27118 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices

1Other existing open-end management

investment companies for which Advisory Corp. or

VKACAM serves as investment adviser or

subadviser do not currently intend to rely on the

requested relief and therefore are not named as

applicants. These investment companies may rely

on the requested relief in the future under the terms

and conditions set forth in the application.

a member of the Hughes’ Maternal Heirs

or A&K and will not permit the

assignment or transfer of any interest

therein except by bequest, gift, or

operation of law, and in the case of gifts,

only to persons who are members of the

donor’s family.

3. Applicant will have a ten-year

duration from the date of the granting of

the order unless earlier terminated

pursuant to the terms of the restated

partnership agreement or unless it: (a)

ceases to be an investment company as

such term is defined in the Act; (b)

qualifies for a statutory exception from

such definition under the Act; (c)

obtains an amended exemptive order

permitting it to continue as an exempt

entity; or (d) registers as an investment

company under the Act.

4. Applicant shall not have elected

any new Managing Partner without the

approval of a majority in interest of the

partners, and such new Managing

Partner must be a partner of applicant.

5. Applicant shall not knowingly

make available to any broker or dealer

registered under the Securities

Exchange Act of 1934, any financial

information concerning applicant for

the purpose of knowingly enabling such

broker or dealer to initiate any regular

trading market in any units of

partnership interest.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–13547 Filed 5–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Rel. No. 21977;

812–10042]

Van Kampen American Capital

Comstock Fund, et al.; Notice of

Application

May 23, 1996.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (‘‘Act’’).

APPLICANTS: Van Kampen American

Capital Comstock Fund (‘‘Comstock

Fund’’); Van Kampen American Capital

Enterprise Fund (‘‘Enterprise Fund’’);

Van Kampen 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 (‘‘Life Investment

Trust’’); Van Kampen American Capital

Pace Fund (‘‘Pace Fund’’); Van Kampen

American Capital Equity Trust (‘‘Equity

Trust’’); Common Sense Trust

(collectively, the ‘‘Van Kampen

Funds’’); Smith Barney/Travelers Series

Fund Inc. (‘‘Smith Barney Fund’’)

(collectively, with the Van Kampen

Funds, the ‘‘Public Funds’’); Van

Kampen American Capital Foreign

Securities Fund (‘‘Foreign Securities

Fund’’); Van Kampen American Capital

Investment Advisory Corp. (‘‘Advisory

Corp.’’); and Van Kampen American

Capital Asset Management, Inc.

(‘‘VKACAM’’) (collectively with

Advisory Corp., the ‘‘Advisers’’), on

behalf of themselves and any future

registered open-end management

investment companies for which either

of the Advisers serves as investment

adviser or subadviser.1

RELEVANT ACT SECTIONS: Order requested

under section 6(c) for an exemption

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

sections (c) and 17(b) for an exemption

from section 17(a).

SUMMARY OF APPLICATION: Applicants

seek an order to permit the Foreign

Securities Fund to serve as an

investment vehicle through which the

Public Funds would invest portions of

their assets in a portfolio of foreign

equity securities.

FILING DATES: The application was filed

on March 12, 1996, and amended on

May 10, 1996. Applicants have agreed to

file an additional amendment during the

notice period, the substance of which is

reflected 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

June 17, 1996, 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 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: Van Kampen Funds,

Foreign Securities Fund, and the

Advisers, One Parkview Plaza,

Oakbrook Terrace, Illinois 60181; Smith

Barney Fund, 388 Greenwich Street,

New York, New York 10013.

FOR FURTHER INFORMATION CONTACT:

Courtney S. Thornton, Senior Counsel,

at (202) 942–0583, 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.

Applicants’ Representations

1. The Public Funds are registered

open-end management investment

companies. Each of the Public Funds

invests part or all of its assets in equity

securities as provided in its investment

policies and restrictions. A common

characteristic of the Public Funds is that

limited investment in foreign securities

is an appropriate part of their

investment strategies. While the Public

Funds differ with respect to the portions

of their respective total assets they

might invest in foreign securities, their

investment objectives with respect to

such investments, and their strategies

for making them, are identical.

2. The Foreign Securities Fund is a

newly formed open-end investment

company that will invest primarily in

equity securities of foreign issuers. The

Foreign Securities Fund will invest in

securities of issuers traded on markets

of at least three of the world’s largest

countries by market capitalization, but

securities of issuers traded on quoted

markets of other countries also will be

considered for investment. Although the

Foreign Securities Fund is registered

under the Act, it does not intend to

make a public offering of its shares, and

has not registered under the Securities

Act of 1933. The only investors in the

Foreign Securities Fund will be some or

all of the Public Funds. There will be no

sales load or other charges associated

with distribution of the Foreign

Securities Fund’s shares. Other

expenses incurred by the Foreign

Securities Fund will be borne by it, and

thus indirectly by the Public Funds that

invest in it.

3. The Advisers are wholly owned

subsidiaries of Van Kampen American

Capital, Inc., and are registered as

investment advisers under the

Investment Advisers Act of 1940. The

Advisers serve as investment adviser or

subadviser to each of the Public Funds,

and have investment discretion over the
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices 27119

entire portfolio of each of the Public

Funds they advise. Advisory Corp. also

acts as investment adviser to the Foreign

Securities Fund, but does not charge

any advisory fee for these services.

4. Applicants intend to use the

Foreign Securities Fund to pool the

Public Funds’ investments in foreign

securities. Applicants believe that the

use of a single investment vehicle to

invest in a broadly diversified portfolio

of foreign securities will provide the

Public Funds with the most effective

exposure to the performance of foreign

markets while at the same time

minimizing costs. Applicants state that

the Foreign Securities Fund will be

more diversified in foreign markets than

a Public Fund investing on its own. As

a result, events that affect the price of

a single foreign issuer or country can be

expected to have less impact on the

Foreign Securities Fund than they

would have on the foreign securities

holdings of a Public Fund. Applicants

represent that this diversification can be

expected to benefit both the Foreign

Securities Fund and the Public Funds

by providing greater price stability and

lower volatility, while at the same time

capturing the performance benefits of

exposure to foreign markets.

5. Applicants also expect the Public

Funds’ investments in the Foreign

Securities Fund to increase the

efficiency of portfolio management of

the Public Funds. Tracking the

performance of various country markets

and issuers in foreign markets in a timeconsuming process and substantially

different from tracking the domestic

market and domestic issuers, which

would normally be attendant with a

Public Fund’s portfolio management. By

obtaining most of its exposure to foreign

markets through the Foreign Securities

Fund, a Public Fund and its

shareholders would gain the benefit of

exposure to this sector without

incurring the penalty attendant upon a

Public Fund’s portfolio manager

spending a disproportionate amount of

his or her time following these relatively

small positions.

6. Applicants anticipate that the

efficiencies resulting from use of the

Foreign Securities Fund will result in

cost savings to the Public Funds in three

areas: administrative costs, out-ofpocket costs, and trading costs. Savings

of administrative costs will be

attributable to a great reduction in

administrative procedures. Savings of

out-of-pocket costs such as audit fees

and custodial fees will be substantially

offset by increases in other out-of-pocket

costs such as legal and transfer agency

fees. Applicants expect that the major

cost savings will occur because the

Foreign Securities Fund will experience

trading costs that will be substantially

less than the trading costs that would be

incurred if foreign stocks were

purchased separately for each of the

Public Funds. Applicants believe that

this cost savings will increase in direct

proportion to the number of foreign

stocks over which the investment in

foreign securities is diversified.

7. When the Foreign Securities Fund

begins operations, some of the Public

Funds may contribute foreign securities

from their own portfolios (in addition to

cash) in return for shares of the Foreign

Securities Fund. All of the portfolio

securities contributed will be

appropriate investments for the Foreign

Securities Fund, and will be valued at

the time of contribution in accordance

with rule 17a–7 under the Act.

8. Although the majority of the Public

Funds’ investments in foreign securities

will be through the Foreign Securities

Fund, each Public Fund may have some

additional direct investments in foreign

stocks. Applicants state that the

Advisers have adopted a procedure to

avoid unnecessary expense that could

occur if the Foreign Securities Fund

were to sell a particular stock at the

same time a Public Fund were to

purchase it, or vice versa. The Foreign

Securities Fund will generate a list of

stocks that it intends to purchase or sell,

and will circulate the list among the

portfolio managers of the Public Funds.

If any portfolio manager wishes to sell

or buy a stock on the list, the Foreign

Securities 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 by simultaneous redemption

or issuance of shares of the Foreign

Securities Fund with an equal value,

depending on whether the Public Fund

wishes to alter its investment in the

Foreign Securities Fund. In cases where

the payment for the subject stock is

Foreign Securities 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.

9. To minimize the need for the

Foreign Securities Fund to maintain

large cash balances, the Advisers will

coordinate the Public Funds’ purchases

and sales of shares of Foreign Securities

Fund shares to minimize the cash flow

into or out of the Foreign Securities

Fund, and attempt to anticipate the

Public Funds’ cash needs and

coordinate net cash investments or

redemptions (on a pro rata basis) to

permit the orderly acquisition or

disposition of foreign securities within

the Foreign Securities Fund. The

purchase or sale of shares of the Foreign

Securities Fund by the Public Funds

also will be coordinated with

rebalancing transactions within the

Foreign Securities Fund. The Advisers

will monitor the process over time to

ensure that the best interests of the

Public Funds and the Foreign Securities

Fund are met.

10. Applicants anticipate that they

will be able to follow the foregoing

procedures in virtually all instances.

There may be occasions, however, when

a single Public Fund makes an

unusually large purchase or redemption

of Foreign Securities Fund shares. Such

a large transaction could cause the

Public Funds not involved in the

transaction to bear significant

incremental trading costs associated

with the acquisition or disposition of

foreign stocks. Accordingly, if a Public

Fund intends to make such an

acquisition or disposition, the Advisers,

as fiduciaries to the Public Funds and

the Foreign Securities Fund, may cause

the transaction to be executed in kind.

In the case of a purchase, the Public

Fund would acquire foreign stocks

directly, then contribute them to the

Foreign Securities Fund in exchange for

its shares. In the case of a redemption,

the Foreign Securities Fund would

deliver redemption proceeds to the

Public Fund in the form of a pro rata

distribution of portfolio securities held

by the Foreign Securities Fund, which

the Public Fund could then sell. Such

in-kind transactions will comply with

rule 17a–7 (a) through (f) except that the

consideration for the foreign stocks will

be Foreign Securities 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 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.
27120 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices

2. Applicants request an exemption

from section 12(d)(1) because the Public

Funds in the aggregate will own 100%

of the stock of the Foreign Securities

Fund, thus any one Public Fund’s

investment in the Foreign Securities

Fund may represent more than 5% of

the Public Fund’s total assets.

Applicants believe that the requested

exemption will not implicate any of the

abuses that section 12(d)(1) was

intended to prevent. For example, the

concern that the Public Funds might

exercise undue influence over the

management of the Foreign Securities

Fund is not present because all of the

Funds are advised by the Advisers.

Moreover, because the Advisers will be

paid no advisory fee by the Foreign

Securities Fund and because the

Advisers are under common control,

there will be no incentive for any Public

Fund to assert undue control over the

Foreign Securities Fund. Furthermore,

the concern that large redemptions

could disrupt the orderly management

of the Foreign Securities Fund will not

be a problem because the Advisers will

be in a position to anticipate

redemption needs, and the costs

associated with large redemptions of

Foreign Securities Fund shares would

be mitigated by the ability of the Fund

to redeem its shares in kind. In addition,

the Foreign Securities Fund will not

cause investors in the Public Funds to

incur two layers of costs. The Foreign

Securities Fund will pay no advisory

fee, and its shares will not be subject to

any sales load or rule 12b–1 fee.

3. 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.

VKACAM is an affiliated person of each

of the Public Funds its advises, and

Advisory Corp, is an affiliated person of

the Foreign Securities Fund and of each

Public Fund it advises. In addition, each

of Advisory Corp. and VKACAM is an

affiliated person of the other by reason

of being under common control. To the

extent that the Funds may be deemed to

be under common control, each Fund

would be an affiliated person of each

other Fund. Accordingly, purchases or

sales of securities between the Foreign

Securities Fund and a Public Fund may

violate section 17(a).

4. Sections 6(c) and 17(b) of the Act

set forth the standards for exempting a

series of transactions from section 17(a).

Under section 17(b), the terms of any

such transaction must be reasonable and

fair and must not involve overreaching

on the part of any person, the

transaction must be consistent with the

policy of each investment company

concerned, and the transaction must be

consistent with the general purposes of

the Act. In addition, under section 6(c),

the exemption must be 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.

5. Applicants believe that the

proposed transactions meet the

standards for relief under sections 6(c)

and 17(b). Applicants contend that the

terms of the transactions between the

Foreign Securities Fund and the Public

Funds are reasonable and fair and do

not involve overreaching. The

consideration paid and received for the

purchase and redemption of Foreign

Securities Fund shares will be based on

the net asset value of the Foreign

Securities Fund. The Foreign Securities

Fund will not pay an advisory fee, and

there will be no sales load or other

charge associated with distribution of its

shares. Applicants believe that the

transactions are consistent with the

policies of the Public Funds and the

Foreign Securities Fund. The Public

Funds’ investments in the Foreign

Securities Fund, and the Foreign

Securities Fund’s issuance of shares,

will be in accordance with each Fund’s

investment restrictions and policies.

Applicants also believe that the

transactions are consistent with the

general purposes of the Act. Section

17(a) was intended to prohibit affiliated

persons from furthering their own

interests by, for example, selling

property to an investment company at

less than fair value. Applicants believe

that their proposal does not present

those concerns.

Applicants’ Conditions

Applicants agree that the following

conditions will govern transactions

under the requested order:

1. The Public Funds and the Foreign

Securities Fund will be part of the same

‘‘group of investment companies,’’ as

defined in rule 11a–3 under the Act.

2. The Foreign Securities 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. Advisory Corp. will not charge any

advisory fee for managing the Foreign

Securities 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 Foreign Securities Fund, shall not

exceed the limits set forth in Article III,

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 Foreign Securities Fund’s

portfolio; monthly purchases and

redemptions (other than by exchange)

for each Public Fund’s portfolio and the

Foreign Securities Fund’s portfolio;

annual expense ratios for each Public

Fund’s portfolio and the Foreign

Securities Fund’s portfolio; and a

description of any vote taken by the

shareholders of the Foreign Securities

Fund, including a statement of the

percentage of votes cast for and against

the proposal by the Public Funds and by

the other shareholders of the Foreign

Securities 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 SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–13456 Filed 5–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21975; File No. 812–9696]

Washington National Insurance

Company, et al.

May 22, 1996.

AGENCY: Securities and Exchange

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

ACTION: Notice of Application for an

Order under the Investment Company

Act of 1940 (the ‘‘1940 Act’’).

APPLICANTS: Washington National

Insurance Company (‘‘Washington

National’’) and Separate Account I of

Washington National Insurance

Company (the ‘‘Separate Account’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) granting

exemptions from the provisions of

Sections 26(a)(2)(C) and 27(c)(2).

SUMMARY OF APPLICATION: Applicants

seek an order exempting Washington

National and the Separate Account,

which will be reorganized from a

managed separate account to a separate