Federal Register / Vol. 63, No. 16 / Monday, January 26, 1998 / Notices 3779

1Each Fund that currently intends to rely on the

requested relief has been named as an applicant.

Any other existing or future Fund that relies on the

order will comply with the terms and conditions of

the application.

2Frank Russell Investment Management

Company is the administrator of SSgA Funds.

4. Financing Entities

NFG and the Nonutility Subsidiaries

propose to organize new corporations,

trusts, partnerships or other entities

created for the purpose of facilitating

financings. These entities will issue to

third parties interests in such entities or

other securities authorized or issued

under an exemption. Additionally,

request is made for: (a) The issuance of

debentures or other evidences of

indebtedness by NFG or Nonutility

Subsidiaries to a financing entity in

return for the proceeds of the financing,

and (b) the acquisition by NFG and

Nonutility Subsidiaries of voting

interests or equity securities issued by

the financing entity to establish such

Applicant’s ownership of the financing

entity. NFG and the Nonutility

Subsidiaries also propose to enter into

guarantees and expense agreements

with the corresponding financing

entities, under which they would agree

to pay all amounts payable relating to

the securities issued by the financing

entity. The amount of any guarantees

provided to financing entities will not

exceed $250 million in the aggregate at

any one time during the Authorization

Period.

5. Guarantees by National

NFG is currently authorized to

guarantee up to $500 million of

obligations under Commission order

dated November 12, 1993 (HCAR No.

25922) (‘‘November 1993 Order’’). NFG

now proposes to guarantee securities of,

and provide other forms of credit

support with respect to obligations of,

its Subsidiaries in an aggregate amount

not to exceed $2 billion at any time

during the Authorization Period. The $2

billion of guarantees is in addition to

any financing requested in the

Application. The terms and conditions

of any guarantee will be negotiated on

a case by case basis as the need arises.

NFG proposes that the guarantee

authorization requested in this

proceeding supersede and replace the

guarantee authorization granted in the

November 1993 Order.

Guarantees and other forms of credit

support provided by NFG on behalf of

any EWG, FUCO or rule 58 company

will be subject to the limitations of rule

53 or rule 58, as applicable.

6. Acquisition of EWGs, FUCOs and

Rule 58 Companies

NFG proposes to use some or all of

the proceeds of the financings for which

authorization is requested in this

proceeding to invest in EWGs and

FUCOs in an aggregate amount which,

when added to NFG’s aggregate

investment, as defined in rule 53(a)(1),

would not exceed 50% of NFG’s

consolidated retained earnings, as

defined in rule 53(a)(1). NFG proposes

that the authorization to invest in EWGs

and FUCOs requested in this

Application supersede the authorization

applicable to EWG and FUCO

investments contained in Commission

order dated August 29, 1995 (HCAR No.

26364).

NFG also proposes to use some or all

of the proceeds of the financings for

which authorization is requested in this

proceeding to make investments in

energy-related companies and gasrelated companies under rule 58.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–1677 Filed 1–23–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22999; 812–10678]

SSgA Funds and State Street Bank and

Trust Company, Notice of Application

January 14, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for an

order under section 6(c) of the

Investment Company Act of 1940 (the

‘‘Act’’) for an exemption from sections

13(a)(2), 13(a)(3), 18(f)(1), 22(f), and

22(g) of the Act and rule 2a–7

thereunder; under sections 6(c) and

17(b) of the Act for an exemption from

sections 17(a)(1) and (2) of the Act; and

pursuant to section 17(d) of the Act and

rule 17d–1 thereunder.

SUMMARY OF APPLICATION: Applicants

SSgA Funds and State Street Bank and

Trust Company (‘‘State Street’’) request

an order that would permit SSgA Funds

to enter into deferred compensation

arrangements with certain of their

directors.

FILING DATES: The application was filed

on May 22, 1997 and amended on

November 26, 1997. Applicants have

agreed to file an amendment during the

notice period, the substance of which is

included 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

February 9, 1998 and should be

accompanied by proof of service on the

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

SSgA Funds, Two International Place,

35th Floor, Boston, Massachusetts

02110; State Street, 225 Franklin Street,

Boston, Massachusetts 02110.

FOR FURTHER INFORMATION CONTACT:

David W. Grim, Staff Attorney, at (202)

942–0571, or Nadya B. Roytblat,

Assistant Director, 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 (tel. 202–942–

8090).

Applicants’ Representations

1. SSgA Funds is an open-end

management investment company

registered under the Act and comprised

of several investment portfolios. State

Street serves as investment adviser to

each portfolio of SSgA Funds.

Applicants request that the relief also

apply to all registered investment

companies or series of these companies

now or in the future advised by State

Street or any entity under common

control with or controlled by State

Street (these registered investment

companies, together with SSgA Funds,

the ‘‘Funds’’).1

2. Each member of the board of

trustees of SSgA Funds (collectively, the

‘‘Trustees’’) who is not an employee of

State Street or Frank Russell Investment

Management Company 2 or any of their

affiliates (each, an ‘‘Eligible Trustee’’)

receives annual fees from SSgA Funds

which collectively are, and are expected

to continue to be, insignificant in

comparison to the total net assets of

SSgA Funds. No Trustee who is an

employee of State Street or Frank

Russell Investment Management
3780 Federal Register / Vol. 63, No. 16 / Monday, January 26, 1998 / Notices

3Although a Fund’s shares may serve as an

Underlying Security with respect to deferred fees

earned by a Trustee, it is not anticipated that a

Fund will purchase its own shares. Rather, monies

equal to the amount credited to the Deferred Fee

Account with respect to the Fund’s own shares will

be invested as part of the general investment

operations of that Fund.

Company or any of their affiliates

receives any remuneration from SSgA

Funds.

3. SSgA Funds proposes to adopt a

formal Deferred Compensation Plan (the

‘‘Plan’’). The Plan permits individual

Eligible Trustees to elect to defer receipt

of all or a portion of their fees, thereby

also enabling them to defer payment of

income taxes on such fees. The Plan

may be amended from time to time by

the Trustees, as long as such

amendments are not inconsistent with

the relief granted to applicants pursuant

to the application.

4. An Eligible Trustee will be able to

defer fees, but must so elect with respect

to all of the Funds for which he or she

serves as a Trustee. The election is to be

made by execution of a notice of

election to defer compensation (‘‘Notice

of Election’’). Such election generally

must be made prior to January 1 of each

calendar year for which compensation is

to be deferred.

5. Under the Plan, the deferred fees

will be credited to a book entry account

established by each Fund (the ‘‘Deferred

Fee Account’’) as of the date such fees

would have been paid to the Trustee.

SSgA Funds proposes to use returns on

shares (‘‘Underlying Securities’’) of

certain designated Funds and of other

investment companies that are not

affiliated with State Street designated

from time to time by the Trustees (the

‘‘Eligible Funds’’) to determine the

amount of earnings and gains or losses

allocated to a Trustee’s Deferred Fee

Account. The value of the Deferred Fee

Account as of any date would be

periodically adjusted by treating the

Deferred Fee Account as though an

equivalent dollar amount had been

invested and reinvested in the

Underlying Securities. The Underlying

Securities for a Deferred Fee Account

will be shares of any of the Eligible

Funds as the participating Trustee

designates in his or her Notice of

Election. The Trustee may change his or

her designation quarterly. Each Deferred

Fee Account will be credited or charged

with book adjustments representing all

interest, dividends, and other earnings

and all gains and losses that would have

been realized had the account been

invested in the Underlying Securities.

6. The Plan provides that a

participating Fund’s obligation to make

payments from a Deferred Fee Account

will be a general obligation of the Fund

and payments made pursuant to the

Plan will be made from the Fund’s

general assets and property. With

respect to the obligations created under

the Plan, the relationship of the Trustee

to the participating Fund will be that of

a general unsecured creditor.

7. The Plan also provides that the

participating Fund will be under no

obligation to the Trustee to purchase,

hold, or dispose of any Underlying

Securities. If the Fund chooses to

purchase investments in order to cover

its obligations under the Plan, any and

all Underlying Securities will continue

to be part of the general assets and

property of the Fund.

8. Each Fund intends generally, and

with respect to any Fund that is a

money market fund and that values its

assets using either the amortized cost or

penny rounding method (a ‘‘Money

Market Fund’’) hereby undertakes, to

purchase and maintain Underlying

Securities in an amount equal to the

deemed investments of the Deferred Fee

Accounts of its Trustees.3 All purchases

and sales of Underlying Securities will

be within the limitations imposed by

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

9. Under the Plan, the Trustee’s

deferred fees generally will be

distributed in whole or in part on a date

specified in the Trustee’s Notice of

Election, which date may not be sooner

than the earlier of the first business day

of January following the termination of

the Trustee’s service as a trustee or one

year following the deferral election.

Payments will be made in a lump sum

or in installments as elected by the

Trustee at the time of executing the

Notice of Election. In the event of the

Trustee’s death, amounts payable to him

or her under the Plan thereafter will be

payable to his or her designated

beneficiary; in other circumstances, the

Trustee’s right to receive payments

generally will be nontransferable.

10. The Plan will not obligate any

Fund to retain the services of a Trustee,

nor will it obligate any Fund to pay any

(or any particular level of) Trustee’s fees

to any Trustee. Rather, it will merely

permit a Trustee to elect to defer receipt

of all or part of the Trustee’s fees that

he or she would otherwise receive.

Applicants’ Legal Analysis

1. Applicants request an order under

section 6(c) for an exemption from

sections 13(a)(2), 13(a)(3), 18(f)(1), 22(f),

and 22(g) and rule 2a–7 to the extent

necessary to permit the Funds to offer

deferred fee arrangements to the Eligible

Trustees; under sections 6(c) and 17(b)

for an exemption from sections 17(a) (1)

and (2) to permit each Fund to sell its

shares to and redeem its shares from

other Funds as part of the deferred fee

arrangements; and pursuant to section

17(d) and rule 17d–1 to permit the

Funds to effect joint transactions

incident to the deferred fee

arrangements.

2. Section 6(c) provides that the SEC

may exempt any person, security, or

transaction from any provision of the

Act, if and to the extent that such

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.

3. Section 18(f)(1) generally prohibits

a registered open-end investment

company from issuing senior securities.

Section 13(a)(2) requires that a

registered investment company obtain

shareholder authorization before issuing

any senior security not contemplated by

the recitals of policy in its registration

statement. Applicants assert that the

Plan raises none of the concerns

underlying section 18(f). Applicants

state that, in all cases, the liabilities for

deferred fees are expected to be de

minimis in relation to Fund net assets.

Applicants submit that the Plan would

not induce speculative investments by

any Fund or provide opportunity for

manipulative allocation of a Fund’s

expenses and profits; that control of

each Fund would not be affected; and

that the Plan would not confuse

investors or convey a false impression of

safety.

4. Section 22(f) prohibits undisclosed

restrictions on the transferability or

negotiability of redeemable securities

issued by open-end investment

companies. Applicants state that the

restriction on transferability of a

Trustee’s benefits under the Plan would

be clearly set forth in the Plan, would

be included primarily to benefit the

participating Trustee, and would not

adversely affect the interests of the

Trustee, the Fund, or any shareholder of

any Fund.

5. Section 22(g) prohibits registered

open-end investment companies from

issuing any of their securities for

services or for property other than cash

or securities. Applicants believe that the

Plan would provide for deferral of

payment of Trustee fees and thus should

be viewed as being issued not in return

for services but in return for a Fund’s

not being required to pay such fees on

a current basis.

6. Section 13(a)(3) provides that no

registered investment company shall,

unless authorized by the vote of a

majority of its outstanding voting

securities, deviate from any investment

policy that is changeable only if
Federal Register / Vol. 63, No. 16 / Monday, January 26, 1998 / Notices 3781

authorized by shareholder vote.

Applicants request relief from section

13(a)(3) only with respect to Funds that

have a fundamental investment

restriction prohibiting investments in

securities of investment companies (the

‘‘Restriction Funds’’). Applicants submit

that it is appropriate to enable the

Restriction Funds to invest in

Underlying Securities without a

shareholder vote. Applicants note that

the value of the Underlying Securities is

expected to be de minimis in relation to

the total net assets of each Restriction

Fund. Furthermore, applicants state that

the value of the Underlying Securities

held by each Restriction Fund will at all

times equal the value of each Restriction

Fund’s obligations to pay deferred fees.

Accordingly, applicants submit that

changes in the value of the Underlying

Securities will not affect the value of

shareholders’ investments in the

Restriction Fund. Applicants also

represent that appropriate disclosure

regarding the Plan will be included in

the statement of additional information

of each Fund.

7. Rule 2a–7 imposes certain

restrictions on the investments of

money market funds that use the

amortized cost method or pennyrounding method of computing their per

share price. Applicants state that the

requested exemption would permit each

Money Market Fund in question to

achieve an exact matching of

Underlying Securities with the deemed

investments of the Deferred Fee

Accounts, thereby ensuring that the

deferred fee arrangements will not affect

net asset value. Applicants assert that

the amounts involved in all cases will

be de minimis in relation to total net

assets of each Money Market Fund and

will have no effect on the per share net

asset value of the Money Market Fund.

8. Sections 17(a) (1) and (2) generally

prohibit an affiliated person of a

registered investment company from

selling any security to, or purchasing

any security from, such company.

Section 2(a)(3)(C) provides that an

affiliated person of another person

includes any person directly or

indirectly controlling, controlled by, or

under common control with, such other

person. Applicants submit that because

the Funds share the same or an affiliated

investment manager, generally the same

Trustees, and many of the same officers,

each Fund might be deemed to be under

common control with all other Funds,

and therefore each Fund might be

deemed to be an affiliated person of

every other Fund. Applicants believe

that the sale of securities issued by the

Funds pursuant to the Plan does not

implicate Congress’s concerns in

enacting section 17(a). Applicants assert

that such sales of securities merely

would facilitate the matching of a

Fund’s liability for deferred Trustees’

fees with the Underlying securities that

would determine the amount of such

Fund’s liability.

9. Section 17(b) authorizes the SEC to

exempt a proposed transaction from

section 17(a) if evidence establishes

that: (1) the terms of the transaction,

including the consideration to be paid

or received, are reasonable and fair and

do not involve overreaching; (b) the

transaction is consistent with the policy

of each registered investment company

concerned; and (c) the transaction is

consistent with the general purposes of

the Act. Because section 17(b) may

apply only to a specific proposed

transaction, applicants also request an

order under section 6 (c) to permit a

series of transactions between Funds

contemplated by the Plan. Applicants

represent that their application meets

the standards of section 6(c) and 17(b).

10. Applicants state that because

purchases of shares of any open-end

Fund pursuant to the Plan are made at

net asset value, the terms of the deferred

fee arrangements are reasonable and fair

and do not involve overreaching on the

part of any person concerned.

Applicants also submit that, because the

purchase of shares of another Fund

would not be made for investment

purposes, but solely to match the Fund’s

liability for deferred fees, the purchase

of the shares would not be inconsistent

with the policies of each of the Funds.

Applicants assert that in addition,

because the number of shares pursuant

to the deferred fee arrangements will be

de minimis in relation to the size of

each Fund, none of the Act’s concerns

with affiliated sales and purchases of

Fund shares would be implicated.

11. Section 17(d) of the Act prohibits

affiliated persons of registered

investment companies, acting as

principal, from effecting any transaction

in which such registered investment

company is a joint or joint and several

participant with such person in

contravention of rules and regulations

prescribed by the SEC. Rule 17d–1

under the Act provides that the SEC

may approve a transaction subject to

section 17(d) after considering whether

the participation of such registered

investment company is consistent with

the provisions, policies, and purposes of

the Act and the extent to which such

participation is on a basis different from

or less advantageous than that of other

participants. Because the Plan may be

deemed to be a joint arrangement within

the meaning of rule 17d–1, applicants

request relief under section 17(d) and

rule 17d–1 to the extent that these

provisions may be applicable to the

Plan. Applicants submit that the

participating Trustee would neither

directly nor indirectly receive a benefit

that would otherwise inure to the Funds

or any of their shareholders. Applicants

submit that the effect of the Plan merely

would be to defer the payment of fees

that the Funds otherwise would be

obligated to pay on a current basis.

Applicants’ Condition

Applicants agree that the order

granting the requested relief shall be

subject to the following condition:

1. With respect to the requested relief

from rule 2a–7, any Money Market Fund

will buy and hold Underlying Securities

(other than its own shares) that

determine the performance of Deferred

Fee Accounts to achieve an exact match

between such Fund’s liability to pay

deferred fees and the assets that offset

that liability.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–1792 Filed 1–23–98; 8:45 am]

BILLING CODE 8010–01–M

TENNESSEE VALLEY AUTHORITY

Sunshine Act Meeting

AGENCY HOLDING THE MEETING: Tennessee

Valley Authority (Meeting No. 1500).

TIME AND DATE: 9 a.m. (CST), January 28,

1998.

PLACE: Centerville City Hall, 102 East

Swan, Centerville, Tennessee.

STATUS: Open.

Agenda

Approval of minutes of meeting held

on December 9, 1997.

New Business

C—Energy

C1. Contract with Foster Wheeler

Energy Corporation for pendant reheater

replacements for Cumberland Fossil

Plant, Units 1 and 2 boilers.

E—Real Property Transactions

E1. Abandonment of easement rights

affecting 2.76 acres of the HohenwaldMt. Pleasant 46–kV Transmission Line

easement in Lewis County, Tennessee

(Tract No. HMP–30).

E2. Abandonment of easement rights

affecting 5.03 acres of the Bull RunSolway and Bull Run-Solway No. 2

Transmission Line easements in Knox

County, Tennessee (Tract Nos. BRSW–