Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 / Notices 62793

1Until October 31, 1995, the Fund was named

The Regis Fund, Inc. All parties that currently

intend to rely on the order are named as applicants.

Payment on the Series B Notes will be

applied to pay the maturing principal

and redemption price of and interest

and other costs on the Series B Bonds

as such amounts become due. Each

Declarant also proposes to pay any

trustees’ fee or other expenses incurred

by the Authority.

Yankee Atomic Electric Company (70–

9135)

Yankee Atomic Electric Company

(‘‘Yankee Atomic’’), 580 Main Street,

Bolton, Massachusetts 01740, an

indirect electric utility subsidiary of

New English Electric System and

Northeast Utilities, both registered

holding companies, has filed a

declaration under Sections 6(a) and 7 of

the Act and rule 54 under the Act.

By order dated December 28, 1995

(HCAR No. 26441), the Commission

authorized Yankee Atomic to incur

short-term borrowings through

December 31, 1997 from banks up to an

aggregate principal amount of $10

million at any one time. Yankee Atomic

now requests an extension of this

authority through December 31, 2002.

Yankee Atomic will evidence its

borrowings through the issuance of

notes that will be payable in less than

one year from the date of issuance. The

interest rate will not exceed the lending

bank’s base or prime lending rate, or the

high federal funds rate, plus 1% in

either case. Yankee Atomic pays fees to

the banks in lieu of compensating

balance arrangements. Yankee Atomic

will use the proceeds to meet its

working needs.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30861 Filed 11–24–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

22895; 812–10624]

UAM Funds, Inc., et al.; Notice of

Application

November 19, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for an

order under section 12(d)(1)(J) of the

Investment Company Act of 1940 (the

‘‘Act’’) for an exemption from section

12(d)(1)(G)(i)(II), and under sections 6(c)

and 17(b) for an exemption from section

17(a).

SUMMARY OF THE APPLICATION:

Applicants seek an order that would

permit a fund of funds relying on

section 12(d)(1)(G) to make direct

investments in equity and fixed income

securities. The order also would permit

applicants to redeem shares in-kind

under certain circumstances.

APPLICANTS: UAM Funds, Inc. (the

‘‘Fund’’), on behalf of the TS & W

Balanced Portfolio (the ‘‘Balanced

Portfolio’’) and the TS & W International

Equity Portfolio (the ‘‘International

Equity Portfolio’’) (collective, the

‘‘Portfolios’’), and Thompson, Siegel &

Walmsley, Inc. (the ‘‘Adviser’’).

FILING DATES: The application was filed

on April 18, 1997, and amended on

August 4, 1997. Applicants have agreed

to file an additional amendment, the

substance of which is incorporated in

this notice, during the notice period.

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 applicants with a

copy of the request, personally or by

mail. Hearing requests should be

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

December 15, 1997, and should be

accompanied by proof of service on

applicants, 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 Fifth

Street, N.W., Washington, D.C. 20549.

Applicants, One International Place,

44th Floor, Boston, MA 02110.

FOR FURTHER INFORMATION CONTACT:

Kathleen L. Knisely, Staff Attorney, at

(202) 942–0517, or Christine Y.

Greenless, 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 from the SEC’s

Public Reference Branch, 450 Fifth

Street, N.W., Washington, D.C. 20549

(tel. 202–942–8090).

Applicants’ Representations

1. The Fund, a Maryland corporation,

is registered under the Act as an openend management investment company

and is comprised of multiple series,

including the Portfolios.1 The Balanced

Portfolio invests in a diversified

portfolio of common stocks of

established companies and investment

grade fixed income securities. The

Balanced Portfolio may invest in equity

securities issued by foreign companies

as provided in its investment policies.

2. The International Equity Portfolio

generally invests in equity securities of

established companies listed on U.S. or

foreign securities exchanges. The

International Equity Portfolio also may

invest in convertible bonds, convertible

preferred stocks, non-convertible

preferred stocks, fixed income securities

of governments, government agencies,

supranational agencies and companies,

and cash equivalents (including foreign

money market instruments). The

International Equity Portfolio may

purchase and sell options on any of the

above-mentioned securities and also

may invest in closed-end investment

companies holding foreign securities.

3. The Adviser, registered under the

Investment Advisers Act of 1940, serves

as investment adviser to the Portfolios.

The Adviser is a wholly-owned

subsidiary of United Asset Management

Corporation (‘‘UAM’’), which is a

Delaware holding company

incorporated for the purpose of

acquiring and owning firms engaged

primarily in institutional investment

management.

4. The Adviser receives an advisory

fee based on a percentage of net assets

of the particular Portfolio. The Adviser

currently intends to waive its advisory

fee with respect to the portion of the

Balanced Portfolio’s assets that are

invested in the shares of the

International Equity Portfolio by

excluding these assets from the net

assets of the Balanced Portfolio for

purposes of calculation of the advisory

fee. Currently, no sales loads or other

distribution charges will be incurred by

the Balanced Portfolio in purchasing

shares of the International Equity

Portfolio. Other expenses incurred by

the International Equity Portfolio will be

borne by it, and thus indirectly by the

Balanced Portfolio.

5. Applicants propose to use the

International Equity Portfolio as a

means to invest a portion of the

Balanced Portfolio’s assets in foreign

equity securities. Applicants believe

that the use of a single investment

vehicle to invest in a broadly diversified

portfolio of foreign equity securities will

provide the Balanced Portfolio with the

most effective exposure to the
62794 Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 / Notices

performance of foreign markets while at

the same time minimizing costs. The

Balanced Portfolio also may have some

additional direct investments in foreign

stocks. This could occur both (a)

because the Balanced Portfolio, between

its periodic purchase or sale

transactions in shares of the

International Equity Portfolio, may

accumulate cash that it wishes to invest

in foreign securities, and (b) because the

Balanced Portfolio may use foreign

securities to meet some of its remaining

strategic diversification targets.

Applicants state that the Balanced

Portfolio needs the flexibility to invest

directly in foreign securities because, on

occasion, a particular foreign security

may be determined to be the most

suitable investment to satisfy a specific

investment strategy being pursued by

the Balanced Portfolio. Direct

investments also may result because the

Balanced Portfolio determines that a

specific weighting in a particular foreign

security, which is not satisfied by

ownership of the International Equity

Portfolio, would be beneficial to the

Portfolio.

6. Applicants state that the

International Equity Portfolio is more

diversified in foreign markets than the

Balanced Portfolio could be investing on

its own. As a result, events affecting the

price of a single foreign issuer or

country can be expected to have less

impact on the International Equity

Portfolio than they would have on the

foreign securities holdings of the

Balanced Portfolio. Applicants represent

that this diversification can be expected

to benefit both Portfolios by providing

greater price stability and lower

volatility, while at the same time

capturing the performance benefits of

exposure to foreign markets.

7. Applicants also expect that use of

the International Equity Portfolio as a

vehicle for international investing by

the Balanced Portfolio will increase the

efficiency of portfolio management of

the Balanced Portfolio. Tracking the

performance of various country markets

and issuers in foreign markets is a timeconsuming process and substantially

different from tracking the domestic

market and domestic issuers, which

would normally be attendant with the

Balanced Portfolio’s portfolio

management. By obtaining most of its

exposure to foreign markets through the

International Equity Portfolio, the

Balanced Portfolio and its shareholders

would gain the benefit of exposure to

this sector without incurring the penalty

attendant upon its portfolio manager

spending a disproportionate amount of

his or her time following these relatively

small positions.

8. Applicants anticipate that the

efficiencies resulting from the use of the

International Equity Portfolio will result

in cost savings to the Balanced Portfolio

in three areas: administrative costs, outof-pocket costs, and trading costs.

Savings of administrative costs will be

attributable to a great reduction in

administrative procedures. Savings of

out-of-pocket costs such as audit fees

and custodial fees will be offset by

increases in other out-of-pocket costs

such as legal and transfer agency fees.

Applicants expect that the major cost

savings will occur because the

International Equity Portfolio will

experience trading costs that will be

substantially less than the trading costs

that would be incurred if the foreign

stocks were purchased separately for the

Balanced Portfolio. Applicants believe

that this cost savings will increase in

direct proportion to the number of

foreign stocks over which the

investment in the foreign securities is

diversified.

9. Although the majority of the

Balanced Portfolio’s investments in

foreign securities will be through the

International Equity Portfolio, the

Balanced Portfolio may have some

additional direct investments in foreign

stocks. Applicants state that the Adviser

has adopted the following procedures to

avoid the unnecessary expense that

could occur if the International Equity

Portfolio were to sell a particular stock

at the same time that the Balanced

Portfolio were to purchase it, or vice

versa. The International Equity Portfolio

will generate a list of stocks that it

intends to purchase or sell, which it will

forward to the portfolio manager of the

Balanced Portfolio. If the Balanced

Portfolio’s portfolio manager wishes to

sell or buy a stock on the list, the

International Equity Portfolio will effect

the transaction directly with the

Balanced Portfolio pursuant to the

provisions of rule 17a–7 (a) through (f),

except as described below. The value of

the stock will be the current market

price, determined in accordance with

the provisions of rule 17a–7. Payment

will be made by simultaneous transfer

of cash or by simultaneous redemption

or issuance of shares of the International

Equity Portfolio with an equal value,

depending on whether the Balanced

Portfolio wishes to alter its investment

in the International Equity Portfolio. In

cases where the payment for the subject

stock is International Equity Portfolio

shares rather than cash, the transactions

will comply with the provision of rule

17a–7 (a) through (f) in all respects other

than the requirement that purchases and

sales be made only for cash

consideration.

10. To minimize the need for the

International Equity Fund to maintain

excessive cash balances, the Adviser

will coordinate the Balanced Portfolio’s

purchases and sales of shares of the

International Equity Portfolio to

minimize the cash flow into or out of

the International Equity Portfolio, and

attempt to anticipate the Balanced

Portfolio’s cash needs and to coordinate

net cash investment or redemptions to

permit the orderly acquisition or

disposition of foreign securities within

the International Equity Portfolio. The

purchase or sale of shares of the

International Equity Portfolio by the

Balanced Portfolio will also be

coordinated with purchase and sale or

‘‘rebalancing’’ transactions calculated to

bring the holdings of the International

Equity Portfolio back in line with its

targets. The Adviser will monitor the

process over time to ensure that the best

interests of the Balanced Portfolio and

the International Equity Portfolio are

met.

11. The Adviser anticipates that in

virtually all instances it will be able to

follow the foregoing procedures. It is

conceivable, however, that there will be

occasions where these procedures

cannot be followed because the

Balanced Portfolio makes an unusually

large purchase or redemption of

International Equity Portfolio shares.

Under these circumstances, the Adviser

in its sole discretion may cause the

transaction to be executed in-kind. In

the case of a purchase, the Balanced

Portfolio would acquire foreign stocks

directly, then contribute them to the

International Equity Portfolio in

exchange for its shares. In the case of a

redemption, the International Equity

Portfolio would deliver redemption

proceeds to the Balanced Portfolio in

the form of a pro rata distribution of

foreign stocks, which the Balanced

Portfolio could then sell. These in-kind

transactions will comply with the

provisions of rule 17a–7(a) and (f),

except that the consideration for the

foreign stocks will be International

Equity Portfolio shares rather than cash.

Applicants’ Legal Analysis

A. Section 12(d)(1)

1. Section 12(d)(1)(A) of the Act

provides that no registered investment

company may acquire securities of

another investment company if such

securities represent more than 3% of the

acquired company’s outstanding voting

stock, more than 5% of the acquiring

company’s total assets, or if such

securities, together with the securities of
Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 / Notices 62795

2Section 12(d)(1)(G)(i)(II) limits a fund of funds’

investments to certain government securities and

short-term instruments.

other investment companies, represent

more than 10% of the acquiring

company’s total assets. Section

12(d)(1)(B) provides that no registered

open-end investment company may sell

its securities to another investment

company if the sale will cause the

acquiring company to own more than

3% of the acquired company’s voting

stock, or if the sale will cause more than

10% of the acquired company’s voting

stock to be owned by investment

companies.

2. Section 12(d)(1)(G) of the Act

provides that section 12(d)(1) will not

apply to securities of an acquired

company purchased by an acquiring

company if: (a) The acquiring company

and the acquired company are part of

the same group of investment

companies; (b) the acquiring company

holds only securities of acquired

companies that are part of the same

group of investment companies,

government securities, and short-term

paper; (c) the aggregate sales loads and

distribution-related fees of the acquiring

company and the acquired company are

limited; and (d) the acquired company

has a policy that prohibits it from the

acquiring securities of registered openend investment companies or registered

unit investment trusts in reliance on

section 12(d)(1)(F) or (G).

3. Applicants state that the proposed

arrangement would comply with the

provisions of section 12(d)(1)(G), but for

the fact that the Balanced Portfolio

would like to retain the flexibility to

invest directly in stocks, bonds, and

other instruments, in addition to

investing in the International Equity

Portfolio.2

4. Section 12(d)(1)(J) provides that the

SEC may exempt persons or transactions

from any provision of section 12(d)(1) if

and to the extent the exemption is

consistent with the public interest and

the protection of investors. Applicants

believe that the proposed arrangement

will not implicate any of the abuses that

section 12(d)(1) was intended to

prevent, such as duplicative costs,

undue influence or control, or the

potential adverse impact of large-scale

redemptions.

B. Section 17(a)

5. Section 17(a) of the Act prohibits

certain purchases and sales of securities

between investment companies and

their affiliated persons, as defined in

section 2(a)(3) of the Act. The Adviser

is an affiliated person of each Portfolio.

To the extent that the Portfolios are

deemed under common control by

reason of having the same investment

adviser, each Portfolio would be an

affiliated person of the other Portfolio

under section 2(a)(3)(C) of the Act.

Accordingly, purchases or sales of

securities between the International

Equity Portfolio and the Balanced

Portfolio may violate section 17(a).

Applicants request an exemption from

section 17(a) of the Act to the extent

necessary to permit them to redeem

shares in-kind as described in the

application.

6. Sections 6(c) and 17(b) of the Act

set forth the standards for exempting a

series of transactions from section 17(a).

Under section 17(b), the terms of the

transaction must be reasonable and fair

and must not involve overreaching on

the part of any person, the transaction

must be consistent with the policy of

each investment company concerned,

and the transaction must be consistent

with the general purposes of the Act. In

addition, under section 6(c), the

exemption must be necessary or

appropriate in the public interest,

consistent with the protection of

investors, and consistent with the

purposes fairly intended by the policy

and provisions of the Act.

7. Applicants believe that the

proposed transactions meet the

standards for relief under sections 6(c)

and 17(b). Applicants contend that the

terms of the proposed transactions are

reasonable and fair and do not involve

overreaching. The consideration paid

and received for the purchase and

redemption of International Equity

Portfolio shares will be based on the net

asset value of the International Equity

Portfolio. Currently, the Balanced

Portfolio will not incur any sales load or

other charge in purchasing shares of the

International Equity Portfolio.

Applicants believe that the proposed

transactions are consistent with the

policies of each Portfolio. The Balanced

Portfolio’s investments in the

International Equity Portfolio, and the

International Equity Portfolio’s issuance

of shares, will be effected in accordance

with each Portfolio’s investment

restrictions and policies. Applicants

also believe that the proposed

transactions are consistent with the

general purposes of the Act. Section

17(a) was intended to prohibit affiliated

persons from furthering their own

interests by, for example, selling

property to an investment company at

less than fair value. Applicants believe

that their proposal does not present

those concerns.

Applicants’ Conditions

Applicants agree that the order

granting the requested relief shall be

subject to the following conditions:

1. Applicants will comply with all

provisions of section 12(d)(1)(G), except

for section 12(d)(1)(G)(i)(II) to the extent

that it restricts the Balanced Portfolio

from investing in equity and fixed

income securities, and other

instruments as described in the

application.

2. Before approving any advisory

contract for the Balanced Portfolio

under section 15 of the Act, the

directors of the Fund, including a

majority of the directors who are not

‘‘interested persons’’ as defined in

section 2(a)(19) of the Act (the

‘‘Independent Directors’’), shall find

that the advisory fee, if any, charged

under the contract is based on services

provided that are in addition to, rather

than duplicative of, services provided

pursuant to the International Equity

Portfolio’s advisory contract. The

finding, and the basis upon which the

finding was made, will be recorded fully

in the minute books of the Fund.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30862 Filed 11–24–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39333; File No. SR–AMEX–

97–36]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

American Stock Exchange, Inc.

Relating to Revised Equity Fee

Schedule

November 17, 1997.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on October 14, 1997,

the American Stock Exchange, Inc.

(‘‘Amex’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

the fee change as described in Items I,

II and III below, which Items have been

prepared by the self-regulatory

organization. The Commission is

publishing this notice to solicit

comments on the fee change from

interested persons.