Federal Register / Vol. 60, No. 78 / Monday, April 24, 1995 / Notices 20139

1Section 17(a) of the Act generally prohibits sales

or purchases of securities between registered

investment companies and any affiliated person of

that company. Rule 17a–8 provides an exemption

from section 17(a) for certain reorganizations among

registered investment companies that may be

affiliated persons, or affiliated persons of an

affiliated person, solely by reason of having a

common investment adviser, common directors,

and/or common officers. Applicant and the

Acquiring Fund were ‘‘affiliated persons’’ as

defined in the Act solely by reason of having a

common investment adviser.

2 Dividing the number of outstanding shares by

the total net assets does not yield a precise figure

of $1.00 per share. This results from both the effect

on the total net assets of realized gains and losses

resulting from the sale of portfolio securities prior

to their stated maturity and the effect of penny

rounding.

end management investment company.

In addition, the board of trustees made

the findings required by rule 17a–8

under the Act.1

3. On July 27, 1994, applicant mailed

proxy materials to its shareholders. On

November 11, 1994, applicant’s

shareholders approved the

reorganization at a special meeting of

shareholders.

4. Pursuant to the Plan, on November

18, 1994, applicant transferred all of its

assets to the Acquiring Fund in

exchange for shares of the Acquiring

Fund and the assumption by the

Acquiring Fund of certain liabilities of

applicant. Immediately thereafter,

applicant liquidated and distributed pro

rata to its shareholders the shares it

received from the Acquiring Fund in the

reorganization. On November 18, 1994,

applicant had 14,865,420,439 shares

outstanding, having an aggregate net

asset value of $14,862,405,321 and a per

share net asset value of $1.00.2

5. Expenses incurred in connection

with the reorganization, consisting of

accounting, printing, administrative,

and legal expenses, totaled $3,351,547.

One half of the expenses were borne by

the Fund’s sponsor, Smith Barney Inc.,

and the remainder were divided

between applicant and the Acquiring

Fund based on relative net assets.

6. There are no securityholders to

whom distributions in complete

liquidation of their interests have not

been made. Applicant has no debts or

other liabilities that remain outstanding.

Applicant is not a party to any litigation

or administration proceeding.

7. Applicant intends to file the

appropriate notice of termination with

Maryland authorities.

8. Applicant is not now engaged, nor

does it propose to engage, in any

business activities other than those

necessary for the winding up of its

affairs.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–10047 Filed 4–21–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–2105; 811–7133]

SSL 1993–1 Trust; Notice of

Application

April 17, 1955.

AGENCY: Securities and Exchange

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

ACTION: Notice of application for

deregistration under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: SSL 1993–1 Trust.

RELEVANT ACT SECTION: Section 8(f).

SUMMARY OF APPLICATION: Applcant

seeks an order declaring that it has

ceased to be an investment company.

FILING DATE: The application was filed

on April 7, 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

May 15, 1995, and should be

accompanied by proof of service on

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 who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 5th

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

Applicant, 200 Park Avenue, New York,

New York 10166.

FOR FURTHER INFORMATION CONTACT:

Elaine M. Boggs, Staff Attorney, at (202)

942–0572, 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 at the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant is an open-end, nondiversified management investment

company that was organized as a

business trust under the laws of

Massachusetts. Applicant originally

registered under the Act and filed a

registration statement under the

Securities Act of 1933 on December 23,

1993. Applicant’s registration statement

under the Securities Act of 1933 was

declared effective on April 13, 1994.

Applicant has not commenced a public

offering of its shares.

2. Applicant has not sold any

securities of which it is the issuer other

than the shares sold to its sponsor,

Major Trading Corporation, to meet the

net worth requirements of section 14(a)

of the Act. On December 7, 1994,

applicant’s board of trustees determined

that is was advisable and in the best

interests of applicant that applicant

terminate its existence as a

Massachusetts business trust and

liquidate its assets and that the proceeds

be returned to applicant’s sponsor.

3. There are no security holders to

whom distributions in complete

liquidation of their interests have not

been made. Applicant has no debts or

other liabilities that remain outstanding.

Applicant is not a party to any litigation

or administrative proceeding.

4. Applicant is not now engaged, nor

does it proposes to engage, in any

business activities other than those

necessary for the winding up of its

affairs.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–9985 Filed 4–21–95; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Release No.

21014; 812–9478]

Van Kampen American Capital

Distributors Inc., et al.; Notice of

Application

April 17, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Van Kampen American

Capital Distributors Inc. (the

‘‘Sponsor’’); Insured Municipals Income

Trust, California Insured Municipals

Income Trust, New York Insured

Municipals Income Trust, Pennsylvania

Insured Municipals Income Trust,

Insured Municipals Income Trust,

Insured Multi-Series, Insured Tax Free

Bond Trust, Investors’ Quality TaxExempt Trust, Insured Municipals

Income Trust and Investors’ Quality Tax
20140 Federal Register / Vol. 60, No. 78 / Monday, April 24, 1995 / Notices

1 Investment Company Act Release Nos. 11514

(Dec. 24, 1980) (notice) and 11589 (Jan. 28, 1981)

(order).

Exempt Trust, Multi-Series Investors’

Governmental Securities—Income

Trust, Van Kampen American Capital

Insured Income Trust, Van Kampen

Merritt Utility Income Trust, Van

Kampen Merritt Emerging Markets

Income Trust, Van Kampen Merritt

Equity Opportunity Trust, California

Investors’ Quality Tax-Exempt Trust,

and Pennsylvania Investors’ Quality

Tax-Exempt Trust (each an ‘‘Existing

Trust’’); and any other future unit

investment trust sponsored by the

Sponsor (collectively, with the Existing

Trusts, the ‘‘Trusts’’).

RELEVANT ACT SECTIONS: Order requested

pursuant to section 6(c) for exemptions

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

and 26(a)(2) of the Act, and rule 22c–1

thereunder, and pursuant to section

11(a) to amend a prior order (the ‘‘Prior

Order’’) granting relief from section

11(c).1

SUMMARY OF APPLICATION: Applicants

seek to impose sales charges on a

deferred basis and waive the deferred

sales charge in certain cases, exchange

Trust units having deferred sales

charges, and exchange units of a

terminating series of a Trust for units of

the next available series of that Trust.

FILING DATES: The application was filed

on February 7, 1995, and amended on

March 31, 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

May 15, 1995, 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 the

date 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, c/o Mark J. Kneedy, Esq.,

Chapman and Cutler, 111 West Monroe

Street, Chicago, Illinois 60603–4080.

FOR FURTHER INFORMATION CONTACT:

James J. Dwyer, Staff Attorney, at (202)

942–0581, 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 is

available 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 sponsored by the

Sponsor and is or will be registered

under the Act. The Trusts are made up

of one or more separate series

(‘‘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 and

deposits them with the trustee of the

Series in exchange for certificates

representing fractional undivided

interests (‘‘Units’’) in the deposited

portfolio. The Units will be registered

under the Securities Act of 1933 and

offered to the public through the

Sponsor, underwriters, and dealers at a

price based upon the aggregate offering

side evaluation of the underlying

securities plus an up-front sales charge.

The maximum sales charge currently

ranges from 5.5% to 1.9% of the public

offering price, and is subject to

reduction as permitted by rule 22d–1. In

addition, although not legally obligated

to do so, the Sponsor maintains a

secondary market for Units of

outstanding Series and continually

offers to purchase such Units. The sales

charge imposed for sales in the

secondary market typically is 1% higher

than it is during the initial offering

period, and decreases over time.

2. Applicants seek an order under

section 6(c) exempting the Trusts from

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

26(a)(2), and rule 22c–1, to let the Trusts

impose sales charges on Units on a

deferred basis and waive the deferred

sales charge in certain cases. Under

applicants’ proposal, the Sponsor will

determine the amount of sales charge

per Unit at the time portfolio securities

are deposited in a Series. The Sponsor

also may defer collection of all or part

of this sales charge over a period

following the purchase of Units. In no

event, however, will the Sponsor add to

the deferred amount initially

determined any additional amount for

interest or any similar or related charge

to reflect or adjust for such deferral.

3. Deferred sales charges, if any,

generally will be paid in regular

installments over a period of time. To

the extent a particular Series provides

distribution income, the trustee of the

Series will withdraw the appropriate

amount of the deferred sales charge

from such distribution income. If the

distribution income is insufficient to

pay the deferred sales charge, the trustee

may sell portfolio securities in an

amount necessary to provide the

requisite payments.

4. Although the Sponsor does not

presently intend to do so, a sales charge

may be deducted from the proceeds of

any redemption of Units or of any sale

of Units to the Sponsor. For purposes of

calculating the amount of the deferred

sales charge due upon redemption or

sale of Units, it will be assumed that

Units on which no sales charge is due

are liquidated first. Any Units disposed

of over such amounts will be redeemed

in the order of their purchase, so that

Units held for the longest time are

redeemed first. If any deferred sales

charge is collected upon sale or

redemption of Units, the Sponsor may,

and intends to, waive payment of the

balance of the deferred sales charge on

such redemptions or sales in certain

cases. Any such waiver will be

disclosed in the prospectus and will

satisfy the other conditions of rule 22d–

1.

5. The Sponsor believes that the

operation and implementation of the

deferred sales charge program will be

disclosed adequately to potential

investors and unitholders. The

prospectus for each Trust will describe

the operation of the deferred sales

charge, including the amount of and

date of each installment payment. The

prospectus also will describe the

trustee’s ability to sell portfolio

securities if the income generated by a

Series’ portfolio is insufficient to pay an

installment. The securities confirmation

statement sent to each purchaser will

state the amount of any initial sales

charge, and the amount of the deferred

sales charge to be deducted in regular

installments. The annual report of each

Series will state the amount of annual

installment payments deducted during

the previous fiscal year on both a Series

and per Unit basis.

6. Applicants seek an order under

section 11(a) to approve certain

exchange transactions subject to section

11(c). The Prior Order permits

applicants covered thereunder to allow

unitholders to exchange Units of one

Series for Units of another Series

generally subject to a flat fee of $25 per

Unit. The requested order would amend

the Prior Order to create an expanded

exchange option that would apply to all

exchanges of Units sold with a sales

charge imposed either at the time of

purchase or on a deferred basis, and to

include all Series. The sales charge

imposed on the exchange of Units is
Federal Register / Vol. 60, No. 78 / Monday, April 24, 1995 / Notices 20141

2Without an exemption, a Trust selling Units

subject to a deferred sales charge could not meet the

definition of a unit investment trust under section

4(2) of the Act. Section 4(2) defines a unit

investment trust as an investment company that

issues only ‘‘redeemable securities.’’

calculated as the greater of (a) $25 per

Unit, or (b) if Units of any Series are

exchanged within five months of their

acquisition for Units of a Series with a

higher sales charge, or if Units subject

to a deferred sales charge are exchanged

for Units sold with an initial sales

charge, an amount that, together with

the sales charge already paid on the

Units being exchanged, equals the

normal sales charge on the acquired

Units.

7. If Units subject to a deferred sales

charge are exchanged for Units of a

Series not having such a charge, the

deferred sales charge will be collected at

the time of the exchange. If Units

subject to a deferred sales charge are

exchanged for Units without such a

charge, installment payments will

continue to be deducted from the

distributions on the acquired Units until

the original balance of the sales charge

owed on the initial investment has been

collected. In either case, the additional

sales charge will be imposed at the time

of the exchange.

Applicants’ Legal Analysis

1. Under section 6(c), the SEC may

exempt any person or transaction from

any provision of the Act or any rule

thereunder 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.

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 deferred sales

charge 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 deferred sales charge are

considered redeemable securities for

purposes of the Act.2

3. Section 2(a)(35) defines the term

‘‘sales load’’ to be the difference

between the sales price and the

proceeds to the issuer, less any expenses

not properly chargeable to sales or

promotional expenses. Because a

deferred sales charge is not charged at

the time of purchase, an exemption from

section 2(a)(35) is necessary.

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 investment company’s

current net asset value. Because the

imposition of a deferred sales charge

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 that

reflect scheduled variations in, or

elimination of, the sales load.’’ Because

rule 22d–1 does not extend to scheduled

variations in deferred sales charges,

applicants seek relief from section 22(d)

to let them waive or reduce their

deferred sales charge 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 let the

trustee collect the deferred sales charge

installments from distribution

deductions or Trust assets.

7. Applicants believe that

implementation of the deferred sales

charge program in the manner described

above would be fair and equitable and

consistent with all provisions of the Act.

Thus, granting the requested order

would be 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.

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. 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.

Applicants’ Conditions

Applicants agree that any relief

granted will be subject to the following

conditions:

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: (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 that 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) 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

that would be paid for the Units by a

new investor.

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

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.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–9982 Filed 4–21–95; 8:45 am]

BILLING CODE 8010–01–M