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Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6283provisions to other persons orcircumstances will not be affected.For the U.S. Nuclear RegulatoryCommission.Dated: December 2, 1996.James M. Taylor,Executive Director for Operations.For the State of Vermont.Dated: December 10, 1996.George L. Lowe,Director, Vermont Emergency Management.[FR Doc. 97–3320 Filed 2–10–97; 8:45 am]BILLING CODE 7590–01–MSECURITIES AND EXCHANGECOMMISSION[Release No. IC–22492; 812–10396]John Nuveen & Co. Incorporated andNuveen Tax-Free Unit Trusts; Notice ofApplicationFebruary 4, 1997.AGENCY: Securities and ExchangeCommission (‘‘SEC’’).ACTION: Notice of Application forExemption under the InvestmentCompany Act of 1940 (the ‘‘Act’’).APPLICANTS: John Nuveen & Co.Incorporated (the ‘‘Sponsor’’), NuveenTax-Free Unit Trusts (the ‘‘NuveenTrust’’), and any future trusts sponsoredby the Sponsor (together with theNuveen Trust, the ‘‘Trusts’’), and theirrespective series (each, a ‘‘Series’’ or a‘‘Trust Series’’).RELEVANT ACT SECTIONS: Order requestedunder section 6(c) for an exemptionfrom sections 2(a)(32), 2(a)(35), 12(d)(3),14(a), 19(b), 22(d), and 26(a)(2) of theAct, and rules 19b–1 and 22c–1thereunder; under section 11(a) for anexemption from section 11(c); andunder sections 6(c) and 17(b) for anexemption from section 17(a).SUMMARY OF APPLICATION: Applicantsrequest an order to permit: (a) the Trustto impose sales charges on a deferredbasis, and to waive the deferred salescharge in certain circumstances; (b)certain offers of exchange involving theTrusts; (c) units of the Trusts to bepublicly offered without requiring theSponsor to take for its own account orplace with others $100,000 worth ofunits in those Trusts; (d) certain Truststo distribute capital gains resulting fromthe sale of portfolio securities within areasonable time after receipt; (e) aterminating Series of a Trust to sellportfolio securities to a new Series ofthe Trust; and (f) certain Trust Series toinvest up to 10.5%, and certain otherTrust Series to invest up to 20.5% oftheir assets in the securities of issuersthat derived more than 15% of theirgross revenues in their most recentfiscal year from securities relatedactivities.FILING DATE: The application was filedon October 15, 1996.HEARING OR NOTIFICATION OF HEARING: Anorder granting the application will beissued unless the SEC orders a hearing.Interested persons may request ahearing by writing to the SEC’sSecretary and serving applicants with acopy of the request, personally or bymail. Hearing requests should bereceived by the SEC by 5:30 p.m. onMarch 3, 1997, and should beaccompanied by proof of service onapplicants, in the form of an affidavit or,for lawyers, a certificate of service.Hearing requests should state the natureof the writer’s request, the reason for therequest, and the issues contested.Persons may request notification of ahearing by writing to the SEC’sSecretary.ADDRESSES: Secretary, SEC, 450 FifthStreet N.W., Washington, D.C. 20549.Applicants: 333 West Wacker Drive,Chicago, IL 60606.FOR FURTHER INFORMATION CONTACT:Christine Y. Greenlees, Senior Counsel,at (202) 942–0581, or Mary Kay Frech,Branch Chief, at (202) 942–0564(Division of Investment Management,Office of Investment CompanyRegulation).SUPPLEMENTARY INFORMATION: Thefollowing is a summary of theapplication. The complete applicationmay be obtained for a fee at the SEC’sPublic Reference Branch.Applicants’ Representations1. Each Trust is or will be a unitinvestment trust registered as aninvestment company under the Act.Each of the Trusts is sponsored by theSponsor, and is made up of one or moreSeries of separate unit investment trustsissuing securities registered or to beregistered under the Securities Act of1933. Each Series is created by a TrustIndenture (the ‘‘Indenture’’) between theSponsor and a banking institution ortrust company as trustee (the‘‘Trustee’’). The Sponsor is a whollyownedsubsidiary of The John NuveenCompany, of which approximately 78%is owned by The St. Paul Companies,Inc.2. The fundamental structures of theTrusts and the various Series are similarin most respects, however, theinvestment objectives may differ. In allcases, the Sponsor will acquire aportfolio of securities which it thendeposits with the Trustee in exchangefor certificates representing units offractional undivided interest (‘‘Units’’)in the deposited portfolio. The Units arethen offered to the public through theSponsor and dealers at a public offeringprice which, during the initial offeringperiod, is based upon the aggregateoffering side evaluation of theunderlying securities plus a front-endsales charge. This sales charge is themaximum amount applicable to anyparticular Series of a Trust andcurrently ranges from 4.9% to 2.5% ofthe public offering price, depending onthe term of the underlying securities.The Sponsor may reduce the salescharge under certain circumstances,which will be disclosed in theprospectus. Any such reduction will bemade in accordance with rule 22d–1.3. The Sponsor maintains a secondarymarket for Units of outstanding Series,and continually offers to purchase theseUnits at prices based upon the bid sideevaluation of the underlying securities.Investors may purchase Units on thesecondary market at the current publicoffering price plus a front-end salescharge. If the Sponsor discontinuesmaintaining such a market at any timefor any Series, holders of Units(‘‘Unitholders’’) of such a Series mayredeem their Units through the Trustee.A. Deferred Sales Charge1. The Sponsor proposes toimplement a program for one or moreTrust Series under which part or all ofthe sales charge would be deferred.Under applicants’ deferred sales charge(‘‘DSC’’) proposal, the Sponsor willdetermine both the maximum amount ofthe sales charge per Unit, and whetherto defer the collection of all or part ofthe sales charge over a period (the‘‘Collection Period’’) subsequent to thesettlement date for the purchase ofUnits. The Sponsor will in no event addto the deferred amount of the salescharge any additional amount forinterest or any similar or related chargeto reflect or adjust for such deferral.2. The Sponsor anticipates collectinga portion of the total sales chargeimmediately upon the purchase of TrustUnits. The balance of the sales chargewill be collected over the CollectionPeriod for the particular Trust Series. Aratable portion of the sales chargeremaining to be collected will bededucted from each Unitholder’sdistributions on the Units (‘‘DistributionDeductions’’) during the CollectionPeriod until the total amount of thesales charge per Unit is collected. Ifdistribution income is insufficient topay a DSC installment, the Trustee,pursuant to the powers granted in theIndenture, will have the ability to sellportfolio securities in an amount
6284 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesnecessary to provide the requisitepayments. If a Unitholder redeems hisor her Units before the total sales chargehas been collected from installmentpayments, the Sponsor intends todeduct any amount of unpaid DSC fromsale or redemption proceeds. Applicantsrepresent that the total of all theseamounts will in no event exceed themaximum sales charge per Unit.3. For purposes of determiningwhether a DSC applies to a particularredemption or sale of Units, the Sponsorwill assume that Units on which thetotal aggregate of DistributionDeductions has been collected areliquidated first. Any Units disposed ofover and above such amounts will besubject to the DSC, which will beapplied on the assumption that Unitsheld for the longest time are redeemedfirst. Therefore, the DSC will be thebalance of the sales charge per Unit,determined as of the date of purchase,which remains owing and uncollected.The Sponsor may in the future chooseto waive the DSC in connection withredemption or sales of Units undercertain circumstances. Any such waiverof the DSC will be disclosed in theprospectus and will be implemented inaccordance with rule 22d–1.4. The Sponsor believes that the DSCprogram will be adequately disclosed topotential investors as well asUnitholders. The prospectus for eachTrust Series will describe the operationof the DSC, including the amount anddate of each Distribution Deduction, andthe duration of the Collection Period.The prospectus also will disclose thatthe Trustee may sell Trust securities inthe event that income generated by theTrust portfolio is insufficient to pay forDSC expenses. Applicants also state thateach annual report will provideUnitholders with information as to theaggregate amount of annual DSCpayments made by the Trust during theprevious fiscal year on both a Series andper Unit basis. Further, the securitiesconfirmation statement for eachUnitholder’s purchase transaction willstate both the front-end sales charge andthe DSC that will be imposed, and thatthe DSC will be withdrawn in regularinstallments from distribution paymentsmade to Unitholders.B. Exchange Option and RolloverOption1. Applicants also seek an exemptionto permit offers of exchange amongSeries of the Trusts (the ‘‘ExchangeOption’’), and offers of exchange madein connection with the termination ofTrust Series (the ‘‘Rollover Option’’).The Exchange Option will extend to allexchanges of Units sold either with afront-end sales charge or with a DSC.The Rollover Option will giveUnitholders the ability to ‘‘roll over’’any or all of their Units in a Series ofa Trust (each, a ‘‘Rollover Trust’’) thatis terminating for Units of a new TrustSeries of the same type (a ‘‘New Trust’’)at a reduced sales charge.2. An investor who purchases Unitsunder either the Exchange Option or theRollover Option will pay a lower salescharge than that which would be paidby a new investor. The reduced salescharge imposed will be reasonablyrelated to the expenses incurred inconnection with the administration ofthe program, which may include anamount that will fairly and adequatelycompensate the Sponsor and theparticipating underwriters and brokersfor their services in providing theprogram.3. The sales charge on Units acquiredpursuant to the Exchange optiongenerally will be reduced frommaximum sales charges ranging from4.9% to 2.5% of the public offeringprice (5.5% to 0% for sales on thesecondary market) to a flat fee (e.g., $25per 100 Units for Units of a Serieswhose initial cost was approximately$10 per Unit, or $25 per 1,000 Units forUnits of a Series whose initial cost wasapproximately $1.00 per Unit) or apercentage of the public offering price.An adjustment will be made if Units ofany Trust Series are exchanged withinfive months of their acquisition forUnits of a Trust Series with a highersales charge (the ‘‘Five MonthsAdjustment’’). An adjustment also willbe made if Units that imposeDistribution Deductions are exchangedfor Units of a Trust Series that imposesa front-end sales charge at any timebefore the Distribution Deductions (plusany portion of the sales charge on theexchanged Units collected up front)have at least equaled the per Unit salescharge then applicable on the acquiredUnits (the ‘‘DSC Front-end ExchangeAdjustment’’). In cases involving eitherthe Five Months or the DSC Front-endExchange Adjustment, the exchange feewill be the greater of: (a) the reducedsales charge, or (b) an amount which,together with the sales charge alreadypaid on the Units being exchanged,equals the normal sales charge on theUnits of the Trust Series being acquiredthrough such exchange (the ‘‘ExchangeTrust’’), determined as of the date of theexchange. The Sponsor may waive, withappropriate disclosures, such exchangefee, and reserves the right to vary thesales charge normally applicable to aSeries, to vary the charge applicable toexchanges, and to modify, suspend, orterminate the Exchange Option as setforth in the conditions to theapplication.4. Under the Exchange Option, if DSCUnits are exchanged for DSC Units ofanother Series, the reduced sales chargewill be collected in connection withsuch an exchange. The DistributionDeductions will continue to be takenfrom the investment income generatedby the newly acquired Units, orproceeds from the sale of Trust portfoliosecurities, as the case may be, until theoriginal balance of the sales chargeowed on the initial investment has beencollected. The DSC due on the initialinvestment will not be collected at thetime of exchange, except in the case ofany exchange to a Series not having aDSC.5. Under the Rollover Option,Unitholders of Rollover Trusts may electby a certain date (the ‘‘RolloverNotification Date’’) to redeem theirUnits in a terminating Rollover Trust,and invest in Units of a New Trust,which is created on or about theRollover Notification Date, at a reducedsales charge. Unitholders making suchan election will be referred to as‘‘Rollover Unitholders.’’ The applicablesales charge upon the initial investmentin a Rollover Trust typically is 2.9% ofthe public offering price, while thereduced sales charge applicable to aRollover Unitholder’s investment in aNew Trust usually will be 1.9% of thepublic offering price.C. Purchase and Sale TransactionsBetween a Rollover Trust and a NewTrust1. Applicants also request anexemption to permit any Rollover Trustto sell their portfolio securities to a NewTrust, and the New Trust to purchasethese securities. Each Rollover Trustwill contain a portfolio of equitysecurities (the ‘‘Equity Securities’’)representing a portion of a specificpublished index (an ‘‘Index’’). TheEquity Securities in each portfolio willbe: (a) Actively traded (i.e., have had anaverage daily trading volume in thepreceding six months of a least 500shares equal in value to at least U.S.$25,000) on (i) an exchange (an‘‘Exchange’’) which is either a nationalsecurities exchange that meets thequalifications of section 6 of theSecurities Exchange Act of 1934, or aforeign securities exchange (‘‘ForeignExchange’’) that meets the qualificationsset forth in a proposed amendment torule 12d3–1(d)(6) under the Act, 1 and1 Investment Company Act Release No. 17096(Aug. 3, 1989) (proposing amendments to rule12d3–1). The proposed amendment defined a‘‘Qualified Foreign Exchange’’ to mean a foreign
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