February 4, 1991
TO: BOARD OF GOVERNORS NO. 9-91
CLOSED-END FUND MEMBERS NO. 5-91
CLOSED-END FUND DIVISIONAL COMMITTEE
RE: INSTITUTE LETTER TO SEC STAFF TO CLARIFY HYBRID FUND
PROPOSAL
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The Institute submitted the attached letter to the SEC
staff to clarify the recommendation in our letter on the SEC’s
study of the reform of regulation of investment companies to
permit the creation of funds offering periodic redemptions.
Specifically, the Institute clarified that such funds should be
classified as a third type of management investment company
rather than as a modified open-end or closed-end fund.
This letter was submitted in response to concerns that were
raised that if the hybrid structure were adopted as a type of
closed-end fund, all closed-end funds could be forced to offer
periodic redemptions. Those closed-end funds that do not have a
relationship with a distributing organization felt that they
could not offer periodic redemptions, since they would not be
able to continuously offer fund shares. Thus, there was concern
that the Institute’s proposal, as originally submitted, could
jeopardize the existence of the traditional closed-end fund.
Amy B.R. Lancellotta
Assistant General Counsel
Attachment