67420 Federal Register / Vol. 62, No. 247 / Wednesday, December 24, 1997 / Notices

Notice is hereby given that pursuant

to the Paperwork Reduction Act of 1995

(44 U.S.C. 3501 et seq.) the Securities

and Exchange Commission

(‘‘Commission’’) has submitted to the

Office of Management and Budget a

request for extension of the previously

approved collection of information

discussed below.

Rule 15c3–3 Customer Protection—

Reserves and Custody of Securities

Rule 15c3–3 (‘‘Rule’’) requires

registered broker-dealers to maintain

certain records in connection with their

compliance with the Rule’s

requirements that broker-dealers

maintain possession and control of and

segregate customer funds and securities.

Commission staff estimates that the

average number of hours necessary for

each broker-dealer to make the required

computations pursuant to the Rule is 2.5

hours per response. In order to

demonstrate compliance with the Rule,

approximately 326 broker-dealers

choose to make a weekly computation

and 127 broker-dealers choose to make

a monthly computation. Accordingly,

the total is approximately 48,290 hours

annually for all broker-dealers, based

upon past submissions. The average cost

per hour is approximately $60.

Consequently, the staff estimates that

the total cost of compliance with the

Rule for all broker-dealers is $2,897,400.

The retention period for the

recordkeeping requirement under the

Rule is three years following the date of

a report prepared pursuant to the rule.

The recordkeeping requirement under

the Rule is mandatory to assist the

Commission with monitoring brokerdealers and ensuring compliance with

the Rule. The information collected

under this Rule is kept confidential to

the extent permitted by the Freedom of

Information Act and any other

applicable law. Please note that an

agency may not conduct or sponsor, and

a person is not required to respond to,

a collection of information unless it

displays a currently valid control

number.

Written comments regarding the

above information should be directed to

the following persons: (i) Desk Officer

for the Securities and Exchange

Commission, Office of Information and

Regulatory Affairs, Office of

Management and Budget, Room 3208,

New Executive Office Building,

Washington, D.C. 20503; and (ii)

Michael E. Bartell, Associate Executive

Director, Office of Information

Technology, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Comments

must be submitted to OMB within 30

days of this notice.

Dated: December 15, 1997.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–33586 Filed 12–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

22947; 812–10890]

Merrill Lynch & Co., Inc., et al.; Notice

of Application

December 19, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under section 6(c) of the

Investment Company Act of 1940 (the

‘‘Act’’) from section 15(a) of the Act.

Summary of Application: Applicants

seek an order to permit the

implementation, without shareholder

approval, of new investment advisory or

sub-advisory agreements (‘‘New

Agreements’’) between Mercury Asset

Management International Limited

(‘‘MAM International’’) and Mercury

Asset Management International

Channel Islands Ltd. (‘‘MAM Channel

Islands’’) (collectively, the ‘‘Advisers’’)

and various registered investment

companies (each a ‘‘Fund’’ and

collectively, the ‘‘Funds’’) in connection

with the acquisition of Mercury Asset

Management Group plc (‘‘Mercury’’) by

Merrill Lynch & Co., Inc. (‘‘Merrill

Lynch’’). The order would cover a

period of up to 150 days following the

later of the date on which the

assignment of the existing investment

advisory contracts is deemed to have

occurred (i.e., the date Merrill Lynch is

deemed to control the issued share

capital of Mercury (the ‘‘Assignment

Date’’)) or the date upon which the

requested order is issued (but in no

event later than July 15, 1998) (the

‘‘Interim Period’’). The order also would

permit the Advisers to receive all fees

earned under the New Agreements

during the Interim Period following

shareholder approval.

Applicants: Merrill Lynch, Mercury,

and the Advisers.

Filing Dates: The application was

filed on December 10, 1997. Applicants

have agreed to file an amendment

during the notice period, the substance

of which is included in this notice.

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

January 9, 1998, 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 who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicants: Merrill Lynch, World

Financial Center, North Tower, 250

Vesey Street, New York, New York

10281–1318; Mercury and MAM

International, 33 King William Street,

London, England EC4R 9AS; MAM

Channel Islands, Forum House,

Grenville Street, St. Helier, Jersey

JE48RL, Channel Islands.

FOR FURTHER INFORMATION CONTACT:

John K. Forst, Attorney Advisor, at (202)

942–0569, or Mary Kay Frech, Branch

Chief, at (202) 942–0564 (Office of

Investment Company Regulation,

Division of Investment Management).

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 Fifth

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

(tel. 202–942–8090).

Applicant’s Representations

1. Merrill Lynch, through its

subsidiaries, provides investment,

financing, insurance, and related

services on a global basis. Mercury, a

holding company whose shares are

listed on the London Stock Exchange,

provides investment and related

services through its subsidiaries on a

global basis. The Advisers are

investment advisers registered under the

Investment Advisers Act of 1940. MAM

International provides discretionary

international investment portfolio

management services to individual and

institutional clients. MAM International

provides investment advice to its

wholly-owned subsidiary, MAM

Channel Islands. MAM Channel Islands

acts as investment adviser and MAM

International acts as sub-adviser for The

Europe Fund, Inc. and The United

Kingdom Fund Inc., each a management

investment company registered under

the Act. MAM International also acts as

investment sub-adviser to the Global

Bond Series of Fortis Series Fund, Inc.,
Federal Register / Vol. 62, No. 247 / Wednesday, December 24, 1997 / Notices 67421

1Applicants state that if the Assignment Date

precedes issuance of the requested order, the

advisers will continue to serve as investment

advisers after the Assignment Date (and prior to the

issuance of the order) in a manner consistent with

their fiduciary duty to continue to provide advisory

services to the Funds even though approval of the

new arrangements has not yet been secured from

the Funds’ shareholders. Applicants also state that

the Funds may be required to pay, with respect to

the period until receipt of the order, no more than

the actual out-of-pocket cost to the Advisers for

providing advisory services.

a management investment company

registered under the Act.

2. On November 19, 1997, the boards

of directors of Merrill Lynch and

Mercury announced that they had

agreed on the terms of a recommended

cash offer (the ‘‘Offer’’) under which

Merrill Lynch, through its newly-formed

wholly-owned subsidiary, ML Invest

plc, would seek to acquire all of the

issued share capital of Mercury (the

‘‘Transaction’’). Applicants state that,

upon completion of the Transaction, it

is intended that Mercury will be

combined with the worldwide

institutional business of Merrill Lynch

Asset Management, L.P. and Fund Asset

Management, L.P., which are both

owned and controlled by Merrill Lynch,

to form Merrill Lynch Mercury Asset

Management. Applicants expect that all

conditions to the Offer, including

receipt of all necessary regulatory

approvals, will be fulfilled by or after

late December 1997.

3. Applicants state that the

Transaction could be deemed to result

in an assignment of the existing

advisory and sub-advisory contracts

between the Funds and the Advisers

(the ‘‘Existing Agreements’’) and, thus,

their automatic termination. Applicants

request an exemption to permit

implementation, prior to obtaining

shareholder approval, of the New

Agreements. The requested exemption

will cover the Interim Period of not

more than 150 days beginning on the

later of the Assignment Date or the date

of the issuance of the requested order

and continuing, in respect of each Fund,

through the date on which each New

Agreement is approved or disapproved

by the respective Fund’s shareholders,

but in no event after July 15, 1998.

Applicants represent that, during the

Interim Period, the New Agreements

will contain identical terms and

conditions as the Existing Agreements,

except in each case for the names of the

parties, effective dates, termination

dates, and the escrow provisions.

4. On December 11, 1997, the board

of directors of each Fund (the ‘‘Board’’)

met, in accordance with section 15(c) of

the Act, so that they could evaluate

whether the terms of the New

Agreements, including the escrow

provisions, are in the best interests of

the Funds and their shareholders. Each

of the Boards voted to approve the New

Agreements in accordance with section

15(c).

5. Applicants submit that it will not

be possible to obtain shareholder

approval of New Agreements in

accordance with section 15(a) of the Act

prior to the Assignment Date.

Applicants state the each Fund will

promptly schedule a meeting of

shareholders to vote on the approval of

the New Agreements to be held within

150 days after the commencement of the

Interim Period, but in no event later

than July 15, 1998.

6. Applicants also request an

exemption to permit the Advisers to

receive from each Fund all fees earned

under the New Agreements during the

Interim Period, if an to the extent the

New Agreements are approved by the

shareholders of each Fund.1 Applicants

state that the fees to be paid during the

Interim Period will not be greater than

the fees currently paid by the Funds.

7. Applicants propose to enter into

escrow arrangements with an

unaffiliated financial institution (the

‘‘Escrow Agent’’). The advisory fees

payable by the Funds under the New

Agreements during the Interim Period

will be paid into an interest-bearing

escrow account. The Escrow Agent will

pay the amounts in the escrow account

(including interest) to the Advisers only

after the New Agreements are approved

by the shareholders of the relevant Fund

in accordance with section 15(a) of the

Act. If shareholder approval is not

given, the Escrow Agent will return the

moneys to the appropriate Fund. Before

any such release is made, the Boards

will be notified.

Applicants’ Legal Analysis

1. Section 15(a) of the Act provides,

in pertinent part, that it is unlawful for

any person to serve as an investment

adviser to a registered investment

company, except pursuant to a written

contract that has been approved by the

vote of a majority of the outstanding

voting securities of the investment

company. Section 15(a) further requires

that the written contract provide for its

automatic termination in the event of its

‘‘assignment.’’ Section 2(a)(4) of the Act

defines the term ‘‘assignment’’ to

include any direct or indirect transfer of

an investment advisory contract by the

assignor or a controlling block of the

assignor’s outstanding voting securities

by a security holder of the assignor.

2. Applicants state that it is possible

that Merrill Lynch may be deemed to

have obtained control of more than 25%

of the voting securities of Mercury as

early as mid-December. Applicants state

that they are concerned that if an

assignment does exist, the Existing

Agreements will terminate by their

terms.

3. Rule 15a–4 provides, in pertinent

part, that if an investment advisory

contract with a registered investment

company is terminated by an

assignment, the adviser may continue to

serve for 120 days under a written

contract that has not been approved by

the company’s shareholders, provided

that (as) the new contract is approved by

the company’s board of directors

(including a majority of the noninterested directors); (b) the

compensation to be paid under the new

contract does not exceed the

compensation that would have been

paid under the contract most recently

approved by the company’s

shareholders; and (c) neither the adviser

not any controlling person of the adviser

‘‘directly or indirectly receive money or

other benefit’’ in connection with the

assignment. Applicants state that

because Merrill Lynch, Mercury and/or

the Advisers may be deemed to receive

a benefit in connection with the

Transaction, there is a question as to

applicants’ ability to rely on rule 15a–

4. However, applicants submit that

granting the requested exemption would

be within the spirit of rule 15a–4.

4. Section 6(c) provides that the SEC

may exempt any person, security, or

transaction from any provision of the

Act, if and to the extent that 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. Applicants

believe that the requested relief meets

this standard.

5. Applicants note that the terms and

the timing of the Transaction were

determined by Merrill Lynch and

Mercury in response to a number of

factors beyond to scope of the Act and

substantially unrelated to the Funds or

the Advisers. Applicants state that it is

not possible for the Funds to obtain

shareholder approval of the New

Agreements prior to the Assignment

Date. Applicants submit that the Boards

have approved the New Agreements,

and the shareholders of the Funds will

be further protected by the

establishment of the escrow account

described in the application.

6. Applicants submit that the

Advisers will take all appropriate steps

to ensure that the scope and quality of

advisory and other services provided to

the Funds during the Interim Period

will be at least equivalent to the scope
67422 Federal Register / Vol. 62, No. 247 / Wednesday, December 24, 1997 / Notices

1Securities Exchange Act Release No. 34–39402

(December 4, 1997) 62 FR 65459 (December 12,

1997).

2 15 U.S.C. 78s(b)(1).

3 17 CFR 240.19b–4(e)(6).

4 17 CFR 200.30–3(a)(12).

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

2The Commission has modified the text of the

summaries prepared by MBSCC.

and quality of services previously

provided. During the Interim Period, the

Advisers would operate under the New

Agreements, which would have the

same terms and conditions as the

respective Existing Agreements, except

for the effective dates, termination dates

and escrow provisions. Applicants

believe that the level of service provided

by the Advisers will remain the same

under the New Agreements as under the

existing ones.

7. Applicants believe that the best

interests of shareholders of the Funds

would be served by allowing for the

implementation of the New Agreements

during the Interim Period. Applicants

state that allowing the implementation

of the New Agreements will ensure that

there will be no disruption to the

investment program and the delivery of

related services to the Funds because

the personnel that provide such services

to the Funds will remain substantially

the same as before the Transaction.

Applicants’ Conditions

Applicants agree as conditions to the

issuance of the exemptive order

requested by the application that:

1. The New Agreements to be

implemented following the

commencement of the Interim Period

will have the same terms and conditions

as the respective Existing Agreements,

except for the effective dates,

termination dates, and escrow

provisions.

2. Fees payable to the Advisers by the

Funds for the period covered by the

order will be maintained during the

Interim Period in an interest-bearing

escrow account, and will be paid (1) to

the Advisers after the requisite approval

by shareholders is obtained, or (b) in the

absence of such approval, to the

relevant Fund.

3. Each Fund will promptly schedule

a meeting of shareholders to vote on

approval of the New Agreements to be

held within 150 days after the

commencement of the Interim Period,

but in no event later than July 15, 1998.

4. Merrill Lynch and/or Mercury will

pay the costs of preparing and filing the

application and the costs relating to the

solicitation of approval of the Funds’

shareholders of the New Agreements.

5. The Advisers will take all

appropriate steps to ensure that the

scope and quality of advisory and other

services provided to the Funds during

the Interim Period will be at least

equivalent, in the judgment of the

respective Boards, including a majority

of the directors who are not ‘‘interested

persons’’ of the Funds, as defined in

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

‘‘Disinterested Directors’’), to the scope

and quality of services previously

provided. In the event of any material

change in the personnel providing

services pursuant to the advisory

agreements, the Advisers will apprise

and consult with the Boards of the

affected Funds in order to assure that

the Boards, including a majority of the

Disinterested Directors, are satisfied that

the services provided will not be

diminished in scope or quality.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–33595 Filed 12–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39402A; File No. SR–

Amex–97–46]

Self-Regulatory Organizations; Notice

of Filing and Order Granting Immediate

Effectiveness of Proposed Rule

Change by American Stock Exchange,

Incorporated Relating to the Listing of

Commodity Indexed Preferred or Debt

Securities

December 17, 1997.

Notice of Corrections

On December 4, 1997 the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) issued a notice of filing

and order granting immediate

effectiveness of proposed rule change by

the American Stock Exchange,

Incorporated (‘‘Amex’’) relating to the

listing of commodity indexed preferred

or debt securities 1 pursuant to section

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

of 1934, as amended (‘‘Act’’),2 and

paragraph (e)(6) of Rule 19b–4 under the

Act.3 The following sentence should be

deleted from the first paragraph of

Section A—Self-Regulatory

Organization’s Statement of the Purpose

of, and Statutory Basis for, the Proposed

Rule Change: ‘‘[T]he Exchange also will

require that the issuer have a minimum

tangible net worth of $150 million.’’

For the Commission, by the Division of

Market Regulation, pursaunt to delegated

authority.4

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–33525 Filed 12–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39449; File No. SR–

MBSCC–97–08]

Self-Regulatory Organizations; MBS

Clearing Corporation; Notice of Filing

and Immediate Effectiveness of

Proposed Rule Change Relating to the

Electronic Pool Notification Service’s

Fee Schedule

December 15, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’), notice is hereby given that on

October 22, 1997, the MBS Clearing

Corporation (‘‘MBSCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which items have been

prepared primarily by MBSCC. The

Commission is publishing this notice to

solicit comments from interested

persons on the proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The text of the proposed rule change

consists of modifications to the

Electronic Pool Notification (‘‘EPN’’)

schedule of charges, which is attached

as Exhibit A to the filing.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

MBSCC included statements concerning

the purpose of and basis for the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. MBSCC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of such statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

MBSCC currently assesses message

processing fees as reflected in the EPN

Schedule of Charges. MBSCC assesses