Federal Register / Vol. 65, No. 230 / Wednesday, November 29, 2000 / Notices 71149

1Applicants request that the relief apply also to

the board of trustees of the Trust, which is

comprised of the same individuals as the board of

directors of the Company.

SECURITIES AND EXCHANGE

COMMISSION

[Release No. IC–24746; 812–12088]

TIP Funds, et al.; Notice of Application

November 21, 2000.

AGENCY: Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Notice of application for an

order under section 6(c) of the

Investment Company Act of 1940

(‘‘Act’’) for an exemption from section

15(f)(1)(A) of the Act.

Applicants: TIP Funds (‘‘TIP Funds’’),

Turner Investment Partners, Inc.

(‘‘Turner’’), Mercury Funds, Inc.

(‘‘Company’’), Mercury Master Trust

(‘‘Trust’’), and Fund Asset Management,

L.P. (‘‘FAM’’).

Summary of Application: Applicants

request an order that would permit the

Company not to reconstitute its board of

directors following an acquisition of

substantially all of the assets of a series

of TIP Funds in order to comply with

the disinterested director requirement of

section 15(f)(1)(A) of the Act.

Filing Dates: The application was

filed on May 3, 2000, and amended on

November 13, 2000.

Hearing or Notification of Hearing: An

order granting the application will be

issued unless the Commission orders a

hearing. Interested persons may request

a hearing by writing to the

Commission’s Secretary and serving

applicants with a copy of the request,

personally or by mail. Hearing requests

should be received by the Commission

by 5:30 p.m. on December 15, 2000, 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

Commission’s Secretary.

ADDRESSES: Secretary, Commission, 450

Fifth Street, N.W., Washington, DC

20549–0609. Applicants, TIP Funds and

Turner, 1235 Westlakes Drive, Suite

350, Berwyn, PA 19312; the Company,

the Trust and FAM, 800 Scudders Mill

Road, Plainsboro, NJ 08536.

FOR FURTHER INFORMATION CONTACT:

Bruce R. MacNeil, Senior Counsel, at

(202) 942–0634 or Nadya Roytblat,

Assistant Director, at (202) 942–0693

(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

Commission’s Public Reference Branch,

450 Fifth Street, N.W., Washington, DC

20549–0101, telephone (202) 942–8090.

Applicants’ Representations

1. TIP Funds is a Massachusetts

business trust registered under the Act

as an open-end management investment

company. Turner Large Cap Growth

Fund (‘‘Turner Fund’’) was a series of

TIP Funds. Turner is an investment

adviser registered under the Investment

Advisers Act of 1940 (the ‘‘Advisers

Act’’), and served as the investment

adviser to the Turner Fund until the

Reorganization (as defined below).

2. The Company is a Maryland

corporation registered under the Act as

an open-end management investment

company. The Company is comprised of

seven separate series, one of which is

Mercury Select Growth Fund (‘‘Mercury

Fund’’). On June 19, 2000, the Mercury

Fund acquired substantially all of the

assets of the Turner Fund in exchange

for the assumption by the Mercury Fund

of substantially all of the liabilities of

the turner Fund and Class I shares of the

Mercury Fund equal in value to the net

asset value of the assets acquired from

the Turner Fund (the ‘‘Reorganization’’).

The Mercury Fund invests substantially

all of its assets in the Master Select

Growth Portfolio (‘‘Master Portfolio’’), a

series of the Trust. The Trust is a

Delaware business trust registered under

the Act as an open-end management

investment company. FAM, an

investment adviser registered under the

Advisers Act, serves as the investment

adviser to the Master Portfolio, and

Turner serves as the subadviser.

3. Applicants state that the board of

directors of the Company consists of 2

directors who are interested persons, as

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

(‘‘Interested Directors’’), and 4 directors

who are not interested persons

(‘‘Disinterested Directors’’). Applicants

request an order under section 6(c) of

the Act exempting the Company from

the provisions of section 15(f)(1)(A) of

the Act with respect to the

Reorganization.1

Applicants’ Legal Analysis

1. Section 15(f) of the Act is a safe

harbor that permits an investment

adviser to a registered investment

company (or an affiliated person of the

investment adviser) to receive ‘‘any

amount or benefit’’ in connection with

the sale of securities of, or sale of any

interest in, such adviser (which results

in the assignment of an investment

advisory contract with such company) if

certain conditions are met. Section

15(f)(1)(A) requires that, for a period of

three years after such sale, at least 75

percent of the board of directors of an

investment company (or its successor,

by reorganization or otherwise) may not

be ‘‘interested persons’’ with respect to

either the predecessor or successor

investment adviser to the investment

company.

2. Section 6(c) of the Act permits the

Commission to exempt any person or

transaction from any provision of the

Act, or rule or regulation thereunder, if

the 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. Section 15(f)(3)(B) of the Act

provides that if the assignment of an

investment advisory contract results

from the merger of, or sale of

substantially all the assets by, a

registered investment company with or

to another registered investment

company with assets substantially

greater in amount, such discrepancy in

size shall be considered by the

Commission in determining whether, or

to what extent, to grant exemptive relief

pursuant to section 6(c) from section

15(f)(1)(A). Applicants state that, as a

result of the Reorganization, it could be

argued that section 15(f)(1)(A) of the Act

requires the board of directors of the

Company to be comprised of at least

75% Disinterested Directors. Applicants

request an order under section 6(c) of

the Act for an exemption from the

requirement in section 15(f)(1)(A) with

respect to the Reorganization.

Applicants acknowledge that the

requested order would grant relief only

for the period following the date on

which the order is granted.

3. Applicants state that the aggregate

net assets of the Company

($2,906,843,959 as of June 16, 2000)

were substantially greater than the

aggregate net assets of the Turner Fund

($45,527,647 as of June 16, 2000),

making the Turner Fund’s assets

approximately 1.5% of the Company’s

assets. Applicants submit that it is

appropriate for the assets of the

Company as a whole, as opposed to the

Mercury Fund alone, to be taken into

account when considering the

‘‘substantially greater’’ test of section

15(f)(3)(B).

4. Applicants state that, in order to

comply with section 15(f)(1)(A), the

Company would have to either add two

Disinterested Directors or reduce the

number of Interested Directors from two

71150 Federal Register / Vol. 65, No. 230 / Wednesday, November 29, 2000 / Notices

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

2 17 CFR 240.19b–4.

3Letter from Bruce Ferguson, Associate General

Counsel, Legal & Regulatory Policy, Amex, to Jack

Drogin, Assistant Director, Division of Market

Regulation, Commission, September 25, 2000

(‘‘Amendment No. 1’’). Amendment No. 1 made a

technical revision to the text of Amex Rule 417.

4Securities Exchange Act Release No. 43468

(October 20, 2000), 65 FR 65034 (October 31, 2000).

5The NASD filed a proposed rule change to adopt

a new rule very similar to new Amex rule 471 (SR–

NASD–00–50). See Securities Exchange Act Release

No. 43580 (November 17, 2000).

6NASD Code of Conduct, Section IX, Paragraph

C.3.

7See Letter from Lori Richards, Director, OCIE,

SEC to Richard Syron, Chairman and Chief

Executive Officer, Amex, November 6, 1998. The

SEC recommendation that the Amex adopt a rule

prohibiting members from making loans to

Exchange employees was made as a result of an SEC

examination of all SRO conflict of interest policies.

The SEC staff’s recommendation arose from a 1996

incident in which an Amex member made a

$70,000 loan to an Amex floor employee.

to one. The shareholders have elected

all six of the Company’s current

directors. If the Company were to add

two Disinterested Directors, the

Company would not be required to seek

shareholder approval to comply with

section 16(a) of the Act, which requires

that at least two-thirds of a fund’s

directors be elected by shareholders.

The Company would be vulnerable to

the possibility of having to

unexpectedly call a shareholders’

meeting that it would not otherwise

have to call in the event of the death or

resignation of a director. If the Company

were instead to reduce the number of

Interested Directors from two to one, it

would reduce the size of its board by

over sixteen percent. Applicants submit

that reconstitution of the Company’s

board would serve no public interest,

and may be contrary to the interests of

shareholders of the Company.

5. For the reasons stated above,

applicants submit that the requested

relief is necessary and 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 Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30371 Filed 11–28–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43607; File No. 265–22]

Advisory Committee on Market

Information

AGENCY: Securities and Exchange

Commission.

ACTION: Notice of meeting of the

Securities and Exchange Commission

Advisory Committee on Market

Information.

SUMMARY: The second meeting of the

Securities and Exchange Commission

Advisory Committee on Market

Information (‘‘Committee’’) will be held

on December 14, 2000, in the William

O. Douglas Room, at the Commission’s

main offices, 450 Fifth Street, N.W.,

Washington, DC., beginning at 1:00 p.m.

The meeting will be open to the public,

and the public is invited to submit

written comments to the Committee.

ADDRESSES: Written comments should

be submitted in triplicate and should

refer to File No. 265–22. Comments

should be submitted to Jonathan G.

Katz, Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, DC 20549–0609.

FOR FURTHER INFORMATION CONTACT:

Anitra Cassas, Special Counsel, Division

of Market Regulation, at 202–942–0089;

Securities and Exchange Commission,

450 Fifth Street, N.W., Washington, DC

20549–1001.

SUPPLEMENTARY INFORMATION: In

accordance with Section 10(a) of the

Federal Advisory Committee Act, 5

U.S.C. App. 10a, and the regulations

thereunder, the Designated Federal

Official of the Committee, David S.

Shillman, has ordered publication of

this notice that the Committee will

conduct a meeting on December 14,

2000, in the William O. Douglas Room

at the Commission’s main offices, 450

Fifth Street, N.W., Washington, DC.,

beginning at 1:00 p.m. The meeting will

be open to the public. This will be the

second meeting of the Committee. The

purpose of this meeting will be to

discuss appropriate models for

consolidating and disseminating market

information, and other issues relating to

the public availability of market

information in the equities and options

markets.

Dated: November 21, 2000.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–30370 Filed 11–28–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43587; File No. SR–Amex–

00–23]

Self Regulatory Organizations; Order

Granting Accelerated Approval to

Proposed Rule Change by the

American Stock Exchange LLC

Relating to Member Firm Transactions

with Exchange Employees

November 17, 2000.

I. Introduction

On April 13, 2000, the American

Stock Exchange LLC (‘‘Amex’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’), pursuant to Section

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

of 1934 (‘‘Act’’),1 and Rule 19b–4

thereunder,2 a proposed rule change to

amend certain Amex rules relating to

member firm transactions with Amex

employees. On September 25, 2000, the

Amex filed Amendment No. 1 to the

proposal.3 The proposed rule change

was published for comment in the

Federal Register on October 31, 2000. 4

No comments were received on the

proposal. This order approves the

proposal rule change, as amended, on

an accelerated basis.

II. Description of the Proposal

The Exchange proposes to amend

Amex Rule 15 (Loans by Exchange

Officers) and Amex Rule 416 (Accounts

of Employees of Exchange and

Members), to delete Amex Rule 348

(Gratuities to Employees of Exchange),

and to add new Amex Rule 417

(Transactions Involving Exchange

Employees).5

A. Member Loans to Exchange

Employees

The NASD Code of Conduct generally

prohibits NASD and Amex employees

from accepting loans from members,

issuers, or any person with whom the

NASD or Amex transacts business.6

Amex Rule 15 also prohibits Exchange

employees from accepting loans from

members without prior written approval

of the Exchange, but does not

specifically prohibit members from

making those loans to Exchange

employees.

The SEC staff has recommended that

the Amex adopt a rule expressly

prohibiting members from making loans

to Amex employees, outside routine

brokerage or banking relationships.7 The

Amex therefore proposes to amend

Amex Rule 15 to expressly provide that

no member shall make a loan to an

Exchange employee without prior

approval of the Amex board of

Governors. The Amex also proposes to

adopt new Amex Rule 417(b), which

prohibits members from making loans to

Exchange employees outside of

disclosed, routine banking and