Federal Register / Vol. 65, No. 85 / Tuesday, May 2, 2000 / Notices 25525

1All investment companies that currently intend

to rely on the requested relief have been named as

applicants, and any existing or future registered

management investment company or series thereof

that relies on the requested relief in the future will

do so only in accordance with the terms and

conditions of the application.

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

24403; 812–11440]

SSgA Funds and State Street Bank and

Trust Company; Notice of Application

April 25, 2000.

AGENCY: Securities and Exchange

Commission (‘‘Commission’’)

ACTION: Notice of an application for an

order under section 12(d)(1)(J) of the

Investment Company Act of 1940 (the

‘‘Act’’) for an exemption from sections

12(d)(1)(A) and (B) of the Act, under

sections 6(c) and 17(b) of 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 to permit

certain joint transactions.

Summary of Application: Applicants

request an order to permit certain

registered open-end management

investment companies to invest

uninvested cash and cash collateral in

affiliated money market funds and/or

short-term bond funds.

Applicants: SSgA Funds, on behalf of

its series SSgA Money Market Fund,

SSgA U.S. Government Money Market

Fund, SSgA S&P 500 Index Fund, SSgA

Small Cap Fund, SSgA Matrix Equity

Fund, SSgA Active International Fund,

SSgA International Pacific Index Fund,

SSgA Bond Market Fund, SSgA Yield

Plus Fund, SSgA U.S. Treasury Money

Market Fund, SSgA U.S. Treasury

Obligations Fund, SSgA Growth and

Income Fund, SSgA Intermediate Fund,

SSgA Emerging Markets Fund, SSgA

Prime Money Market Fund, SSgA Tax

Free Money Market Fund, SSgA

Tuckerman Active REIT Fund, SSgA

Life Solutions Income and Growth

Fund, SSgA Life Solutions Balanced

Fund, SSgA Life Solutions Growth

Fund, SSgA Special Equity Fund, SSgA

High Yield Bond Fund, SSgA

International Growth Opportunities

Fund, SSgA Aggressive Equity Fund,

and SSgA IAM SHARES Fund (each a

‘‘Fund’’ and collectively, the ‘‘Funds’’),

and State Street Bank and Trust

Company (‘‘State Street’’).

Filing Dates: The application was

filed December 23, 1998. Applicants

have agreed to file an amendment

during the notice period, the substance

of which is reflected in this notice.

Hearing Nor Notification of Hearing:

An order granting the application will

be issued unless the Commission orders

a hearing. Interested persons may

request a hearing by writing to the

Commission’s Secretary and serving

applicants with a copy of the request,

personally or by mail. Hearing requests

should be received by the Commission

by 5:30 p.m. on May 22, 2000, 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

Commission’s Secretary.

ADDRESSES: Secretary, Securities and

Exchange Commission, 450 Fifth Street,

NW, Washington, DC 20549–0609;

Applicants, SSgA, Two International

Place, 35th Floor, Boston MA 02110,

State Street, 225 Franklin Street, Boston,

MA 02110.

FOR FURTHER INFORMATION CONTACT:

Deepak T. Pai, Senior Counsel, at (202)

942–0574 or George J. Zornada, 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

Commission’s Public Reference Branch,

450 Fifth Street, NW, Washington, DC

20549–0102 (telephone (202) 942–8090).

Applicants’ Representations

1. SSgA Funds, organized as a

Massachusetts business trust, is

registered under the Act as an open-end

management investment company. Each

Fund is a series of SSgA Funds and has

a separate investment objective and

policies. State Street serves as the

investment adviser for each of the

Funds. State Street is a bank and is not

required to register as an investment

adviser under the Investment Advisers

Act of 1940. Applicants also request

relief for all other registered

management investment companies and

series thereof now or hereafter existing

for which State Street, or a person

controlling, controlled by, or under

common control with State Street

(collectively, ‘‘State Street’’), acts as

investment adviser (together with the

Funds, the ‘‘Funds’’).1

2. Each Fund (‘‘Participating Fund’’)

has, or may be expected to have, cash

that has not been invested in portfolio

securities (‘‘Uninvested Cash’’) held by

its custodian bank. Such Uninvested

Cash may result from a variety of

sources, including dividends or interest

received from portfolio securities,

unsettled securities transactions,

reserves held for investment strategy

purposes, scheduled maturity of

investments, liquidation of investment

securities to meet anticipated

redemptions and dividend payments,

and new monies received from

investors. Certain of the Participating

Funds also may participate in a

securities lending program under which

a Participating Fund may lend its

portfolio securities to registered brokerdealers or other institutional investors.

The loans are continuously secured by

collateral equal at all times to at least

the market value of the securities

loaned. Collateral for these loans may

include cash (‘‘Cash Collateral,’’ and

together with Uninvested Cash, ‘‘Cash

Balances’’).

3. Applicants request relief to permit

Participating Funds to use Cash

Balances to purchase shares of one or

more of the funds that are money market

funds or short-term bond funds (the

‘‘Central Funds’’), and the Central

Funds to sell shares to and purchase

shares from the Participating Funds (the

‘‘Proposed Transactions’’). Certain of the

Central Funds are money market funds

operating pursuant to rule 2a–7 under

the Act. The other Central Funds are or

will be short-term bond funds that seek

high current income consistent with the

preservation of capital by investing in

fixed-income securities and maintaining

a dollar-weighted average maturity of

three years or less (the ‘‘Short-Term

Bond Funds.’’) Applicants believe that

the Participating Funds’ investment in

the Central Funds may reduce the risk

of counterparty default on repurchase

agreements and the market risk

associated with direct purchases of

short-term obligations, while providing

high current money market rates of

return, ready liquidity, and increased

diversity of holdings.

Applicants’ Legal Analysis

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

provides that no registered investment

company may acquire securities of

another investment company if such

securities represent more than 3% of the

acquired company’s outstanding voting

stock, more than 5% of the acquiring

company’s total assets, or if such

securities, together with the securities of

other acquired investment companies,

represented more than 10% of the

acquiring company’s total assets.

Section 12(d)(1)(B) of the Act provides

that no registered open-end investment

company sell its securities to another

investment company if the sale will

cause the acquiring company to own

25526 Federal Register / Vol. 65, No. 85 / Tuesday, May 2, 2000 / Notices

more than 3% of the acquired

company’s voting stock, or if the sale

will cause more than 10% of the

acquired company’s voting stock to be

owned by investment companies.

2. Section 12(d)(1)(J) of the Act

provides that the Commission may

exempt any person or transaction from

any provision of section 12(d)(1) if, and

to the extent that, the exemption is

consistent with the public interest and

the protection of investors. Applicants

request an exemption from the

provisions of sections 12(d)(1)(A) and

(B) to the extent necessary to permit

each Participating Fund to invest Cash

Balances in the Central Funds.

3. Applicants state that the proposed

arrangement would not result in the

abuses that sections 12(d)(1)(A) and (B)

were intended to prevent. Applicants

state that because each Central Fund

will maintain a highly liquid portfolio,

a Participating Fund will not be in a

position to gain undue influence over a

Central Fund. Applicants represent that

the proposed arrangement will not

result in an inappropriate layering of

fees because shares of the Central Funds

sold to the Participating Funds will not

be subject to a sales load, redemption

fee, distribution fee under a plan

adopted in accordance with rule 12b–1

or service fee (as defined in rule

2830(b)(9) of the National Association of

Securities Dealers’ (‘‘NASD’’) Conduct

Rules) or, if such shares are subject to

any such distribution fee or service fee,

State Street will waive its advisory fee

for each Participating Fund in an

amount that offsets the amount of such

distribution and/or service fees incurred

by the Participating Fund. In connection

with approving any advisory contract

for a Participating Fund, the

Participating Fund’s board of trustees

(the ‘‘Board’’), including a majority of

the trustees who are not ‘‘interested

persons,’’ as defined in section 2(a)(19)

of the Act (‘‘Disinterested Trustees’’)

will consider to what extent, if any, the

advisory fees charged to the

Participating Fund by the Adviser

should be reduced to account for

reduced services provided to the

Participating Fund by the Adviser as a

result of the investment of Uninvested

Cash in the Central Funds. Applicants

represent that no Central Fund will

acquire securities of any other

investment company in excess of the

limitations contained in section

12(d)(1)(A) of the Act.

4. 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 to include the investment

adviser, any person that owns 5% or

more of the outstanding voting

securities of that company, and any

person directly or indirectly controlling,

controlled by, or under common control

with the investment company.

Applicants state that the Participating

Funds and Central Funds may share a

common investment adviser and a

common Board. Therefore, each

Participating Fund and each Central

Fund may be an affiliated person of

every other Fund. In addition,

applicants state that a Participating

Fund may become an affiliated person

of a Central Fund by owning more than

5% of the outstanding voting securities

of a Central Fund. Accordingly,

applicants seek an exemption from the

provisions of section 17(a) to permit the

sale of shares of the Central Funds to the

Participating Funds and the redemption

of such shares by the Central Funds.

5. Section 17(b) of the Act authorizes

the Commission to exempt a proposed

transaction from section 17(a) of the Act

if the terms of the proposed transaction,

including the consideration to be paid

or received, are fair and reasonable and

do not involve overreaching on the part

of any person concerned, the proposed

transaction is consistent with the

policies of each registered investment

company involved, and with the general

purposes of the Act. Section 6(c) of the

Act provides, in part, that the

Commission may exempt any person,

security or transaction, or any class or

classes of person, securities or

transactions, from any provision of the

Act if, and to the extent that such

exemption is necessary or appropriate

in the public interest and is consistent

with the protection of investors and the

purposes fairly intended by the policy

and provisions of the Act.

6. Applicants submit that the request

for relief satisfies the standards of

sections 17(b) and 6(c) of the Act.

Applicants state that the terms of the

Proposed Transactions are fair and

reasonable, and do not involve

overreaching because the consideration

paid and received on the sale and

redemption of shares of a Central Fund

will be based on the Central Fund’s net

asset value per share. In addition, under

the Proposed Transactions, the

Participating Funds will retain their

ability to invest their Cash Balances

directly in money market instruments

and other short-term obligations, as

permitted by each Participating Fund’s

investment objectives and policies.

Applicants state that each of the Central

Funds reserves the right to discontinue

selling shares to any of the Participating

Funds if its Board determines that such

sales would adversely affect its portfolio

management and operations. Applicants

note that the investment of assets of the

Participating Funds in shares of the

Central Funds will be affected in

accordance with each Participating

Fund’s investment restrictions and will

be consistent with each Participating

Fund’s policies as set forth in its

registration statement.

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

17d–1 under the Act prohibits an

affiliated person of an investment

company, acting as principal, from

participating in or effecting any

transaction in connection with any joint

enterprise or joint arrangement in which

the investment company participates.

Applicants state that the Participating

Funds and the Central Funds, by

participating in the Proposed

Transactions, and State Street, by

managing the Proposed Transactions,

could be deemed to be participants in a

joint enterprise or arrangement within

the meaning of section 17(d) of the Act

and rule 17d–1 under the Act.

8. Rule 17d–1 permits the

Commission to approve a proposed joint

transaction covered by the terms of

section 17(d) of the Act. In determining

whether to approve a transactions, the

Commission is to consider whether the

proposed transaction is consistent with

the provisions, policies, and purposes of

the Act, and the extent to which the

participation is on a basis different from

or less advantageous than that of other

participants. Applicants submit that the

investment by the Participating Funds

in shares of the Central Funds would be

indistinguishable from any other

shareholder account maintained by the

Central Fund and that the transactions

will be consistent with the Act.

Applicants’ Conditions

Applicants agree that the order of the

Commission granting the requested

relief shall be subject to the following

conditions:

1. The shares of the Central Funds

sold to and redeemed from the

Participating Funds will not be subject

to a sales load, redemption fee,

distribution fee under a 12b–1 plan, or

service fee (as defined in rule 2830(b)(9)

of the Conduct Rules of the NASD), or

if such shares are subject to any such

distribution fee or service fee, State

Street will waive its advisory fee for

each Participating Fund in an amount

that offsets the amount of such

distribution and/or service fees incurred

by the Participating Fund.

2. If State Street collects a fee from

any Central Fund for acting as its

investment adviser with respect to

Federal Register / Vol. 65, No. 85 / Tuesday, May 2, 2000 / Notices 25527

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 42450

(February 23, 2000), 65 FR 10577 (‘‘Concept

Release’’).

assets invested by a Participating Fund,

before the next meeting of the Board of

that Participating Fund is held for the

purpose of voting on the Participating

Fund’s advisory contract pursuant to

section 15 of the Act, State Street will

provide the Board with specific

information regarding the approximate

cost to State Street for, or portion of the

advisory fee under the existing advisory

contract attributable to, managing the

assets of the Participating Fund that can

be expected to be invested in such

Central Funds. Before approving the

Participating Fund’s advisory contract

pursuant to section 15, the Board,

including a majority of the Disinterested

Trustees shall consider to what extent,

if any, the advisory fees charged to the

Participating Fund by State Street

should be reduced to account for

reduced services provided to the

Participating Fund by State Street as a

result of Uninvested Cash being

invested in the Central Funds. The

minute books of the Participating Fund

will record fully the Board’s

consideration in approving the advisory

contract, including the considerations

relating to fees referred to above.

3. Each of the Participating Funds will

invest Uninvested Cash in, and hold

shares of, the Central Funds only to the

extent that the Participating Fund’s

aggregate investment in the Central

Funds does not exceed 25% of the

Participating Fund’s total assets. For

purposes of this limitation, each

Participating Fund or series thereof will

be treated as a separate investment

company.

4. Investment in shares of the Central

Funds will be in accordance with each

Participating Fund’s respective

investment restrictions, if any, and will

be consistent with each Participating

Fund’s policies as set forth in its

prospectus(es) and statement(s) of

additional information. Participating

Funds that are money market funds will

not acquire shares of any Central Fund

that does not comply with the

requirements of rule 2a–7 under the Act.

5. Each Participating Fund, each

Central Fund, and any future Fund that

may rely on the order shall be advised

by State Street.

6. No Central Fund shall acquire

securities of any other investment

company in excess of the limits

contained in section 12(d)(1)(A) of the

Act.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–10856 Filed 5–1–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42723; File No. SR–NYSE–

99–48]

Notice of Extension of Comment

Period for Issues Relating to Market

Fragmentation

April 26, 2000.

On December 10, 1999, the New York

Stock Exchange, Inc. (‘‘NYSE’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Exchange Act’’) 1 and Rule

19b–4 thereunder,2 a proposed rule

change to rescind Exchange Rule 390.

The proposed rule change was

published for comment in the Federal

Register on February 28, 2000.3 The

release publishing notice of the

proposed rule change also included a

Commission request for public comment

on issues relating to market

fragmentation (‘‘Concept Release’’). The

comment period relating to the

rescission of Exchange Rule 390 expired

on March 20, 2000; the comment period

for issues related to market

fragmentation is scheduled to expire on

April 28, 2000.

The Commission has decided to

extend for two weeks until May 12,

2000, the comment period for issues

related to market fragmentation. The

Concept Release requested comment on

a wide range of issues, including

whether fragmentation is now, or may

become in the future, a problem that

significantly detracts from the fairness

and efficiency of the U.S. markets. In

addition, the Concept Release requested

comment on six potential options for

addressing fragmentation. These issues

are very complex, and the Commission

believes that it will be helpful for

commenters to have two extra weeks in

which to prepare and submit their

views.

In this regard, the Commission urges

commenters not to limit their attention

to a single option raised in the Concept

Release, particularly the option of

establishing comprehensive price/time

priority for all displayed trading

interest. This option has been widely

referred to in the press as a ‘‘CLOB’’—

a central limit order book. The other five

options were included in the Concept

Release specifically to afford

commenters an opportunity to submit

their views on alternatives to a CLOB

that would be more focused on specific

practices or problems that may isolate

investor orders, discourage quote

competition, or impair public price

discovery. The Commission hopes to

receive the benefit of commenters’

views on these other options as well.

Interested persons are invited to

submit written data, views, and

arguments concerning issues relating to

market fragmentation discussed in the

Concept Release. Persons making

written submissions should file six

copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, NW, Washington, DC

20549–0609. Comments also may be

submitted electronically at the following

E-mail address: rule-comments@sec.gov.

All comment letters should refer to File

No. SR–NYSE–99–48. Comments

submitted by E-mail should include this

file number in the subject line.

Comment letters received will be

available for public inspection and

copying in the Commission’s Public

Reference Room. Electronically

submitted comment letters will be

posted on the Commission’s Internet

web site (http://www.sec.gov).

It is therefore ordered that the period

for public comment on issues relating to

market fragmentation is extended until

May 12, 2000.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–10893 Filed 5–1–00; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Notice of Availability of the Draft

Environmental Assessment for the

Proposed Actions Relating to the

Change in Departure Procedure at

Sarasota Manatee International Airport

and Public Comment

AGENCY: Federal Aviation

Administration (FAA).

ACTION: Notice of availability and

request for comments.

SUMMARY: The Federal Aviation

Administration (FAA) announces the