Federal Register / Vol. 65, No. 237 / Friday, December 8, 2000 / Notices 77051

charges, distribution fees, or

shareholder servicing fees.

Applicant’s Legal Analysis

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

provides that no registered investment

company (‘‘acquiring company’’) may

acquire securities of another investment

company (‘‘acquired company’’) if such

securities represent more that 3% of the

acquired company’s outstanding voting

stock or more than 5% of the acquiring

company’s total assets, or if such

securities, together with the securities of

other investment companies, represent

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 may sell its securities to

another investment company if the sale

will cause the acquiring company to

own 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)(G) of the Act

provides that section 12(d)(1) will not

apply to securities of an acquired

company purchased by an acquiring

company if: (a) The acquiring company

and the acquired company are part of

the same group of investment

companies; (b) the acquiring company

holds only securities of acquired

companies that are part of the same

group of investment companies,

government securities, and short-term

paper; (c) the aggregate sales loads and

distribution-related fees of the acquiring

company and the acquired company are

not excessive under rules adopted

pursuant to section 22(b) or section

22(c) of the Act by a securities

association registered under section 15A

of the Securities Exchange Act of 1934

or by the Commission; and (d) the

acquired company has a policy that

prohibits it from acquiring securities of

registered open-end management

investment companies or registered unit

investment trusts in reliance on section

12(d)(1)(F) or (G). Applicants state that

the proposed arrangement would

comply with the provisions of section

12(d)(1)(G), but for the fact that an

Upper Tier Fund’s investments will

include shares of one or more

Underlying Funds as well as Other

Securities.

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

provides that the Commission may

exempt persons or transactions 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 order under section

12(d)(1)(J) exempting them from section

12(d)(1)(G)(i)(II). Applicants assert that

permitting the Upper Tier Funds to

invest in the Underlying Funds and

Other Securities as described in the

application would not raise any of the

concerns that the requirements of

section 12(d)(1)(G) were designed to

address.

Applicants’ Conditions

Applicants agree that the order

granting the requested relief will be

subject to the following conditions:

1. Before approving any advisory

contract under section 15 of the Act, the

board of directors of NFI (on behalf of

Nations Equity Income Fund) or any

other Company (on behalf of another

Upper Tier Fund), including a majority

of the independent directors who are

not ‘‘interested persons,’’ as defined in

section 2(a)(19) of the Act, will find that

advisory fees, if any, charged under the

contract are based on services provided

that are in addition to, rather than

duplicative of, services provided

pursuant to any Underlying Fund’s

advisory contract; provided, however,

that no such finding will be necessary

if: (a) The Upper Tier Fund pays no

advisory fee on assets invested in an

Underlying Fund; or (b) the Upper Tier

Fund pays an advisory fee on asserts

invested in an Underlying Fund and

either (i) the Underlying Fund pays no

advisory fee, or (ii) the advisory fee paid

by the Upper Tier Fund is reduced by

the proportional amount of the advisory

fee paid by the Underlying Funds with

respect to the shares held by the Upper

Tier Fund. If a finding is necessary, the

finding, and the basis upon which the

finding was made, will be recorded fully

in the minute books of NFI or other

relevant Company (on behalf of another

Upper Tier Fund).

2. Applicants will comply with all

provisions of section 12(d)(1)(G), except

for section 12(d)(1)(G)(i)(II) to the extent

that it restricts Nations Equity Income

Fund or any Upper Tier Fund from

investing in Other Securities as

described in the application.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–31274 Filed 12–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–24780; 812–12316]

Vision Group of Funds, et al.; Notice of

Application

December 1, 2000.

AGENCY: Securities and Exchange

Commission (the ‘‘Commission’’).

ACTION: Notice of an application under

section 17(b) of the Investment

Company Act of 1940 (the ‘‘Act’’) for an

exemption from section 17(a) of the Act.

SUMMARY OF APPLICATION: Applicants

request an order to permit the proposed

reorganizations of eleven series (the

‘‘Acquired Funds’’) of Governor Funds

with and into eleven series of Vision

Group of Funds (‘‘Vision Funds’’) (the

‘‘Acquiring Funds,’’ and together with

the Acquired Funds, the ‘‘Funds’’).

Because of certain affiliations,

applicants may not rely on rule 17a–8

under the Act.

APPLICANTS: Vision Funds, Governor

Funds, Manufacturers and Traders Trust

Company (‘‘M&T Bank’’), Governor

Funds, and Martindale Andres &

Company LLC (‘‘Martindale’’).

FILING DATES: The application was filed

on November 3, 2000. Applicants have

agreed to file an amendment to the

application 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 Commission orders a

hearing. Interested persons may request

a hearing by writing to the

Commission’s Secretary and serving

applicants with copies of the request,

personally or by mail. Hearing requests

should be received by the Commission

by 5:30 p.m. on December 26, 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 may request

notification of a hearing by writing to

the SEC’s Secretary.

ADDRESSES: Secretary, Securities and

Exchange Commission, 450 5th Street,

NW., Washington, DC 20549–0609.

Applicants, c/o Victor R. Siclari, Esq.,

Federated Services Company, Federated

Investors Tower—12th Floor,

Pittsburgh, Pennsylvania 15222–3779.

FOR FURTHER INFORMATION CONTACT:

Karen L. Goldstein, Senior Counsel, at

(202) 942–0646, or Christine Y.

Greenlees, Branch Chief, at (202) 942–

77052 Federal Register / Vol. 65, No. 237 / Friday, December 8, 2000 / Notices

1Under the Plans, the Acquired Funds will be

reorganized into the Acquiring Funds as follows:

Governor Aggressive Growth Fund will reorganize

into Vision Small Cap Stock Fund, Governor

Established Growth Fund into Vision Large Cap

Core Fund, Governor Intermediate Term Income

Fund into Vision Intermediate Term Bond Fund,

Governor International Equity Fund into Vision

International Equity Fund, Governor Lifestyle

Conservative Growth Fund into Vision Managed

Allocation Fund—Conservative Growth, Governor

Lifestyle Growth Fund into Vision Managed

Allocation Fund—Aggressive Growth, Governor

Lifestyle Moderate Growth Fund into Vision

Managed Allocation Fund—Moderate Growth,

Governor Limited Duration Government Securities

Fund into Vision Institutional Limited Duration

U.S. Government Fund, Governor Pennsylvania

Municipal Bond Fund into Vision Pennsylvania

Municipal Income Fund, Governor Prime Money

Market Fund into Vision Institutional Prime Money

Market Fund and Governor U.S. Treasury

Obligations Money Market Fund into Vision

Treasury Money Market Fund.

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, 450 Fifth

Street, NW., Washington, DC 20549–

0102 (telephone (202) 942–8090).

Applicants’ Representations

1. Vision Funds, a Delaware business

trust, is registered under the Act as an

open-end management investment

company and currently offers eighteen

series (the ‘‘Vision Series’’). Eleven of

the Vision Series, Vision Treasury

Money Market Fund, Vision Large Cap

Core Fund, Vision Institutional Prime

Money Market Fund, Vision Small Cap

Stock Fund, Vision International Equity

Fund, Vision Intermediate Term Bond

Fund, Vision Institutional Limited

Duration U.S. Government Fund, Vision

Pennsylvania Municipal Income Fund,

Vision Managed Allocation Fund—

Conservative Growth, Vision Managed

Allocation Fund—Moderate Growth,

and Vision Managed Allocation Fund—

Aggressive Growth, are Acquiring

Funds. All of the Acquiring Funds

except Vision Treasury Money Market

Fund and Vision Large Cap Core Fund

were recently organized for purposes of

the proposed Reorganizations (as

defined below).

2. Governor Funds, a Delaware

business trust, is registered under the

Act as an open-end management

investment company and currently

offers eleven series, which are Acquired

Funds: Governor Prime Money Market

Fund, Governor U.S. Treasury

Obligations Money Market Fund,

Governor Established Growth Fund,

Governor Aggressive Growth Fund,

Governor International Equity Fund,

Governor Intermediate Term Income

Fund, Governor Limited Duration

Government Securities Fund, Governor

Pennsylvania Municipal Bond Fund,

Governor Lifestyle Conservative Growth

Fund, Governor Lifestyle Moderate

Growth Fund, and Governor Lifestyle

Growth Fund.

3. M&T Bank serves as investment

adviser to each Acquiring Fund. M&T

Bank is not currently required to register

as an investment adviser pursuant to

section 202(a)(11)(A) of the Investment

Advisers Act of 1940 (‘‘Advisers Act’’).

M&T Bank is the principal banking

subsidiary of M&T Bank Corporation, a

regional bank holding company.

4. Martindale is an investment adviser

registered under the Advisers Act and

serves as investment adviser to each of

the Acquired Funds. In addition,

Martindale will be the sub-adviser of the

Vision Small Cap Stock Fund.

Martindale is a subsidiary of M&T Bank

Corporation. Brinson Partners, Inc., an

investment adviser registered under the

Advisers Act, is the current sub-adviser

to the Governor International Equity

Fund and will be the sub-adviser for the

corresponding Vision International

Equity Fund.

5. M&T Bank and/or certain affiliated

persons of M&T Bank (M&T Bank and

such affiliated persons are collectively

referred to as ‘‘M&T Bank Affiliates’’)

hold of record for the benefit of others,

in trust, agency, custodial or other

fiduciary or representative capacity,

more than 5% (in some cases, more than

25%) of the total outstanding shares of

certain of the Acquired Funds.

6. On August 11, 2000 and October

27, 2000, the board of trustees of Vision

Funds (‘‘Vision Board’’) and the board

of trustees of Governor Funds

(‘‘Governor Board’’ and together with

the Vision Board, the ‘‘Boards’’),

respectively, including all the trustees

who are not ‘‘interested persons’’ of

those Funds, as defined in section

2(a)(19) of the Act (‘‘Disinterested

Trustees’’), approved the respective

agreements and plans or reorganization

entered into between Vision Funds and

Governor Funds (the ‘‘Plans’’). Under

the Plans, each Acquired Fund will

acquire all, or substantially all, of the

assets and liabilities of the

corresponding Acquired Fund in

exchange for Class A shares of the

Acquiring Fund (each a

‘‘Reorganization,’’ and collectively, the

‘‘Reorganizations’’).1 The shares of each

Acquiring Fund exchanged will have an

aggregate net asset value equal to the

aggregate net asset value of the Acquired

Fund’s shares determined as of the close

of regular trading on the New York

Stock Exchange on the business day

preceding the day of the closing of each

Reorganization (‘‘Closing Date’’). The

value of the assets of the Acquired

Funds will be determined according to

the Acquired Funds’ then-current

prospectuses and statements of

additional information. As soon as

reasonably practicable after the Closing

Date, each Acquired Fund will be

liquidated by the distribution of the

Acquiring Fund shares pro rata to the

shareholders of the Acquired Fund.

7. Applicants state that the

investment objectives and policies of

each Acquired Fund are identical or

substantially similar to those of the

corresponding Acquiring Fund. The

Acquired Funds offer two classes

shares, Investor shares and S shares, and

the Acquiring Funds offer Class A, Class

B and Class S shares. The only shares

that will be involved in the

Reorganizations will be Investor shares

and Class A shares. Investor shares and

Class A shares of the Acquired and

Acquiring Funds are subject to a frontend sales charge, except for Class A

shares of Vision Treasury Money Market

Fund and Vision Institutional Prime

Money Market Fund and Investor shares

of their corresponding Acquired Funds.

Shares of each Acquired Fund and the

Class A shares of each Acquiring Fund

are currently not subject to a contingent

deferred sales charge. The Acquired

Funds’ Investor shares are not subject to

rule 12b–1 distribution or shareholder

service fees, except for Investor shares

of three of the Acquired Funds, which

are subject to rule 12b–1 distribution

fees. The Acquiring Funds’ Class A

shares are subject to rule 12b–1

distribution and shareholder services

fees. Shareholders of the Acquired

Funds will not be subject to a

contingent deferred sales charge upon

redemption of the Acquiring Fund

shares that they receive in connection

with the Reorganizations. No sales

charges will be imposed in connection

with the Reorganizations. M&T Bank

will bear the costs associated with the

Reorganizations.

8. The Boards, including all of the

Disinterested Trustees, determined that

the participation of each Acquiring and

Acquired Fund in a Reorganization was

in the best interests of each Fund and

its shareholders, and that the interests of

the shareholders of each Fund would

not be diluted as a result of the

Reorganization. In assessing the

Reorganizations, the Boards considered

various factors, including: (a) The

investment objectives, policies and

strategies of each of the Acquired Funds

and their corresponding Acquiring

Funds; (b) the investment advisory and

other fees paid by each of the Acquiring

Federal Register / Vol. 65, No. 237 / Friday, December 8, 2000 / Notices 77053

1Elfun Trust, Investment Company Act Release

Nos. 22335 (Nov. 14, 1996) (notice) and 22385 (Dec.

10, 1996) (order); Elfun Money Market Fund,

Investment Company Act Release Nos. 17384 (Mar.

16, 1990) (notice) and 17433 (Apr. 13, 1990) (order);

Elfun Trust, Investment Company Act Release Nos.

17039 (June 30, 1998) (notice) and 17082 (July 25,

1989) (order); Elfun Trusts, Investment Company

Act Release Nos. 17038 (June 30, 1989) (notice) and

17083 (July 25, 1989) (order); Elfun Diversified

Fund, Investment Company Act Release Nos. 16146

(Nov. 24, 1978) (notice) and 16186 (Dec. 22, 1987)

(order); Elfun Global Fund, Investment Company

Act Release Nos. 16042 (Oct. 8, 1987) (notice) and

16114 (Nov. 5, 1987) (order); Elfun Income Fund,

Investment Company Act Release Nos. 13485 (Sept.

7, 1983) (notice) and 13612 (Nov. 2, 1983) (order);

General Electric S&S Long Term Interest Fund,

Investment Company Act Release Nos. 10929 (Nov.

6, 1979) (notice) and 10971 (Dec. 4, 1979 (order);

Elfun Trust. Investment Company Act Release Nos.

10375 (Aug. 23, 1978) (notice) and 10414 (Sept. 20,

1978) (order); Elfun Tax-Exempt Income Fund,

Investment Company Act Release Nos. 9839 (July 5,

1977) (notice) and 9879 (Aug. 2, 1977) (order);

General Electric Company, Investment Company

Act Release Nos. 4973 (May 31, 1967) (notice) and

5830 (Sept. 29, 1969) (order); and Executives

Investment Trusts and Elfun Trusts, Investment

Company Act Release No. 584 (Dec. 2, 1943)

(order).

Funds and the projected expenses of

each of the Acquiring Funds; (c) the

terms and conditions of the Plans; and

(d) the anticipated tax consequences of

the Reorganizations for the Funds and

their shareholders. In addition, the

Governor Board considered: (a) The

capabilities, resources, and experience

of M&T Bank and other service

providers; and (b) the shareholder

services offered by Vision Funds.

9. The Reorganizations are subject to

a number of conditions precedent,

including that: (a) The shareholders of

each Acquired Fund will have approved

the Reorganization; (b) the Funds will

have received opinions of counsel

concerning the tax-free nature of each

Reorganization; (c) applicants will have

received from the Commission an

exemption from section 17(a) of the Act

for the Reorganizations, (d) an N–14

Registration Statement relating to each

Reorganization has become effective

with the Commission, and (e) each of

the Acquired Funds and the Vision

Treasury Money Market Fund will

declare and pay on or before the Closing

Date a dividend or dividends, which,

together with all previous dividends,

will have the effect of distributing to its

shareholders substantially all of its net

investment income and realized net

capital gain, if any, for all taxable years

ending on or before the Closing Date.

The Plans may be terminated and the

Reorganizations abandoned at any time

prior to the Closing Date by the mutual

consent of the Governor Board and the

Vision Board. Applicants agree not to

make any material changes to the Plans

without prior approval of the

Commission staff.

10. A registration statement on Form

N–14 with respect to the

Reorganizations, containing a proxy

statement/prospectus, was filed with the

Commission on November 13, 2000 and

was mailed to shareholders of the

Acquired Funds on November 14, 2000.

A shareholders meeting of the Acquired

Funds is scheduled for December 13,

2000.

Applicant’s Legal Analysis

1. Section 17(a) of the Act, in relevant

part, 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.

2. Rule 17a–8 under the Act exempts

certain mergers, consolidations, and

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 are satisfied. Applicants

believe that rule 17a–8 not be available

to exempt the Reorganizations because

the Funds may be deemed to be

affiliated by reasons other than having

a common investment adviser, common

directors/trustees, and/or common

officers. Applicants state that M&T Bank

Affiliates hold of record for the benefit

of others, in trust, agency, custodial or

other fiduciary or representative

capacity, more than 5% (in some cases,

more than 25%) of the total outstanding

shares of certain of the Acquired Funds.

Because of these ownership positions,

each Acquired Fund may be deemed to

be an affiliated person of an affiliated

person of its corresponding Acquiring

Fund.

3. Section 17(b) of the Act provides,

in relevant part, that the Commission

may exempt a transaction from the

provisions of section 17(a) if evidence

establishes that the terms of the

proposed transaction, including the

consideration to be paid or received, 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.

4. Applicants request an order under

section 17(b) of the Act exempting them

from section 17(a) to the extent

necessary to complete the

Reorganizations. Applicants submit that

the Reorganizations satisfy the

standards of section 17(b) of the Act.

Applicants state that the terms of the

Reorganizations are reasonable and fair

and do not involve overreaching.

Applicants state that the investment

objectives and policies of each Acquired

Fund are identical, or substantially

similar to, those of its corresponding

Acquiring Fund. Applicants also state

that the Boards, including all of the

Disinterested Trustees, found that the

participation of the Acquired and

Acquiring Funds in the Reorganizations

is in the best interests of each Fund and

its shareholders and that such

participation will not dilute the

interests of the existing shareholders of

each Fund. In addition, applicants state

that the Reorganizations will be on the

basis of the Funds’ relative net asset

values.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–31275 Filed 12–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC—24782; 813–224]

Elfun Trusts, et al.; Notice of

Application

December 1, 2000.

AGENCY: Securities and Exchange

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

ACTION: Notice of application for an

order under section 6(b) of the

Investment Company Act of 1940 (the

‘‘Act’’).

SUMMARY OF APPLICATION: Applicants

request an order that would amend prior

orders (‘‘Prior Orders’’) 1 to expand the

class of persons eligible to purchase

shares of certain employees’ securities

companies to include certain specified

immediate family members and

grandchildren of eligible employees. In

addition, the order would permit

eligible employees to transfer shares of