38216 Federal Register / Vol. 63, No. 135 /Wednesday, July 15, 1998 / Notices

1All existing Funds that currently intend to rely

on the order have been named as applicants. Any

other existing Funds and any future Funds will rely

on the order only in accordance with its terms and

conditions.

UNITED STATES POSTAL SERVICE

BOARD OF GOVERNORS

Sunshine Act Meeting

Governors Vote to Close Meeting

In person and by telephone vote on

May 12, 1998, a majority of the

Governors contacted and voting, the

Governors voted to close to public

observation a meeting held in

Washington, D.C. The Governors

determined that prior public notice was

not possible.

Item Considered: 1. Appointment and

Compensation of the Postmaster

General.

General Counsel Certification: The

General Counsel of the United States

Postal Service has certified that the

meeting was properly closed under the

Government in the Sunshine Act.

Contact Person for More Information:

Requests for information about the

meeting should be addressed to the

Secretary of the Board, Thomas J.

Koerber, at (202) 268–4800.

Thomas J. Koerber,

Secretary.

[FR Doc. 98–18914 Filed 7–14–98; 8:45 am]

BILLING CODE 7710–12–M

SECURITIES AND EXCHANGE

COMMISSION

Proposed Collection; Comment

Request

Upon Written Request, Copies Available

From: Securities and Exchange

Commission, Office of Filings and

Information Services, Washington, DC

20549.

Extension:

Rule 11Ac1–4, SEC File No. 270–405, OMB

Control No. 3235–0462

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’’) is soliciting comments

on the collection of information

summarized below. The Commission

plans to submit this existing collection

of information to the Office of

Management and Budget for extension

and approval.

Rule 11Ac1–4 (17 CFR § 240.11Ac1–

4) under the Securities Exchange Act of

1934 requires specialists and market

makers to publicly display a customer

limit order when that limit order is

priced superior to the quote that is

currently being displayed by the

specialist or market maker. Customer

limit orders that match the bid or offer

being displayed by the specialist or

market maker must also be displayed if

the limit order price matches the

national best bid or offer. It is estimated

that approximately 580 broker and

dealer respondents incur an average

burden of 5,684 hours per year to

comply with this rule.

Rule 11Ac1–4 does not contain record

retention requirements. Compliance

with the rule is mandatory. Responses

are not confidential. 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 are invited on: (a)

Whether the proposed collection of

information is necessary for the proper

performance of the functions of the

agency, including whether the

information shall have practical utility;

(b) the accuracy of the agency’s estimate

of the burden of the proposed collection

of information; (c) ways to enhance the

quality, utility, and clarity of the

information to be collected; and (d)

ways to minimize the burden of the

collection of information on

respondents, including through the use

of automated collection techniques or

other forms of information technology.

Consideration will be given to

comments and suggestions submitted in

writing within 60 days of this

publication.

Direct your written comments to

Michael E. Bartell, Associate Executive

Director, Office of Information

Technology, Securities and Exchange

Commission, 450 5th Street, N.W.,

Washington, DC 20549.

Dated: July 7, 1998.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–18761 Filed 7–14–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

23306; 812–10578]

Calvert Social Investment Fund, et al.;

Notice of Application

July 8, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for an

order under sections 6(c) and 17(b) of

the Investment Company Act of 1940

(the ‘‘Act’’) for an exemption from

section 17(a) of the Act and under

section 17(d) of the Act and rule 17d–

1 under the Act.

SUMMARY OF APPLICATION: Applicants

request an order to permit certain

registered investment companies to

invest up to a specified percentage of

their assets in an affiliated non-profit

social and community development

foundation.

APPLICANTS: Calvert Social Investment

Fund (‘‘CSIF’’), The Calvert Fund,

Calvert World Values Fund, Inc. and

any existing or future registered

investment company, advised by Calvert

Asset Management Company, Inc.

(‘‘CAMCO’’) and whose investment

policies permit investment in the

Calvert Social Investment Foundation

(‘‘Funds’’).1

FILING DATES: The application was filed

on March 17, 1997, and amended on

September 2, 1997, May 18, 1998, and

June 11, 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

August 3, 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, 4550 Montgomery Avenue,

Bethesda, MD 20814.

FOR FURTHER INFORMATION CONTACT:

Mary Kay Frech, 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 at the SEC’s

Public Reference Branch 450 Fifth

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

(tel. 202–942–8090).

Applicant’s Representations

1. Each Fund is registered under the

Act as an open-end management

investment company. CSIF and The

Calvert Fund are organized as

Massachusetts business trusts. The

Calvert World Values Fund, Inc. is

organized as a Maryland corporation.
Federal Register / Vol. 63, No. 135 /Wednesday, July 15, 1998 / Notices 38217

2CSIF’s investment policy permits investment of

less than 1% of its assets in HSII. The policies of

the Calvert International Equity Fund (a series of

the Calvert World Values Fund, Inc.) and the

Calvert New Vision Small Cap Fund (a series of The

Calvert Fund) permit investment up to 1% and 3%,

respectively, of their assets in HSII. The policy of

the Calvert Capital Accumulation Fund (a series of

Calvert World Values Fund, Inc.) permits

investment of up to 3% of its assets in HSII when

its assets reach $100 million.

The Funds’ investment adviser is

CAMCO, an investment adviser

registered under the Investment

Advisers Act of 1940.

2. Each Fund’s investment policy

permits it to invest a specified

percentage of its assets in high social

impact investments (‘‘HSII’’) that offer a

rate of return below the prevailing

market rate and that present attractive

opportunities for furthering the Fund’s

social criteria.2 HSII are typically

illiquid and unrated and generally

considered non-investment grade debt

securities which involve a greater risk of

default or price decline than

investment-grade securities. Each

Funds’ investments in HSII were

approved by the Fund’s shareholders.

3. The Funds currently invest directly

in community organizations and other

HSII. Applicants propose to invest

assets, allocated for investment in HSII,

in the Calvert Social Investment

Foundation (‘‘Foundation’’). The

Foundation will then place the assets in

the community.

4. The Foundation is a non-profit

organization that seeks to use

community development opportunities

to assist the poor, correct social

injustices, and improve society in a proactive way. The Foundation’s securities

are exempt from registration under

section 3(a)(4) of the Securities Act of

1933. The Foundation is exempt from

registration as an investment company

under section 3(c)(10)(A) of the Act. The

Foundation has nine directors, eight of

whom are members of CSIF’s board of

trustees, four of whom are members of

The Calvert Fund’s board of trustees,

and four of whom are members of the

Calvert World Values Fund, Inc.’s board

of directors.

5. The Foundation receives grants and

loans from various foundations and

Acacia Mutual Life Insurance Company

(‘‘Acacia’’), the parent company of the

Funds’ investment adviser. The

Foundation also receives funding from

individual investors, through a program

called Calvert Community Investments

(‘‘CI’’). Investments in the Foundation

are evidenced by Calvert Community

Investments notes (‘‘CI Notes’’).

Investors in CI Notes are allowed to

choose the interest rate (ranging from

0% to 4%) that they would like to

receive on their investment. The average

interest rate currently for CI Notes is

3%. The Foundation generally realizes a

basis point spread on each investment

to cover administrative and overhead

costs. The basis point spread is the

difference between the interest rate that

purchasers of the CI Notes receive and

the average interest rate at which the

Foundation makes investments in

community development organizations.

6. Under the proposed arrangement,

each Fund will receive a CI Note

evidencing its investment in the

Foundation. The Funds’ boards of

trustees/directors (‘‘Boards’’) will

determine the interest rate and the

maturity of the CI Notes that the Funds

receive from the Foundation. The

Funds’ assets invested in the

Foundation will be pooled with the

Foundation’s other assets and will be

used by the Foundation to make

investments in community development

organizations. The Foundation’s

investments are evidenced by

promissory notes at below market rates

in amounts between $50,000 and

$500,000 each and for terms of one,

three, or five years, with interest rate

currently ranging from 4.5% to 8.8%.

Applicants expect that a Fund will

invest in the CI Notes quarterly.

7. Each Fund will invest its HSII

assets in the CI Notes only in

accordance with its investment

objectives, policies and restrictions.

Each Fund’s Board will monitor this

proposed arrangement to ensure that it

is consistent with the Fund’s investment

objectives, policies and restrictions.

Each Fund’s Board also will

periodically review the adequacy of the

Fund’s disclosure of the proposed

arrangement and of the possible risks of

loss to the Fund and its shareholders.

The percentage of each Fund’s assets

which may be invested in HSII will not

be increased without shareholder

approval. Any future Fund relying on

the requested relief will obtain prior

shareholder approval to invest in the

Foundation.

8. Neither the Funds, CAMCO, nor the

Funds’ subadvisers will invest directly

in the organizations in which the

Foundation invests or plans to invest.

Neither Acacia, CAMCO, nor the Funds’

subadvisers will invest in the

Foundation by purchasing CI Notes.

Further, neither CAMCO nor any

subadviser will receive any

compensation for the Funds’ investment

in CI Notes.

Applicants’ Legal Analysis

A. Section 17(a)

1. Section 17(a) of the Act makes it

unlawful for any affiliated person of a

registered investment company, acting

as principal, to sell or purchase any

security to or from the company.

Section 2(a)(3) of the Act defines an

affiliated person of an investment

company as any person directly or

indirectly controlling, controlled by, or

under common control with such

investment company, and any officer,

director, partner, copartner, or employee

of the investment company. Section

2(a)(36) defines a security to include,

among other things, any note, stock

treasury stock, or evidence of

indebtedness. Applicants believe that

the Foundation may be considered to be

an affiliated person of the Funds due to

common directors/trustees that serve on

the boards of the Funds and the

Foundation. Thus, investment by the

Funds in the CI Notes may be prohibited

by section 17(a).

2. Section 17(b) of the Act authorities

the SEC to exempt a transaction from

section 17(a) if the terms of the

proposed transaction, including the

consideration to be paid or received, are

reasonable and fair and do not involve

overreaching on the part of any person

concerned, and the proposed

transaction is consistent with the policy

of each investment company concerned

and the general purposes of the Act.

Section 6(c) authorizes the Commission

to exempt transactions from the

provisions of the Act to the extent that

such exemptions are appropriate in the

public interest and consistent with the

protection of investors and the purposes

fairly intended by the policies and

provisions of the Act.

3. Applicants believe that the Funds’

proposed investment in the Foundation

meets the standards of section 17(b) and

6(c). Applicants state that the Fund’s

investment in the Foundation will be

consistent with each Fund’s investment

objectives, policies and restrictions and

that investment in HSII has been

approved by each Fund’s shareholders.

Applicants assert that each Fund will

likely recognize certain economies of

scale by having the Foundation

undertake analysis, placing and

processing of prospective investments

in HSII. Each Fund’s investments in

HSII through the Foundation will be on

the same terms and in the same amounts

as currently made directly, with

comparable rates of interest.

B. Section 17(d) and Rule 17d–1

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

17d–1 prohibit an affiliated person of a
38218 Federal Register / Vol. 63, No. 135 /Wednesday, July 15, 1998 / Notices

registered investment company, acting

as principal, from participating in any

joint arrangement with the investment

company unless the SEC has issued an

order authorizing the arrangement.

Applicants believe that each Fund may

be deemed to be participating in a joint

transaction with each other Fund

through the pooling of assets in the

Foundation, and that the Funds could

be deemed to be participating in a joint

transaction with the Foundation

through their investments in HSII.

2. In determining whether to grant an

exemption under rule 17d–1, the SEC

considers whether the investment

company’s participation in the joint

enterprises in consistent with the

provisions, policies and purposes of the

Act, and the extend to which such

participation is on a basis different from

or less advantageous than that of other

participants. Applicants assert that all

investors in the Foundation will

participate on the same basis.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–18760 Filed 7–14–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCAHNGE

COMMISSION

[Rel. No. IC–23308; 812–10008]

Corporate Income Fund, et al.; Notice

of Application

July 9, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (‘‘Act’’).

SUMMARY OF APPLICATION: Applicants

request an order under section 6(c) of

the Investment Company Act of 1940 to

permit certain unit investment trusts to

invest up to 10.5% of their assets in

securities of an issuer that derives more

than 15% of its gross revenues from

securities-related activities.

APPLICANTS: Corporate Income Fund,

Equity Income Fund, International Bond

Fund, and Defined Asset Funds, each on

behalf of its component unit investment

trust (each a ‘‘Trust’’).

FILING DATES: The application was filed

on February 22, 1996, and amended on

July 10, 1996, January 13, 1997, and

January 23, 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

August 3, 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 may request notification of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, DC 20549.

Applicants, c/o Merrill Lynch, Pierce,

Fenner & Smith Inc., P.O. Box 9051,

Princeton, N.J. 08543–9051, Attention:

Teresa Koncick, Esq.

FOR FURTHER INFORMATION CONTACT:

Mary T. Geffroy, Senior Counsel, (202)

942–0553, or Nadya B. Roytblat,

Assistant Director, (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 at the SEC’s

Public Reference Branch, 450 Fifth St.

N.W., Washington, D.C. 20549 (tel. (202)

942–8090).

Applicant’s Representations

1. Each applicant is a unit investment

trust registered under the Act and

composed of one or more separate

Trusts. The depositors of the Trusts are

Merrill Lynch, Pierce, Fenner & Smith

Inc., PaineWebber Inc., Smith Barney

Inc., and Dean Witter Reynolds Inc.

(collectively, the ‘‘Sponsors’’).

2. Each Trust pursues its investment

objective by investing over its life in a

fixed portfolio of securities. Following

the initial deposit of securities in a

Trust, the Sponsors may, in response to

investor demand for units, deposit

additional securities. Subsequent

deposits of securities into the Trust

must generally maintain the original

proportionate relationship among the

securities comprising the Trust’s

portfolio.

3. Disposition of a Trust’s portfolio

securities is generally limited to sales

made in response to redemptions of

units and at the termination of the

Trust. Other than these specific

instances, the Sponsors’ discretion to

sell a Trust’s portfolio securities is

limited to narrow circumstances,

principally: a default in payment by an

issuer; the institution of certain legal

proceedings; a default under certain

documents adversely affecting the

future declaration of dividends or

payment of amounts due by an issuer;

to maintain a Trust’s qualification under

the federal tax laws; to remain

consistent with a Trust’s investment

objectives; or the occurrence of certain

other market or credit factors that, in the

opinion of the Sponsors, would make

the retention of certain securities in a

Trust detrimental to the interest of the

unitholders.

4. Applicants would like the

flexibility to invest up to 10.5% of a

Trust’s assets in securities of an issuer

that derives more than 15% of its gross

revenues from securities-related

activities (as defined below). No Trust

will invest in securities issued by any of

the Sponsors or other underwriters for

the Trusts.

Applicants’ Legal Analysis

1. Section 12(d)(3) of the Act

generally prohibits a registered

investment company from acquiring any

security issued by any person who is a

broker, dealer, investment adviser, or

engaged in the business of underwriting

(collectively, ‘‘securities-related

activities’’). Rule 12d3–1 under the Act,

in relevant part, exempts from the

prohibition of section 12(d)(3)

purchases of securities of an issuer that

derives more than 15% of its gross

revenues from securities-related

activities if certain conditions are met.

One of these conditions, set forth in rule

12d3–1(b)(3), requires that, immediately

after the acquisition, the investment

company has invested not more than

5% of the value of its total assets in

securities of the issuer.

2. Applicants request an exemption

from rule 12d3–1(b)(3) to permit a Trust

to invest up to 10.5% of its assets in

securities of an issuer that derives more

than 15% of its gross revenues from

securities-related activities. Applicants

will comply with all other requirements

of rule 12d3–1.

3. Section 6(c) of the Act 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.

4. Applicants state that section

12(d)(3) was designed to prevent certain

potential conflicts of interest and to

eliminate certain reciprocal practices

between investment companies and

securities-related businesses. One

potential abusive practice is that an