29580 Federal Register / Vol. 61, No. 113 / Tuesday, June 11, 1996 / Notices

1An SEC exemptive order permits Funds advised

by Norwest to invest their cash balances in shares

of certain affiliated money market series. See

Norwest Funds, Investment Company Act Release

Nos. 20940 (Mar. 6, 1995) (notice) and 20983 (Apr.

3, 1995) (order).

Accounting Standards Advisory Board

and adopted in its entirety by OMB.

ADDRESSES: Copies of the Statement of

Federal Financial Accounting Standards

No. 6, ‘‘Accounting for Property, Plant,

and Equipment,’’ may be obtained for

$6.50 each from the Superintendent of

Documents, Government Printing

Office, Washington, DC 20402–9325

(telephone 202–783–3238), Stock No.

041–001–00462–9.

FOR FURTHER INFORMATION CONTACT:

Ronald Longo (telephone: 202–395–

3993), Office of Federal Financial

Management, Office of Management and

Budget, 725–17th Street, N.W.—Room

6025, Washington, DC 20503.

SUPPLEMENTARY INFORMATION: This

Notice indicates the availability of the

sixth Statement of Federal Financial

Accounting Standards, ‘‘Accounting for

Property, Plant, and Equipment.’’ The

standard was recommended by the

Federal Accounting Standards Advisory

Board (FASAB) in September 1995, and

adopted in its entirety by the Office of

Management and Budget (OMB).

Under a Memorandum of

Understanding among the General

Accounting Office, the Department of

the Treasury, and OMB on Federal

Government Accounting Standards, the

Comptroller General, the Secretary of

the Treasury, and the Director of OMB

decide upon principles and standards

after considering the recommendations

of FASAB. After agreement to specific

principles and standards, they are to be

published in the Federal Register and

distributed throughout the Federal

Government.

G. Edward DeSeve,

Controller.

[FR Doc. 96–14689 Filed 6–10–96; 8:45 am]

BILLING CODE 3110–01–P

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22004; 812–10014]

Norwest Funds, et al.; Notice of

Application

June 4, 1996.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption Under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Norwest Advantage Funds,

Norwest Select Funds, Core Trusts

(collectively, the ‘‘Trusts’’) and Norwest

Bank Minnesota, N.A. (‘‘Norwest’’).

RELEVANT ACT SECTION: Order requested

under rule 17d–1 to permit certain

transactions in accordance with section

17(d) of the Act and rule 17d–1

thereunder.

SUMMARY OF APPLICATION: Applicants

request an order to permit the series of

certain investment companies and

certain private accounts to deposit daily

cash balances in one or more joint

accounts to be used to enter into shortterm investments.

FILING DATES: The application was filed

on February 26, 1996 and amended on

May 16, 1996.

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 July

1, 1996, 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 5th

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

Applicants, Forum Financial Services,

Inc., Two Portland Square, Portland,

Maine 04101; Norwest Bank Minnesota,

N.A., Norwest Center, Sixth and

Marquette, Minneapolis, Minnesota

55479–1026.

FOR FURTHER INFORMATION CONTACT:

Suzanne Krudys, Senior Counsel, at

(202) 942–0641, or Alison E. Baur,

Branch Chief, (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.

Applicants’ Representations

1. The Trusts, organized as Delaware

business trusts, are registered open-end

management investment companies

comprised of multiple series (the

‘‘Series’’). Existing and future series of

the Trusts and other registered

investment companies or Series thereof

that are advised by Norwest are

collectively referred to as the ‘‘Funds’’

and individually as a ‘‘Fund.’’ Norwest,

a national bank, serves as investment

adviser to each Fund. Norwest also

serves as transfer agent, custodian,

shareholder servicing and dividend

paying agent of each Trust. The term

‘‘Norwest’’ shall include, in addition to

the company itself, any other entity

controlling, controlled by or under

common control with Norwest that acts

in the future as investment adviser for

the Trusts or other investment

companies.

2. Applicants request relief on behalf

of themselves and also any present or

future Series and Funds that are advised

by Norwest, or any entity controlling,

controlled by, or under common control

with Norwest and any individual

corporate, charitable, endowment,

common and collective trust fund,

public entity, individual and retirement

accounts for which Norwest serves as

investment adviser (the ‘‘Private

Accounts’’). All Funds that currently

intend to rely on the requested order are

named as applicants.

3. All of the Funds are authorized to

invest at least a portion of their

uninvested cash balances in short-term

liquid assets. Private Accounts are

invested by Norwest in accordance with

each Private Accounts’ investment

objectives, policies and restrictions.

Assets of the Funds and Private

Accounts are held by Norwest as

custodian (the ‘‘Custodian’’).

4. The Funds and Private Accounts

have uninvested cash balances in their

accounts at the Custodian that are not

otherwise invested in portfolio

securities. Generally, such cash balances

are invested in short-term liquid assets,

such as commercial paper or U.S.

Treasury bills. Cash balances may also

be invested in shares of the money

market series of the Trusts.1

5. Applicants propose to deposit daily

cash balances of the Funds and Private

Accounts into one or more joint

accounts (the ‘‘Joint Accounts’’)

established at the Custodian and to

invest the daily balance of the Joint

Account in: (a) Repurchase agreements

‘‘collateralized fully’’ (as defined in rule

2a–7 under the Act); (b) interest-bearing

or discounted commercial paper,

including dollar denominated

commercial paper of foreign issuers; and

(c) any other short-term money market

instruments, including variable rate

demand notes and other tax exempt

money market instruments, that

constitute ‘‘Eligible Securities’’ (as

defined in rule 2a–7 under the Act)

(collectively, ‘‘Short-Term

Investments’’). The Funds and Private

Accounts that are eligible to participate

in a Joint Account and that elect to
Federal Register / Vol. 61, No. 113 / Tuesday, June 11, 1996 / Notices 29581

participate in such Account are

collectively referred to as

‘‘Participants.’’

6. A Participant’s decision to use a

Joint Account will be based on the same

factors as its decision to make any other

short-term liquid investment. The sole

purpose of the Joint Accounts is to

provide a convenient means of

aggregating what otherwise would be

one or more daily transactions for some

or all Participants necessary to manage

their respective daily account balances.

7. Norwest would be responsible for

investing funds held by the Joint

Accounts, establishing accounting and

control procedures, and ensuring fair

treatment of Participants. Norwest

would manage investments in the Joint

Accounts in essentially the same

manner as if it had invested in such

instruments on an individual basis for

each Fund or Private Account. A

Participant will be able to transfer a

portion of its cash balances to more than

one Joint Account and a Joint Account

would be permitted to invest in more

than one Short-Term Investment.

8. Any repurchase agreements entered

into through the Joint Account will

comply with the terms of Investment

Company Act Release No. 13005

(February 2, 1983). Applicants

acknowledge that they have a

continuing obligation to monitor the

SEC’s published statements on

repurchase agreements, and represent

that repurchase agreement transactions

will comply with future 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 the Joint

Account will comply with those

guidelines.

Applicants’ Legal Analysis

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

17d–1 thereunder prohibit an affiliated

person of a registered investment

company, or an affiliated person of such

a person, from participating in any joint

enterprise or arrangement in which such

investment company is a participant,

without an SEC order. The applicants

believe that granting the requested order

is consistent with the provisions,

policies, and purposes of the Act and

the Funds would participate in the Joint

Account on a basis no different from or

less advantageous than that of any other

Participant.

2. The Participants, by participating

in the proposed Joint Accounts, and

Norwest, by managing the proposed

Joint Accounts, 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

Accounts could be deemed to be a ‘‘joint

enterprise or other joint arrangement’’

within the meaning of rule 17d–1.

3. Applicants state that the

Participants may earn a higher rate of

return on investments through the Joint

Accounts relative to the returns they

could earn individually. Under most

market conditions, it is generally

possible to negotiate a rate of return on

larger Short-Term Investments that is

higher than the rate available on smaller

Short-Term Investments. The Joint

Accounts also may increase the number

of dealers and issuers willing to enter

into Short-Term Investments with the

Participants and may reduce the

possibility that their cash balances

remain uninvested.

4. Applicants believe that no

Participant would be in a less favorable

position as a result of the Joint

Accounts. Each Participant’s investment

in a Joint Account would not be subject

to the claims of creditors, whether

brought in bankruptcy, insolvency, or

other legal proceeding, of any other

Participant. Each Participant’s liability

on any Short-Term Investment would be

limited to its interest in such

investment; no Participant would be

jointly liable for the investments of any

other Participant.

Applicants state that the Joint

Accounts may result in certain

administrative efficiencies and a

reduction of the potential for errors by

reducing the number of trade tickets and

cash wires that must be processed by

the counterparties to the transactions,

the Custodian and Norwest’s trading

department.

6. Applicants believe that the

proposed operation of the Joint Account

would not result in any conflicts of

interest between any of the Participants

and Norwest. When making

investments, Norwest would take into

account each Participant’s investment

objective, policies and restrictions, its

obligation to fairly allocate investment

opportunities among participants, the

need for diversification and the time

that cash becomes available.

7. The Boards will have determined,

prior to participation by any Fund, that

the procedures for operating the Joint

Accounts are reasonably designed to

ensure (i) that the Joint Accounts are not

inherently biased in favor of one

Participant over another and should

eliminate any bias due to size or lack

thereof in any transaction; and (ii) that

the anticipated benefits to each

Participant would be within an

acceptable range of fairness.

8. For the reasons set forth above,

applicants believe that granting the

requested order is consistent with the

provisions, policies and purpose of the

Act and intention of rule 17d–1.

Applicants’ Conditions

Applicants would comply with the

following as conditions to any order

granted by the SEC:

1. The Joint Accounts would not be

distinguishable from any other accounts

maintained by Participants at the

Custodian except that monies from

Participants would be deposited in a

Joint Account on a commingled basis.

The Joint Accounts would not have a

separate existence and would not have

indicia of a separate legal entity. The

sole function of the Joint Accounts

would be to provide a convenient way

of aggregating individual transactions

which would otherwise require daily

management by Norwest of uninvested

cash balances.

2. Cash in the Joint Accounts would

be invested in one or more of the

following, as directed by Norwest: (a)

Repurchase agreements ‘‘collateralized

fully’’ as defined in rule 2a–7 under the

Act; (b) interest-bearing or discounted

commercial paper, including dollar

denominated commercial paper of

foreign issuers; and (c) any other shortterm money market instruments,

including variable rate demand notes

and other tax-exempt money market

instruments, that constitute ‘‘Eligible

Securities’’ (as defined in rule 2a–7

under the Act) (collectively, ‘‘ShortTerm Investments’’). Short-Term

Investments that are repurchase

agreements would have a remaining

maturity of 60 days or less and other

Short-Term Investments would have a

remaining maturity of 90 days or less,

each as calculated in accordance with

rule 2a–7 under the Act.

3. All assets held in the Joint

Accounts would be valued on an

amortized cost basis to the extent

permitted by applicable SEC releases,

rules or orders.

4. Each Participant that is a registered

investment company valuing its net

assets in reliance on rule 2a–7 under the

Act would use the average maturity of

the instruments in the Joint Account in

which such Participant has an interest

(determined on a dollar weighted basis)

for the purpose of computing its average

portfolio maturity with respect to its

portion of the assets held in a Joint

Account on that day.

5. In order to assure that there will be

no opportunity for any Participant to

use any part of a balance of a Joint

Account credited to another Participant,

no Participant will be allowed to create
29582 Federal Register / Vol. 61, No. 113 / Tuesday, June 11, 1996 / Notices

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 19406

(Feb. 17, 1983), 48 FR 8385 (Feb. 28, 1983) (order

approving File No. SR–PSE–82–16).

4See PSE Const., Art. III, Sec. 2(c).

a negative balance in any Joint Account

for any reason, although each

Participant will be permitted to draw

down its entire balance at any time.

Each Participant’s decision to invest in

a Joint Account would be solely at its

option, and no Participant would be

obligated to invest in the Joint Account

or to maintain any minimum balance in

the Joint Account. In addition, each

Participant would retain the sole rights

of ownership to any of its assets

invested in the Joint Account, including

interest payable on such assets invested

in the Joint Account.

6. Norwest would administer the

investment of cash balances in and

operation of the Joint Accounts as part

of its general duties under its advisory

agreements with Participants and would

not collect any additional or separate

fees for advising any Joint Account.

7. The administration of the Joint

Account would be within the fidelity

bond coverage required by section 17(g)

of the Act and rule 17g–1 thereunder.

8. The Board of Trustees of each Trust

(each a ‘‘Board’’) would adopt

procedures pursuant to which the Joint

Accounts would operate, which will be

reasonably designed to provide that the

requirements of this application will be

met. Each Board will make and approve

such changes as they deem necessary to

ensure that such procedures are

followed. In addition, the Board of each

Fund would determine, no less

frequently than annually, that the Joint

Accounts have been operated in

accordance with the proposed

procedures and would permit a Fund to

continue to participate therein only if it

determines that there is a reasonable

likelihood that the Fund and its

shareholders would benefit from the

Fund’s participation.

9. Any Short-Term Investments made

through the Joint Accounts would

satisfy the investment criteria of all

Participants in that investment.

10. Each Participant and the

Custodian would maintain records (in

conformity with Section 31 of the Act

and the rules thereunder) documenting

for any given day, the Participant’s

aggregate investment in a Joint Account

and the Participant’s pro rata share of

each Short-Term Investment made

through such Joint Account. Each

Participant that is not a registered

investment company or registered

investment adviser would make

available to the Commission, upon

request, such books and records with

respect to its participation in a Joint

Account.

11. Short-Term Investments held in a

Joint Account generally would not be

sold prior to maturity except if: (a)

Norwest 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 a

downgrading or otherwise; or (c) in the

case of a repurchase agreement, the

counterparty defaults. Norwest 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 transaction

would not adversely affect other

Participants. In no case would a sale

prior to maturity of a Short-Term

Investment on behalf of less than all

Participants be permitted if it would

reduce the principal amount or yield to

be received by other Participants in the

Short-Term Investment or otherwise

adversely affect the other Participants.

Each Participant of a Joint Account will

be deemed to have consented to such

sale and partition of the investments in

the Joint Account.

12. Short-Term Investments held

through a Joint Account with a

remaining maturity of more than seven

days, as calculated pursuant to rule 2a–

7 under the Act, will be considered

illiquid and, for any Participant that is

an open-end investment company

registered under the Act, will be subject

to the restriction that the Fund may not

invest more than 10%, in the case of a

money market fund, and 15%, in the

case of a non-money market fund, (or

such other percentage as set forth by the

SEC from time to time) of its net assets

in illiquid securities, if Norwest cannot

sell the instrument, or the Fund’s

fractional interest in such instrument,

pursuant to the preceding condition.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–14712 Filed 6–10–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37274; File No. SR–PSE–

96–08]

Self-Regulatory Organizations; the

Pacific Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change Relating to Amendments to

Exchange Constitution Article III,

Section 2(c)

June 4, 1996.

I. Introduction

On March 28, 1996, the Pacific Stock

Exchange, Inc. (‘‘PSE’’ or ‘‘Exchange’’)

submitted to the Securities and

Exchange Commission) ‘‘SEC’’ or

‘‘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 Exchange Constitution Article II,

Section 2(c).

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 37083 (April

8, 1996), 61 FR 16515 (April 15, 1996).

No comments were received on the

proposal.

II. Background

Prior to 1973, the Exchange had no

rule in place regarding conflicts of

interest on the Board of Governors. In

1973, a simplified version of the current

rule was added to the PSE Constitution,

which read as follows:

No two or more Governors for a common

or overlapping term may be associated either

as partners, stockholders or otherwise in the

same member firm or in a partnership or

corporation which is affiliated with the same

member firm.

In 1983, the rule expanded the

definition of associates to include

officers and directors,3 and attempted to

define more clearly an ‘‘indirect

association’’ between Governors, by

using two specific tests that are set forth

in the current rule.4 The experience of

PSE management and the PSE Board of

Governors, however, in interpreting and

applying the current rule has been that

the language is too cumbersome and

specific to achieve the intended purpose

of eliminating conflicts. The existing

rule limits the Exchange’s authority to

force a governor off the Board only in

limited circumstances.

A task force was created to review the

current rule and to examine alternatives

that might work better to avoid conflicts

on both the Board of Governors and the

Exchange committees. The task force

consisted of nine members as follows:

four Governors (including a public

governor, a specialist, an options floor

broker and an allied member), two

options clearing firm officials, the

chairman of the Options Floor Trading

Committee, the chairman of the Equity

Floor Trading Committee, and the

chairman of the Ethics and Business

Conduct Committee. The task force

concluded that the current language was

unnecessarily specific, and therefore

was too restrictive on the Board’s power