49542 Federal Register / Vol. 62, No. 183 / Monday, September 22, 1997 / Notices

Dated: September 15, 1997.

Noel F. Dudley

Acting Chief Nuclear Reactors Branch.

[FR Doc. 97–25076 Filed 9–19–97; 8:45 am]

BILLING CODE 7590–01–P

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22822; 812–10736]

Liberty All-Star Growth Fund, Inc.;

Notice of Application

September 15, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

SUMMARY OF APPLICATION: Applicant

requests an order under section 6(c) of

the Act granting an exemption from

section 19(b) and under rule 19b–1 to

permit it to make up to four

distributions of net long-term capital

gains in any one taxable year, so long as

it maintains in effect a distribution

policy calling for quarterly distributions

of a fixed percentage of its net asset

value.

FILING DATE: The application was filed

on July 23, 1997.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicant with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

October 9, 1997, and should be

accompanied by proof of service on

applicant, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons may request notification of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 5th

Street N.W., Washington, DC 20549.

Applicant, 600 Atlantic Ave., Federal

Reserve Plaza, Boston, MA 02210.

FOR FURTHER INFORMATION CONTACT: Lisa

McCrea, Attorney Adviser, at (202) 942–

0562, or Mary Kay Frech, Branch Chief,

at (202) 942–0564 (Division of

Investment Management, Office of

Investment Company Regulation.

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch, 450 5th Street

N.W., Washington, D.C. 20549 (tel. 202–

942–8090).

Applicant’s Representations

1. Applicant is a closed-end

management investment company

organized as a Maryland corporation.

Applicant’s investment objective is to

invest primarily in a diversified

portfolio of equity securities.

2. On February 20, 1997, applicant

adopted a distribution policy (the

‘‘Distribution Policy’’) that calls for

quarterly distributions of 2.5% of

applicant’s net asset value at the time of

declaration, for a total of approximately

10% of net asset value per year. If the

total distributions required by the

Distribution Policy exceed applicant’s

investment income and net realized

capital gains, the excess will be treated

as a return of capital. If applicant’s net

investment income, net short-term

realized gains and net long-term

realized gains for any year exceed the

amount required to be distributed under

its Distribution Policy, applicant at its

discretion may retain, and not

distribute, net realized long-term capital

gains to the extent of such excess.

3. Applicant states that the

distributions will provide a steady cash

flow to shareholders, and, during

periods when their per share net asset

value is increasing, a means for

shareholders to receive on a regular

basis some of the appreciation in value

of their shares. Applicant also believes

that the Distribution Policy plays a role

in reducing the discount from net asset

value at which applicant’s shares

typically trade.

4. Applicant requests relief to permit

applicant to make up to four

distributions of net long-term capital

gains in any one taxable year, so long as

it maintains in effect a distribution

policy calling for quarterly distributions

of a fixed percentage of its net asset

value.

Applicant’s Legal Analysis

1. Section 19(b) of the Act provides

that a registered investment company

may not, in contravention of such rules,

regulations, or orders as the SEC may

prescribe, distribute long-term capital

gains more often than once every twelve

months. Rule 19b–1(a) permits a

registered investment company, with

respect to any one taxable year, to make

one capital gains distribution, as

defined in section 852(b)(3)(C) of the

Internal Revenue Code of 1986, as

amended (the ‘‘Code’’). Rule 19b–1(a)

also permits a supplemental distribution

to be made pursuant to section 855 of

the Code not exceeding 10% of the total

amount distributed for the year. Rule

19b–1(f) permits one additional longterm capital gains distribution to be

made to avoid the excise tax under

section 4982 of the Code.

2. Applicant asserts that the limitation

on the number of net long-term capital

gains distributions in rule 19b–1

prohibits applicant from including

available net long-term capital gains in

certain of its fixed quarterly

distributions. As a result, applicant

states that it must fund these quarterly

distributions with returns on capital (to

the extent net investment income and

realized short-term capital gains are

insufficient to cover a quarterly

distribution). Applicant further asserts

that, in order to distribute all of its longterm capital gains within the limits on

the number of long-term capital gains

distributions in rule 19b–1, applicant

may be required to make certain of its

quarterly distributions in excess of the

total annual amount called for by the

Distribution Policy. Alternatively,

applicant states that it may be forced to

retain long-term capital gains and pay

the applicable taxes. Applicant asserts

that the application of rule 19b–1 to its

Distribution Policy may cause

anomalous results and create pressure to

limit the realization of long-term capital

gains based on considerations unrelated

to investment goals.

3. Applicant believes that the

concerns underlying section 19(b) and

rule 19b–1 are not present in applicant’s

situation. One of these concerns is that

shareholders might not be able to

distinguish between frequent

distributions of capital gains and

dividends from investment income.

Applicant states that the Distribution

Policy has been disclosed in applicant’s

communications to its shareholders,

including its 1996 annual report, and

applicant will disclose the Distribution

Policy in future quarterly and annual

reports to shareholders. Applicant

further states that, in accordance with

rule 19a-1 under the Act, a separate

statement showing the source of the

distribution (net investment income, net

realized capital gain or return of capital)

will accompany each distribution (or

the confirmation of the reinvestment

under applicant’s dividend

reinvestment plan). In addition, a

statement showing the amount and

source of each quarterly distribution

received during the year will be

included with applicant’s IRS Form

1099–DIV report sent to each

shareholder who received distributions

during the year (including shareholders

who sold shares during the year).

Applicant believes that its shareholders

fully understand that their distributions
Federal Register / Vol. 62, No. 183 / Monday, September 22, 1997 / Notices 49543

1 15 U.S.C. 78s(b)(1)

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 37960

(November 15, 1996).

4See 61 FR 59261.

5See Letters from Claire P. McGrath, Managing

Director & Special Counsel, Derivative Securities,

Amex, to Ivette Lopez, Assistant Director, Division

of Market Regulation (‘‘Division’’), SEC, dated

December 23, 1996 (‘‘Amendment No. 1’’), February

28, 1997 (‘‘Amendment No. 2’’), and June 3, 1997

(‘‘Amendment No. 3’’), respectively. Amendment

No. 1, sets forth, among other things, the definition

of ‘‘available capitalization,’’ the calculation

formula for the Index and the foreign stock

exchanges with which the Amex has

comprehensive surveillance sharing agreements. In

Amendment No. 2, the Amex provides for each

Index component, the average daily trading volume

for the six month period ending December 31, 1996

and their weights in the Index. In Amendment No.

3, the Amex provides Index maintenance standards.

6The Index is a sub-index of the Barings

Emerging Markets Index (‘‘BEMI’’).

7A company’s ‘‘available capitalization’’ is

defined as the lower of (i) the company’s ‘‘free

float’’ or (ii) the legally available capitalization of

the company. A company’s ‘‘free float’’ is defined

as the percentage of shares which could reasonably

be expected to trade on the open market. Generally,

government holdings, corporate cross-ownership

and other strategic holdings are not considered

freely floating.

are not tied to applicant’s net

investment income and realized capital

gains and do not represent yield or

investment return.

4. Another concern underlying

section 19(b) and rule 19b–1 is that

frequent capital gains distributions

could facilitate improper sales practices,

including in particular, the practice of

urging an investor to purchase fund

shares on the basis of an upcoming

distribution (‘‘selling the dividend’’),

when the distribution would result in

an immediate corresponding reduction

in net asset value and would be, in

effect, a return of the investor’s capital.

Applicant submits that this concern

does not apply to closed-end investment

companies, such as applicant, which do

not continuously distribute shares.

5. Applicant states that increased

administrative costs also are a concern

underlying section 19(b) and rule 19b–

1. Applicant asserts that it will continue

to make quarterly distributions

regardless of whether capital gains are

included in any particular distribution.

6. Section 6(c) provides that the SEC

may exempt any person, security, or

transaction from any provision of the

Act, or from any rule thereunder, if such

exemption is necessary or appropriate

in the public interest and consistent

with the protection of investors and the

purposes fairly intended by the policy

and provisions of the Act. For the

reasons stated above, applicant believes

that the requested relief satisfies this

standard.

Applicant’s Condition

Applicant agrees that the order

granting the requested relief shall

terminate upon the effective date of a

registration statement under the

Securities Act of 1933 for any future

public offering by applicant of its shares

other than: (i) a non-transferable rights

offering to shareholders of applicant,

provided that such offering does not

include solicitation by brokers or the

payment of any commissions or

underwriting fee; and (ii) an offering in

connection with a merger,

consolidation, acquisition, or

reorganization.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–25029 Filed 9–19–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39079; International Series

Release No. 1099, File No. SR–Amex–96–

38]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change and

Notice of Filing and Order Granting

Accelerated Approval of Amendment

Nos. 1, 2, and 3 Thereto by the

American Stock Exchange, Inc.,

Relating to the Listing and Trading of

Warrants on the ING Barings

Securities Limited BEMI Latin America

Index

September 15, 1997.

I. Introduction

On October 15, 1996, the American

Stock Exchange, Inc. (‘‘Amex’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 the proposed rule change

to list and trade warrants on the ING

Barings Securities Limited BEMI Latin

America Index (‘‘Index’’).3 A notice

appeared in the Federal Register on

November 21, 1996.4 No comment

letters were received concerning the

proposed rule change. On December 24,

1996, March 3, 1997 and June 3, 1997,

the Exchange filed Amendment Nos. 1,

2 and 3, respectively, to the proposed

rule change.5 This order approves the

Amex’s proposal, as amended.

II. Description of the Proposal

The purpose of the proposed rule

change is to permit the Exchange to list

and trade, under Section 106 of the

Amex Company Guide, cash-settled

index warrants based on the Index.

A. Design of the Index

The Exchange represents that the

Index is a market capitalizationweighted broad-based index developed

by ING Barings Securities Limited

(‘‘Barings’’) comprised of 122 stocks

from 112 companies from the following

seven Latin American countries:

Argentina; Brazil; Chile; Colombia;

Mexico; Peru; and Venezuela.6 In

addition, the stocks represent eleven

different industry groups. As of June 30,

1997, the number of stocks and

weightings in the Index was as follows:

Argentina 22 stocks/12.63% weighting;

Brazil 22 stocks/46.84% weighting;

Chile 21 stocks/11.20% weighting;

Columbia 12 stocks/1.50% weighting;

Mexico 26 stocks/21.76% weighting;

Peru 12 stocks/3.90% weighting; and

Venezuela 7 stocks/2.16% weighting. As

of the same date, the largest stock

accounted for 10.95% of the Index

weight, while the smallest accounted for

0.016%. The top five stocks in the Index

by weight accounted for 32.15%.

The total available market

capitalization of the Index was

$158,437,566,290 billion on that date.7

The average available market

capitalization of these companies was

$1,298,668,576 billion. The individual

available market capitalization of the

companies ranged from $25,050,774

million to $17,343,762,504 billion.

B. Maintenance of the Index

The Index is maintained by Barings’

Recomposition Committee. The

Recomposition Committee, established

at the time of the launch of the Index,

reviews on a quarterly basis the Index

rules and composition. The

Recomposition Committee implements

changes or fixes standards as

appropriate and oversees the security

environment of the Index and its recordkeeping. The quarterly meeting is

normally held in the second week of the

last month of the quarter. The date of

these meetings is posted at least two

months in advance on Reuters and the

results are publicly disclosed on Reuters

the day after a meeting. Actual

implementation of any changes to the

composition of the Index occurs on the

last day of the month that the meeting

is held. This is approximately two