Federal Register / Vol. 62, No. 30 / Thursday, February 13, 1997 / Notices 6819

1 Investment Company Act Release Nos. 20772

(Dec. 15, 1994) (notice) and 20824 (Jan. 10, 1995)

(order).

2Under the Existing Order, LAMCO managed

20% of All-Star Growth’s assets, subject to an

increase to include all of All-Star Growth’s assets

as provided in an Asset Acquisition and Fund

Management Transition Agreement, dated February

9, 1994, among LAMCO, Growth Stock Outlook,

Inc. (‘‘GSO’’), and GSO’s principal stockholder.

Pursuant to that Agreement and as approved by AllStar Growth’s shareholders at its 1995 annual

meeting: (a) LAMCO assumed management of the

remaining approximately 80% of All-Star Growth’s

assets; (b) the fund’s name was changed to ‘‘Liberty

All-Star Growth Fund, Inc.;’’ and (c) its investment

objective was changed to long-term capital

appreciation. Accordingly, since November 6, 1995,

the exemptive relief granted by the Existing Order

has been applicable to 100% of All Star Growth’s

assets.

it by LAMCO from time to time and

related record keeping and reporting.

5. The new sub-advisory agreement

will provide for a sub-advisory fee no

higher than that provided in All-Star’s

existing sub-advisory agreements and,

except for the provisions relating to

shareholder approval referred to in

condition 1 above, will be on

substantially the same other terms and

conditions as such existing agreements.

In the event that the new sub-advisory

agreement provides for sub-advisory

fees at rates less than those provided in

the existing agreements, the difference

will be passed on to All-Star and its

shareholders through a corresponding

voluntary reduction in the fund

management fees payable by All-Star to

LAMCO.

6. The appointment of the new or

successor Sub-Advisor will be

announced by press release promptly

following the trustees’ action referred to

in condition 3 above, and a notice of the

new sub-advisory agreement, together

with a description of the new or

successor sub-Advisor, will be included

in All-Star’s next report to shareholders.

7. In the case of a new subadvisory

agreement with an existing Sub-Advisor

or its successor following an

‘‘assignment,’’ as defined in section

2(a)(4) of the Act and the rules

thereunder, off All-Star’s sub-advisory

agreement with that Sub-Advisor,

LAMCO or the Sub-Advisor (or its

successor) will pay the incremental cost

of including the proposal to approve or

disapprove the new sub-advisory

agreement in the proxy material for the

next annual meeting of All-Star

Growth’s shareholders.

8. LAMCO will provide overall

supervisory responsibility for the

general management and investment of

All-Star’s assets, subject to All-Star’s

investment objectives and policies and

any directions of All-Star’s trustees. In

particular, LAMCO will: (a) Provide

overall investment programs and

strategies for All-Star; (b) recommend to

All-Star’s trustees investment

management firms for appointment or

replacement as All-Star Sub-Advisors;

(c) allocate and reallocate All-Star’s

portfolio assets among the SubAdvisors; and (d) monitor and evaluate

the investment performance of the SubAdvisors, including their compliance

with All Star’s investment objectives,

policies, and restrictions.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3543 Filed 2–12–97; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–22499; 812–10436]

Liberty All-Star Growth Fund, Inc., et

al.; Notice of Application

February 6, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Liberty All-Star Growth

Fund, Inc. (‘‘All-Star Growth’’) and

Liberty Asset Management Company

(‘‘LAMCO’’).

RELEVANT ACT SECTIONS: Order requested

under section 6(c) for an exemption

from section 15(a) of the Act.

SUMMARY OF APPLICATION: Applicants

request an order amending an existing

order that lets All-Star Growth and

LAMCO change or add sub-advisers, or

continue the services of a sub-adviser

following an assignment of its subadvisory agreement, and delay

shareholder approval until the next

annual shareholder meeting. Among

other things, the existing order is subject

to a requirement that the new

subadvisory agreement will affect no

more than approximately one-third of

All-Star Growth’s assets. The amended

order would eliminate this condition.

FILING DATES: The application was filed

on November 14, 1996, and amended on

February 3, 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 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

March 3, 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 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, DC 20549.

Applicants: Federal Reserve Plaza,

Boston, MA 02210.

FOR FURTHER INFORMATION CONTACT:

Christine Y. Greenlees, Senior Counsel,

at (202) 942–0581 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.

Applicants’ Representations

1. All-Star Growth is a closed-end

diversified management investment

company. LAMCO, a registered

investment adviser, is an indirect

wholly-owned subsidiary of Liberty

Financial Companies, Inc. (‘‘LFC’’). LFC

is an indirect majority-owned subsidiary

of Liberty Mutual Insurance Company.

2. All-Star Growth employs a multimanager methodology of portfolio

management. It allocates its investment

portfolio on an approximately equal

basis among several independent

investment management firms (‘‘SubAdvisors’’), currently three in number,

selected and recommended from time to

time by LAMCO based on specific

criteria, including a sufficient diversity

and breadth of investment styles. None

of the Sub-Advisors has any affiliation

with All-Star Growth or LAMCO other

than as Sub-Advisor.

3. Applicants received an order that

permits All-Star Growth and LAMCO to

change or add Sub-Advisors, or

continue the services of a Sub-Advisor

following an assignment of its

subadvisory agreement, and delay

shareholder approval of the new subadvisory agreements with such SubAdvisors until All-Star Growth’s next

annual meeting of shareholders (the

‘‘Existing Order’).1 Applications

reaffirm all of the representations made

in the original application, as amended

for the Existing Order, except as

described below.

4. Among other things, the Existing

Order is conditioned upon the

requirement that the new subadvisory

agreement involved will, when entered

into, affect no more than approximately

one-third of All-Star Growth’s assets.2

Applicants seek to amend the Existing

Order to eliminate such restriction.
6820 Federal Register / Vol. 62, No. 30 / Thursday, February 13, 1997 / Notices

Applicant’s Legal Analysis

1. Section 15(a) of the Act makes it

unlawful for any person to act as an

investment adviser to a registered

investment company except pursuant to

a written contract, whether with such

registered company or with an

investment adviser of such registered

company, which has been approved by

the majority vote of the outstanding

voting securities of such registered

company.

2. Applicants state that All-Star

Growth’s multi-manager methodology of

portfolio management is based on the

premise that most investment

management firms consistently employ

a distinctive investment style that

causes them to emphasize stocks with

particular characteristics, and that,

because of changing investor

preferences, any given investment style

will move into and out of market favor

and will result in better investment

performance under certain market

conditions, but less successful

performance under other conditions.

All-Star Growth’s multi-manager

methodology, by allocating its portfolio

among several Sub-Advisors employing

different investment styles, seeks to

achieve more consistent and less

volatile performance over the long term

than if a single investment style was

employed throughout the entire period.

The Sub-Advisors recommended by

LAMCO represent a blending of

different investment styles, which, in its

opinion, is appropriate to All-Star

Growth’s investment objective, and

which is sufficiently broad so that,

insofar as All-Star Growth’s investment

objective permits, at least one of such

styles can reasonably be expected to be

in market favor in all reasonably

foreseeable market conditions.

3. LAMCO believes that the

investment styles of certain investment

management firms may result in more

volatile performance than those of other

firms. Accordingly, it believes that the

objectives of reducing volatility and

providing a blending of different

investment styles appropriate for AllStar Growth’s investment objectives

may be better served by allocating more

than an equal portion of All-Star

Growth’s assets to a Sub-Advisor whose

investment style is expected to result in

less volatile performance than those of

the other Sub-Advisors, and allocating

the remaining assets among the other

Sub-Advisors (not necessarily on an

equal basis). The relative allocations

among the Sub-Advisors, once

established, would be maintained

through rebalancings at approximately

the same levels until the next change or

addition of a Sub-Advisor.

4. Applicants submit that, except for

the fact that any order granting the

requested relief will not contain the

Existing Order’s requirement that the

new subadvisory agreement involved

will, when entered into, affect no more

than approximately one-third of All-Star

Growth’s assets, each of the factors that

provided the basis for the granting of the

Existing Order would continue to apply.

5. Section 6(c) of the Act authorizes

the SEC to exempt persons or

transactions from the provisions of the

Act to the extent that such exemptions

are 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 submit

that the requested amendment to the

exemption from section 15(a) of the Act

granted by the Existing Order would be

consistent with the standards set forth

in section 6(c) of the Act and would be

in the best interests of All-Star Growth

and its shareholders.

Applicants’ Conditions

Applicants agree that any order

granting the requested relief shall be

subject to the following conditions:

1. Each new sub-advisory agreement

will be submitted for ratification and

approval to the vote of All-Star Growth’s

shareholders no later than at the

regularly scheduled annual meeting of

shareholders of All-Star Growth next

following the effective date of the new

sub-advisory agreement, and its

continuance after such meeting is

conditioned on approval by a majority

vote (as defined in section 2(a)(42) of

the Act) of such shareholders.

2. All-Star Growth will continue to

hold annual meetings of its

shareholders, whether or not required to

do so by the rules of the New York

Stock Exchange, Inc. or otherwise.

3. The directors of All-Star Growth, in

addition to approving the new subadvisory agreement in accordance with

the requirements of section 15(c) of the

Act, will specifically determine that

entering into the new sub-advisory

agreement in advance of the next regular

annual meeting of the shareholders of

All-Star Growth, and without prior

shareholder approval is in furtherance

of All-Star Growth’s multi-manager

methodology, and is in the best interests

of All-Star Growth and its shareholders.

4. The new Sub-Advisor will have no

affiliation with All-Star Growth or

LAMCO other than as Sub-Advisor, and

will have no duties or responsibilities

with respect to All-Star Growth beyond

the investment management of the

portion of All-Star Growth’s assets

allocated to it by LAMCO from time to

time and related record keeping and

reporting.

5. The new sub-advisory agreement

will provide for a sub-advisory fee no

higher than that provided in All-Star

Growth’s existing sub-advisory

agreements and, except for the

provisions relating to shareholder

approval referred to in condition 1

above, will be on substantially the same

other terms and conditions as such

existing agreements. In the event that

the new sub-advisory agreement

provides for sub-advisory fees at rates

less than those provided in the existing

sub-advisory agreements, the difference

will be passed on to All-Star Growth

and its shareholders through a

corresponding voluntary reduction in

the fund management fees payable by

All-Star Growth to LAMCO.

6. The appointment of the new or

successor Sub-Advisor will be

announced by press release promptly

following the directors’ action referred

to in condition 3 above, and a notice of

the new sub-advisory agreement,

together with a description of the new

or successor Sub-Advisor, will be

included in All-Star Growth’s next

report to shareholders.

7. LAMCO will provide overall

supervisory responsibility for the

general management and investment of

All-Star Growth’s assets, subject to AllStar Growth’s investment objectives and

policies and any directions of All-Star

Growth’s directors. In particular,

LAMCO will: (a) provide overall

investment programs and strategies for

All-Star Growth’s assets; (b) recommend

to All-Star Growth’s directors

investment management firms for

appointment or replacement as SubAdvisors for All-Star Growth’s assets; (c)

allocate and reallocate All-Star Growth’s

assets among the Sub-Advisors; and (d)

monitor and evaluate the investment

performance of the Sub-Advisors,

including their compliance with AllStar Growth’s investment objectives,

policies, and restrictions.

8. In the case of a new sub-advisory

agreement with an existing Sub-Advisor

or its successor following an

‘‘assignment,’’ as defined in section

2(a)(4) of the Act and the rules

thereunder, of All-Star Growth’s subadvisory agreement with that SubAdvisor, LAMCO or the Sub-Advisor (or

its successor) will pay the incremental

cost of including the proposal to

approve or disapprove ratification of the

new sub-advisory agreement in the

proxy material for the next annual

meeting of All-Star Growth’s

shareholders.
Federal Register / Vol. 62, No. 30 / Thursday, February 13, 1997 / Notices 6821

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

2 17 CFR 240.19b–4.

3On December 18, 1996, CBOE submitted an

amendment to the rule change. See letter from

Eileen Smith, Director, Product Development,

Research Department, CBOE to Marianne H.

Khawly, Staff Attorney, Division of Market

Regulation, SEC, dated December 18, 1996.

4A list of the securities comprising the World

Property Index was submitted by the Exchange as

Exhibit B, and is available at the Office of the

Secretary, CBOE and at the Commission.

5The following countries are represented in the

Index: Australia; Belgium; Canada; Denmark;

France; Germany; Hong Kong; Ireland; Japan;

Malaysia; the Netherlands; Norway; Singapore;

Spain; Sweden; Switzerland; the United Kingdom;

and the United States.

6The U.S. group consists of the following 12

industry subgroups: apartments; healthcare

facilities; hotels; manufactured homes; office/

industrial buildings; diversified properties; net/

lease properties; REOCs; self-storage facilities;

factory outlets; regional malls; and shopping

centers.

7The top five stocks were: Sun Hung Kai

Properties Ltd. from Hong Kong (6.43 percent);

Cheung Kong Holdings Ltd. from Hong Kong (5.29

percent); Mitsubishi Estate Co. from Japan (5.04

percent); Mitsui Fudosan Co. from Japan (3.44

percent); and New World Development Company

Ltd. from Hong Kong (2.52 percent).

8Salomon Brothers currently does not calculate

intra-day values of the Index during the U.S. trading

day.

9WM is a UK-based company that specializes in

performance measurement. WM is a neutral force,

not related to any trading firm or broker-dealer.

WM/Reuters Rates represent an effort led by WM

to standardize the closing spot rates used in the

global investment community for fund valuation,

index compilation, and performance measurement.

WM/Reuters Rates are considered to be an industry

standard and are used by various firms in index

calculation.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3542 Filed 2–12–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38255; International Series

Release No. 1049; File No. SR–CBOE–96–

60]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 Thereto by the

Chicago Board Options Exchange,

Incorporated Relating to Listing and

Trading of Options on the Salomon

Brothers BMI World Property Index

February 6, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on October

7, 1996, the Chicago Board Options

Exchange, Incorporated (‘‘CBOE’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’) the proposed rule

change 3 as described in Items I, II, and

III below, which Items have been

prepared by the CBOE. The Commission

is publishing this notice to solicit

comments on the proposed rule change

from interested persons.

1. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The CBOE proposes to list and trade

cash-settled, European-style stock index

options on the Salomon Brothers BMI

World Property Index (‘‘World Property

Index’’ or ‘‘Index’’), a broad-based, float

capitalization-weighted index

comprised of 339 stocks 4 from eighteen

countries.5

The text of the proposed rule change

is available at the Office of the secretary,

CBOE and at the Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

CBOE included statements concerning

the purpose of and basis for the

proposed rule change and represented it

did not receive any comments on the

proposed rule change. The text of these

statements may be examined at the

places specified in Item IV below. The

CBOE has prepared summaries, set forth

in Sections A, B, and C below, of the

most significant parts of such

statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The purpose of the proposed rule

change is to permit the CBOE to list and

trade cash-settled, European-style stock

index options on the World Property

Index. As discussed further in the

Maintenance paragraph, the World

Property Index is a broad-based float

capitalization-weighted index (price

times available shares outstanding). The

Index is currently composed of 339

high-capitalization stocks of real estate

and property companies from 18

countries. The World Property Index is

a subset of the Salomon Brothers World

Equity Index is a subset of the Salomon

Brothers World Equity Index which is

comprised of listed equities from 22

countries.

Index Design. The World Property

Index has been designed to measure the

performance of certain high

capitalization real estate and property

stocks from various countries. The

World Property Index is a broad-based

float capitalization-weighted index

calculated as described below. The

Exchange represents that the Index is

broad-based for three reasons. First,

although the stocks are all involved in

real estate and property, the types of

real estate vary widely. The Index can

be divided into the following four

industry groups: non-U.S. diversified

property activities group; non-U.S.

property development group; non-U.S.

property investment/management

group; and the U.S. group.6 Second, the

339 component stocks are from 18

countries, therefore, CBOE asserts that

the performance of the various

companies is not as closely linked as it

would generally be in a narrow-based

index. On July 31, 1996, the 339 stocks

ranged in capitalization from $75.5

million to $12.4 billion. The largest

stock accounted for 6.43% of the total

weighting of the Index, while the

smallest accounted for 0.04%. The top

five stocks in the Index accounted for

22.72 percent of the weight of the

Index.7 The median capitalization of the

firms in the Index was $247.3 million.

And third, the CBOE believes that since

each of the components from foreign

countries are traded in local currencies

and then translated into U.S. dollars,

there is an added component of

currency conversion which must be

factored into the movement of the

individual securities.

Calculation. The Index level is

calculated once per day by Salomon

Brothers and will be disseminated by

CBOE prior to the opening the next

business day over the Options Price

Reporting Authority (‘‘OPRA’’) or the

Consolidated Tape Association. Closing

prices in each company’s domestic

market are used in the final daily Index

calculations.8 WM/Reuters Closing Spot

Rates (‘‘WM/Reuters Rates’’), taken at

4:00 p.m. London time, are midmarket

rates (as opposed to bid-side quotations)

based on Reuters data that are used to

calculate the U.S. dollar value of the

Index. WM/Reuters Rates are calculated

by the WM Company (‘‘WM’’) and

appear on Reuters beginning on page

WMRA.9

Shares are adjusted for corporate

actions on their ex-dates. These actions

include splits, scrip and bonus issues,

and preemptive rights. For actions

resulting in no net change to the

capitalization of the issue, such as stock

splits and stock dividends, the Index

divisor, described below, remains

unchanged. The Index divisor is

updated at each quarter-end for changes

in share capital because of share