41606 Federal Register / Vol. 63, No. 149 /Tuesday, August 4, 1998 / Notices

Department of Health and Human

Services

Confidential Assistant to the

Executive Secretary to the Department

of Health and Human Services. Effective

June 26, 1998.

Department of Housing and Urban

Development

Special Assistant to the Director,

Intergovernmental Relations. Effective

June 1, 1998.

Special Assistant to the Director,

Executive Scheduling. Effective June 11,

1998.

Special Assistant to the Secretary’s

Representative. Effective June 11, 1998.

Special Assistant to the Assistant

Secretary for Public Affairs. Effective

June 12, 1998.

Secretary’s Representative-Midwest to

the Deputy Secretary, Office of the

Secretary’s Representative. Effective

June 25, 1998.

Department of Justice

Assistant to the Attorney General.

Effective June 4, 1998.

Confidential Assistant to the Assistant

Attorney General, Criminal Division.

Effective June 18, 1998.

Counsel to the Assistant Attorney

General. Effective June 26, 1998.

Department of Labor

Chief of Staff to the Assistant

Secretary for Employment and Training.

Effective June 26, 1998.

Department of State

Staff Assistant to the Ambassador-atLarge for War Crimes Initiatives.

Effective June 18, 1998.

Special Advisor to the Under

Secretary for Economic, Business and

Agricultural Affairs. Effective June 18,

1998.

Special Assistant to the Women’s

Coordinator. Effective June 18, 1998.

Department of Transportation

Special Assistant to the Director,

Office of External Communications.

Effective June 1, 1998.

Special Assistant to the Associate

Deputy Secretary. Effective June 29,

1998.

Department of the Treasury

Special Assistant to the Assistant

Secretary (Legislative Affairs and Public

Liaison). Effective June 25, 1998.

Federal Labor Relations Authority

Director of External Affairs/Special

Projects to the Chair, Federal Labor

Relations Authority. Effective June 1,

1998.

National Aeronautics and Space

Administration

Program Specialist to the Special

Assistant to the Administrator. Effective

June 25, 1998.

President’s Commission on White House

Fellowships

Special Assistant to the Director,

President’s Commission on White

House Fellowships. Effective June 11,

1998.

Securities and Exchange Commission

Confidential Assistant to a

Commissioner. Effective June 11, 1998.

Public Affairs Specialist to the Public

Affairs Director, Office of Public Affairs,

Policy Evaluation and Research.

Effective June 11, 1998.

Writer-Editor to the Chairman.

Effective June 11, 1998.

Selective Service System

Confidential Assistant to the Director,

Selective Service System. Effective June

1, 1998.

Small Business Administration

Speech Writer to the Associate

Administrator for Communications and

Public Liaison. Effective June 18, 1998.

Authority: 5 U.S.C. 3301 and 3302; E.O.

10577, 3 CFR 1954–1958 Comp., P. 218.

Office of Personnel Management.

Janice R. Lachance,

Director.

[FR Doc. 98–20733 Filed 8–3–98; 8:45 am]

BILLING CODE 6325–01–U

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–23363; 812–11084]

The First Australia Fund, Inc.; Notice of

Application

July 28, 1998

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of an application for an

order under section 6(c) of the

Investment Company Act of 1940 (the

‘‘Act’’) for an exemption from section

19(b) of the Act and rule 19b–1 under

the Act.

SUMMARY OF APPLICATION: The First

Australia Fund, Inc. (the ‘‘Fund’’), a

registered closed-end diversified

management investment company,

requests an order to permit it to make

up to four distributions of net long-term

capital gains in any one taxable year, so

long as it maintains in effect a

distribution policy with respect to its

common stock calling for quarterly

distributions of an annually adjusted

percentage of its net asset value

(‘‘NAV’’).

FILING DATES: The application was filed

on March 19, 1998 and amended on

May 29, 1998 and July 27, 1998.

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 applicant with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

August 21, 1998, and should be

accompanied by proof of service on the

applicant, 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.

Fund, c/o Margaret A. Bancroft, Esq.,

Dechert Price & Rhoads, 30 Rockefeller

Plaza, New York, NY 10112.

FOR FURTHER INFORMATION CONTACT:

John K. Forst, Attorney Advisor, at (202)

942–0569, or Mary Kay Frech, 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 SEC’s

Public Reference Branch, 450 Fifth

Street, NW., Washington, DC 20549 (tel.

202–942–8090).

Applicant’s Representations

1. The Fund is a closed-end

diversified management investment

company organized as a Maryland

corporation and registered under the

Act. The Fund’s primary investment

objective is long-term capital

appreciation through investment

primarily in equity securities of

Australian companies listed on

Australian stock exchanges. The Fund’s

shares are listed on the American Stock

Exchange. The Fund’s shares have

traded at various times at a premium as

well as at a discount to the NAV.

2. On December 12, 1997, the Fund

instituted a distribution policy (the

‘‘Distribution Policy’’) that calls for

regular quarterly distributions at an

annual rate, set once a year by the

Fund’s board of directors (the ‘‘Board’’),

which is a percentage of the rolling

average of the Fund’s prior four quarterend NAVs (‘‘Rolling Distribution Rate’’).
Federal Register / Vol. 63, No. 149 /Tuesday, August 4, 1998 / Notices 41607

The Fund states that, in adopting the

Distribution Policy, the Board

considered that the Distribution Policy

provides a steady return to the Fund’s

shareholders and, during periods when

its per share NAV is increasing, a means

for the shareholders to receive, on a

periodic basis, some of the appreciation

in the value of their shares. The Board

also considered empirical evidence that,

in many cases, market discounts to

NAVs have narrowed upon adoption of

similar distribution policies by other

closed-end funds. The Board has set the

annualized Rolling Distribution Rate for

fiscal year 1998 at 9%.

3. The Fund requests relief to permit

it, so long as it maintains in effect the

Distribution Policy, to make up to four

capital gains distributions (as defined in

section 852(b)(30(C) of the Internal

Revenue Code of 1986, as amended (the

‘‘Code’’)) in any one taxable year.

Applicant’s Legal Analysis

1. Section 19(b) of the Act provides

that a registered investment company

may not, in contravention of such rules,

regulations, or orders as the SEC may

prescribe, distribute long-term capital

grains more often than once every

twelve months. Rule 19b–1(a) under the

Act permits a registered investment

company, with respect to any one

taxable year, to make one capital gains

distributions, as defined in section

852(b)(3)(C) of the Code. Rule 19b–1(a)

also permits a supplemental distribution

to be made pursuant to section 855 of

the Code not exceeding 10% of the total

amount distributed for the year. Rule

19b–1(f) permits one additional longterm capital gains distribution to be

made to avoid the excise tax under

section 4982 of the Code.

2. The Fund asserts that the limitation

on the number of net long-term capital

gains distributions in rule 19b–1

prohibits the Fund from including

available net long-term capital gains in

certain of its fixed quarterly

distributions. As a result, the Fund

states that it must fund these quarterly

distributions with returns of capital (to

the extent net investment income and

net realized short-term capital gains are

insufficient to cover a quarterly

distribution). The Fund further asserts

that, in order to distribute all of its longterm capital gains within the limits

permitted by rule 19b–1, the Fund may

be required to make certain of its

quarterly distributions in excess of the

total annual amount called for by the

Distribution Policy or retain and pay

taxes on the excess amount. The Fund

asserts that the application of rule 19b–

1 to the Fund’s Distribution Policy may

create pressure on the investment

adviser to limit the realization of longterm capital grains based on

considerations unrelated to investment

goals.

3. The Fund submits that the concerns

underlying section 19(b) and rule 19b–

1 are not present in the Fund’s situation.

One of the concerns leading to the

adoption of section 19(b) and rule 19b–

1 was that shareholders might be unable

to distinguish between frequent

distributions of capital gains and

dividends from investment income. The

Fund states that its Distribution Policy

has been fully and repeatedly described

in the Fund’s periodic communications

to its shareholders. The Fund states that,

in accordance with rule 19a–1 under the

Act, a separate statement showing the

source of the distribution accompanies

each distribution (or the confirmation of

reinvestment under the Fund’s dividend

reinvestment plan). In addition, a

statement showing the amount and

source of each quarterly distribution

during the year is included with Fund’s

IRS Form 1099–DIV report sent to each

shareholder who received distributions

during the year (including shareholders

who have sold shares during the year).

4. Another concern underlying

section 19(b) and rule 19b–1 is that

frequent capital gains distributions

could facilitate improper distribution

practices including, in particular, the

practice of urging an investor to

purchase shares of a fund on the basis

of an upcoming dividend (‘‘selling the

dividend’’), when the dividend results

in an immediate corresponding

reduction in NAV and is, in effect, a

return of the investor’s capital. The

Fund submits that this concern does not

arise with regard to closed-end

management investment companies,

such as the Fund, which do not

continuously distribute their shares.

Applicant further asserts that if the

Fund makes a rights offering to its

shareholders, the rights offering will be

timed so that issuable upon exercise of

the right will be issued only in the six

week period immediately following the

record date for the declaration of a

dividend. Thus, the abuse of selling the

dividend cannot occur as a matter of

timing.

5. The Fund states that increased

administrative costs also are a concern

underlying section 19(b) and rule 19b–

1. The Fund asserts, however, that it

will continue to make quarterly

distributions regardless of what portion

of the distribution is composed of longterm capital gains.

6. Section 6(c) of the Act provides that

the SEC may exempt any person or

transaction from any provision of the

Act or any rule thereunder 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. For the reasons stated above,

the Fund believes that the requested

relief satisfies this standard.

Applicant’s Condition

The Fund agrees that the order

granting the requested relief will

terminate upon the effective date of a

registration statement under the

Securities Act of 1933 for any future

public offering by the Fund of its shares

other than: (i) A rights offering with

respect to the Fund’s common stock to

holders of the Fund’s common stock, in

which (a) shares are issued only within

the six-week period immediately

following the record date of a quarterly

dividend, (b) the prospectus for the

rights offering makes it clear that

shareholders exercising the rights will

not be entitled to receive such dividend,

and (c) the Fund has not engaged in

more than one rights offering during any

given calendar year; or (ii) an offering in

connection with a merger,

consolidation, acquisition, spin-off or

reorganization of the Fund; unless the

Fund has received from the staff of the

SEC written assurance that the order

will remain in effect.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–20690 Filed 8–3–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–23365; 812–10710]

MEMBERS Mutual Funds and CIMCO

Inc.; Notice of Application July 29,

1998

AGENCY: Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Notice of application under

section 6(c) of the Investment Company

Act of 1940 (the ‘‘Act’’) for an

exemption from section 15(a) of the Act

and rule 18f–2 under the Act.

SUMMARY OF APPLICATION: Applicants

request an order to permit them to enter

into and materially amend subadvisory

contracts without obtaining shareholder

approval.

APPLICANTS: MEMBERS Mutual Funds

(the ‘‘Trust’’) and CIMCO Inc. (the

‘‘Manager’’).