October 19, 1992
TO: TRANSFER AGENT ADVISORY COMMITTEE NO. 61-92
RE: HYBRID FUNDS PROPOSAL
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As you know, the Securities and Exchange Commission has
proposed the creation of three new types of funds:
a. Closed-end funds which could offer to repurchase no
less than 5% or more than 25% of their outstanding
shares on a periodic basis (e.g., quarterly,
annually),
b. Open-end funds which could offer redemptions at
periodic intervals ("Interval Funds"). These funds
would be able to take up to one month (31 days) to pay
redemption proceeds, and
c. Open-end funds which could extend the payment of
redemption proceeds for up to 31 days after receipt of
the redemption request ("Extended Payment Funds").
These proposals are summarized in the enclosed SEC Rules
Committee Memo No. 52-92, dated August 3, 1992. Attached to the
August 3 memo is SEC Release No. 33-6948 which proposes rules and
rule amendments necessary for the creation of these funds.
The Institute has received extensive input on these
proposals from a legal perspective from an ad hoc group of
representatives of the Institute’s SEC Rules Committee and the
Closed-End Fund Committee. This group has voted in favor of both
the closed-end fund proposal and the interval fund proposal and
against the extended payment fund proposal.
We would like you to perform a two-part review of the
enclosed proposals. First, please make a broad overview for the
purpose of identifying any immediate, fundamental concerns that
present important operational difficulties associated with
implementation of the proposals. Please provide us with any
comments based on your overview of the proposals by October 29,
1992. Second, because the Commission’s consideration of the
proposals and the Institute’s continuing dialogue with its
members regarding implementation of the proposals will evolve
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over the coming weeks and months, please conduct a more in-depth
review of the proposals’ operational implications and provide us
with any more detailed comments by November 30, 1992.
Please provide any comments you may have via fax at
202/293-1058. Thank you for your assistance in this matter.
Gregory M. Smith
Director - Operations/Compliance
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