31564 Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Notices

The retention of these records may not

exceed ten years beyond the employee’s

separation date. The records are

maintained longer if the employee is

rehired during the ten year period.

5. Disciplinary Tracking System

Records. These are maintained until

research purposes are served, not to

exceed thirty years. Destruction is by

electronic erasure.

SYSTEM MANAGER(S) AND ADDRESS:

[CHANGE TO READ]

Vice President, Human Resources,

United States Postal Service, 475

L’Enfant Plaza SW, Washington DC

20260–4200

Vice President, Labor Relations, United

States Postal Service, 475 L’Enfant

Plaza SW, Washington DC 20260–

4100

NOTIFICATION PROCEDURE:

[Change to Read] Current employees

wishing to gain access to records within

this system should submit requests to

the facility head where currently

employed. Requests should include

their name and Social Security number.

Former employees should submit

requests to the facility head where last

employed. Requests should include

name, Social Security number, date of

birth, name and address of office where

last employed, and the begin and end

dates of postal employment. Former

Post Office Department employees

having no Postal Service employment

(prior to July 1971) must submit the

request to the Office of Personnel

Management (formerly the U.S. Civil

Service Commission) at:

Office of Personnel Management,

Compliance and Investigations Group,

1900 E Street NW, Washington DC

20415–0001

RECORD ACCESS PROCEDURES:

Requests for access must be made in

accordance with the notification

procedure above and Postal Service

Privacy Act regulations regarding access

to records and verification of identity

under 39 CFR 266.6.

CONTESTING RECORD PROCEDURES:

See Notification and Record Access

Procedures above.

RECORD SOURCE CATEGORIES:

[CHANGE TO READ] Individual

employee, personal references, former

employers, and other Postal Service

personnel records systems.

SYSTEMS EXEMPTED FROM CERTAIN PROVISIONS

OF THE ACT:

The Postal Service has claimed

exemptions from certain provisions of

the Act for several of its other systems

of records as permitted by 5 U.S.C. 552a

(j) and (k). See 39 CFR 266.9. To the

extent that copies of exempted records

from those other systems are

incorporated into this system, the

exemptions applicable to the original

primary system must continue to apply

to the incorporated records.

Stanley F. Mires,

Chief Counsel, Legislative.

[FR Doc. 96–15779 Filed 6–19–96; 8:45 am]

BILLING CODE 7710–12–P

SECURITIES AND EXCHANGE

COMMISSION

[Release No. IC–22017; 812–9830]

National Financial Services

Corporation, et al.; Notice of

Application

June 14, 1996.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: National Financial Services

Corporation (the ‘‘Sponsor’’) and

Fidelity Unit Investment Trusts, Fidelity

Defined Trusts, Series 1 and Subsequent

Series (the ‘‘Trust’’).

RELEVANT ACT SECTIONS: Order requested

pursuant to section 6(c) for exemptions

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;

pursuant to section 11(a) for an

exemption from section 11(c); and

pursuant to sections 6(c) and 17(b) for

an exeption from section 17(a).

SUMMARY OF APPLICATION: Applicants

request an order to allow: (a) the Trust

and any future unit investment trust

sponsored by the Sponsor (collectively,

the ‘‘Trusts’’) to implement a deferred

sales charge program; (b) the exchange

of units of different series of the Trusts

(each, a ‘‘Series’’) and, in addition,

certain exchange transactions made in

connection with the termination of a

Series into a new Series of the same

Trust; (c) units of the Trusts to be

publicly offered without requiring the

Sponsor to take for its own account or

place with others $100,000 worth of

units in those Trusts; (d) certain Trusts

to distribute capital gains resulting from

the sale of portfolio securities within a

reasonable time after receipt; and (e) a

terminating Series of a Trust to sell

portfolio securities to a new Series of

that Trust.

FILING DATES: The application was filed

on October 26, 1995, and amended and

fully restated applications were filed on

February 26 and June 7, 1996.

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 July

9, 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

request, 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 Fifth

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

Applicants, 82 Devonshire Street,

Boston, MA 02109.

FOR FURTHER INFORMATION CONTACT: H.R.

Hallock, Jr., Special Counsel, at (202)

942–0564, or Robert A. Robertson,

Branch Chief, at (202) 942–0564

(Division of Investment Management,

Office of Investment Company

Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch.

Applicant’s Representations

1. The Sponsor, a registered brokerdealer, is a wholly-owned subsidiary of

Fidelity Global Brokerage Group, Inc.,

which in turn is a wholly-owned

subsidiary of FMR Corp. The Sponsor

engages in various securities trading,

brokerage and clearing activities as well

as serving as sponsor of the Trust.

2. The Trust is a unit investment trust

registered as an investment company

under the Act, and any future Trust

sponsored by the Sponsor similarly will

be a registered unit investment trust.

Fidelity Defined Trusts, Series 1,

consists of three underlying portfolios:

Laddered Government Series 1, Short

Treasury Portfolio; Laddered

Government Series 2, Short/

Intermediate Treasury Portfolio; and

Rolling Government Series 1, Short

Treasury Portfolios.

3. Each of the Trusts is or will be

sponsored by the Sponsor and is or will

be made up of one or more Series

issuing securities registered or to be

registered under the Securities Act of

1933. Each Series is or will be created

by a Trust Indenture among the

Sponsor, a banking institution or trust

company as trustee, and an evaluator.
Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Notices 31565

4. While the structure of particular

Trusts and particular Series may differ

in various respects depending on the

nature of the underlying portfolios, the

Sponsor in each case will acquire 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 in each case will deposit

substantially more than $100,000 of

debt or equity securities, or a

combination thereof, depending on the

investment objective of the particular

Series, for each Series. The Units are

then offered to the public through the

Sponsor 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 sales

charge.

5. The Sponsor 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 Sponsor discontinues maintaining

such a market at any time for any Series,

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

a Series may redeem their Units through

the trustee.

6. Distribution payments of taxexempt or taxable income, depending

on a particular Trust’s investment

objective, will be made to Unitholders

on an annual, semi-annual, quarterly or

monthly basis. The Trusts generally will

distribute to Unitholders any capital

gains realized in connection with the

sale of portfolio securities along with

the Trust’s regular distributions in

reliance on paragraph (c) of rule 19b–1.

A. Deferred Sales Charge Program

1. Applicants request an exemption to

permit them to impose a deferred sales

charge (‘‘DSC’’) on Units, and to reduce

or waive the DSC under certain

circumstances. Under applicants’

proposal, the Sponsor will determine

both the amount of the sales charge per

Unit and whether to defer the collection

of all or part of such 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 Sponsor 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 over

the Collection Period for the particular

Trust Series. 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 terms of the

trust indenture, may 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 any unpaid DSC

expense from sale or redemption

proceeds.

3. For purposes of calculating the

amount of the DSC due upon

redemption or sale of Units, the Sponsor

will assume 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. The Sponsor may adopt a

procedure of waiving the DSC in

connection with redemptions or sales of

Units under certain circumstances. Any

such waiver will be disclosed in the

prospectus for each Series subject to the

waiver, and will be implemented in

accordance with rule 22d–1.

4. The Sponsor believes the DSC

program will be adequately disclosed to

potential investors as well as

Unitholders. The prospectus for each

Trust Series 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 disclose that

the trustee may sell portfolio securities

in the event that income generated by

the portfolio is 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 deducted in regular

installments.

B. The Exchange and Rollover Options

1. Applicants propose to permit

certain offers of exchange among the

Series of the Trusts (the ‘‘Exchange

Option’’) and to permit certain offers of

exchange made in connection with the

termination of certain Trust Series (the

‘‘Rollover Option’’). The Exchange

Option will extend to exchanges of

Units sold either with a front-end sales

charge or with DSC for Units of another

Trust Series sold either with a front-end

sales charge or with a DSC. The Rollover

Option will extend to exchanges of

Units in certain terminating Series of a

Trust (the ‘‘Rollover Trusts’’) for Units

of a new Trust Series of the same type

(the ‘‘New Trusts’’).

2. An investor who purchases Units

under either the Exchange or the

Rollover Option will pay a lower sales

charge than that which would be paid

by a new investor. The reduced sales

charge imposed will be reasonably

related to the expenses incurred in

connection with the administration of

the program, which may include an

amount that will fairly and adequately

compensate the Sponsor and the

participating underwriters and brokers

for their services in providing the

program.

3. The sales charge on Units acquired

pursuant to the Exchange Option

generally will be reduced from the

normally higher sales charge on

secondary market transactions to a flat

fee of $25 per Unit (for Units of a Series

whose initial cost was approximately

$1,000 per Unit), or its equivalent,

depending on the cost of Units in a

particular Series. An adjustment will be

made if Units of any Series are

exchanged within five months of their

acquisition for Units of a Series with a

higher sales charge (the ‘‘Five Months

Adjustment’’). An adjustment also will

be made if Units that impose

Distribution Deductions are exchanged

for Units of a Series that imposes a

front-end sales charge at any time before

the Distribution Deductions (plus any

portion of the sales charge on the

exchanged Units collected up front)

have at least equaled the per Unit sales

charge then applicable on the acquired

Units (the ‘‘DSC Front-end Exchange

Adjustment’’). In cases involving either

the Five Months or the DSC Front-end

Exchange Adjustment, the exchange fee

will be the greater of $25 per Unit (or

its equivalent) or an amount which,

together with the sales charge already

paid on the Units being exchanged,

equals the normal sales charge on the

acquired Units.

4. Under the Exchange Option, if DSC

Units are exchanged for DSC Units or

another Series, 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 due on the initial

investment will not be collected at the

time of exchange.
31566 Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Notices

1 Investment Company Act Release No. 17096

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

12d3–1). The proposed amendment defined a

‘‘Qualified Foreign Exchange’’ to mean a foreign

stock exchange meeting certain standards with

respect to trading volume and other matters. As

subsequently amended, however, the rule omitted

that proposed definition.

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) defined a unit

investment trust as an investment company that

issues only ‘‘redeemable securities.’’

5. Under the Rollover Option,

Unitholders of Rollover Trusts may elect

by a certain date (the ‘‘Rollover

Notification Date’’) to redeem their

Units in the terminating Rollover Trust

and invest in Units in the New Trust,

which is created on or about the

Rollover Notification Date, at a reduced

sales charge. The applicable sales charge

upon the initial investment in the

Rollover Trust typically is 2.9% of the

public offering price, while the reduced

sales charge applicable to investment in

the New Trust by Unitholders electing

the Rollover Option usually will be

1.9% of the public offering price.

C. Purchase and Sale Transactions

Between Series

1. Applicants also request an

exemption to permit the Rollover Trusts

to sell their portfolio securities to the

New Trusts. Each of the Rollover Trusts

will contain a portfolio of equity

securities (the ‘‘Equity Securities’’)

representing a portion of a specific

published index (an ‘‘Index‘’). The

Equity Securities in each portfolio will

be (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 or a

foreign securities 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

National Market System and (b)

included in an Index. The investment

objective of each Rollover Trust will be

to seek a greater total return than that

achieved by the stocks constituting the

entire Index over the life of the Rollover

Trust. To achieve this objective, each

Rollover Trust will consist of a specified

number of the highest dividend yielding

stocks in such Trusts’ respective Index.

2. 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 Trust for the next period.

With respect to the Rollover Trusts, the

New Trust will be based on the same

Index, using the same number of current

top dividend yielding stocks in the

Index.

3. In connection with its termination,

each Rollover Trust will sell all of its

portfolio securities as quickly as

practicable in the applicable market, 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 market 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.

4. In light of these costs, applicants

request exemptive relief to allow any

Rollover Trust to sell Equity Securities

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.’’ The Sale Date for

securities sold to a New Trust will be,

with respect to Units that will be

exchanged under the Rollover Option,

the first day of the period between the

Rollover Notification Date and the date

specified for termination of the Rollover

Trust. With respect to other sales to the

New Trust, the Sale Date will be the

date the Sponsor deposits cash or a

letter of credit in a New Trust with

instructions to purchase securities, to

the extent appropriate Equity Securities

are available from a Rollover Trust by

reason of Units tendered for redemption

that day or termination of the Rollover

Trust.

5. Each sale of Equity Securities by a

Rollover Trust to a New Trust will

satisfy all of the requirements of rule

17a–7, except for paragraph (e) thereof.

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, (b)

the date of such transaction and (c) the

closing sales prices on the Exchange or

Nasdag-NMS 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

notify the Sponsor. 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, independently published list

of closing sales prices for the date of the

transaction.

Applicants’ Legal Analysis

1. Applicants request and 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 them

to assess a DSC, and to waive the DSC

under certain circumstances. Applicants

also request SEC approval under

sections 11(a) and 11(c) to enable them

to implement the Exchange and

Rollover Options. In addition,

applicants request and exemption under

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

request 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,
Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Notices 31567

applicants request an exemption from

this rule.

5. Section 22(d) requires an

investment company and its principal

underwriter and dealers 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 with

scheduled variations in 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 exempt any person or

transaction, or any class or classes of

persons or transactions, from any

provision of the Act or any rule

thereunder if such exemption is

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 believe that

implementation of the DSC 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 believe that the

reduced sales charge imposed at the

time of exchange is a reasonable and

justifiable expenses to be allocated for

the professional assistance and

operational expenses incurred in

connection with either the Exchange or

Rollover Option. Applicants further

believe that the requirement that a

person who has acquired Units at a

lower sales charge pay the difference, if

greater than the reduced fixed charge,

upon exercising the Exchange Option

when the Five Months Adjustment or

the DSC Front-end Exchange

Adjustment applies is appropriate in

order to maintain the equitable

treatment of various investors in each

Trust Series.

9. Section 17(a) generally 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, National

Financial Services Corporation. 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

other Series.

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 purposes 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 as described above

satisfy the requirements set forth in

sections 6(c) and 17(b).

11. Rule 17a–7 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 Trust

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 Trust 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. The Sponsor will

deposit substantially more than

$100,000 of 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 an exemption under

section 6(c) 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 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 will not

restrict their investments to ‘‘eligible

trust securities,’’ such Trusts will not

qualify for the exemption in paragraph

(c) of rule 19b–1. Applicants therefore

request an exemption under section 6(c)

from section 19(b) and rule 19b–1 to the

extent necessary to permit any capital

gains earned in connection with the sale

of portfolios securities 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 believe 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 sale of portfolio securities

would be triggered by the need to meet

Trust expenses, DSC 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.
31568 Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Notices

Applicants’ Conditions

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 and Rollover

Options

1. Whenever the Exchange Option or

Rollover 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 the Rollover

Option, or to delete a Service 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 or the

Rollover Option will pay a lower sales

charge than that which would be paid

for the Units by a new investor.

3. The prospectus of each Trust

offering exchanges or rollovers and any

sales literature or advertising that

mentions the existence of the Exchange

Option or the Rollover Option will

disclose that such Option is subject to

modification, termination or

suspension, without notice except in

certain limited cases.

4. Each Series offering Units subject to

a DSC 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.

B. Condition for Exemption From

Section 14(a)

Applications 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 a

Rollover Trust to a New Trust will be

effected at the closing price of the

securities sold on the applicable

Exchange or the Nasdaq-NMS 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. 96–15774 Filed 6–19–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 35–26533]

Filings Under the Public Utility Holding

Company Act of 1935, as amended

(‘‘Act’’)

June 14, 1996.

Notice is hereby given that the

following filing(s) has/have been made

with the Commission pursuant to

provisions of the Act and rules

promulgated thereunder. All interested

persons are referred to the application(s)

and/or declaration(s) for complete

statements of the proposed

transaction(s) summarized below. The

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

any amendments thereto is/are available

for public inspection through the

Commission’s Office of Public

Reference.

Interested persons wishing to

comment or request a hearing on the

application(s) and/or declaration(s)

should submit their views in writing by

July 8, 1996, to the Secretary, Securities

and Exchange Commission,

Washington, D.C. 20549, and serve a

copy on the relevant applicant(s) and/or

declarant(s) at the address(es) specified

below. Proof of service (by affidavit or,

in case of an attorney at law, by

certificate) should be filed with the

request. Any request for hearing shall

identify specifically the issues of fact or

law that are disputed. A person who so

requests will be notified of any hearing,

if ordered, and will receive a copy of

any notice or order issued in the matter.

After said date, the application(s) and/

or declaration(s), as filed or as amended,

may be granted and/or permitted to

become effective.

General Public Utilities Corporation, et

al. (70–7926)

General Public utilities Corporation

(‘‘GPU’’), 100 Interpace Parkway,

Parsippany, New Jersey 07054, and its

subsidiaries, Jersey Central Power &

Light Company (JCP&L’’), 300 Madison

Avenue, Morristown, New Jersey 07962,

Metropolitan Edison Company (‘‘MetEd’’), P.O. Box 16001, Reading,

Pennsylvania 19640, and Pennsylvania

Electric Company (‘‘Penelec’’), P.O. Box

16001, Reading, Pennsylvania 19640

(together, ‘‘GPU Companies’’), have filed

a post-effective amendment to their

declaration under Sections 6(a) and 7 of

the Act and rule 54 thereunder.

By order dated October 26, 1994

(HCAR No. 26150) (‘‘Order’’), the

Commission, among other things,

authorized the GPU Companies to enter

into an amendment to their Credit

Agreement, dated as of March 19, 1992,

with a group of commercial banks for

which Citibank, N.A. and Chemical

Bank act as co-agents and Chemical

Bank acts as the administrative agent, in

order to extend through December 31,

1997 the period during which the GPU

Companies were authorized to issue,

sell and renew their unsecured

promissory notes (‘‘Notes’’) from timeto-time in amounts up to $250 million

outstanding at any time. In addition, on

October 24, 1995, the GPU Companies

entered into a Second Amendment to

the Credit Agreement which modified

certain negative covenants in the Credit

Agreement (‘‘Prior Credit Agreement’’).

Under the Order, the aggregate

principal amount of Notes outstanding

at any time under the Prior Credit

Agreement, together with all other

unsecured debt then outstanding, may

not exceed the limitations on such

indebtedness imposed by the charters of

each of JCP&L, Met-Ed and Penelec, and

$200 million in the case of GPU. As of

March 31, 1996, the charter limitations

on such indebtedness for JCP&L, Met-Ed

and Penelec were $290 million, $133

million and $145 million, respectively.

At May 1, 1996, the GPU Companies