37188 Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Notices

1See Southern Co., HCAR No. 27134 (February 9,

2000) (authorizing electric utility holding company

to issue unsecured debt and preferred securities).

2The record notes that the interest rates, fees and

expenses associated with the long-term debt issued

by Allegheny and Supply will be comparable to

those obtainable by similar utilities issuing

comparable securities containing the same or

similar terms and maturities.

3Supply proposes to lend to and borrow up to

$300 million from the Money Pool on the same

terms and under the same conditions that are

available to current Money Pool members.

Allegheny Energy, Inc., Holding Co. Act Release No.

25481 (February 28, 1992).

1A post-effective amendment to the registration

statement for the ten newly created Acquiring

Series was filed with the Commission on March 17,

2000, and became effective on May 31, 2000.

of the Act and rules 45 and 54 under the

Act.

By prior Commission orders dated

January 29, 1992, February 28, 1992,

July 14, 1992, November 5, 1993,

November 28, 1995, April 18, 1996,

December 23, 1997, May 19, 1999 and

October 8, 1999 (HCAR Nos. 25462,

25481, 25581, 25919, 26418, 26506,

26804, 27030 and 27084) (‘‘Money Pool

Orders’’), among other things, Allegheny

and its subsidiary companies were

authorized to establish and participate

in a system money pool (‘‘Money Pool’’)

to be administered by Service. By order

dated November 12, 1999 (HCAR No.

27101) (‘‘Financing Order’’), among

other things, the Commission

authorized, through July 31, 2005,

Supply to effect short-term borrowings

in aggregate outstanding amounts of

$300 million, consisting of the issuance

of up to $100 million of notes (‘‘Notes’’)

to Allegheny and up to $200 million of

commercial paper (‘‘Paper’’) to dealers

and Allegheny to enter into credit and

counterparty support agreements

(‘‘Support Agreements’’) for the benefit

of Supply in amounts of up to $150

million.

The Applicants state that competitive

pressures in the industry have required

that the system expand its generating

capacity to a level that will allow it to

serve a larger customer base. In order to

meet the additional capital requirements

associated with the expansion, the

Applicants request that the Commission

modify the authority granted in the

Money Pool Orders to include Supply in

the Money Pool Additionally, it is

requested that the authority granted in

the Financing Order be modified to

allow for additional financing authority.

In particular, Allegheny proposes to:

(1) issue and sell up to $135 million of

long-term unsecured notes to banks or

other institutions,1 and (2) enter into

Support Agreements for the benefit of

Supply in amounts increased from $150

million to $250 million. Supply

proposes to: (1) issue and sell up to

$400 million of secured and unsecured

long-term debt,2 and (2) issue and sell

Notes and Paper and borrow from the

Money Pool,3 each in aggregate

outstanding amounts of up to $300

million, provided that its aggregate

outstanding short-term debt does not

exceed $300 million.

For the Commission by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14818 Filed 6–12–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. IC–24490; 812–12050]

American General Series Portfolio

Company 2, et al., Notice of

Application

June 7, 2000.

AGENCY: Securities and Exchange

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

ACTION: Notice of an application under

section 17(b) of the Investment

Company Act of 1940 (‘‘Act’’) for an

exemption from section 17(a) of the Act.

Summary of Application: Applicants

request an order to permit certain series

of the North American Funds (‘‘NAF’’)

to acquire all of the assets and liabilities

of certain series of the American

General Series Portfolio Company 2

(‘‘AGSPC2’’). Because of certain

affiliations, applicants may not rely on

rule 17a–8 under the Act.

Applicants: AGSPC2, NAF, The

Variable Annuity Life Insurance

Company (‘‘VALIC’’), and American

General Corporation (‘‘American

General’’).

Filing Dates: The application was

filed on March 24, 2000. Applicants

agree to file an amendment during the

notice period, the substance of which is

reflected in this notice.

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

June 29, 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 SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, NW, Washington, DC 20549–

0609. Applicants: AGSPC2, VALIC, and

American General 2929 Allen Parkway,

Houston, Texas 77019; NAF, 286

Congress Street, Boston, Massachusetts,

02210.

FOR FURTHER INFORMATION CONTACT: J.

Amanda Machen, Senior Counsel, at

(202) 942–7120, or Christine Y.

Greenlees, Branch Chief, at (202) 942–

0564 (Division of Investment

Management, Office of Investment

Company Regeulation).

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, NW, Washington, DC 20549–

0102 (telephone (202) 942–8090).

Applicants’ Representations

1. AGSPC2, a Delaware business trust,

is registered under the Act as an openend management investment company

and is comprised of twenty-four series,

twenty-two of which are involved in the

proposed transactions (the ‘‘Acquired

Series’’). NAF, a Massachusetts business

trust, is registered under the Act as an

open-end management investment

company and is comprised of twentyfive series, twenty of which are involved

in the proposed transactions (The

‘‘Acquiring Series’’). Ten of the

Acquiring Series are newly organized

for purposes of the proposed

transactions.1 The Acquiring Series and

the Acquired Series are collectively

referred to as the ‘‘Series.’’

2. VALIC serves as investment adviser

to the Acquired Series and is registered

under the Investment Advisers Act of

1940 (‘‘Advisers Act’’). VALIC has

delegated responsibility for the day-today management of five of the Acquired

Series to American General Investment

Management, L.P. (‘‘AGIM’’), an

investment adviser registered under the

Advisers Act. American General Asset

Management Corp. (‘‘AGAM’’) is the

investment adviser for NAF and is

registered under the Advisers Act.

VALIC, AGIM, and AGAM are whollyowned subsidiaries of American

General.

3. Currently, VALIC and American

General’s employee pension plan, the

American General Retirement Plan (the

‘‘Affiliated Plan’’), each hold of record

in excess of 5% (in some cases, more

Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Notices 37189

2The Acquired Series and Acquiring Series will

combine as follows: (1) AGSPC2 Large Cap Growth

Fund into NAF Large Cap Growth Fund; (2)

AGSPC2 International Growth Fund and AGSPC2

International Value Fund into NAF International

Equity Fund; (3) AGSPC2 Large Cap Value Fund

into NAF Growth & Income Fund; (4) AGSPC2

Balanced Fund into NAF Balanced Fund; (5) ASPC2

Mid Cap Growth Fund into NAF Mid Cap Growth

Fund; (6) AGSPC2 Small Cap Growth Fund into

NAF Small Cap Growth Fund; (7) AGSPC2 Strategic

Bond Fund into NAF Strategic Income Fund; (8)

AGSPC2 Municipal Bond Fund into NAF

Municipal Bond Fund; (9) AGSPC2 Money Market

Fund into NAF Money Market Fund; (10) AGSPC2

Core Bond Fund and AGSPC2 Domestic Bond Fund

into NAF Core Bond Fund; (11) AGSPC2 Mid Cap

Value Fund into NAF Mid Cap Value Fund; (12)

AGSPC2 Stock Index Fund into NAF Stock Index

Fund; (13) AGSPC2 Small Cap Index Fund into

NAF Small Cap Index Fund; (14) AGSPC2 Socially

Responsible Fund into NAF Socially Responsible

Fund; (15) AGSPC2 High Yield Bond Fund into

NAF High Yield Bond Fund; (16) AGSPC2 Growth

Lifestyle Fund into NAF Aggressive Growth

Lifestyle Fund; (17) AGSPC2 Moderate Growth

Lifestyle Fund into NAF Moderate Growth Lifestyle

Fund; (18) AGSPC2 Conservative Growth Lifestyle

Fund into NAF Conservative Growth Lifestyle

Fund; (19) AGSPC2 Municipal Money Market Fund

into NAF Municipal Money Market Fund; and (20)

AGSPC2 Science & Technology Fund into NAF

Science & Technology Fund.

than 25%) of the outstanding voting

securities of certain of the Acquired

Series. VALIC holds its shares for its

own account and, thus, may be deemed

to have an economic interest in the

shares. The Affiliated Plan holds its

shares in a fiduciary capacity and does

not have an economic interest in these

shares.

4. On February 27, 2000, and March

2, 2000, respectively, the board of

trustees of each of NAF (the ‘‘NAF

Board’’) and AGSPC2 (the ‘‘AGSPC

Board,’’ and together with the NAF

Board, the ‘‘Boards’’), including in each

case a majority of the trustees who are

not ‘‘interested persons,’’ as defined in

section 2(a)(19) of the Act

(‘‘Independent Trustees’’), approved

plans of reorganization between the

Acquiring Funds and the Acquired

Funds (the ‘‘Plans,’’ and the

transactions, the ‘‘Fund

Reorganizations’’).2 The Fund

Reorganizations are expected to occur

on June 30, 2000 (the ‘‘Closing Date’’).

Under the Plans, the Acquiring Series

will acquire substantially all of the

assets, subject to the liabilities, of the

Acquired Series in exchange for shares

of designated classes of the

corresponding Acquiring Series having

an aggregate net asset value (‘‘NAV’’)

equal to the aggregate NAV of the

corresponding Acquired Series’ shares,

determined as of 4 p.m. Eastern Time on

the Closing Date. The aggregate NAV of

the Series’ shares will be computed in

the manner set forth in the Acquiring

Series’ prospectuses and statements of

additional information. Upon

consummation of the proposed

transactions, each Acquired Series will

distribute its full fractional shares of the

Acquiring Series pro rata to its

shareholders of record, determined as of

the Closing Date, and the Acquired

Series will be liquidated.

5. Applicants state that the

investment objective of each Acquired

Series and its corresponding Acquiring

Series are similar. Applicants also state

that the investment restrictions and

limitations of each Acquired Series and

its corresponding Acquiring Series

generally are similar, but in some cases

involve differences that reflect the

differences in the general investment

strategies used by the Series.

6. The Series offer four classes of

shares: Class A, Class B, Institutional

Class I, and Institutional Class II. The

various expenses of each class of shares

of the Acquired and Acquiring Series

are as follows:

a. Class A: Class A shares of both the

Acquired Series and the Acquiring

Series have a front-end sales load of up

to 5.75% (4.75% for the fixed income

Acquired Series), but no contingent

deferred sales charge (‘‘CDSC’’). The

Acquired Series and the Acquiring

Series generally are subject to a 12b–1

fee of up to 0.25% and 0.35%,

respectively (0.15% for the NAF

Municipal Bond Fund). Class A shares

of the AGSPC2 Growth Lifestyle Fund,

the AGSPC2 Moderate Growth Lifestyle

Fund, and the AGSPC2 Conservative

Growth Lifestyle Fund (collectively, the

‘‘American General Lifestyle Funds’’)

are not subject to a rule 12b–1 fee, but

Class A shares of the corresponding

Acquiring Series will be subject to a rule

12b–1 fee of up to 0.35%. Class A shares

of the NAF Money Market Fund are not

subject to a front-end sales charge or a

rule 12b–1 fee.

b. Class B: Class B shares of each

Acquired and Acquiring Series have no

front-end sales load. Class B shares of

the Acquired Series have a maximum

CDSC of 5%, which decreases by one

percentage point each year until the

fifth year, when the fee is 1% and zero

thereafter. Class B shares of the

Acquiring Series have a maximum

CDSC of 5% in the first two years,

which decreases by one percentage

point each year until the sixth year,

when the fee is 1% and zero thereafter.

For purposes of calculating the CDSC on

Class B shares, shareholders of the

Acquired Series will be deemed to have

held Class B shares of the Acquiring

Series since the date the shareholders

initially purchased the shares of the

Acquired Series. Class B shares of each

Acquired and Acquiring Series have a

rule 12b–1 fee of up to 1%, except for

Class B shares of the American General

Lifestyle Funds and the NAF Money

Market Fund, which do not have a rule

12b–1 fee. Class B shares of the

Acquiring Series and the Acquired

Series convert to Class A shares eight

and six years, respectively, after

purchase. After the Fund

Reorganizations, Class B shares will

convert to Class A shares six years after

purchase.

c. Institutional Class I: Institutional

Class I shares of the Acquired Series

have no front-end sales load, CDSC, or

12b–1 fee, but are subject to a 0.25%

administrative services fee. Institutional

Class I shares of the corresponding

Acquired Series, will have the same

characteristics as the corresponding

Acquiring Series, except for the

corresponding Acquiring Series of the

American General Lifestyle Funds,

which will not be subject to the 0.25%

administrative services fee. All of the

Acquired Series have Institutional Class

I Shares, except for AGSPC2 Stock

Index Fund, AGSPC2 Small Cap Index

Fund, AGSPC2 Municipal Money

Market Fund, and AGSPC2 Municipal

Bond Fund, Institutional Class I Shares

will be offered by all of the Acquiring

Series, except for NAF Municipal

Money Market Fund and NAF

Municipal Bond Fund.

d. Institutional Class II: Currently, on

AGSPC2 High Yield Bond Fund and

AGSPC2 Core Bond Fund have

Institutional Class II shareholders. The

Institutional Class II shares of these

Acquired Series have no front-end sales

load, CDSC, or rule 12b–1 fee. The

Institutional Class II shares of the

corresponding Acquiring Series will

have the same characteristics as the two

corresponding Acquired Series.

Shareholders of the Acquired Series will

not incur any sales charges in

connection with the Fund

Reorganizations. American General will

pay the expenses of the Fund

Reorganizations.

7. The Boards of AGSPC2 and NAF,

including in each case a majority of the

Independent Trustees, found that

participation in the Fund

Reorganizations is in the best interests

of the shareholders of each of the

Acquired and Acquiring Series and that

the interests of existing shareholders

will not be diluted as a result of the

Fund Reorganizations. In approving the

Fund Reorganizations, the Boards of

AGSPC2 and NAF considered, among

other things: (a) The terms and

conditions of each Fund Reorganization;

(b) the expense ratios of the Acquired

Series and the Acquiring Series before

the Fund Reorganization and the

estimated expense ratios of the

37190 Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Notices

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 42752

(May 3, 2000), 65 FR 30154.

4The current caps are set at 2,000 contracts for

customer trades and 3,000 contracts for member

firm proprietary, non-member broker-dealer,

specialist, and market maker trades.

5See Securities Exchange Act Release No. 42675,

(April 13, 2000), 65 FR 21223 (April 20, 2000).

Acquiring Series after the Fund

Reorganizations; (c) the fact that the

costs estimated to be incurred by the

Series as a result of the Fund

Reorganizations will not be borne by the

Series, but by American General; and (d)

the tax-free nature of the Fund

Reorganizations.

8. The Plans are subject to a number

of conditions precedent, including that:

(a) the Plans will have been approved by

the Boards of each of the Acquired

Series and the Acquiring Series and by

the shareholders of each of the Acquired

Series; (b) each Acquired Series will

solicit proxies from its shareholders

pursuant to definitive proxy materials

filed with the Commission; (c) the

applicants will have received an

opinion of counsel concerning the

federal income tax aspects of the Fund

Reorganizations; and (d) applicants will

have received from the Commission

exemptive relief from section 17(a) of

the Act for the Fund Reorganizations.

Each Plan may be terminated by mutual

agreement of the Boards at any time

prior to the Closing Date. Applicants

agree not to make any material changes

to the Plans that affect the application

without prior SEC approval.

9. Definitive proxy materials have

been filed with the Commission and

were mailed to shareholders of each

Acquired Series on or about June 1,

2000. A special meeting of the

shareholders of each Acquired Series is

scheduled to be held on or about June

22, 2000.

Applicant’s Legal Analysis

1. Section 17(a) of the Act generally

prohibits an affiliated person of a

registered investment company, or an

affiliated person of such a person, acting

as principal, from selling any security

to, or purchasing any security from, the

company. Section 2(a)(3) of the Act

defines an ‘‘affiliated person’’ of another

person to include: (a) any person

directly or indirectly owning,

controlling, or holding with power to

vote 5% or more of the outstanding

voting securities of the other person; (b)

any person 5% or more of whose

securities are directly or indirectly

owned, controlled, or held with power

to vote by the other person; (c) any

person directly or indirectly controlling,

controlled by, or under common control

with the other person; and (d) if the

other person is an investment company,

any investment adviser of that company.

Applicants state that the Series may be

deemed affiliated persons and, thus, the

Fund Reorganizations may be

prohibited by section 17(a).

2. Rule 17a–8 under the Act exempts

from the prohibitions of section 17(a)

mergers, consolidations, or purchasers

or sales of substantially all of the assets

of registered investment companies that

are affiliated persons, or affiliated

persons of an affiliated person, solely by

reason of having a common investment

adviser, common directors, and/or

common officers, provided that certain

conditions set forth in the rule are

satisfied.

3. Applicants believe that they may

not rely on rule 17a–8 in connection

with the Fund Reorganizations because

certain Series may be deemed to be

affiliated for reasons other than those set

forth in the rule. By virtue of the direct

or indirect ownership by VALIC and the

Affiliated Plan of more than 5% (in

some cases, more than 25%) of the

outstanding voting securities of certain

of the Acquired Series, each Acquired

Series may be deemed an affiliated

person of an affiliated person of the

corresponding Acquiring Series.

4. Section 17(b) of the Act provides

that the SEC may exempt a transaction

from the provisions of section 17(a) if

the evidence establishes that the terms

of the proposed transaction, including

the consideration to be paid, are

reasonable and fair and do not involve

overreaching on the part of any person

concerned, and that the proposed

transaction is consistent with the policy

of each registered investment company

concerned and with the general

purposes of the Act.

5. Applicants request an order under

section 17(b) of the Act exempting them

from section 17(a) of the Act to the

extent necessary to permit applicants to

consummate the Fund Reorganizations.

Applicants submit that the Fund

Reorganizations satisfy the standards of

section 17(b) of the Act. Applicants

submit that the Fund Reorganizations

satisfy the standards of section 17(b) of

the Act. Applicants state that the Boards

of AGSPC2 and NAF, including in each

case a majority of their Independent

Trustees, found that participating in the

Fund Reorganizations is in the best

interests of the shareholders of each of

the Series, and that the interests of the

shareholders will not be diluted as a

result of the Fund Reorganizations.

Applicants also note that the exchange

of the Acquired Series’ assets for shares

of the Acquiring Series will be based on

the Series’ relative NAVs.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14849 Filed 6–12–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42872; File No. SR–Amex–

00–18]

Self-Regulatory Organizations;

American Stock Exchange LLC; Order

Granting Accelerated Approval of

Proposed Rule Change to Raise Equity

Options Transaction Fees for NonMember Broker-Dealers

May 31, 2000.

I. Introduction

On April 7, 2000, the American Stock

Exchange LLC (‘‘Amex’’ 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

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a

proposed rule change was published for

comment in the Federal Register on

May 10, 2000.3 The Commission

received no comments on the proposal.

This order grants accelerated approval

of the proposal.

II. Description of the Proposal

The Amex proposes to increase equity

options transaction fees for non-member

broker-dealer orders. The Amex

currently imposes a transaction charge

on options trades executed on the

Exchange. The charges vary depending

on whether the transaction involves an

equity or index option and whether the

transaction is executed for a specialist

or market maker account, a member

firm’s proprietary account, a nonmember broker-dealer, or a customer

account. The Amex also imposes a

charge for clearance of options trades

and an options floor brokerage charge,

which also depends upon the type of

account for which the trade is executed.

In addition, all three types of charges—

transactions, options clearance, and

options floor brokerage—are subject to

caps on the number of options contracts

subject to the charges on a given day.4

Recently, the Amex eliminated all

options transaction, clearance, and floor

brokeage fees for customer equity

options orders.5 To offset the

elimination of these fees for customer

equity options orders, the Exchange

raised the equity options transaction fee