1 See Memorandum to Accounting/Treasurers Committee No. 12-95, SEC Rules Committee No. 32-95 and Unit Investment Trust Committee No. 23-95, dated February 28, 1995.
April 18, 1995
TO: ACCOUNTING/TREASURERS COMMITTEE No. 18-95
SEC RULES COMMITTEE No. 58-95
UNIT INVESTMENT TRUST COMMITTEE No. 42-95
RE: INSTITUTE COMMENTS ON PROPOSED AMENDMENTS TO RULE 6c-10
______________________________________________________________________________
The Institute has filed a comment letter with the Securities and Exchange Commission
concerning proposed amendments to Rule 6c-10 and related revisions to prospectus disclosure
requirements.1 A copy of the InstituteGs comment letter is attached.
In its letter, the Institute expresses general support for the CommissionGs proposal which,
among other things, would permit mutual funds to assess deferred sales loads other than contingent
deferred sales loads (such as installment loads). In response to the CommissionGs requests for
comments on certain specific matters, the letter: (1) recommends that the rule be modified to make it
available to unit investment trusts; (2) suggests that funds be permitted to base deferred loads either on
offering price or net asset value, but be required to express such loads as a percentage of offering price
in the prospectus fee table; (3) supports the CommissionGs proposal to allow funds to impose deferred
loads on reinvested dividends so long as such loads are disclosed in the prospectus; (4) proposes certain
revisions to Rule 11a-3 to make it more flexible (consistent with Rule 6c-10 as proposed to be amended)
and to accommodate exchanges involving funds that impose installment loads; (5) supports the
CommissionGs proposed treatment of installment loads for purposes of advertising yield (but suggests
that it may be appropriate to revisit this issue after further practical experience with installment loads is
gained); and (6) opposes amending Form N-1A to add a specific requirement for funds that impose
deferred sales loads to disclose the amount of commissions paid to dealers selling the fundsG shares.
(The letter notes that the NASD is actively considering the issue of disclosure of cash compensation
paid to dealers for selling fund shares, and suggests that the question of the need to disclose
commissions paid to dealers for selling deferred load funds is best addressed in that context.)
Frances M. Stadler
Associate Counsel
Attachment