Federal Register / Vol. 61, No. 20 / Tuesday, January 30, 1996 / Notices 3065

1The boards of IDEX, IDEX II, and IDEX 3 have

adopted a policy whereby any Independent Trustee

in office on September 1, 1990 who has served at

least three years may, subject to certain limitations,

elect upon his or her resignation to serve as a

trustee emeritus. A trustee emeritus has no

authority, power, or responsibility with respect to

any IDEX, IDEX II, or IDEX 3 matter. A trustee

emeritus, however, is entitled to receive an annual

fee equal to one-half the fee then payable per

annum to the Independent Trustees of the Fund or

Funds from which he or she resigned, plus

reimbursement of expenses incurred for attendance

at board meetings.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–1638 Filed 1–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21697; 812–9824]

IDEX Fund, et al.; Notice of Application

January 23, 1996.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: IDEX Fund (‘‘IDEX’’), IDEX

II Series Fund (‘‘IDEX II’’), IDEX Fund

3 (‘‘IDEX 3’’), WRL Series Fund, Inc.

(‘‘WRL’’), (collectively, the ‘‘Existing

Funds’’), any future registered open-end

management investment company, or

series thereof, for which IDEX

Management, Inc (‘‘IMI’’),

InterSecurities. Inc (‘‘ISI’’), or Western

Reserve Life Assurance Co. of Ohio

(‘‘Western Reserve,’’ and together with

IMI and ISI the ‘‘Investment Advisers’’)

or any entity controlling, controlled by,

or under common control with the

Investment Advisors, acts as investment

adviser (the ‘‘Future Funds,’’ and

together with the Existing Funds, the

‘‘Funds’’), and the Investment Advisers.

RELEVANT ACT SECTIONS: Order requested

under section 6(c) of the Act for an

exemption from sections 13(a)(2),

18(f)(1), 22(f), and 22(g), and rule 2a–7

thereunder, under sections 6(c) and

17(b) of the Act for an exemption from

section 17(a)(1), and under section 17(d)

of the Act and rule 17d–1 thereunder to

permit certain joint arrangements.

SUMMARY OF APPLICATION: Applicants

request an order that would permit the

Funds to enter into deferred

compensation arrangements with their

independent trustees.

FILING DATES: The application was filed

on October 16, 1995 and amended on

January 18, 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

February 20, 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 notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street NW., Washington, DC 20549.

Applicants, 201 Highland Avenue,

Largo, Florida 34640.

FOR FURTHER INFORMATION CONTACT:

Marianne H. Khawly, Staff Attorney, at

(202) 942–0562, 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

Reference Branch.

Applicants’ Representations

1. IDEX, IDEX II, and IDEX 3 are

Massachusetts business trusts registered

under the Act as open-end management

investment companies. IDEX and IDEX

II currently offer one series and eleven

series of shares, respectively, that are

continuously offered for sale to the

general investing public. IDEX 3

currently consists of one series of shares

but discontinued its sale to new

investors effective June 15, 1990. WRL

is a Maryland Corporation registered

under the Act as an open-end

management investment company. WRL

currently offers eighteen series of

shares, one of which is a money-market

series, that are continuously offered for

sale to insurance company separate

accounts that fund variable annuity

contracts.

2. Each of the Investment Advisers is

registered under the Investment

Advisers Act of 1940. IMI is the

investment adviser of IDEX, IDEX 3, and

the following five IDEX II portfolios:

Growth Portfolio, Global Portfolio,

Flexible Income Portfolio, Balanced

Portfolio, and Capital Appreciation

Portfolio. ISI is the investment adviser

to the remaining six IDEX II portfolios:

Tax-Exempt Portfolio, Income Plus

Portfolio, Aggressive Growth Portfolio,

Equity Income Portfolio, Tactical Asset

Allocation Portfolio, and C.A.S.E.

Portfolio. Western Reserve is the

investment adviser to each of the WRL

portfolios.

3. Each Existing Fund has a board of

trustees/directors (collectively, the

‘‘boards’’), a majority of the members of

which are not ‘‘interested persons’’ (the

‘‘Independent Trustees’’) of such

Existing Fund within the meaning of

section 2(a)(19) of the Act. The boards

of IDEX, IDEX II, and IDEX 3 currently

consist of the same seven persons, five

of whom are Independent Trustees.

Each of the five Independent Trustees

currently is entitled to receive a total

annual retainer of $13,000 of which

IDEX, IDEX II, and IDEX 3 each pay a

pro rata share based on its relative net

assets. In addition, each of the five

Independent Trustees receives $1,250

plus reimbursement for incidental

expenses for each IDEX II board meeting

attended and $500 plus reimbursement

for incidental expenses for each IDEX or

IDEX 3 board meeting attended.1 The

board of WRL currently consists of five

persons, three of whom are Independent

Trustees. Each WRL Independent

Trustee is entitled to receive an annual

fee of $6,000, and $500 for each board

meeting attended plus reimbursement

for incidental expenses.

4. Applicants request an order to

permit the Independent Trustees to elect

to defer receipt of all or a portion of

their trustees’ fees pursuant to a

deferred compensation plan (the

‘‘Plan’’) and related election agreement

(the ‘‘Agreement’’) entered into between

each Independent Trustee and the

appropriate Fund. Under the Plan, the

Independent Trustee could defer

payment of trustees’ fees (the ‘‘Deferred

Compensation’’) in order to defer

payment of income taxes, or for other

reasons.

5. Under the Plan, the deferred fees

payable by a Fund to a participating

Independent Trustee (a ‘‘Participant’’)

will be credited to a book reserve

account established by the Fund (an

‘‘Account’’), as of the date such fees

would have been paid to such

Independent Trustee. The value of the

Account as of any date will be

determined by reference to a

hypothetical investment in Class A

shares of one or more portfolios of IDEX

II (‘‘Underlying Securities’’), as selected

by a Participant.

6. The election to participate in the

Plan must be made on or before

September 30 preceding the calendar

year during which the amounts to be

deferred, absent deferral, would be paid

to the Participant. The Plan’s effective

date is January 1, 1996. In order to

facilitate implementation of the Plan, a
3066 Federal Register / Vol. 61, No. 20 / Tuesday, January 30, 1996 / Notices

2Until such time as an order is granted with

respect to the application, Deferred Compensation

will be credited to an Account in the form of cash,

and each Account shall be deemed to earn interest

at an annual rate, effective on each January 1,

determined by the committee established by the

boards to administer the Plan. The initial interest

rate shall be a rate equal to the yield on 90-day U.S.

Treasury Bills.

3Applicants acknowledge that the requested

order would not permit a party acquiring a Fund’s

assets to assume a Fund’s obligations under the

Plan if such obligations would constitute a violation

of the Act by the assuming party.

Participant may elect to defer fees

payable during 1996 no later than

January 30, 1996. An individual who

becomes a Participant after the effective

date of the Plan may make a deferral

election with respect to fees that, absent

deferral, would be paid to him or her

during the remainder of the calendar

year in which he or she becomes a

Participant on or before the date that is

30 days after the date on which he or

she becomes a Participant.2

7. The initial value of Deferred

Compensation credited to an Account

will be effected at the respective current

net asset value of each Fund. Thereafter,

the value of such Account will fluctuate

as the net asset value of the shares of

each Fund fluctuates and also will

reflect the value of assumed

reinvestment of dividends and capital

gains distributions from each Fund in

additional shares of such Fund.

8. The Funds’ respective obligations

to make payments of amounts accrued

under the Plan will be general

unsecured obligations, payable solely

from their respective general assets and

property. The Plan provides that the

Funds will be under no obligation to

purchase, hold or dispose of any

investments under the Plan, but, if one

or more of the Funds choose to purchase

investments to cover their obligations

under the Plan, then any and all such

investments will continue to be a part

of the respective general assets and

property of such Funds.

9. As a matter of prudent risk

management, to the extent a Participant

selects Underlying Securities of a Fund

other than the Fund for which the

Participant is deferring his or her

trustee’s fees, each Fund intends in all

cases to, and with respect to any money

market Fund or portfolio that values its

assets by the amortized cost method

will, purchase and maintain Underlying

Securities in amounts equal in value to

the deemed investments of the Account

of its Participants. Thus, in cases where

the Funds purchase shares of the

Underlying Securities, liabilities created

by the credits to the Accounts under the

Plan are expected to be matched by an

equal amount of assets (i.e., a direct

investment in Underlying Securities),

which assets would not be held by the

Fund if trustees’ fees were paid on a

current basis.

10. Payments under the Plan will be

made in one lump sum or in quarterly

installments (not to exceed 40) as the

Independent Trustee elects. Upon

application by an Independent Trustee

and a determination by the board or

such person(s) as the board may

designate from time to time (the ‘‘Plan

Administrator’’) that the Independent

Trustee has suffered a severe financial

hardship resulting from an

unanticipated emergency caused by an

event beyond the control of the

Independent Trustee, the Plan

Administrator shall distribute to the

Trustee, in a single lump sum, an

amount equal to the lesser of the

amount needed by the Independent

Trustee to meet the hardship, or the

balance of the Trustee’s Account.

11. In the event of a Participant’s

death, amounts payable under the Plan

will thereafter be payable to the

Participant’s designated beneficiaries. In

all other events, a Participant’s right to

receive payments will be

nontransferable. In the event of the

liquidation, dissolution, or winding up

of a Fund or the distribution of all or

substantially all of a Fund’s assets and

property to its shareholders (unless the

Fund’s obligations under the Plan have

been assumed by a financially

responsible party purchasing such

assets) or in the event of a merger or

reorganization of a Fund (unless prior to

such merger or reorganization, the

Fund’s Board determines that the Plan

shall survive the merger or

reorganization), all unpaid amounts in

the Accounts maintained by such Fund

shall be paid in a lump sum to the

Participants on the effective date

thereof.3 The Plan will not obligate any

participating Fund to retain a trustee in

such a capacity, nor will it obligate any

Fund to pay any (or any particular level

of) trustees’ fees to any trustee.

Applicants’ Legal Analysis

1. Applicants request an order which

would exempt the Funds: (a) under

section 6(c) of the Act from sections

13(a)(2), 18(f)(1), 22(f), and 22(g), and

rule 2a–7 thereunder, to the extent

necessary to permit the Funds to adopt

and implement the Plan; (b) under

sections 6(c) and 17(b) of the Act from

section 17(a)(1) to permit the Funds to

sell securities for which they are the

issuer to participating Funds in

connection with the Plan; and (c) under

section 17(d) of the Act and rule 17d–

1 thereunder to permit the Funds to

effect certain joint transactions incident

to the Plan.

2. Section 18(f)(1) generally prohibits

a registered open-end investment

company from issuing senior securities.

Section 13(a)(2) requires that a

registered investment company obtain

shareholder authorization before issuing

any senior security not contemplated by

the recitals of policy in its registration

statement. Applicants state that the Plan

possesses none of the characteristics of

senior securities that led Congress to

enact these sections. The Plan would

not: (a) induce speculative investments

or provide opportunities for

manipulative allocation of any Fund’s

expenses or profits; (b) affect control of

any Fund; or (c) confuse investors or

convey a false impression as to the

safety of their investments. All

liabilities created under the Plan would

be offset by equal amounts of assets that

would not otherwise exist if the fees

were paid on a current basis.

3. Section 22(f) prohibits undisclosed

restrictions on transferability or

negotiability of redeemable securities

issued by open-end investment

companies. The Plan would set forth all

such restrictions, which would be

included primarily to benefit the

Participants and would not adversely

affect the interests of the trustees or of

any shareholder.

4. Section 22(g) prohibits registered

open-end investment companies from

issuing any of their securities for

services or for property other than cash

or securities. This provision prevents

the dilution of equity and voting power

that may result when securities are

issued for consideration that is not

readily valued. Applicants believe that

the Plan would merely provide for

deferral of payment of such fees and

thus should be viewed as being issued

not in return for services but in return

for a Fund not being required to pay

such fees on a current basis.

5. Rule 2a–7 imposes certain

restrictions on the investments of

‘‘money market funds,’’ as defined

under the rule, that would prohibit a

Fund that is a money market Fund from

investing in the shares of any other

Fund. Applicants believe that the

requested exemption would permit the

Funds to achieve an exact matching of

Underlying Securities with the deemed

investments of the Accounts, thereby

ensuring that the deferred fees would

not affect net asset value.

6. Section 6(c) provides, in relevant

part, that the SEC may, conditionally or

unconditionally, by order, exempt any

person or class of persons from any

provision of the Act or from any rule

thereunder, if such exemption is
Federal Register / Vol. 61, No. 20 / Tuesday, January 30, 1996 / Notices 3067

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. Applicants

submit that the relief requested from the

above provisions satisfies this standard.

7. Section 17(a)(1) generally prohibits

an affiliated person of a registered

investment company from selling any

security to such registered investment

company. Funds that are advised by the

same entity are ‘‘affiliated persons’’

under section 2(a)(3)(C) of the Act by

reason of being under common control.

Applicants assert that section 17(a)(1)

was designed to prevent, among other

things, sponsors of investment

companies from using investment

company assets as capital for enterprises

with which they were associated or to

acquire controlling interest in such

enterprises. Applicants submit that the

sale of securities issued by the Funds

pursuant to the Agreement does not

implicate the concerns of Congress in

enacting this section, but merely would

facilitate the matching of each Fund’s

liability for deferred trustees’ fees with

the Underlying Securities that would

determine the amount of such Fund’s

liability.

8. Section 17(b) authorizes the SEC to

exempt a proposed transaction from

section 17(a) if evidence establishes that

the terms of the transaction, including

the consideration to be paid or received,

are reasonable and fair and do not

involve overreaching on the part of any

persons concerned, and the transaction

is consistent with the policies of the

registered investment company and the

general purposes of the Act. Applicants

assert that the proposed transaction

satisfies the criteria of section 17(b).

Applicants also request relief from

section 17(a)(1) under section 6(c) to the

extent necessary to implement the

Deferred Compensation under the Plan

and Agreement on an ongoing basis.

9. Section 17(d) and rule 17d–1

generally prohibit a registered

investment company’s joint or joint and

several participation with an affiliated

person in a transaction in connection

with any joint enterprise or other joint

arrangement or profit-sharing plan ‘‘on

a basis different from or less

advantageous than that of’’ the affiliated

person. Participants will not receive a

benefit, directly or indirectly, that

would otherwise inure to a Fund or its

shareholders. Participants will receive

tax deferral but the Plan otherwise will

maintain the parties, viewed both

separately and in their relationship to

one another, in the same position as if

the deferred fees were paid on a current

basis. When all payments have been

made to a participant, the Participant

will be no better off (apart from the

effect of tax deferral) than if he or she

had received trustees fees on a current

basis and invested them in Underlying

Securities.

Applicants’ Conditions

Applicants agree that the order

granting the requested relief shall be

subject to the following conditions:

1. With respect to the requested relief

from rule 2a–7, any money market Fund

or any money market portfolio thereof

that values its assets by the amortized

cost method will buy and hold

Underlying Securities that determine

the value of the Accounts to achieve an

exact match between the liability of any

such Fund’s or portfolio’s liability to

pay deferred fees and the assets that

offset that liability.

2. If a Fund purchases Underlying

Securities issued by an affiliated Fund,

the Fund will vote such shares in

proportion to the votes of all other

shareholders of such affiliated Fund.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–1637 Filed 1–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21700; 812–9928]

Van Kampen American Capital Global

Managed Assets Fund, et al.; Notice of

Application

January 24, 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 Global Managed Assets Fund,

Van Kampen American Capital Life

Investment Trust, Van Kampen

American Capital World Portfolio Series

Trust (collectively, the ‘‘Funds’’), Van

Kampen American Capital Asset

Management, Inc. (the ‘‘Adviser’’), John

Govett & Co. Limited (‘‘Govett’’), and

John Govett Holdings Limited (‘‘Govett

Holdings’’).

RELEVANT ACT SECTIONS: Order requested

under section 6(c) of the Act for an

exemption from sections 15 (a) and (c)

of the Act.

SUMMARY OF APPLICATION: Applicants

request an order that would permit the

implementation, without shareholder

approval, of new sub-advisory

agreements (each a ‘‘New Sub-Advisory

Agreement’’) for a period of up to 120

days following the termination of the

former sub-advisory contracts on

December 29, 1995 (each a ‘‘Former

Sub-Advisory Contract’’) (the ‘‘Interim

Period’’). The order also would permit

the sub-adviser to receive from the

Funds fees earned during the Interim

Period after shareholders have approved

the New Sub-Advisory Agreements. The

order further would allow the

implementation, without board of

trustee approval, of the New SubAdvisory Agreements, for a limited

period of time.

FILING DATES: The application was filed

on December 28, 1995, and amended on

January 23, 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

February 19, 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 notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street NW., Washington, DC 20549.

Applicants, Transco Tower, 2800 Post

Oak Boulevard, Houston, TX 77056.

FOR FURTHER INFORMATION CONTACT:

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

942–0572, 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 at the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Each Fund is an open-end

management investment company

registered under the Act. The Adviser

serves as investment adviser to each

Fund and has engaged Govett to serve

as subadviser in connection with nonU.S. securities held by the Funds

pursuant to the Former Sub-Advisory

Contracts. Govett is a United Kingdom

corporation that is registered under the

Investment Advisers Act of 1940 as an

investment adviser.

2. On December 7, 1995, the former

ultimate parent of Govett, London