29046 Federal Register / Vol. 63, No. 101 /Wednesday, May 27, 1998 / Notices

the date of a determination of the Board,

the first two years in an easily accessible

place, a record of the determination and

the basis and information upon which

the determination was made. This

record will be subject at all times to

examination by the Commission and its

staff.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–13956 Filed 5–26–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

23192; 812–10596]

Stein Roe Income Trust, et al.; Notice

of Application

May 19, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for an

order under section 17(d) of the

Investment Company Act of 1940 (the

‘‘Act’’) and rule 17d–1.

SUMMARY OF THE APPLICATION:

Applicants request an order to permit

certain registered investment companies

to deposit uninvested cash balances in

a joint account to be used to enter into

short-term investments.

APPLICANTS: Stein Roe Income Trust,

Stein Roe Investment Trust, Stein Roe

Municipal Trust, Stein Roe Institutional

Trust, Stein Roe Advisor Trust, Stein

Roe Trust, SR&F Base Trust (each a

‘‘Trust,’’ and collectively, the ‘‘Trusts’’),

and Stein Roe & Farnham Incorporated

(the ‘‘Adviser’’).

FILING DATES: The application was filed

on March 26, 1997 and amended on

August 5, 1997 and April 17, 1998.

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

June 15, 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, c/o Cameron S. Avery, Bell,

Boyd & Lloyd, Three First National

Plaza, Suite 3300, Chicago, IL 60602.

FOR FURTHER INFORMATION CONTACT:

Michael W. Mundt, Staff Attorney, at

(202) 942–0578, or Nadya B. Roytblat,

Assistant Director, 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, NW., Washington, DC 20549 (tel.

202–942–8090).

Applicant’s Representations

1. Each Trust, other than SR&F Base

Trust (‘‘Base Trust’’), is organized as a

business trust under the laws of

Massachusetts. Base Trust is organized

as a common law trust under the laws

of Massachusetts. Each Trust is

registered under the Act as an open-end

management investment company and

has, or intends to have, multiple series

(‘‘Funds’’). Base Trust was organized so

that its various series could serve as

master funds in a master-feeder

structure. Currently, each series of Stein

Roe Advisor Trust, Stein Roe

Institutional Trust, Stein Roe Trust,

Stein Roe Investment Trust (other than

Stein Roe Emerging Markets Fund and

Stein Roe Capital Opportunities Fund),

Stein Roe Municipal Money Market

Fund (a series of Stein Roe Municipal

Trust), and Stein Roe High Yield Fund

(a series of Stein Roe Income Trust)

operate as feeder funds.

2. The Adviser, a wholly-owned

indirect subsidiary of Liberty Financial

Companies, Inc., is registered as an

investment adviser under the

Investment Advisers Act of 1940 and

provides investment advisory services

to the respective series of the Base Trust

and to each of the Funds that are not

feeder funds. The Adviser also provides

administrative, accounting and

bookkeeping services to certain of the

Funds. The Adviser has discretion to

purchase and sell securities for each

Fund in accordance with that Fund’s

investment objectives, policies and

restrictions.

3. Applicants request that any relief

granted pursuant to the application also

apply to any other registered open-end

management investment company and

series thereof for which the Adviser may

serve as investment adviser in the future

(‘‘Future Funds’’). Any Future Fund

relying on the requested relief will do so

only in compliance with the terms and

conditions of the application.

4. The assets of the Funds are held by

State Street Bank and Trust Company

(‘‘State Street’’). On each trading day,

some or all of the Funds generally have

uninvested cash balances in their

accounts. Each Fund is authorized to

invest its uninvested cash assets in

repurchase agreements and certain

short-term money market instruments.

Currently, such cash balance of each

Fund is used on an individual basis to

invest in short-term instruments,

including individual issues of

commercial paper or United States

Government agency paper. Applicants

assert that these separate purchases

result in certain inefficiencies that limit

a Fund’s return on its cash balances. In

addition, the assets of some Funds are

too small or become available too late

on a given day to be invested effectively

on an individual basis.

5. Applicants propose to deposit all or

a portion of their uninvested cash

balances into a single joint account

(‘‘Joint Account’’) to enter into one or

more short-term investment

transactions, including repurchase

agreements ‘‘collateralized fully’’ as

defined in rule 2a–7 under the Act and

other short-term money market

instruments that constitute ‘‘eligible

securities’’ as defined in rule 2a–7

under the Act. All counterparties to

repurchase agreements entered into

through the Joint Account are expected

to be banks and broker-dealers.

Repurchase agreements will be entered

into on a ‘‘hold-in-custody’’ basis (i.e.,

repurchase agreements where the

counterparty or one of its affiliated

persons may have possession of, or

control over, the collateral subject of the

agreement) only where cash is received

very late in the business day and

otherwise would be unavailable for

investment. Purchases of short-term

money market instruments will be made

from dealers in the open market or

directly from issuers and will include

investments in various taxable and taxexempt short-term money market

instruments with overnight, over-theweekend or over-the-holiday maturities.

6. Any repurchase agreements entered

into through the Joint Accounts will

comply with the terms of Investment

Company Act Release No. 13005

(February 2, 1983) and interpretations of

the staff of the SEC. Applicants

acknowledge that they have a

continuing obligation to monitor the

SEC’s published statements on

repurchase agreements and represent

that the repurchase agreement

transactions entered into through a Joint

Account will comply with future
Federal Register / Vol. 63, No. 101 /Wednesday, May 27, 1998 / Notices 29047

positions of the SEC to the extent that

such positions set forth different or

additional requirements regarding

repurchase agreements. In the event that

the SEC sets forth guidelines with

respect to other short-term investments,

all such investments made through any

Joint Account will comply with those

guidelines.

7. The proposed Joint Account would

not be distinguishable from any other

account maintained by State Street or a

Fund, except that monies from multiple

Funds would be deposited on a

commingled basis. The sole function of

the Joint Account would be to provide

a convenient means of aggregating what

otherwise would be two or more daily

transactions for each Fund necessary to

manage its respective daily uninvested

cash balance. Each Fund will participate

in the Joint Account and in any given

investment made by the Joint Account

on the same voluntary basis as every

other participant in the Joint Account

and in conformity with that Fund’s

investment objectives, policies and

restrictions. If a tax-exempt money

market fund contributes cash to the

Joint Account, the cash will only be

invested in securities that qualify for

purchase by a tax-exempt money market

fund under rule 2a–7 as it may be

amended from time to time. Participants

will not be required either to invest a

minimum amount or to maintain a

minimum balance in the Joint Account.

Each participant will retain the sole

ownership rights to any of its assets

invested in the Joint Account, including

income payable on the invested assets.

8. The applicants anticipate that,

under certain circumstances, the Joint

Account may invest in more than one

repurchase agreement or short-term

money market instrument on a given

day and that, under such circumstances,

each participant in the Joint Account

would not necessarily have its cash

invested in every repurchase agreement

entered into and/or short-term money

market instrument purchased through

the Joint Account. Such a situation

could occur for a variety of reasons,

including a Fund’s investment

restrictions, the unavailability of a

Fund’s cash until after repurchase

agreements have been negotiated on a

given day, or a Fund’s determination to

invest its cash individually. The

Adviser believes that no conflict of

interest or potential for favoring one

Fund over another arises merely as a

result of the fact that the participating

Funds may not always be allocated a

pro rata portion of every investment

made through the Joint Account.

9. The Adviser will have no monetary

participation in the Joint Account, but

will be responsible for investing assets

in the Joint Account, establishing

accounting and control procedures, and

fairly allocating investment

opportunities among the Funds. The

recordkeeping system for the proposed

Joint Account will be substantively

identical to that which would be used

if several joint accounts were

established, with each investing in only

a specific type of instrument. Among

other recordkeeping and accounting

control mechanisms, the Adviser will

document each participant’s pro rata

portion of each joint investment,

including investment amounts and the

proportionate income to be received by

each participant.

Applicant’s Legal Analysis

1. Section 17(d) of the Act and rule

17d–1 under the Act prohibit an

affiliated person of a registered

investment company, or an affiliated

person of such person, from

participating in any joint enterprise or

other joint arrangement in which such

investment company is a participant,

without an SEC order. Rule 17d–1

provides that in passing upon such

applications, the SEC may consider the

extent to which an entity’s participation

in a joint arrangement or enterprise is

on a basis different or less advantageous

than that of other participants.

2. The Funds, by participating in the

Joint Account, and the Adviser, by

managing the Joint Account, could be

deemed to be ‘‘joint participants’’ in a

‘‘transaction’’ within the meaning of

section 17(d) of the Act. In addition, the

proposed Joint Account could be

deemed to be a ‘‘joint enterprise or other

joint arrangement’’ within the meaning

of rule 17d–1 under the Act.

3. Applicants assert that participants

in the Joint Account could save

significant amounts in yearly

transaction fees by reducing the total

number of transactions, thereby

increasing the rate of return on

investments. Because the Joint Account

could invest larger amounts than the

individual Funds, the rate of return for

investments in the Joint Account may

also be higher than could be negotiated

by the Funds individually. The

existence of a Joint Account could

increase the number of dealers willing

to enter into investment transactions

with the participants, enhancing

flexibility in the management of cash

balances and reducing the possibility

that any participant would have an

uninvested cash balance overnight. The

use of a single Joint Account could

result in savings of the costs of

establishing and maintaining several

different accounts. By reducing the

number of trade tickets that each

repurchase agreement and/or short-term

money market instrument counterparty

has to write, the Joint Account also

could simplify transactions and reduce

opportunity for errors.

4. Applicants submit that the

participation by the respective Funds in

the Joint Account would be consistent

with the provisions, policies and

purposes of the Act, and would be on

a basis that is no different from or less

advantageous than that of other

participating Funds. Although the

Adviser might gain some benefit

through administrative convenience and

possible reduction in clerical costs, the

participating Funds and their

shareholders will be the primary

beneficiaries of the Joint Account

because the Joint Account is likely to

permit a greater return on short-term

investments.

Applicants’ Conditions

Applicants will comply with the

following as conditions to any order

granted by the SEC:

1. A separate Joint Account will be

established with State Street. Each Fund

will be permitted to deposit its

uninvested net cash balances into the

Joint Account on a daily basis. The Joint

Account will not be distinguishable

from any other accounts maintained by

the participants except that monies will

be deposited in the Joint Account on a

commingled basis. The Joint Account

will not have a separate existence and

will not have any indicia of a separate

legal entity. The sole function of the

Joint Account will be to provide a

convenient way of aggregating

individual transactions which would

otherwise require daily management by

the Adviser of uninvested cash

balances.

2. Cash in the Joint Account will be

invested by the Adviser in one or more

(a) repurchase agreements

‘‘Collateralized Fully’’ as defined in rule

2a–7 under the Act, and/or (b) shortterm money market instruments that

constitute ‘‘Eligible Securities’’ (as

defined in rule 2a–7 under the Act) with

overnight, over-the-weekend or overthe-holiday maturities. Any repurchase

agreements will have a remaining

maturity of 60 days or less and other

short-term investments will have a

remaining maturity of 90 days or less,

each as calculated in accordance with

rule 2a–7 under the Act.

3. All investments held by the Joint

Account will be valued on an amortized

cost basis to the extent permitted by

applicable SEC releases, rules or orders.

4. Each participating Fund valuing its

net assets in reliance upon rule 2a–7
29048 Federal Register / Vol. 63, No. 101 /Wednesday, May 27, 1998 / Notices

under the Act will use the average

maturity of the instrument(s) in the Joint

Account in which such Fund has an

interest (determined on a dollar

weighted basis) for the purpose of

computing the Fund’s average portfolio

maturity with respect to the portion of

its assets held in the Joint Account for

that day.

5. In order to ensure that there will be

no opportunity for one participant to

use any part of a balance of the Joint

Account credited to another participant,

no participant will be allowed to create

a negative balance in the Joint Account

for any reason, although each Fund will

be permitted to draw down its entire

balance at any time. Each Fund’s

decision to invest in the Joint Account

will be solely at its option, and no Fund

will be obligated either to invest in the

Joint Account or to maintain any

minimum balance in the Joint Account.

In addition, each Fund will retain the

sole rights of ownership to any of its

assets invested in the Joint Account,

including interest payable on such

assets in the Joint Account.

6. Not every participant in the Joint

Account will necessarily have its cash

invested in every short-term investment

entered into through the Joint Account.

However, to the extent that a

participant’s cash is applied to a

particular short-term investment made

through the Joint Account, the

participant will participate in and own

a proportionate share of such short-term

investment, and any income earned or

accrued thereon, based upon the

percentage of such investment

purchased with monies contributed by

the participant.

7. The Adviser will administer the

investment of cash balances in and

operations of the Joint Account as part

of its general duties under its existing or

any future investment advisory

contracts will the Funds and the

Adviser will not collect any additional

or separate fees from any Fund for

advising the Joint Account.

8. The administration of the Joint

Account will be within the fidelity bond

coverage required by section 17(g) of the

Act and rule 17g–1 thereunder.

9. The Board of Trustees of each Trust

that has Funds and/or Future Funds

participating in the Joint Account will

adopt procedures pursuant to which the

Joint Account will operate, which will

be reasonably designed to provide that

the requirements of this application will

be met. The Board of Trustees of each

Trust that has Funds and/or Future

Funds participating in the Joint Account

will make and approve such changes as

each deems necessary to ensure that

such procedures are followed. In

addition, each of such Board of Trustees

will determine, no less frequently than

annually, that the Joint Account has

been operated in accordance with the

proposed procedures and will permit

continued participation by those Funds

in the Joint Account only if it

determines that there is a reasonable

likelihood that the Fund and its

shareholders will benefit from the Joint

Account.

10. Any short-term investments made

through the Joint Account will satisfy

the investment criteria of all

participants in that investment.

11. The Adviser and State Street will

maintain records documenting, for any

given day, each participant’s aggregate

investment in the Joint Account and its

pro rata share of each investment made

through the Joint Account. The records

will be maintained in conformity with

section 31 of the Act and the rules and

regulations thereunder.

12. Short-term investments held in

the Joint Account generally will not be

sold prior to maturity unless: (a) The

Adviser believes the investment no

longer presents minimal credit risks; (b)

the investment no longer satisfies the

investment criteria of all participants in

the investment because of downgrading

or otherwise; or (c) in the case of a

repurchase agreement, the counterparty

defaults. The Adviser may, however,

sell any short-term investment (or any

fractional portion thereof) on behalf of

some or all participants prior to the

maturity of the investment if the cost of

such transactions will be borne solely

by the selling participants and the

transactions will not adversely affect

other participants participating in the

Joint Account. In no case would an early

termination by less than all participants

be permitted if it would reduce the

principal amount or yield received by

other participants in the Joint Account

or otherwise adversely affect the other

participants. Each participant in the

Joint Account will be deemed to have

consented to such sale and partition of

the investments in the Joint Account.

13. Short-term investments held

through the Joint Account with a

remaining maturity of more than seven

days, as calculated pursuant to rule 2a–

7 under the Act, would be considered

illiquid and would be subject to the

restriction that a Fund may not invest

more than 15% or, in the case of a

money market fund, more than 10% (or,

in either such case, such other

percentage as set forth by the SEC from

time to time) of its net assets in illiquid

securities, if the Adviser cannot sell the

instruments, or the Fund’s fractional

interest in such instrument, pursuant to

the preceding condition.

14. Future Funds will be permitted to

participate in the Joint Account

arrangement only on the same terms and

conditions as the Funds have set forth

herein.

For the SEC, by the Division of Investment

Management, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–13959 Filed 5–26–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel No. IC–23194; 812–11114]

UBS Investor Portfolios Trust, et al.;

Notice of Application

May 20, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application under

section 6(c) of the Investment Company

Act of 1940 (the ‘‘Act’’) for an

exemption from section 15(a) of the Act.

SUMMARY OF APPLICATION: Applicants

seek an order to permit the

implementation, without prior

shareholder approval, of new

investment advisory and sub-advisory

agreements (‘‘New Advisory

Agreements’’) in connection with the

merger of Union Bank of Switzerland

(‘‘UBS’’) and Swiss Bank Corporation

(‘‘SBC’’). The order would cover a

period of up to 150 days following the

later of: (i) date on which the

transactions contemplated by the merger

agreement are consummated (the

‘‘Closing Date’’), or (ii) the date upon

which the requested order is issued (but

in no event later than December 31,

1998) (the ‘‘Interim Period’’). The order

also would permit UBS-New York

Branch (‘‘UBS–NY Branch’’), UBS Asset

Management (New York) Inc.

(‘‘UBSAM–NY’’), and UBS International

Investment London Limited (UBSII)

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

shareholder approval, to receive all fees

earned under the New Advisory

Agreements during the Interim Period.

Applicants: UBS Investor Portfolios

Trust (‘‘UBS Investor Portfolios’’), UBS,

UBSAM–NY, and UBSIL.

Filing Dates: The application was

filed on April 20, 1998. 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