section 6(c)

granting relief from sections 14(a) and

19(b) and rule 19b–1 to the extent

described below.

2. Section 2(a)(32) defines a

‘‘redeemable security’’ as a security that,

upon its presentation to the issuer,

entitles the holder to receive

approximately his or her proportionate

share of the issuer’s current net assets,

or the cash equivalent of those assets.

Because the imposition of a DSC may

cause a redeeming Unitholder to receive

an amount less than the net asset value

of the redeemed Units, Applicants seek

an exemption from section 2(a)(32) so

that Units subject to a DSC are

considered redeemable securities for

purposes of the Act.2

3. Section 2(a)(35), in relevant part,

defines the term ‘‘sales load’’ to be the

difference between the public selling

price of a security and that portion of

the sale proceeds invested or held for

investment by the depositor or trustee.

Because a DSC is not charged at the time

of purchase, Applicants request an

exemption from section 2(a)(35).

4. Rule 22c–1 requires that the price

of a redeemable security issued by an

investment company for purposes of

sale, redemption, and repurchase be

based on the security’s current net asset

value. Because the imposition of a DSC

may cause a redeeming Unitholder to

receive an amount less than the net

asset value of the redeemed Units,

Applicants seek an exemption from this

rule.

5. Section 22(d) requires an

investment company and its principal

underwriter and dealer to sell securities

only at a current public offering price

described in the investment company’s

prospectus. Because sales charges

traditionally have been a component of

the public offering price, section 22(d)

historically required that all investors be

charged the same load. Rule 22d–1 was

adopted to permit the sale of

redeemable securities ‘‘at prices which

reflect scheduled variations in, or

elimination of, the sales load.’’ Because

rule 22d–1 does not extend to scheduled

variations in DSCs, Applicants seek

relief from section 22(d) to permit them

to waive or reduce their DSC in certain

instances.

6. Section 26(a)(2), in relevant part,

prohibits a trustee or custodian of a unit

investment trust from collecting from

the Trust as an expense any payment to

a depositor or principal underwriter

thereof. Because of this prohibition,

Applicants need an exemption to permit

the trustee to collect the DSC

installments from Distribution

Deductions or Trust assets and disburse

them to the Sponsor.

7. Section 6(c) provides, in relevant

part, that the SEC, by order upon

application, may conditionally or

uconditionally exempt any person or

transaction, or any class or classes of

persons or transactions, from any

provision or provisions of the Act or of

any rule thereunder, if and to the extent

that such exemption is appropriate in

the public interest and consistent with

the protection of investors and the
67376 Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Notices

purposes fairly intended by the policy

and provisions of the Act. Applicants

believe that implementation of the

deferred sales charge program in the

manner described above would be fair

and in the best interests of the

Unitholders of the Trusts. Thus,

granting the requested relief from

sections 2(a)(32), 2(a)(35), 22(d), and

26(a)(2) and rule 22c–1 would meet the

requirements for an exemption

established by section 6(c).

8. Section 11(c) prohibits any offers of

exchange of the securities of a registered

unit investment trust for the securities

of any other investment company,

unless the terms of the offer have been

approved by the SEC under section

11(a). Applicants assert that the reduced

sales charge imposed at the time of

exchange is a reasonable and justifiable

expense to be allocated for the

professional assistance and operational

expenses incurred in connection with

the Exchange Option.

9. Section 17(a) makes it unlawful for

an affiliated person of a registered

investment company to sell securities

to, or purchase securities from, the

company. Investment companies under

common control may be considered

affiliated persons of one another. Each

Series will have an identical or common

Sponsor, Voyageur Fund Managers, Inc.

Since the Sponsor of each Series may be

considered to control each Series, it is

likely that each Series would be

considered an affiliated person of the

others.

10. Section 17(b) provides that the

SEC shall exempt a proposed

transaction from section 17(a) if

evidence establishes that: (a) The terms

of the proposed transaction are

reasonable and fair and do not involve

overreaching; (b) the proposed

transaction is consistent with the

policies of the registered investment

company involved; and (c) the proposed

transaction is consistent with the

general provisions of the Act. As noted

above, section 6(c) authorizes the SEC to

exempt classes of transactions.

Applicants believe the proposed sales of

portfolio securities from a Rollover

Trust to a New Trust satisfy the

exemptive requirements set forth in

sections 6(c) and 17(b).

11. Rule 17a–7 under the Act permits

registered investment companies that

might be deemed affiliates solely by

reason of common investment advisers,

directors, and/or officers, to purchase

securities from, or sell securities to, one

another at an independently determined

price, provided certain conditions are

met. Paragraph (e) of the rule requires

an investment company’s board of

directors to adopt and monitor the

procedures for these transactions to

assure compliance with the rule. A unit

investment trust does not have a board

of directors and, therefore, may not rely

on the rule. Applicants represent that

they will comply with all of the

provisions of rule 17a–7, other than

paragraph (e).

12. Applicants represent that

purchases and sales between Series will

be consistent with the policy of each

Series, as only securities that otherwise

would be bought and sold on the open

market pursuant to the policy of each

Series will be involved in the proposed

transactions. Further, Applicants submit

that requiring the Series to buy and sell

on the open market leads to unnecessary

brokerage fees and is therefore contrary

to the general purposes of the Act.

13. Section 14(a) requires in substance

that investment companies have

$100,000 of net worth prior to making

a public offering. As noted previously,

the Sponsor will deposit substantially

more than $100,000 of debt or equity

securities for each Series. As the

Sponsor intends to sell all of a Trust

Series’ Units to the public, however,

representing the entire beneficial

ownership of the Trust, Applicants

request exemptive relief from the net

worth requirement of section 14(a).

Applicants will comply in all respects

with rule 14a–3, which provides an

exemption from section 14(a), except

that the Voyageur Equity Trust and

certain future Trusts (the ‘‘Equity

Trusts’’) will not restrict their portfolio

investments to ‘‘eligible trust securities’’

as required by the rule.

14. Section 19(b) and rule 19b–1 make

it unlawful, except under limited

circumstances, for a registered

investment company to distribute longterm capital gains more than once every

twelve months. Rule 19b–1(c), under

certain circumstances, excepts a unit

investment trust investing in ‘‘eligible

trust securities’’ (as defined in rule 14a–

3) from the requirements of rule 19b–1.

Because the Equity Trusts, as noted

above, will not restrict their portfolio to

‘‘eligible trust securities,’’ the Equity

Trusts will not qualify for the

exemption in paragraph (c) of rule 19b–

1. Applicants therefore request an

exemption from section 19(b) and 19b–

1 to the extent necessary to permit any

capital gains earned in connection with

the sale of portfolios shares to be

distributed to Unitholders along with

the Equity Trust’s regular distributions.

In all other respects, Applicants will

comply with section 19(b) and rule 19b–

1.

15. Applicants submit that the

dangers which section 19(b) and rule

19b–1 are designed to prevent do not

exist in the Equity Trusts. Any gains

from the redemption of portfolio

securities would be triggered by the

need to meet Trust expenses, deferred

sales charge installments, or by requests

to redeem Units, events over which the

Sponsor and the Equity Trusts have no

control. Moreover, since principal

distributions must be clearly indicated

in accompanying reports to Unitholders

as a return of principal and will be

relatively small in comparison to

normal dividend distributions, there is

little danger of confusion from failure to

differentiate among distributions.

Applicants’ Conditions

The Applicants agree that any order

granting the application will be made

subject to the following conditions:

A. Conditions With Respect to DSC

Relief and Exchange Option

1. Whenever the Exchange Option is

to be terminated or its terms are to be

amended materially, any holder of a

security subject to that privilege will be

given prominent notice of the

impending termination or amendment

at least 60 days prior to the date of

termination or the effective date of the

amendment, provided that: (a) No such

notice need be given if the only material

effect of an amendment is to reduce or

eliminate the sales charge payable at the

time of an exchange, to add one or more

new Series eligible for the Exchange

Option, or to delete a Series which has

terminated; and (b) no notice need be

given if, under extraordinary

circumstances, either (i) there is a

suspension of the redemption of Units

of the Trust under section 22(e) of the

Act and the rules and regulations

promulgated thereunder, or (ii) a Trust

temporarily delays or ceases the sale of

its Units because it is unable to invest

amounts effectively in accordance with

applicable investment objectives,

policies and restrictions.

2. An investor who purchases Units

under the Exchange Option will pay a

lower aggregate sales charge than that

which would be paid for the Units by

a new investor, unless the Five Months

or DSC Front-end Exchange

Adjustments apply.

3. The prospectus of each Trust

offering exchanges and any sales

literature or advertising that mentions

the existence of the Exchange Option

will disclose that the Exchange Option

is subject to modification, termination

or suspension, without notice except in

certain limited cases.

4. Each Series offering Units subject to

a deferred sales charge will include in

its prospectus the table required by item

2 of Form N–1A (modified as
Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Notices 67377

appropriate to reflect the differences

between unit investment trusts and

open-end management investment

companies) and a schedule setting forth

the number and date of each installment

payment.

B. Condition for Exemption From

Section 14(a)

Applicants will comply in all respects

with the requirements of rule 14a–3,

except that the Equity Trusts will not

restrict their portfolio investments to

‘‘eligible trust securities.’’

C. Conditions for Exemption From

Section 17(a)

1. Each sale of Equity Securities by an

Index Trust, or Eligible Companies’

securities by a State Trust, to a New

Trust will be effected at the closing

price of the securities sold on the

applicable Exchange or the NasdaqNMS on the sale date, without any

brokerage charges or other remuneration

except customary transfer fees, if any.

2. The nature and conditions of such

transactions will be fully disclosed to

investors in the appropriate prospectus

of each future Rollover Trust and new

Trust.

3. The trustee of each Rollover Trust

and New Trust will (a) review the

procedures discussed in the application

relating to the sale of securities from a

Rollover Trust and the purchase of those

securities for deposit in a New Trust

and (b) make such changes to the

procedures as the trustee deems

necessary that are reasonably designed

to comply with paragraphs (a) through

(d) of rule 17a–7.

4. A written copy of these procedures

and a written record of each transaction

pursuant to any order granting the

application will be maintained as

provided in rule 17a–7(f).

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–31513 Filed 12–28–95; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Release No.

21618; 811–7684]

Household Personal Portfolios

December 22, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Deregistration under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: Household Personal

Portfolios.

RELEVANT ACT SECTION: Section 8(f).

SUMMARY OF APPLICATION: Applicant

requests an order declaring that it has

ceased to be an investment company.

FILING DATES: The application was filed

on August 10, 1995 and amended on

December 12, 1995.

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 applicant 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 16, 1996 and should be

accompanied by proof of service on the

applicant, 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 5th

Street, NW., Washington, D.C. 20549.

Applicant, 2 North LaSalle Street,

Chicago, Illinois 60602.

FOR FURTHER INFORMATION CONTACT:

Sarah A. Buescher, Staff Attorney, at

(202) 942–0573, or Alison E. Baur,

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.

Applicant’s Representations

1. Applicant is an open-end,

diversified management investment

company organized as a Massachusetts

business trust. Applicant has five

portfolios; Growth Equity Portfolio;

Equity Income Portfolio; Fixed Income

Portfolio; Tax-Exempt Income Portfolio;

and Short-Term Income Portfolio.

2. SEC records indicate that applicant

registered under the Act on April 28,

1993 by filing a notification of

registration on Form N–8A pursuant to

section 8(a) of the Act. Also on that

date, applicant filed a registration

statement on Form N–1A pursuant to

section 8(b) of the Act and the Securities

Act of 1933. The registration statement

became effective on August 3, 1993, and

the initial public offering commenced

on the same date.

3. On December 19, 1994, after

determining that applicant could no

longer provide the desired safety,

diversity, or earnings to shareholders

because of applicant’s small asset base,

applicant’s board of trustees authorized

the appropriate officers to enter into an

Agreement and Plan of Liquidation

(‘‘Plan’’).

4. Pursuant to the Plan, applicant

would be liquidated on February 28,

1995 (‘‘Liquidation Date’’), and on that

date shareholders who had not

redeemed their shares would have them

automatically redeemed. Shareholders

of applicant on or after December 19,

1994 would receive, upon redemption,

the greater of (a) the shareholder’s

account balance (reflecting net asset

value per share) on the date the

redemption request is received or the

Liquidation Date (whichever applies) or

(b) the aggregate amount of the

shareholder’s purchase payments. Such

payment method was used to ensure

that shareholders would not receive less

than their minimum initial investment.

Household International, Inc.,

(‘‘Household’’) the parent of applicant’s

manager/distributor, Hamilton

Investments, Inc., agreed to compensate

any shareholder of record on or after

December 19, 1994 for the amount by

which all purchase payments made by

that shareholder exceeded the

shareholder’s account balance upon

redemption.

5. On February 28, 1995, all

outstanding shares of applicant were

liquidated and the proceeds were paid

in cash to the shareholders.

Distributions to all securityholders in

complete liquidation of their interests

have been made. Applicant did not

incur any brokerage commissions

attributable to the disposition of its

portfolio securities.

6. In connection with the liquidation,

applicant incurred $9,725 of aggregate

expenses, consisting primarily of legal

fees and mailing expenses, all of which

were paid by Household. Household

also reimbursed applicant for

applicant’s remaining unamortized

organizational expenses of $287,710.

7. As of the date of this application,

applicant has no assets and no

outstanding debts or liabilities.

Applicant has no shareholders and is

not a party to any litigation or

administrative proceeding. Applicant is

not presently engaged, nor does it

propose to engage, in any business

activities other than those necessary for

the winding up of its affairs.

8. Applicant intends to file an

instrument required to terminate its

existence as a Massachusetts business

trust.