62906 Federal Register / Vol. 60, No. 235 / Thursday, December 7, 1995 / Notices

1Certain series of Stagecoach Inc., Stagecoach

Trust and Overland are feeder funds in a master/

feeder structure and currently invest substantially

all of their assets in corresponding master portfolios

of MIP, MIT or MSIT.

ability to invest in potentially

advantageous securities.

5. Applicants state that expenses

incurred by the BP have remained

relatively high, and a large portion of

the BP’s expenses is fixed. Applicants

represent that the lack of substantial

assets in the BP results in high operating

expenses that are borne by the Contract

owners. The BP’s 1994 actual expenses

of 1.56% of average total net assets were

higher than expenses of 1.03% of

average total net assets for the AAP.

Applicants contend that in comparing

the expenses of the BP and AAP, the

asset base of the BP and the increasing

asset base of the AAP is a relevant

consideration. Applicants assert that the

increase in total assets of the AAP

resulting from the substitution should

result in a lessening of its overall

expenses.

6. Applicants state that the AAP offers

Contract owners investments

compatible with the objectives of

Contract owners investing in the BP.

Applicants state that management of

PaineWebber Life, in consultation with

Mitchell Hutchins, studied the

investment objectives, policies and

restrictions of each of the Remaining

Portfolios to form an opinion as to

which of the Remaining Portfolios

appeared most closely identified with

the investment intent of a Contract

owner invested in the BP. It was

concluded that a Contract owner who

had Contract values invested in the BP

was primarily interested in a Portfolios

with an objective of a stable return

while preserving capital. The

investment objective of the AAP is to

seek a high total return with low

volatility, and the recent revision of the

investment policies of the BP led to the

conclusion that the AAP most closely

suits the investment intent of the

Contract owner who now has Contract

values invested in the BP.

Applicants’ Conclusion

For the reasons discussed above,

applicants submit that the proposed

substitution of shares of the AAP for

shares of the BP is consistent with the

protection of investors and the purposes

fairly intended by the policy and

provisions of the 1940 Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–29831 Filed 12–6–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No IC–21562; File No. 812–9794]

Stagecoach Funds, Inc., et al.; Notice

of Application

December 1, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’)

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (‘‘Act’’).

APPLICANTS: Stagecoach Funds, Inc.

(‘’Stagecoach Funds’’), Stagecoach Inc.,

Stagecoach Trust, Overland Express

Funds, Inc. (‘‘Overland’’), Life &

Annuity Trust (‘‘Annuity Trust’’),

Master Investment Portfolio (‘‘MIP’’),

Master Investment Trust (‘‘MIT’’),

Managed Series Investment Trust

(‘‘MSIT’’) (collectively, the

‘‘Companies’’), Wells Fargo Bank, N.A.

(‘‘Wells Fargo’’), and The Nikko

Building Co., Ltd. (‘‘Nikko Building’’).

RELEVANT ACT SECTIONS: Order requested

under section 6(c) for an exemption

from section 15(f)(1)(A).

SUMMARY OF APPLICATION: Applicants

request an exemption from section

15(f)(1)(A) to permit Wells Fargo and

Nikko Building to sell their interests in

Wells Fargo Nikko Investment Advisors

(‘‘WFNIA’’), the sub-adviser to certain of

the series offered by the Companies, to

Barclays Bank PLC (’’Barclays’’).

Without the requested exemption, the

Companies would have to reconstitute

their boards of directors to meet the 75

percent non-interested director

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

order to comply with the safe harbor

provisions of section 15(f).

FILING DATES: The application was filed

on October 4, 1995, and amended on

December 1, 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

December 22, 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 may request notification of a

hearing writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street NW., Washington, DC 20549.

Applicants: Companies, 111 Center

Street, Little Rock, Arkansas 72201;

Wells Fargo, 420 Montgomery Street,

San Francisco, California 94105; Nikko

Building, 3–1 Marunouchi, 3-Chrome,

Chiyoda-Ku, Tokyo 100, Japan.

FOR FURTHER INFORMATION CONTACT:

Courtney S. Thornton, Senior Counsel,

at (202) 942–0583, 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 from the SEC’s

Public Reference Branch.

Applicants’ Representations

1. The Companies are open-end

management investment companies

registered under the Act, each of which

currently offers several series.1 Wells

Fargo, a wholly-owned subsidiary of

Wells Fargo & Co., currently serves as

investment adviser to each series of the

Companies (including the master

portfolios in which feeder funds invest,

but not the feeder funds themselves).

2. WFNIA is a California general

partnership owned 50 percent by Wells

Fargo Investment Advisors (‘‘WF

Advisors’’), a wholly-owned subsidiary

of Wells Fargo, and 50 percent by The

Nikko Building U.S.A., Inc., a whollyowned subsidiary of Nikko Building.

WFNIA currently serves as sub-adviser

to 15 of the 40 active series (the ‘‘SubAdvised Series’’) offered by the

Companies. As of June 30, 1995, the

Sub-Advised Series had approximately

$3 billion in assets under management,

which represented less than 27% of the

aggregate assets under management in

all active series of the Companies, and

approximately 1.6% of the

approximately $183 billion in assets

that WFNIA had under management.

3. On June 21, 1995, Wells Fargo,

Nikko Building, and certain of their

affiliates entered into a purchase and

assumption agreement (the

‘‘Agreement’’) with Barclays to sell their

interests in WFNIA for an aggregate

price of approximately $443 million,

subject to various adjustments at the

time of closing (the ‘‘Transaction’’). As

part of the purchase price, the

Agreement also provides for Barclays to

make monthly payments to Wells Fargo

and its affiliated sellers of .15 percent of

the aggregate value of the interests held

by retail shareholders of Stagecoach

Trust in the LifePath Master Portfolios
Federal Register / Vol. 60, No. 235 / Thursday, December 7, 1995 / Notices 62907

2Presentations relating to the Transaction were

made to the board of directors at three separate

board meetings. All of the non-interested directors

attended and actively participated in all of these

meetings, as did counsel for the non-interested

directors and counsel to the Companies. Extensive

written materials were provided to the directors in

advance of the October 10 in-person meetings at

which the new advisory arrangements were

approved, and extensive deliberations occurred at

these meetings.

3The exemption provided by rule 2a19–1 is not

available with respect to the two directors who are

officers of a broker-dealer because the broker-dealer

serves as placement agent or distributor to the

Companies (the ‘‘Distributor’’). The exemption

provided by rule 2a19–1 is not available with

respect to the director who is a limited partner of

a government securities dealer because the dealer

engages in government securities transactions with

the broker-dealer, as well as with Wells Fargo and

Barclays, all of which fall within the definition of

‘‘complex’’ in the rule. Accordingly, this director

does not meet the condition specified in the rule.

of MIP (‘‘Installment Payments’’),

subject to certain continuity conditions.

4. Barclays has indicated an intention

to reorganize WFNIA into WF Advisors

(which also is being sold to Barclays),

which then would be re-named BZW

Global Investors. Alternatively, Barclays

may maintain WFNIA as a separate

subsidiary or combine it with the

quantitative group of BZW Asset

Management (‘‘BZWAM’’), the

international management arm of

Barclays. Upon completion of the

Transaction, BZWAM and WFNIA (or

its successor) will have, on a combined

basis, approximately $269 billion of

assets under management, of which

approximately $3 billion, or

approximately 1.1%, will represent

assets of the Sub-Advised Series.

Applicants state that WFNIA or its

successor will continue to operate with

WFNIA’s current management,

investment professionals, and resources

essentially intact, and that WFNIA or its

successor will continue to provide

investment advisory services at least

comparable to those currently provided

by WFNIA to the Sub-Advised Series.

5. The Transaction will result in a

‘‘change in control’’ of WFNIA under

the Act. As required by section 15(a)(4)

of the Act, the current sub-advisory

agreements will terminate upon their

assignment. Applicants anticipate that,

except as described below, WFNIA or its

successor will, subject to the receipt of

all necessary board and shareholder

approvals and the complete satisfaction

of other conditions to the closing of the

Transaction, continue to act as subadviser to the Sub-Advised Series

pursuant to new sub-advisory

agreements (the ‘‘Proposed SubAdvisory Agreements’’). The Proposed

Sub-Advisory Agreements will be

identical in all material respects,

including the respective fee levels, to

the current sub-advisory agreements.

6. Applicants contemplate that

WFNIA or its successor will, upon

consummation of the Transaction, enter

into advisory agreements (the ‘‘Proposed

Advisory Agreements’’) with respect to

nine of the fifteen Sub-Advised Series,

pursuant to which WFNIA or its

successor will become the primary

investment adviser to such series. Wells

Fargo has agreed to resign as primary

adviser to these series primarily in

recognition of an expectation that,

following consummation of the

Transaction, these series will be

marketed largely through sales channels

associated with Barclays. The Proposed

Advisory Agreements will be identical

in all material respects, including the

fee levels, to the current advisory

agreements with Wells Fargo. The

Proposed Advisory Agreements and the

Proposed Sub-Advisory Agreements are

referred to as the ‘‘Proposed

Agreements.’’ In accordance with the

requirements of section 15(c) of the Act,

each Company’s board of directors,

including the directors who are not

interested persons of the Companies,

considered and unanimously approved

the Proposed Agreements at a special

meeting held on October 10, 1995, after

careful consideration of all material

elements of the Transaction, including

the Installment Payment agreement.2

Proxy materials have been mailed to

shareholders, and shareholder meetings

will be convened in early December.

The closing of the Transaction is

currently scheduled for December 27,

1995, but is subject to a variety of

conditions, including the receipt of

various regulatory approvals.

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 realize a profit

upon the sale of its business if certain

conditions are met. One of these

conditions is set forth in section

15(f)(1)(A). This condition provides

that, for a period of three years after

such a sale, at least 75 percent of the

board of an investment company may

not be ‘‘interested persons’’ with respect

to either the predecessor or successor

adviser of the investment company.

Section 2(a)(19)(B)(v) defines an

interested person of an investment

adviser to include any broker or dealer

registered under the Securities

Exchange Act of 1934 or any affiliated

person of such broker or dealer. In

addition, section 2(a)(19)(B)(iii) defines

an interested person of an investment

adviser to include anyone who has any

interest in any security issued by the

investment adviser or by a controlling

person thereof.

2. The board of directors of each

Company is comprised of the same

seven individuals. Four of the seven

directors of each Company may be

considered interested persons of either

the predecessor or successor adviser of

the Company. Two of these directors are

officers of a registered broker-dealer,

and another is a limited partner of a

government securities dealer. As such,

these three directors are affiliated

persons of a broker or dealer (the

‘‘Broker-Affiliated Directors’’), and

interested persons of both the

predecessor and successor advisers of

the Companies.3 Another director is a

shareholder of Wells Fargo & Co., the

parent of Wells Fargo, and therefore is

an interested person of the predecessor

adviser of the Companies. The three

remaining directors are not interested

persons of either the Companies or the

predecessor or successor adviser.

Because four of the seven directors of

the Companies are interested persons of

the predecessor and successor advisers,

absent an exemption, applicants would

be unable to comply with the

requirements of section 15(f)(1)(A).

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

SEC to exempt any person or transaction

from any provision of the Act, or any

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.

4. Applicants believe that the

requested exemption is necessary or

appropriate in the public interest.

Applicants submit that section

15(f)(1)(A) was designed primarily to

address the types of biases and conflicts

of interest that might exist where a

fund’s board of directors is influenced

by a substantial number of interested

directors to approve a transaction

because the interested directors have an

economic interest in the adviser or

another party to the transaction, and the

adviser has a material economic

motivation to influence the interested

directors. Applicants argue that no such

circumstances exist with respect to the

Broker-Affiliated Directors and the

Transaction. Although the BrokerAffiliated Directors are technically

interested persons of Wells Fargo and

WFNIA or its successor (the

‘‘Advisers’’), these directors and the

broker-dealers with which they are

affiliated are not affiliated persons of the

Advisers within the meaning of section

2(a)(3) of the Act, nor are they
62908 Federal Register / Vol. 60, No. 235 / Thursday, December 7, 1995 / Notices

1OPRA is a National Market System Plan

approved by the Commission pursuant to Section

11A of the Exchange Act and Rule 11Aa3–2

thereunder. Securities Exchange Act Release No.

17638 (Mar. 18, 1981).

The Plan provides for the collection

dissemination of last sale and quotation information

options that are traded on the five member

exchanges. The five exchanges which agreed to the

OPRA Plan are the American Stock Exchange

(‘‘AMEX’’); the Chicago Board Options Exchange

(‘‘CBOE’’); the New York Stock Exchange (‘‘NYSE’’);

the Pacific Stock Exchange (‘‘PSE’’); and the

Philadelphia Stock Exchange (‘‘PHLX’’).

2 17 CFR 240.11Aa3–2.

3 15 .S.C. 78K-1.

4Securities Exchange Act Release No. 35804

(June 5, 1995).

5 60 FR 30905 (June 12, 1995).

6Under the proposal, information becomes

‘‘historical’’ upon the opening of trading in the next

succeeding trading session of that same market. For

example, reports of transactions completed in a

trading session on Wednesday become historical

reports from and after the opening of trading on the

following Thursday.

7This $2800 monthly fee currently is payable by

every vendor and news service that receives options

information from another vendor on a current basis.

8Currently, the direct access charge is payable by

every vendor, subscriber or news service that has

been authorized by OPRA to receive options

information via the consolidated high-speed service

from OPRA’s Processor.

controlled by or under common control

with the Advisers. Moreover, none of

these directors is an officer, director,

partner, co-partner, or employee of any

Adviser, and the broker-dealers do not

share any common directors, officers, or

employees with the Advisers.

Applicants also state that the Distributor

is retained directly by the Companies.

Accordingly, the Companies’ retention

of the Distributor is not dependent on

the identity of, or transactions

involving, the Adviser. The Distributor’s

compensation for its services is based

on asset levels and/or the receipt of

sales loads, and it therefore has a direct

economic interest in having the SubAdvised Series prosper and grow. In

this respect, the Distributor’s interests

are consistent with the interests of the

shareholders of the Sub-Advised Series.

5. Applicants believe that the

requested exemption is consistent with

the protection of investors. WFNIA or

its successor will continue to offer

services at least comparable to those

currently performed by WFNIA, and

will be supported by the resources of

one of the largest international financial

services corporations. WFNIA or its

successor will continue operations with

WFNIA’s current management,

investment professionals, and resources

remaining essentially intact. The

services that WFNIA or its successor

will perform under the Proposed SubAdvisory Agreements will be identical

in all material respects to the services

currently performed by WFNIA, and the

fee levels for such services will remain

the same. Finally, applicants state that

each series will continue to be subject

to all other provisions of the Act

designed to protect the interests of

investors, including section 15(f)(1)(B),

and all four interested directors will

continue to be treated as interested

persons of the Companies and the

Advisers for all purposes other than

section 15(f)(1)(A).

6. Applicants also believe that the

requested exemption is consistent with

the purposes fairly intended by the

policies and provisions of the Act.

Applicants submit that the legislative

history of section 15(f) indicates that

Congress intended the SEC to deal

flexibly with situations where the

imposition of the 75 percent

requirement might pose an unnecessary

obstacle or burden on a fund.

Applicants argue that the SEC should

exercise this flexibility in situations

such as the proposed Transaction.

Further, applicants state that section

15(f) was intended to ensure that, where

there is a change in control of an

investment adviser, the interests of

investment company shareholders will

be protected and they will not be subject

to any unfair burden as a result of such

transaction. Applicants argue that the

proposed Transaction is structured to

protect the interests of the shareholders

of each Sub-Advised Series and that

shareholders will benefit from the

requested exemption.

Applicants’ Condition

Applicants agree that any order of the

SEC granting the requested relief will be

subject to the following condition:

If within three years of the completion of

the Transaction, it becomes necessary to

replace any director, that director will be

replaced by a director who is not an

interested person of Wells Fargo Bank,

WFNIA, or its successor within the meaning

of section 2(a)(19)(B) of the Act, unless at

least 75% of the directors at that time are not

interested persons of Wells Fargo Bank,

WFNIA, or its successor.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–29916 Filed 12–4–95; 3:57 pm]

BILLING CODE 8010–01–M

[Release No. 34–36542; International Series

No. 896; File No. S7–8–90]

Order Approving Proposed

Amendment to the Options Price

Reporting Authority’s National Market

System Plan for the Purpose of

Updating the Current Fee Structure

and Eliminating the Use of Separate

News Service Agreements

November 30, 1995.

On April 25, 1995, the Options Price

Reporting Authority (‘‘OPRA’’) 1 filed

with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

pursuant to Rule 11Aa3–2 2 under the

Securities Exchange Act of 1934

(‘‘Exchange Act’’) 3 a proposed

amendment to its National Market

System Plan (‘‘OPRA Plan’’) for the

purpose of updating the current fee

structure and eliminating the use of

separate news service agreements.

Notice of the proposed amendment was

provided by issuance of a Commission

release 4 and by publication in the

Federal Register.5 The Commission

received 220 comment letters. For the

reasons discussed below, the

Commission is approving the proposed

amendment.

I. Description

OPRA proposes to establish a new

redistribution fee of $1800 per month

that will be payable by every vendor

that redistributes options market

information to nay person, whether on

a current or delayed basis. The

redistribution fee, however, will not

apply to a vendor whose redistribution

of options information is limited solely

to ‘‘historical’’ information.6 With the

introduction of the redistribution fee,

the amendment eliminates the vendor

and news service pass-through fee,

previously $2800.7 Further, OPRA

proposes to reduce the direct access

change from $2800 to $900 per month.8

In addition to restructuring its fees,

OPRA proposes to eliminate the

separate news service agreement.

Instead, OPRA will categorize news

services as vendor and will seek to have

news services sign vendor agreements.

OPRA also is proposing to make

conforming changes to the OPRA Plan.

II. Summary of Comments

As noted above, the Commission

received 220 comments letters regarding

the proposal. Most comments were

submitted by suers of delayed data,

primarily small investors who expressed

concern about the impact the

redistribution fee will have on their

owns fees. While some commenters did

not object to existing and proposed

OPRA fee for real-time data, virtually all

commenters opposed the proposed

redistribution fee as it applies to

delayed data. The commenters claimed

that the proposal will set a bad

precedent that will lead other markets

also to charge for delayed data.

Many commenters expressed a belief

that all market information should be