Federal Register / Vol. 60, No. 80 / Wednesday, April 26, 1995 / Notices 20545

8See Letter from Gerald O’Connell, First Vice

President, Phlx, to Michael Walinskas, Branch

Chief, OMS, Division, Commission, dated April 12,

1995 (‘‘O’Connell Letter No. 2’’).

9 15 U.S.C. 78f(b)(5).

10See O’Connell Letter No. 2, supra note 8.

11See Morgan Letter, supra note 7. See also

O’Connell Letter No. 1, supra note 6.

12See OPRA Letter, supra note 7.

13 15 U.S.C. 78s(b)(2).

14 17 CFR 200.30–3(a)(12).

delisting would create a gap in

consecutive strikes.8

The Exchange believes that the

proposed reduction in the strike price

interval should provide investors and

traders of British pound foreign

currency options with the ability to

more closely tailor investment and

hedging strategies to British pound

trading levels and movement. The

Exchange further believes that the

proposed rule change is designed to

promote just and equitable principles of

trade by enabling more effective

management of foreign currency risk

respecting the British pound.

III. Commission Finding and

Conclusions

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange, and, in particular, the

requirements of Section 6(b)(5) of the

Act.9 Specifically the Commission finds

that the Exchange’s proposal to revise

its strike price policy respecting foreign

currency options on the British pound

by changing from a $.025 interval to a

$.01 interval in the nearest three

months; from $.025 interval to $.02

interval in the next three nearest

expiration months; and from $.05 to

$.04 interval for long-term British

pound options, which have 12 to 36

months until expiration, is a reasonable

attempt to perfect the mechanism of a

free and open market and a national

market system.

The Commission recognizes that any

narrowing of strike price intervals

increases the flexibility accorded market

participants and allows options

positions to be more finely tailored to

achieve intended investment objectives.

At the same time, however, narrower

strike price intervals create the

possibility of dispersing trading interest

to the degree that there is an excessive

dilution of liquidity in open options

series.

Accordingly, an evaluation of the

appropriate strike price interval for an

option contract requires a balancing of

the need to accommodate market

participants by providing a wide array

of investment opportunities and the

need to avoid causing excessive

proliferation of illiquid options series.

The Commission believes that the Phlx

proposal strikes such a reasonable

balance. Although the proposal makes

available a significant number of new

options series, the Commission notes

that Phlx generally seeks to delist

options series (including British pound

foreign currency options) with no open

interest.10 Therefore, the Phlx should be

able to eliminate any illiquid series that

might result from the implementation of

the new strike price proposal.

Accordingly, the Commission expects

the Phlx to monitor British pound

foreign currency options activity closely

in order to detect any proliferation of

illiquid series possibly resulting from

the narrower strike price intervals and

to act promptly to remedy this situation

should it occur.

In addition, based on representations

from the Phlx 11 and OPRA,12 the

Commission believes that the predicted

increase in the number of British pound

options series should not adversely

affect the computer processing capacity

to accommodate the additional strike

prices. More specifically, both the Phlx

and OPRA have represented that their

respective systems can adequately

handle the additional options

transaction-related traffic generated by

the projected new series. Nevertheless,

the Commission requests that the

Exchange monitor the volume of

additional options series listed as a

result of this rule change and continue

to ensure that these additional series

will not adversely impact processing

system capacity.

It is therefore ordered, pursuant to

section 19(b)(2) of the Act,13 that the

proposed rule change (File No. SR–

Phlx–95–06) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–10182 Filed 4–25–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21024; 812–9524]

Equity Income Fund, Select Ten

Portfolio

April 20, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: Equity Income Fund, Select

Ten Portfolio.

RELEVANT ACT SECTIONS: Order requested

under section 6(c) of the Act that would

exempt applicant from section 12(d)(3)

of the Act.

SUMMARY OF APPLICATION: Applicant

requests an order on behalf of its series

(the ‘‘Series’’) and the Series’

component trusts (the ‘‘Trusts’’) to

permit each Trust to invest up to ten

percent of its total assets in securities of

issuers that derived more than fifteen

percent of their gross revenues in their

most recent fiscal year from securities

related activities.

FILING DATE: The application was filed

on March 14, 1995 and amended on

April 20, 1995.

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 applicant with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

May 15, 1995 and should be

accompanied by proof of service on the

applicant, 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 5th

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

Applicant, c/o Merrill Lynch, Pierce

Fenner & Smith Incorporated, P.O. Box

9051, Princeton, N.J. 08543–9051.

FOR FURTHER INFORMATION CONTACT:

Marianne H. Khawly, Staff Attorney, at

(202) 942–0562, or C. David Messman,

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 from the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Each Series will be a series of

Equity Income Fund, Select Ten

Portfolio, a unit investment trust

registered under the Act, composed of

one or more separate Trusts. Merrill

Lynch, Pierce, Fenner & Smith

Incorporated (‘‘Merrill Lynch’’),

Prudential Securities Incorporated,

PaineWebber Incorporated, Smith

Barney Inc., and Dean Witter Reynolds
20546 Federal Register / Vol. 60, No. 80 / Wednesday, April 26, 1995 / Notices

1The Sponsors will attempt to purchase equal

values of each of the ten common stocks in a Trust’s

portfolio and may choose to purchase the securities

in odd lots in order to achieve this goal. However,

it is more efficient if securities are purchased in 100

share lots and board lots. A board lot is comprised

of a fixed number of shares determined by the

issuer. Most fees associated with trading, settling,

and transferring of Hong Kong securities are

charged on a per board lot basis. As a result, the

Sponsors may choose to purchase securities of a

securities related issuer which represent over 10%,

but in no event more than 10.5% percent, of a

Trust’s assets on the initial date of deposit to the

extent necessary to enable the Sponsors to meet

their purchase requirements and to obtain the best

price for the securities.

2 In the master agreement among underwriters,

the other Sponsors have appointed Merrill Lynch as

agent for the Sponsors. In that capacity, Merrill

Lynch is authorized to determine the date of

deposit, to purchase securities for deposit in the

Series and to supervise each Series’ portfolio.

Inc. are applicant’s depositors

(collectively, the ‘‘Sponsors’’).

2. Each Trust will invest

approximately 10%, but in no event

more than 10.5%,1 of the value of its

total assets in each of the ten common

stocks in the Financial Times Index or

the Hang Seng Index with the highest

dividend yields as of its initial date of

deposit, and hold those stocks over the

life of the Trust (presently anticipated to

be approximately one year).

3. The Financial Times Index

comprises 30 common stocks chosen by

the editors of The Financial Times

(London) as representative of British

industry and commerce. The companies

are major factors in their industries and

their stocks are widely held by

individuals and institutional investors.

The Hang Seng Index comprises 33 of

the stocks listed on the Hong Kong

Stock Exchange and includes companies

intended to represent four major market

sectors: commerce and industry,

finance, properties, and utilities. The

Hang Seng Index is a recognized

indicator of stock market performance

in Hong Kong.

4. The portfolio securities deposited

in each Trust will be chosen solely

according to the formula described

above, and will not necessarily reflect

the research opinions or buy or sell

recommendations of the Sponsors. The

Sponsors will have no discretion as to

which securities are purchased.

Securities deposited in a Trust may

include securities of issuers that derived

more than fifteen percent of their gross

revenues in their most recent fiscal year

from securities related activities.

5. During the 90-day period following

the initial date of deposit, the Sponsors

may deposit additional securities while

maintaining to the extent practicable the

original proportionate relationship

among the number of shares of each

stock in the portfolio. Deposits made

after this 90-day period generally must

replicate exactly the proportionate

relationship among the face amounts of

the securities comprising the portfolio at

the end of the initial 90-day period,

whether or not a stock continues to be

among the ten highest dividend yielding

stocks.

6. A Trust’s portfolio will not be

actively managed. Sales of portfolio

securities will be made in connection

with redemptions of units issued by a

Trust and at termination of the Trust.

The Sponsors have no discretion as to

when securities will be sold except that

it is authorized to sell securities in

extremely limited circumstances,

namely, upon failure of the issuer of a

security in a Trust to pay amounts due

on any of the securities, institution of

certain legal proceedings, default under

certain documents materially and

adversely affecting future declaration or

payment of amounts due, or the

occurrence of other market or credit

factors that in the opinion of the

Sponsors would make the retention of

such securities in a Trust detrimental to

the interests of the unitholders. The

adverse financial condition of an issuer

will not necessarily require the sale of

its securities from a Trust’s portfolio.2

Applicant’s Legal Analysis

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

limited exceptions, prohibits an

investment company from acquiring any

security issued by any person who is a

broker, dealer, underwriter, or

investment adviser. Rule 12d3–1 under

the Act exempts the purchase of

securities of an issuer that derived more

than fifteen percent of its gross revenues

in its most recent fiscal year from

securities related activities, provided

that, among other things, immediately

after such acquisition, the acquiring

company has invested not more than

five percent of the value of its total

assets in securities of the issuer.

2. Section 6(c) of the Act provides that

the SEC may exempt a person from any

provision of the Act or any rule

thereunder, if and to the extent that 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.

3. Applicant requests an exemption

under section 6(c) from section 12(d)(3)

to permit any Trust to invest up to

approximately 10%, but in no event

more than 10.5%, of the value of its

total assets in securities of an issuer that

derives more than fifteen percent of its

revenues from securities related

activities. Applicant and each Trust will

comply with all provisions of rule

12d3–1, except for the five percent

limitation in paragraph (b)(3) of the rule.

4. Section 12(d)(3) was intended to

prevent investment companies from

exposing their assets to the

entrepreneurial risks of securities

related businesses, to prevent potential

conflicts of interest, and to eliminate

certain reciprocal practices between

investment companies and securities

related businesses. One potential

conflict could occur if an investment

company purchased securities or other

interests in a broker-dealer to reward

that broker-dealer for selling fund

shares, rather than solely on investment

merit. Applicant believes that this

concern does not arise in connection

with its application because neither

applicant nor the Sponsors have

discretion in choosing the portfolio

securities or percentage amount

purchased. The security must first be

included in the Financial Times Index

or the Hang Seng Index, which indexes

are unaffiliated with the Sponsors and

applicant, and must also qualify as one

of the ten highest dividend yielding

securities.

5. Applicant also believes that the

effect of a Trust’s purchase on the stock

of parents of broker-dealers would be de

minimis. Applicant asserts that the

common stocks of securities related

issuers represented in the Financial

Times Index or the Hang Seng Index are

widely held, have active markets, and

that potential purchases by any Trust

would represent an insignificant

amount of the outstanding common

stock and the trading volume of any of

these issues. Accordingly, applicant

believes that it is highly unlikely that

Trust purchases of these securities

would have any significant impact on

the securities’ market value.

6. Another potential conflict of

interest could occur if an investment

company directed brokerage to a brokerdealer in which the company has

invested to enhance the broker-dealer’s

profitability or to assist it during

financial difficulty, even though that

broker-dealer may not offer the best

price and execution. To preclude this

type of conflict, applicant and each

Series agree, as a condition of this

application, that no company held in

the portfolio of a Trust nor any affiliate

thereof will act as a broker for any Trust

in the purchase or sale of any security

for its portfolio. In light of the above,

applicant believes that its proposal

meets the section 6(c) standards.

Applicant’s Condition

Applicant and each Series agree that

any order granted under this application
Federal Register / Vol. 60, No. 80 / Wednesday, April 26, 1995 / Notices 20547

may be conditioned upon no company

held in a Trust’s portfolio nor any

affiliate thereof acting as broker for any

Trust in the purchase or sale of any

security for a Trust’s portfolio.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–10223 Filed 4–25–95; 8:45 am]

BILLING CODE 8010–01–M

Issuer Delisting; Notice of Application

to Withdraw From Listing and

Registration; (Semtech Corporation,

Common Stock, $.01 Par Value) File

No. 1–6395

April 20, 1995.

The Semtech Corporation

(‘‘Company’’) has filed an application

with the Securities and Exchange

Commission (‘‘Commission’’), pursuant

to Section 12(d) of the Securities

Exchange Act of 1934 (‘‘Act’’) and Rule

12d2–2(d) promulgated thereunder, to

withdraw the above specified security

(‘‘Security’’) from listing and

registration on the American Stock

Exchange, Inc. (‘‘Amex’’).

The reasons alleged in the application

for withdrawing the Security from

listing and registration include the

following:

According to the Company, its Board

of Directors unanimously approved

resolutions on March 2, 1995 to

withdraw the Security from listing on

the Amex and, instead, list the Security

on the Nasdaq/NMS. The decision of the

Board followed a lengthy study of the

matter, and was based upon the belief

that listing of the Security on the

Nasdaq/NMS will be more beneficial to

its stockholders than the present listing

on the Amex because:

(a) The support of Market Makers on

the Nasdaq (as compared to the

activities of the AMEX specialist) and

the potential for research coverage and

other financial services will be

advantageous;

(b) The greater visibility of the Nasdaq

with various media coverage will be

advantageous;

(c) The potential for the Company to

be promoted as a growth-oriented,

diversified company is enhanced on the

Nasdaq, given the Nasdaq’s history;

(d) There is potentially more capital

support for the Company in the Nasdaq

given the Market Maker’s

responsibilities; and

(e) The services the Nasdaq offers that

have been reviewed are more likely to

assist the Company in communicating

with shareholders and understanding

the market.

Any interested person may, on or

before May 11, 1995, submit by letter to

the Secretary of the Securities and

Exchange Commission, 450 Fifth Street,

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

bearing upon whether the application

has been made in accordance with the

rules of the Amex and what terms, if

any, should be imposed by the

Commission for the protection of

investors. The Commission, based on

the information submitted to it, will

issue an order granting the application

after the date mentioned above, unless

the Commission determines to order a

hearing on the matter.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 95–10239 Filed 4–25–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21022/812–9550]

Smith Barney Muni Funds, et al.;

Notice of Application

April 19, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Smith Barney Muni Funds

(the ‘‘Trust’’), Smith Barney Income

Trust (the ‘‘Income Trust’’), Smith

Barney Mutual Funds Management Inc.

(‘‘SBMFM’’) and Smith Barney Inc.

(‘‘Smith Barney’’).

RELEVANT ACT SECTIONS: Order requested

under section 17(b) for an exemption

from section 17(a).

SUMMARY OF APPLICATION: Applicants

request an order to allow Smith Barney

Intermediate Maturity California

Municipals Fund (the ‘‘Intermediate

Maturity Fund’’), a series of the Income

Trust, to acquire substantially all of the

assets of the California Limited Term

Portfolio (the ‘‘Limited Term Portfolio’’),

a series of the Trust. Because of certain

affiliations, the two series may not rely

on rule 17a–8 under the Act.

FILING DATE: The application was filed

on March 24, 1995.

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

May 15, 1995, 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, NW., Washington, DC 20549.

Applicants, 388 Greenwich Street, 22nd

Floor, New York, New York 10013.

FOR FURTHER INFORMATION CONTACT:

Deepak T. Pai, Staff Attorney, at (202)

942–0574, or Robert A. Robertson,

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.

Applicants’ Representations

1. The Limited Term Portfolio is a

series of the Trust and the Intermediate

Maturity Fund is a series of the Income

Trust. The Trust and the Income Trust

each are registered under the Act as

open-end management investment

companies and are organized as

Massachusetts business trusts. The

Limited Term Portfolio and the

Intermediate Maturity Fund are referred

to herein as the ‘‘Funds.’’

2. SBMFM serves as investment

adviser to the Intermediate Maturity

Fund and the Limited Term Portfolio.

Smith Barney is the Funds’ distributor

and, as of February 13, 1995, owned

12.22% of the outstanding shares of the

Limited Term Portfolio. SBMFM and

Smith Barney are each a wholly-owned

subsidiary of Smith Barney Holdings,

Inc. (‘‘Holdings’’).

3. Each Fund offers three classes of

shares, Class A, Class C and Class Y

shares. Class A shares of each Fund are

sold with an initial sales charge of

2.00% of the net asset value of the

shares. Class C shares of each Fund are

sold without an initial sales charge but

are subject to a contingent deferred sales

charge (‘‘CDSC’’) of 1.00% payable upon

certain redemptions. Class Y shares of

each Fund are sold without an initial

sales charge or CDSC and are available

only to investors investing a minimum

of $5.0 million. Class A and Class C

shares of each Fund are sold subject to

substantially similar 12b–1 distribution

plans.