AMRICA.N PVNDB DXBTRXVTOB INC

AMRICA.N PVNDB DXBTRXVTOB INC

333

HOPE

SOUTH

STREET

LOS ANGELES

1131

1LI.CP$40NC

CALIFORNIA

00071

dee .0651

MICMAEOWNER

1989

Office

of

Chief

of

Division

Securities

1450

Fifth

fub1tc

Counsel

Investment

and

Exchange

Street

NW

D.C

Washington

Re

j4on

20540

5b

Sections

Act Rules

Investment

under

Management ve1labi1itY

Commission

10a

and

and

13k

the

the

Securities

under

the

1940

the

of

Act

Company

1940 Act

of

1482

Act

Act

1940

1933

of

1933

Section

the

214b

Act and Rule

1933

of

the

214b-3

Gentlemen

American

Funds

investment

the

underwriter for 22

principal

Funds

Investment

Management

Securities

and

literature

and

non-English

statutes

enforcement

any

action

written

materials

sales

consistent

will

with

not

if AFD

in

uses

literal

to

that

other

below

the

sales

than

English

AFD

believes

relevant

terms

of

the

language

of

or

do

of

the

certain

languages

as described

the

recommend

Commission

the

Commission

advertisements

is

request

staff

the

Exchange

Commission take

this

AFD

Inc

Distributors

known

as The

American

Funds

companies

collectively

Group

is writing to confirm

that the staff of the Division

that

rules

and

Facts

Persons

at

all

who

use

According1

with

According to

the

of

the

roughly

second

as

significant

rePrfsent

population

effectively

10%

English

such

1980

percentage

it

rft.en

individuals

census

the

difficult

not

to

communicate

regarding the Funds

23 million U.S

nations population

homes

In Los Angeles

spoke

use English

U.S

residents

language

with

or

other than

where

AFD has its

English in their

principal office according to

report published in The Wall

Street

three

Journal

enrolled in the

students

by 1992 two of every

public school

family where

other

system will come from

language

than English is spoken

The Los Angeles public

school

student

and comes from such

population embraces more than 80 languages

diverse places

Macao

and Mexico

It would not be

as Madagascar

economically

feasible

necessary to translate

to

reach

Fund

such

disparate

prospoctuses

groups

if it

were

Chief Counsel

Office

of

August

25

1989

Page

Of course

or sales literature

English-language advertisements

are accustomed

non-English speaking individuals

living in the U.S

but are naturally more

to conducting business

in English

dealings

and are more likely

to

comfortable with their native language

written in their native

Therefore

respond to material

language

AFD is considering developing non-English sales materials for use

in

U.S

the

distributed to the public would either

Non-English sales materials

be preceded or accompanied

by curreAt

prospectuses for the Funds

and 10a of the 1933 Act

offered

to

Sections

being

pursuant

or qualify as tombstones

pursuant to Rule 13k under the 1933

Act or qualify as omitting prospectuses

pursuant to Rule 182

under the 1933 Act

Only English-language prospectuses would be

in connection with

Each

available

non-English sales materials

prominent legend

piece of non-English sales material would bear

5b

to

the

effect

that

the

prospectuses

in the

only

invest

or send

available

are

should

not

of

prospectuses

the

non-English

Additionally

all

under

156

Potential

for

.the

language

Funds

and

being offered

potential

money without understanding

sales

materials

including

requirements

the 1933 Act

applicable

Rule

English

the

would

also

antifraud

investors

the

content

conform

to

provisions

further

who

receiving non-English sales materials

understand an English-language prospectus would be

protected by the fact that shares of the Funds are sold

through

securities

of

investors

not

might

requirements

dealers

related

to

who

are

subject

to

numerous

protection including Article

III

Association of Securities

Dealers

Rules

investor

Section

of the National

of Fair Practice which

states

pertinent part that

sale or exthnge of eny

purchase

member

shall

have

reasonable

for believing

security

grounds

for the customer..

that

the recommendation is suitable

Emphasis

recommending to

custoier

in

the

supplied

Discussion

Non-English Sales

Materials

Accompanied

or

Preceded by

Prospectus

AFD requests confirmation that the staff would not recommend that

action

if an English-language prospectus

of

the Commission take

delivered to potential

investors

Fund were

pursuant to Sections

5b

and

10a

of

materials

for

that

the

1933

Fund

Act

along with

non-English

sales

Chief Counsel

Office

of

August

25

1989

Page

confirmed to the Franklin Group of Funds that it

no-action position under Section

24b of the 19110

sales material

Act see below with respect to audio-taped

to

intended

for distribution along with

written

prospectus

the Materials

blind

and visually impaired

provided

persons

staff

The

has

would

take

given

the

accurate

i.e

to

whom

the

Materials

representation

audience

of

the

products

the

Materials

misleading

presentation may

ac.cc

ed

under the

No-Action Letter

in Rule

Funds

not

their

pre

are

misleading

forth

are

to whether

respect

SEC

are presented provide an

by Franklin

being offered

with

and

the Materials

156

Act

1933

available

or

may not

be

ri .LiE sat

-th

tLe

See

Franklin

26

February

of

Group

1987

the

letter

Franklin

for example

Chinese-language sales

delivering

an English-language prospectus to native

is analogous

to delivering audio-taped

Chinese-language speakers

sales literature

with

written prospectus

to blind and

along

AFD

believes

literature

that

with

along

visually impaired

has

daily

business

Of

individuals

the

Further

discussed above

as

course

conditLons

contained

in

the

eFi

inends

population

foreign

to written

English and must

exposure

in that language

even if they do not

to

conduct

its

fluently

it

read

adhere

the

to

Fra.iklin letter

Pursuant

Non-English Sales_Materini.s_Used

to

Rules

and

1311

482

confirmation

that the staff would not recommend

for

Commission take action

if non-English sales materials

were

delivered to investors

to

either

Rule

134

or

pursuant

AFD

also

that

the

Fund

requests

Rule

482

would

be

when

Although the

en

only

availaLle

to

only

dealt

Ly

tha

tff

equally to materials used

materials qualified under

pursuant

ccni

Franklin

English-language

investois

English-language

for

that

with

material

fund

letter

those

to Rules

rules

sales

siios

are

134

and

designed

1182

to

since

offer the

prospectus

Non-English Sales

Rule

prospectus

such

Materials

Filed

Pursuant

to

Section

214b

and

24b-3

AFD requests

confirmation that the staff would not recommend

that

action

if non-English sales materials used

the Commission take

are filed pursuant to Section

with English-language prospecttses

24b of the 19110 Act arid Rule 211b-3 thereunder

Chief Counsel

Office

of

August

25

1989

Page

The staff in

respect

to

blind and

of

the

the

the

Franklin

filing

of

letthr

audio-taped

visually impaired

1940

in

Act

As

this

presented

the Franklin letter

is

material

individuals

above

we

believe

analogous

to

the

discussed

letter

no-action position with

to be used with

pursuant to Section 24b

took

the

issue

issue

presented in

based on the facts and representations

request

that it

that the staff provide confirmation

letter

will not recommend

that the Commission take

action

as requested

at 213/486-9425

if you need further

Please

call the undersigned direct

We

respectfully

contained

in

or have

information

Very

truly

yours

4htsL

Michael

this

any

tL

Downer

questions

OC11E

Our Ref

American

RESPONSE

DIVISION

OF THE OFFICE

OF INVESTMENT

No

89-527-CC

Funds

Distributors

OF CHIEF COUNSEL

MANAGEMENT

File

No

Inc

13 2-3

that

Your letter of August 25 1989 requests our assurance

enforcement

take

Commission

any

that the

we would not recommend

the

action

against American Fund Distributors Inc

if

Funds

Group

principal underwriter for The American

in the U.S

materials

sales

non-English

language

AFD distributes

or preceded

by an English language

that are accompanied

of the

and 10a

with Sections

in accordance

prospectus

134

or

under

Rule

and

Securities

Act of 1933

1933

is

prospectus

of the 1933 Act when only an English language

482

would

not

we

that

available

You also seek our confirmation

sales

action

if nonEnglish language

enforcement

recommend

filed under

are

materials used with English language prospectuses

of

1940

Acttt

Act

1940

of the Investment

Company

Section 24b

and Rule 24b-3 thereunder

AFD

Funds

Act

5b

second language

You state that persons who use English as

significant

percentage

or do not use English at all represent

to

difficult

is

therefore

and it

of the U.S population

the Funds

individuals

regarding

with such

communicate

effectively

sales

or

advertisements

when distributing English language

literature

Further you state that non-English speaking

to

individuals living in the U.S are more likely to respond

order

to

In

language

material written in their native

with these individuals

you propose to

communicate

effectively

sales

include

legend on each piece of nonEnglish language

are

for

the

Funds

material

indicatiig that prospectuses

investors should not

available

only in English and potential

the content of the

understanding

invest or send money without

that your request is analogous to the

You believe

prospectus

no-action

request made by the Franklin Group of Funds pub

avail Feb 26 1987 the Franklin letter in which the staff

However we are unwilling to extend

granted noaction relief

taken in the Franklin letter to AFDs distribution

the position

We believe

of nonEnglish sales literature and advertisements

would not

In the Franklin letter the staff stated that it

under

the

Commission

action

to

recommend

any enforcement

Franklin

Group of Funds

Section 24b of the 1940 Act if the

audio

of

taped

transcript

filed three copies of

in connection

the

funds

be

used

to

by

materials

advertising

with the sale of fund shares to blind and visually-impaired

prospectus

supply

Franklin stated that it would

persons

sales materials

the

either

or

would

accompany

that

precede

statement disclosing

The sales materials were to include

statement advising

and

of

prospectus

the availability

review

the

carefully

prospectus

to

investors

prospective

its

is

reconsidering

staff

currently

The

before investing

position

in

the

Franklin

letter

sales literature or advertisements

in

that if AFD distributes

in the same language

language other than English

prospectus

should be readily available

For the reasons stated above we

that the

are unable to assure you that we would not recommend

Commission take any enforcement

action

if AFD proceeds as

described in your letter

LQ

Carol

jj

Peebles

Attorney

21

For

if AFD distributes

sales literature in

other

than

and

an

language

English

English language

either precedes or accompanies

such sales

prospectus

the

sales

literature

should

state

that

literature

in

the

is

available

same

prospectus

language

upon request

and

investors should review

prospectus

prospective

before

investing

carefully

example

believe

is not inconsistent

with Investment

our position

June 23 1970 discussing the

Company Act Rel No 6082

of the federal securities laws to the offer

applicability

shares outside

the

and sale of open-end

investment company

stated

that

in which the Commission

prospectus used

in any foreign country should be printed in

language

by that segment of the foreign public

readily understood

which may or may not be the native

being solicited

language

of the country

While AFD is not distributing prospectuses

in

foreign country it proposes to solicit

segment of

be

the public whose native

language may not

English

We

U.S