Federal Register / Vol. 61, No. 92 / Friday, May 10, 1996 / Notices 21515

Rights. The Board may also, with the

concurrence of a majority of the

Independent Directors, extend the

redemption period for up to an

additional 20 days.

Entergy Corporation, et al. (70–8845)

Entergy Corporation (‘‘Entergy’’), 639

Loyola Avenue, New Orleans, Louisiana

70113, a registered public utility

holding company, and its wholly owned

subsidiary company Entergy Power, Inc.

(‘‘EPI’’), 900 South Shackleford Road,

Little Rock, Arkansas 72211, (both,

‘‘Declarants’’), have filed a declaration

under section 12(c) of the Act and rule

46 thereunder.

EPI proposes to make one or more

cash payments in an aggregate amount

not to exceed $55 million to Entergy

from time to time through December 31,

1998 out of EPI’s unearned surplus. As

of December 31, 1995, EPI had

approximately $249,950,000 of capital

or unearned surplus and cash and cash

equivalents of approximately

$59,482,000. The cash equivalents of

EPI include temporary cash investments

of $59,225,000, which derive from

capital contributions made by Entergy to

EPI in July and December 1995.

Declarants state that these liquid assets

are far in excess of any foreseeable

capital needs of EPI. Therefore, EPI

proposes to return all or most of these

assets to Entergy, EPI’s sole shareholder,

through the proposed cash payments.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–11669 Filed 5–9–96; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21937; 812–9854]

Van Kampen American Capital

Comstock Fund, et al.; Notice of

Application

May 3, 1996.

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 Comstock Fund (‘‘Comstock

Fund’’), Van Kampen American Capital

Enterprise Fund (‘‘Enterprise Fund’’),

Van Kampen American Capital Equity

Income Fund (‘‘Equity Income Fund’’),

Van Kampen American Capital Growth

and Income Fund (‘‘Growth and Income

Fund’’), Van Kampen American Capital

Life Investment Trust on behalf of its

series Common Stock Fund and

Multiple Strategy Fund (‘‘Life Trust’’),

Van Kampen American Capital Pace

Fund (‘‘Pace Fund’’), Common Sense

Trust (‘‘Common Sense Trust’’) on

behalf of its series: Common Sense

Growth Fund, Common Sense Growth

and Income Fund, Common Sense II

Growth Fund, Common Sense II Growth

and Income Fund, Common Sense II

International Equity Fund, Smith

Barney/Travelers Series Fund, Inc.

(‘‘Smith Barney Fund’’) on behalf of its

series American Capital Enterprise

Portfolio, Van Kampen American

Capital Equity Trust (‘‘Equity Trust’’) on

behalf of its series: Van Kampen

American Capital Growth Fund, Van

Kampen American Capital Prospector

Fund, Van Kampen American Capital

Value Fund (collectively, the ‘‘Public

Funds’’); Van Kampen American Capital

Small Capitalization Fund (‘‘Small Cap

Fund’’); and Van Kampen American

Capital Asset Management, Inc.

(‘‘VKACAM’’) and Van Kampen

American Capital Investment Advisory

Corp. (‘‘Advisory Corp.,’’ together with

VKACAM, the ‘‘Advisers’’).

RELEVANT ACT SECTIONS: Order requested

under section 6(c) granting and

exemption from section 12(d)(1), and

under sections 6(c) and 17(b) granting

an exemption from section 17(a).

SUMMARY OF APPLICATION; Applicants

request an order amending a prior order

that permits the Small Cap Fund to

serve exclusively as an investment

vehicle through which certain Public

Funds may invest a portion of their

assets in a portfolio of small

capitalization stocks. The requested

order would add certain parties as

applicants and revise the conditions to

the requested relief.

FILING DATES: The application was filed

on November 17, 1995. Applicants have

agreed to file an amendment during the

notice period, the substance of which is

included in this notice.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicants with a

copy of the request, personally or by

mail. Hearing requests should be

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

May 28, 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.

Person 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: Comstock Fund, Enterprise

Fund, Equity Income Fund, Growth and

Income Fund, Life Trust, Peace Fund,

Small Cap Fund, VKACAM, and

Common Sense Trust, 2800 Post Oak

Boulevard, Houston, Texas 77056;

Smith Barney Fund, 388 Greenwich

Street, New York, New York 10013; and

Equity Trust and Advisory Corp., One

Parkview Plaza, Oakbrook Terrace,

Illinois 60181.

FOR FURTHER INFORMATION CONTRACT:

Sarah A. Wagman, Staff Attorney, at

(202) 942–0654, or Robert A. Robertson,

Branch Chief, at (202) 942–0564 (Office

of Investment Company Regulation,

Division of Investment Management).

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.

Applicants’ Representations

1 The Small Cap Fund is an open-end

management investment company for

which VKACAM serves as investment

adviser. The Small Cap Fund invests at

least 80% of its assets in equity

securities of companies with a market

capitalization less than that of the

largest 500 publicly-traded companies.

Although the Small Cap Fund is

registered under the Act, it does not

intend to make a public offering of its

shares, and has not registered its shares

under the Securities Act of 1933.

2. VKACAM will not charge any

advisory fee for managing the Small Cap

Fund, and there is no sales load or other

charges associated with distribution of

the Small Cap Fund’s shares. The Small

Cap Fund will bear the other expenses

it incurs, and such expenses thus will

be borne indirectly by the public Funds

that invest in the Small Cap Fund.

3. The Public Funds are open-end

management investment companies for

which Advisory Corp. or VKACAM

serves as investment companies for

which Advisory Corp. or VKACAM

serves as investment adviser with

investment discretion over the entire

portfolio. Advisory Corp. and VKACAM

are both wholly-owned subsidiaries of

Van Kampen American Capital, Inc. In

addition to the funds named in the

application, the Public Funds may

include any open-end management

investment company or portfolio thereof

for which Advisory Corp. or VKACAM

may in the future become investment
21516 Federal Register / Vol. 61, No. 92 / Friday, May 10, 1996 / Notices

1The Public Funds may also include other

existing open-end investment management

companies advised by VKACAM or Advisory Corp.

that currently do not intend to rely on the requested

order, but may do so in the future in accordance

with the terms and conditions thereto.

2 Investment Company Act Release Nos. 19660

(Aug. 26, 1993) (notice) and 19730 (Sept. 21, 1993)

(order).

adviser with investment discretion over

the entire investment portfolio.1

4. Limited investment in the small

capitalization sector of the securities

markets is an appropriate part of the

investment strategy of each of the Public

Funds. Under a prior order,2 certain of

the Public Funds may achieve this

aspect of their investment strategy by

investing in the Small Cap Fund.

The requested order would amend the

prior order by adding certain parties as

applicants and revising the conditions

to the requested relief.

5. The Advisers believe that providing

the Public Funds with a single

investment vehicle to invest in a

broadly diversified portfolio of small

capitalization stocks will provide the

Public Funds with the most effective

exposure to the performance of that

sector of the stock market while at the

same time minimizing costs. The Small

Cap Fund will hold a larger number of

small capitalization issues, and thus be

more diversified, than would a Public

Fund if it were investing directly in

small capitalization stocks. The

Advisers expect that the Small Cap

Fund’s diversification will benefit both

the Small Cap Fund and the Public

Funds by providing greater price

stability and lower volatility.

6. Each Public Fund may have, in

addition to its holdings in the Small Cap

Fund, some direct investments in small

capitalization stocks. The advisers have

adopted procedures to avoid the

unnecessary expense that could occur if

the Small Cap Fund were to sell a

particular stock at the same time a

Public Fund were to purchase it, or vice

versa. The Small Cap Fund will

circulate among the portfolio managers

of the Public Funds a list of stocks it

intends to purchase or sell. If any Public

Fund’s portfolio manager wishes to buy

or sell a stock on the list, the Small Cap

Fund will effect the transaction directly

with that Public Fund. The value of the

stock will be the current market price,

determined in accordance with rule

17a–7. Payment will be made by

simultaneous transfer of cash or, if the

Public Fund wishes to alter its

investment in the Small Cap Fund, or

Small Cap Fund shares with an equal

value. In cases where the payment for

the subject stock is Small Cap Fund

shares rather than cash, the transactions

will comply with the provisions of rule

17a–7(a) through (f) in all respects other

than the requirement that purchases and

sales be made only for cash

consideration.

7. The Advisers believe that they will

be able to coordinate purchases and

redemptions of Small Cap Fund shares

in virtually all instances. There may be

occasions, however, when a single

Public Fund purchases or redeems an

unusually large number of Small Cap

Fund shares. Such a large transaction

could cause the Small Cap Fund, and

thus the Public Funds not involved in

the transaction, to bear significant

incremental trading costs associated

with the acquisition or disposition of

small capitalization stocks. Accordingly,

if a Public Fund plans to make an

unusually large purchase or redemption

of Small Cap Fund shares, the Advisers

in their sole discretion may cause the

transaction to be executed in kind. In

the case of a purchase, the Public Fund

would acquire small capitalization

stocks and exchange them for Small Cap

Fund shares. For a redemption, the

Small Cap Fund would deliver small

capitalization stocks to the Public Fund,

which the Public Fund could then sell.

These redemptions will be made on a

pro rata basis, whereby the redeeming

Public Fund will receive its

proportionate share of each portfolio

security. Such in-kind transactions will

comply with rule 17a–7(a) through (f)

except that the consideration for the

small capitalization stocks will be Small

Cap Fund shares rather than cash.

Applicants’ Legal Analysis

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

provides that no registered investment

company may acquire securities of

another investment company

representing more than 3% of the

acquired company’s outstanding voting

stock, more than 5% of the acquiring

company’s total assets or, together with

the securities of other investment

companies, more than 10% of the

acquiring company’s total assets.

Section 12(d)(1)(B) provides that no

registered open-end management

investment company may sell its

securities to another investment

company if the sale will cause the

acquiring company to own more than

3% of the acquired company’s voting

stock, or if the sale will cause more than

10% of the acquired company’s voting

stock to be owned by investment

companies.

2. Applicants request an exemption

from section 12(d)(1) because, among

other holdings, the Public Funds will

own 100% of the stock of the Small Cap

Fund, and a Public Fund’s investment

in the Small Cap fund may represent

more than 5% of that Public Fund’s

total assets. Section 6(c) of the Act

provides that the SEC may exempt

persons or transactions 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.

Applicants request an order under

section 6(c) exempting them from

section 12(d)(1) (A) and (B) to permit

the Public Funds to invest in shares of

the Small Cap Fund in excess of the

percentage limitations of section

12(d)(1).

3. Applicants believe that the

proposed arrangement does not

implicate the concerns underlying

section 12(d)(1). For instance, because

the Advisers are under common control,

there will be no incentive for any Public

Fund to assert undue control over the

Small Cap Fund. Applicants believe that

the proposed arrangement will not

result in disruptive redemptions

because the Advisers will coordinate the

Public Funds’ purchases and sales of

Small Cap Fund shares to minimize the

cash flow into or out of the Small Cap

Fund. In addition, the Small Cap fund

will not cause investors in the Public

Funds to bear two layers of fees. The

Small Cap Fund will pay no advisory

fee, and its shares will not be subject to

any sales load. Accordingly, applicants

believe that the proposed arrangement

meets the standards of section 6(c).

4. Applicants also request an

exemption from section 17(a) of the Act,

which prohibits certain purchases and

sales of securities between investment

companies and their affiliated persons,

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

The Public Funds and the Small Cap

Fund may be deemed to be under

common control because each Public

Fund is advised by the Advisers, and

the Advisers are under the common

control of Van Kampen American

Capital, Inc. Each of the Public Funds

and the Small Cap Fund would

therefore be an affiliated person of each

other within the meaning of section

2(a)(3). Thus, purchases or sales of

securities between the Small Cap Fund

and a Public Fund may be prohibited by

section 17(a).

5. Section 17(b) of the Act 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
Federal Register / Vol. 61, No. 92 / Friday, May 10, 1996 / Notices 21517

3Section 17(b) applies to a specific proposed

transaction, rather than an ongoing series of future

transactions. See Keystone Custodian Funds, 21

S.E.C. 295, 298–99 (1945). Section 6(c), along with

section 17(b), is frequently used to grant relief from

section 17(a) to permit an ongoing series of

transactions. 1 15 U.S.C. 78s(b)(1)

company involved; and (c) the proposed

transaction is consistent with the

general provisions of the Act.

Applicants request an exemption under

sections 6(c) and 17(b) to permit the

Public Funds to purchase shares of the

Small Cap Fund, and the Small Cap

Fund to redeem such shares.3

Applicants believe that the proposed

transactions meet the standards of

sections 6(c) and 17(b).

Applicants’ Conditions

Applicants agree that any order of the

SEC granting the requested relief shall

be subject to the following conditions:

1. The Public Funds and the Small

Cap Fund will be part of the same

‘‘group of investment companies,’’ as

defined in rule 11a–3 under the Act.

2. The Small Cap Fund shall not

acquire securities of any other

investment company in excess of the

limits contained in section 12(d)(1)(A)

of the Act.

3. A majority of the trustees of the

Public Funds will not be ‘‘interested

persons,’’ as defined in section 2(a)(19)

of the Act.

4. VKACAM will not charge any

advisory fee for managing the Small cap

Fund.

5. Any sales charges or service fees

charged with respect to securities of the

Public Funds, when aggregated with any

sales charges or service fees paid by the

Public Funds with respect to securities

of the Small Cap Fund, shall not exceed

the limits set forth in Article II, section

26, of the Rules of Fair Practice of the

National Association of Securities

Dealers, Inc.

6. Applicants agree to provide the

following information, in electronic

format, to the Chief Financial Analyst of

the SEC’s Division of Investment

Management: monthly average total

assets for each Public Fund’s portfolio

and the Small Cap Fund’s portfolio;

monthly purchases and redemptions

(other than by exchange) for each Public

Fund’s portfolio and the Small Cap

Fund’s portfolio; annual expense ratios

for each Public Fund’s portfolio and the

Small Cap fund’s portfolio; and a

description of any vote taken by the

shareholders of the Small Cap Fund,

including a statement of the percentage

of votes cast for and against the proposal

by the Public funds and by any other

shareholders of the Small Cap Fund if

any. Such information will be provided

as soon as reasonably practicable

following each fiscal year-end of each of

the Public Funds (unless the Chief

Financial Analyst shall notify

applicants in writing that such

information need no longer be

submitted).

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–11671 Filed 5–9–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37169; File No. SR–NASD–

96–15]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

National Association of Securities

Dealers, Inc. Relating to Schedule A to

the By-Laws To Amend the Allowable

Exclusions and Deductions From the

Definition of Gross Revenue for

Member Assessment Purposes

May 6, 1996.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

April 4, 1996, the National Association

of Securities Dealers (‘‘NASD’’ or

‘‘Association’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by the NASD. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Following is the text of the proposed

rule change. Proposed new language is

italicized; deletions are in brackets.

NASD By-Laws

Schedule A

* * * * *

Section 5 Gross Revenue for

Assessment Purposes

(a) Gross revenue is defined for

assessment purposes as total income as

reported on FOCUS form Part II or IIA

with the following exclusions:

[• ] (1) Other income unrelated to

the securities business;

[• ] [Interest and dividends;]

[• ] (2) Commodities income;

[• ] (3) Advisory fees, investment

management fees and finders’ fees not

directly involving the offering of

securities; proxy fees; vault service fees;

safekeeping fees; transfer fees; and fees

for financial advisory services for

municipalities;

[• ] (4) Commissions derived from

transactions executed on a registered

national securities exchange or a foreign

securities exchange (Note 1);

[• ] (5) Profits or losses derived from

transactions of which both the purchase

and sale are executed on a registered

national securities exchange, including

arbitrage (Note 1); and

[• ] (6) Profits and losses derived

from transactions in certifications of

deposit and commercial paper, which is

defined to include drafts, bills of

exchange, and bankers acceptances.

(b) In addition, members may deduct:

[• ] (1) Any commissions,

concessions or other allowances paid to

another member in connection with the

execution or clearance of transactions

included in reported revenue. For

example, a member acting as a clearing

agent for another member shall deduct

net amounts allowed to the non-clearing

member; [and]

[• ] (2) 25% of gross wrap fees

charged to and received from customers

and paid or allocated to investment

managers or advisors[.]; and

[• ] (3) Interest and dividend

expense but not in excess of related

interest and dividend revenue or,

alternatively, the member may deduct

40% of interest earned by the member

on customer securities accounts;

provided, however in addition the

member may deduct the first $50,000 of

net interest and dividend revenue.

Note 1: Income not subject to exclusion

for members for whom the NASD is the

designated examining authority.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

self-regulatory organization included

statements concerning the purpose of

and basis for the proposed rule change

and discussed any comments it received

on the proposed rule change. The text

of these statements may be examined at

the places specified in Item IV below.

The self-regulatory organization has

prepared summaries, set forth in

Sections A, B, and C below, of the most

significant aspects of such statements.