17166 Federal Register / Vol. 76, No. 59 / Monday, March 28, 2011 / Notices 

In addition, Rule 17a–3 contains 

ongoing operation and maintenance 

costs for broker-dealers including the 

cost of postage to provide customers 

with account information, and costs for 

equipment and systems development. 

The Commission estimates that under 

Rule 17a–3(a)(17), approximately 

35,627,958 customers will need to be 

provided with information regarding 

their account on a yearly basis. The 

Commission estimates that the postage 

costs associated with providing those 

customers with copies of their account 

record information would be 

approximately $10,688,387 per year 

(35,627,958 × $0.30). The staff believes 

that the ongoing equipment and systems 

development costs relating to Rule 17a– 

3 for the industry would be about 

$23,514,452 per year. Consequently, the 

total cost burden associated with Rule 

17a–3 would be approximately 

$34,202,839 per year. 

Rule 17a–3 does not contain record 

retention requirements. Compliance 

with the rule is mandatory. The 

required records are available only to 

the staffs of the Commission, selfregulatory organizations of which the 

broker-dealer is a member, and the 

States during examination, inspections 

and investigations. 

The Commission may not conduct or 

sponsor a collection of information 

unless it displays a currently valid 

control number. No person shall be 

subject to any penalty for failing to 

comply with a collection of information 

subject to the PRA that does not display 

a valid Office of Management and 

Budget (OMB) control number. 

The public may view the background 

documentation for this information 

collection at the following Web site, 

http://www.reginfo.gov. Comments 

should be directed to (i) Desk Officer for 

the Securities and Exchange 

Commission, Office of Information and 

regulatory Affairs, Office of 

Management and Budget Room 10102, 

New Executive Office Building, 

Washington, DC 20503, or by sending an 

e-mail to: 

Shagufta_Ahmed@omb.eop.gov; and (ii) 

Thomas Bayer, Chief Information 

Officer, Securities and Exchange 

Commission, c/o Remi Pavlik-Simon, 

6432 General Green Way, Alexandria, 

VA 22312 or send an e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within thirty days 

of this notice. 

Dated: March 22, 2011. 

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7151 Filed 3–25–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Rel. No. IC–29600; File No. 812–13791] 

TIAA–CREF Life Insurance Company, 

et al. 

March 22, 2011. 

AGENCY: U.S. Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order under Section 26(c) of the 

Investment Company Act of 1940, as 

amended (the ‘‘1940 Act’’). 

APPLICANTS: TIAA–CREF Life Insurance 

Company (‘‘TC LIFE’’), TIAA–CREF Life 

Separate Account VA–1 (‘‘Separate 

Account VA–1’’), and TIAA–CREF Life 

Separate Account VLI–1 (‘‘Separate 

Account VLI–1’’) (together with, 

Separate Account VA–1, the ‘‘Separate 

Accounts’’) (all foregoing parties 

collectively referred to herein as the 

‘‘Applicants’’). 

SUMMARY OF APPLICATION: Applicants 

request an order of the Commission, 

pursuant to Section 26(c) of the Act, 

approving the substitution of shares of 

the Commodity Return Strategy 

Portfolio of the Credit Suisse Trust (the 

‘‘Substituted Portfolio’’) for Class II 

shares of the Natural Resources Portfolio 

of The Prudential Series Fund (the 

‘‘Replacement Portfolio’’) under certain 

variable life insurance policies and 

variable annuity contracts (the 

‘‘Contracts’’), each issued through a 

Separate Account. 

FILING DATE: The application was filed 

on July 7, 2010 and amended and 

restated on November 3, 2010, January 

20, 2011, and March 14, 2011. 

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 Secretary of 

the Commission and serving Applicants 

with a copy of the request, personally or 

by mail. Hearing requests must be 

received by the Commission by 5:30 

p.m. on April 20, 2011, 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 requester’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 Secretary of the 

Commission. 

ADDRESSES: Secretary, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1090. 

Applicants, c/o Ken Reitz, Associate 

General Counsel, TIAA–CREF Life 

Insurance Company, 8500 Andrew 

Carnegie Boulevard, Charlotte, North 

Carolina 28262–8500. 

FOR FURTHER INFORMATION CONTACT: 

Michael L. Kosoff, Branch Chief, at (202) 

551–6754 or Harry Eisenstein, Senior 

Special Counsel, Office of Insurance 

Products, Division of Investment 

Management, at (202) 551–6795. 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or for an applicant using the 

Company name box, at http:// 

www.sec.gov/search/search.htm, or by 

calling (202) 551–8090. 

Applicants’ Representations: 

1. TC LIFE is a stock life insurance 

company organized under the laws of 

the State of New York on November 20, 

1996. TC LIFE’s executive office mailing 

address is 730 Third Avenue, New York, 

New York 10017. 

2. TC LIFE established Separate 

Account VA–1 under New York state 

law on July 27, 1998. Separate Account 

VA–1 meets the definition of a ‘‘separate 

account’’ under the federal securities 

laws and is registered with the 

Commission under the Act as a unit 

investment trust (File No. 811–08963). 

Separate Account VA–1 consists of 47 

subaccounts, each investing in a 

different investment portfolio and 

including subaccounts investing in both 

the Substituted Portfolio and 

Replacement Portfolio. The subaccount 

investing in the Substituted Portfolio 

was closed to additional payments and 

transfers of contract value on April 12, 

2010. The assets of Separate Account 

VA–1 support Contracts (the ‘‘Separate 

Account VA–1 Contracts’’) that offer the 

Substituted Portfolio and the 

Replacement Portfolio as investment 

options, and interests in Separate 

Account VA–1 offered through such 

Contracts have been registered under 

the Securities Act of 1933 Act (the ‘‘1933 

Act’’) on Form N–4 (File No. 333– 

145064). Other than the subaccounts 

investing in the Substituted Portfolio 

and the two other Credit Suisse 

portfolios, all of the Separate Account 

VA–1 subaccounts are currently 

available under the Separate Account 

VA–1 Contracts. 

3. TC LIFE is the legal owner of the 

assets in Separate Account VA–1. 

Pursuant to the Separate Account VA– 

1 Contracts and prospectuses, TC LIFE 

reserves the right to substitute shares of 

one portfolio for shares of another. The 

terms of the Separate Account VA–1 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 59 / Monday, March 28, 2011 / Notices 17167 

1The Target Portfolio Trust and Prudential 

Mutual Fund Management, Inc., Act Rel. No. 22215 

(Sept. 11, 1996) (Order), File No. 812–10208. 

Contracts and the prospectus for the 

Separate Account VA–1 Contracts also 

permit Contract owners to transfer 

contract value among the subaccounts. 

TC LIFE does not assess a transfer 

charge or limit the number of transfers 

permitted per year, although TC LIFE 

does have in place market timing 

policies and procedures that may 

operate to limit transfers. 

4. TC LIFE established Separate 

Account VLI–1 under New York state 

law on May 23, 2001. Separate Account 

VLI–1 meets the definition of a ‘‘separate 

account’’ under the Federal securities 

laws and is registered with the 

Commission under the Act as a unit 

investment trust (File No. 811–10393). 

Separate Account VLI–1 consists of 47 

subaccounts, each investing in a 

different investment portfolio and 

including subaccounts investing in both 

the Substituted Portfolio and the 

Replacement Portfolio. The subaccount 

investing in the Substituted Portfolio 

was closed to additional payments and 

transfers of contract value on April 12, 

2010. The assets of Separate Account 

VLI–1 support Contracts (the ‘‘Separate 

Account VLI–1 Contracts’’) that offer the 

Substituted Portfolio and the 

Replacement Portfolio as investment 

options, and interests in Separate 

Account VLI–1 offered through such 

Contracts have been registered under 

the 1933 Act on Form N–6 (File Nos. 

333–128699 and 333–151910). Other 

than the subaccounts investing in the 

Substituted Portfolio and the two other 

Credit Suisse portfolios, all of the 

Separate Account VLI–1 subaccounts 

are currently available under the 

Separate Account VLI–1 Contracts. 

5. TC LIFE is the legal owner of the 

assets in Separate Account VLI–1. 

Pursuant to the Separate Account VLI– 

1 Contracts and prospectuses, TC LIFE 

reserves the right to substitute shares of 

one portfolio for shares of another. The 

terms of the Separate Account VLI–1 

Contracts and the prospectuses for the 

Separate Account VLI–1 Contracts also 

permit Contract owners to transfer 

contract value among the subaccounts. 

TC LIFE currently does not assess a 

transfer charge or limit the number of 

transfers permitted per year, although 

TC LIFE does reserve the right to deduct 

a $25 charge for the thirteenth and each 

additional transfer during a policy year. 

Transfers due to dollar cost averaging, 

automatic account rebalancing, loans, 

changes in a subaccount’s investment 

policy, or the initial reallocation from a 

money market subaccount do not count 

as transfers for the purpose of assessing 

the transfer charge. Contract owners also 

must transfer at least $250, or the total 

value in the allocation option being 

transferred, if less. TC LIFE also has in 

place market timing policies and 

procedures that may operate to limit 

transfers. TC LIFE also imposes certain 

restrictions on transfers from the fixed 

account. 

6. Credit Suisse Trust was organized 

on March 15, 1995 under the laws of the 

Commonwealth of Massachusetts as a 

Massachusetts business trust. It is 

registered under the Act as a open-end 

management investment company (File 

No. 811–07261). Credit Suisse Trust 

currently consists of three portfolios, 

one of which—the Commodity Return 

Strategy Portfolio—is the Substituted 

Portfolio. The Credit Suisse Trust issues 

a separate series of shares of beneficial 

interest in connection with each 

portfolio and has registered such shares 

under the 1933 Act on Form N–1A (File 

No. 33–58125). Credit Suisse Asset 

Management, LLC (‘‘Credit Suisse 

Management’’) serves as the investment 

adviser to each portfolio of the Credit 

Suisse Trust. 

7. Aberdeen Investment Management 

acquired Credit Suisse Management in 

December 2009. Applicants state that 

they are concerned that the acquisition 

could result in a change in investment 

style so that the Substituted Portfolio 

may no longer serve the investment 

purposes for which it was selected as an 

investment option in the Contracts. 

8. The Prudential Series Fund is 

organized as a Delaware statutory trust 

and is registered under the Act as an 

open-end management investment 

company (File No. 811–03623). The 

Prudential Series Fund currently 

consists of 19 separate portfolios, one of 

which—the Natural Resources 

Portfolio—is the Replacement Portfolio. 

The Prudential Series Fund issues a 

separate series of shares of beneficial 

interest in connection with each 

portfolio and has registered such shares 

under the 1933 Act on Form N–1A (File 

No. 2–80896). Prudential Investments 

LLC (‘‘P.I.’’), a wholly-owned subsidiary 

of Prudential Financial, Inc., serves as 

the investment adviser to each portfolio 

of The Prudential Series Fund and 

receives an investment management fee 

from each portfolio it manages. 

9. Prudential Mutual Fund 

Management, Inc. (‘‘PMFM’’), the former 

investment adviser to funds sponsored 

by Prudential Financial, Inc. and its 

affiliates, obtained an order from the 

Commission pursuant to Section 6(c) of 

the Act exempting it from Section 15(a) 

of the Act and Rule 18f–2 under the Act, 

with respect to subadvisory agreements 

(the ‘‘Manager of Managers Order’’).1

10. The Manager of Managers Order 

applies not only to the specific 

applicants but also to any future openend management investment company 

advised by PMFM or a person 

controlling, controlled by, or under 

common control with PMFM, provided 

that such investment company operates 

in substantially the same manner as the 

applicant investment company and 

complies with the condition of the 

Manager of Managers Order. More 

particularly, Applicants believe that the 

Manager of Managers Order permits P.I. 

to enter into and materially amend 

investment subadvisory agreements 

with respect to The Prudential Series 

Fund without obtaining shareholder 

approval. For this reason, the 

Applicants believe that the relief 

granted in the Manager of Managers 

Order extends to the Natural Resources 

Portfolio. 

11. Neither the Substituted Portfolio 

nor the Replacement Portfolio nor their 

investment advisers are affiliated with 

the Applicants. 

12. The following charts set out the 

investment objective of the Substituted 

Portfolio and the Replacement Portfolio, 

as stated in their respective 

prospectuses dated May 1, 2010. 

Substituted portfolio Replacement portfolio 

Credit Suisse Trust Commodity Return Strategy Portfolio Prudential Series Fund Natural Resources Portfolio 

(Class II Shares) 

Investment Objective Investment Objective 

Seeks total return relative to the performance of the Dow Jones-UBS Commodity Index 

Total Return (‘‘DJ–UBS Index’’).

Seeks long-term growth of capital. 


Emcdonald on DSK2BSOYB1PROD with NOTICES
17168 Federal Register / Vol. 76, No. 59 / Monday, March 28, 2011 / Notices 

2The Commodity Return Strategy Portfolio’s 

investments will be limited, however, in order to 

qualify as a ‘‘regulated investment company’’ for 

purposes of the Internal Revenue Code. The 

Portfolio has obtained a private letter ruling from 

the Internal Revenue Service confirming that the 

income produced by certain types of commodityindex linked structured notes constitutes qualifying 

income for purposes of qualifying as a ‘‘regulated 

investment company.’’ To qualify, the Portfolio 

complies with certain requirements, including 

limiting its investments so that at the close of each 

quarter of the taxable year (i) not more than 25% 

of the market value of its total assets are invested 

in the securities of a single issuer, and (ii) with 

respect to 50% of the market value of its total 

assets, not more than 5% of the market value of its 

total assets are invested in the securities of a single 

issuer and the portfolio does not own more than 

10% of the outstanding voting securities of a single 

issuer. 

3The Natural Resources Portfolio may not 

purchase any security (other than obligations of the 

U.S. government, its agencies or instrumentalities) 

if, as a result of such purchase, 25% or more of the 

Portfolio’s total assets (determined at the time of 

investment) would be invested in any one industry; 

provided, however, that the Portfolio will 

concentrate its investment in securities of 

companies in the natural resources group of 

industries. 

13. The following information sets out 

the current principal investment 

strategies of the Substituted Portfolio 

and the Replacement Portfolio, as stated 

in their respective prospectuses and/or 

Statements of Additional Information 

(‘‘SAI’’) dated May 1, 2010. 

Substituted portfolio Replacement portfolio 

Credit Suisse Trust Commodity Return Strategy Portfolio Prudential Series Fund Natural Resources Portfolio (Class II 

Shares) 

Principal Investment Strategies Principal Investment Strategies 

The Portfolio is designed to achieve positive total return relative to the 

performance of the Dow Jones-UBS Commodity Index Total Return 

(‘‘DJ–UBS Index’’). The Portfolio intends to invest its assets in a 

combination of commodity-linked derivative instruments and fixed income securities. The Portfolio gains exposure to commodities markets by investing in structured notes whose principal and/or coupon 

payments are linked to the DJ–UBS Index and swap agreements on 

the DJ–UBS Index.

The Portfolio normally invests at least 80% of its net assets (plus any 

borrowings made for investment purposes) in common stocks and 

convertible securities of natural resource companies and securities 

that are related to the market value of some natural resource. 

The Portfolio may invest up to 25% of its total assets in a wholly 

owned subsidiary of the Portfolio formed in the Cayman Islands (the 

‘‘Subsidiary’’), which has the same investment objective as the Portfolio and has a strategy of investing in commodity-linked swap agreements and other commodity-linked derivative instruments, futures 

contracts on individual commodities, or a subset of commodities and 

options on commodities.

Natural resource companies are companies that primarily own, explore, 

mine, process or otherwise develop natural resources, or supply 

goods and services to such companies. Natural resources generally 

include agricultural commodities, precious metals, such as gold, silver and platinum, ferrous and nonferrous metals, such as iron, aluminum and copper, strategic metals such as uranium and titanium, 

hydrocarbons such as coal and oil, timberland and undeveloped real 

property. 

The Portfolio seeks securities with an attractive combination of valuation versus peers, organic reserve and production growth, and competitive unit cost structure. 

The Portfolio invests in a portfolio of fixed income securities normally 

having an average duration of one year or less, and emphasizes investment-grade fixed income securities. The Portfolio may invest 

without limit in U.S. dollar-denominated foreign securities and may 

invest up to 30% of its assets in non-U.S. dollar-denominated securities.

Up to 20% of the Portfolio’s total assets may be invested in securities 

that are not asset-indexed or natural resource-related, including common stock, convertible stock, debt securities and money market instruments. 

The Portfolio is a non-diversified mutual fund portfolio, meaning the 

Portfolio may invest a relatively high percentage of its assets in a 

small number of issuers 2.

Up to 50% of the Portfolio’s total assets may be invested in foreign equity and equity-related securities. 

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities: (i) alternative 

investment strategies—including derivatives—to try and improve the 

Portfolio’s returns, to protect its assets or for short-term cash management. Derivatives includes options, futures contracts, swaps and 

swap options; (ii) forward foreign currency exchange contracts; (iii) 

purchase securities on a when-issued or delayed delivery basis; (iv) 

short sales against-the-box; (v) repurchase agreements. The Portfolio may participate with certain other portfolios of the Fund in a 

joint repurchase account under an order obtained from the SEC; and 

(vi) illiquid securities. 

Under normal circumstances, the Portfolio may invest up to 20% of its 

net assets in money market instruments. 

The Portfolio is a non-diversified mutual fund portfolio, meaning the 

Portfolio may invest a relatively high percentage of its assets in a 

small number of issuers.3 The Portfolio will concentrate its investments (i.e., will invest at least 25% of its assets under normal circumstance) in securities of companies in the natural resources group 

of industries. 

14. The following sets out the 

principal investment risks of the 

Substituted Portfolio and the 

Replacement Portfolio, as stated in their 

respective prospectuses and/or SAIs 

dated May 1, 2010. 

The Commodity Return Strategy 

Portfolio is subject to the following 

principal investment risks: 

• Commodity Risk. The Portfolio’s 

investment in commodity-linked 

derivative instruments may subject the 

Portfolio to greater volatility than 

investments in traditional securities, 

particularly if the instruments involve 

leverage. The value of commoditylinked derivative instruments may be 

affected by changes in overall market 

movements, commodity index volatility, 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 59 / Monday, March 28, 2011 / Notices 17169 

changes in interest rates, or factors 

affecting a particular industry or 

commodity, such as drought, floods, 

weather, livestock disease, embargoes, 

tariffs, and international economic, 

political, and regulatory developments. 

Use of leveraged commodity-linked 

derivatives creates an opportunity for 

increased return but, at the same time, 

creates the possibility for greater loss 

(including the likelihood of greater 

volatility of the portfolio’s net asset 

value), and there can be no assurance 

that the portfolio’s use of leverage will 

be successful. 

• Correlation Risk. Changes in the 

value of a hedging instrument may not 

match those of the investment being 

hedged. In addition, commodity-linked 

structured notes may be structured in a 

way that results in the portfolio’s 

performance diverging from the DJ–UBS 

Index, perhaps materially. For example, 

a note can be structured to limit the loss 

or the gain on the investment, which 

would result in the portfolio not 

participating in declines or increases in 

the DJ–UBS Index that exceed the 

limits. 

• Credit Risk. The issuer of a security 

or the counterparty to a contract, 

including derivatives contracts, may 

default or otherwise become unable to 

honor a financial obligation. 

• Derivatives Risk. Derivatives are 

financial contracts whose value depends 

on, or is derived from, the value of an 

underlying asset, reference rate, or 

index. The Portfolio typically uses 

derivatives as a substitute for taking a 

position in the underlying asset and/or 

as part of a strategy designed to reduce 

exposure to other risks, such as interest 

rate or currency risk. The Portfolio may 

also use derivatives for leverage. The 

Portfolio’s use of derivative instruments, 

particularly commodity-linked 

derivatives, involves risks different 

from, or possibly greater than, the risks 

associated with investing directly in 

securities and other traditional 

investments. Derivatives are subject to a 

number of risks, such as commodity 

risk, correlation risk, liquidity risk, 

interest-rate risk, market risk, and credit 

risk. Also, suitable derivative 

transactions may not be available in all 

circumstances and there can be no 

assurance that the portfolio will engage 

in these transactions to reduce exposure 

to other risks that would be beneficial. 

• Exposure Risk. There is a risk 

associated with investments (such as 

derivatives) or practices (such as short 

selling) that increase the amount of 

money the portfolio could gain or lose 

on an investment. Exposure risk could 

multiply losses generated by a 

derivative or practice used for hedging 

purposes. Such losses should be 

substantially offset by gains on the 

hedged investment. However, while 

hedging can reduce or eliminate losses, 

it can also reduce or eliminate gains. To 

the extent that a derivative or practice 

is not used as a hedge, the Portfolio is 

directly exposed to its risks. Gains or 

losses from speculative positions in a 

derivative may be much greater than the 

derivative’s original cost. For example, 

potential losses from writing uncovered 

call options and from speculative short 

sales are unlimited. 

• Extension Risk. An unexpected rise 

in interest rates may extend the life of 

a fixed income security beyond the 

expected payment time, typically 

reducing the security’s value. 

• Focus Risk. The Portfolio will be 

exposed to the performance of 

commodities in the DJ–UBS Index, 

which may from time to time have a 

small number of commodity sectors 

(e.g., energy, metals or agricultural) 

representing a large portion of the 

index. As a result, the Portfolio may be 

subject to greater volatility than if the 

index were more broadly diversified 

among commodity sectors. 

• Foreign Securities Risk. A portfolio 

that invests outside the United States 

carries additional risks. Fluctuations in 

exchange rates between the U.S. dollar 

and foreign currencies may negatively 

affect an investment. Adverse changes 

in exchange rates may erode or reverse 

any gains produced by foreign-currency 

denominated investments and may 

widen any losses. Although the 

Portfolio may seek to reduce currency 

risk by hedging part or all of its 

exposure to various foreign currencies, 

it is not required to do so. Key 

information about an issuer, security, or 

market may be inaccurate or 

unavailable. Moreover, foreign 

governments may expropriate assets, 

impose capital or currency controls, 

impose punitive taxes, or nationalize a 

company or industry. Any of these 

actions could have a severe effect on 

security prices and impair the 

Portfolio’s ability to bring its capital or 

income back to the U.S. Other political 

risks include: economic policy changes, 

social and political instability, military 

action and war. 

• Interest Rate Risk. Changes in 

interest rates may cause a decline in the 

market value of an investment. With 

bonds and other fixed-income 

securities, a rise in interest rates 

typically causes a fall in values, while 

a fall in interest rates typically causes a 

risk in values. 

• Liquidity Risk. Certain portfolio 

securities, such as commodity-linked 

notes and swaps, may be difficult or 

impossible to sell at the time and the 

price that the Portfolio would like. The 

Portfolio may have to lower the price, 

sell other securities instead, or forgo an 

investment opportunity. Any of these 

could have a negative effect on portfolio 

management or performance. 

• Market Risk. The market value of a 

security may fluctuate, sometimes 

rapidly and unpredictably. These 

fluctuations, which are often referred to 

as ‘‘volatility,’’ may cause a security to 

be worth less than it was worth at an 

earlier time. Market risk may affect a 

single issuer, industry, commodity, 

sector of the economy, or the market as 

a whole. Market risk is common to most 

investments, including: stocks, bonds 

and commodities, and the mutual funds 

that invest in them. 

• Non-diversified Status. The 

Portfolio is considered a non-diversified 

investment company under the Act and 

is permitted to invest a greater 

proportion of its assets in the securities 

of a smaller number of issuers. As a 

result, the portfolio may be subject to 

greater volatility with respect to its 

portfolio securities than a fund that is 

diversified. 

• Subsidiary Risk. By investing in the 

Credit Suisse Cayman Commodity Fund 

II, Ltd. (the ‘‘Subsidiary’’), the Portfolio 

is indirectly exposed to the risks 

associated with the Subsidiary’s 

investments. The derivatives and other 

investments held by the Subsidiary are 

generally similar to those that are 

permitted to be held by the Portfolio 

and are subject to the same risks that 

apply to similar investments if held 

directly by the Portfolio. There can be 

no assurance that the investment 

objective of the Subsidiary will be 

achieved. The Subsidiary is not 

registered under the Act and is not 

subject to all the investor protections of 

the Act. However, the Portfolio wholly 

owns and controls the Subsidiary, and 

the Portfolio and the Subsidiary are both 

managed by Credit Suisse Asset 

Management, LLC, making it unlikely 

that the Subsidiary will take action 

contrary to the risks of the Portfolio and 

its shareholders. Changes in the laws of 

the United States and/or the Cayman 

Islands could result in the inability of 

the Portfolio and/or the Subsidiary to 

operate as it does currently and could 

adversely affect the Portfolio. 

• Tax Risk. Any income the Portfolio 

derives from direct investments in 

commodity-linked swaps or certain 

other commodity-linked derivatives 

must be limited to a maximum of 10% 

of the portfolio’s gross income in order 

for the portfolio to maintain its pass 

through tax status. The Portfolio has 

obtained a private letter ruling from the 


Emcdonald on DSK2BSOYB1PROD with NOTICES
17170 Federal Register / Vol. 76, No. 59 / Monday, March 28, 2011 / Notices 

4Management fee of the Commodity Return 

Strategy Portfolio and the Credit Suisse Cayman 

Commodity Fund II, Ltd. (the ‘‘Subsidiary’’). 

5Credit Suisse Management has voluntarily 

agreed to waive fees and reimburse expenses so that 

total operating expenses will not exceed 1.05% of 

the portfolio’s average daily net assets. 

Internal Revenue Service (the ‘‘IRS’’) 

confirming that the income produced by 

certain types of structured notes 

constitutes ‘‘qualifying income’’ under 

the Internal Revenue Code. In addition, 

the IRS has issued a private letter ruling 

to the Portfolio confirming that income 

derived from the Portfolio’s investment 

in its Subsidiary will also constitute 

qualifying income to the Portfolio. 

Based on such rulings, the Portfolio 

seeks to gain exposure to the commodity 

markets primarily through investments 

in commodity index-linked notes and, 

through investments in the Subsidiary, 

commodity-linked swaps and 

commodity futures. 

The Natural Resources Portfolio is 

subject to the following principal 

investment risks: 

• Derivatives Risk. The use of 

derivatives involves a variety of risks. 

There is a risk that the counterparty on 

a derivative transaction will be unable 

to honor its financial obligation to the 

Portfolio. Certain derivatives and related 

trading strategies create debt obligations 

similar to borrowings and, therefore, 

create leverage which can result in 

losses to a Portfolio that exceed the 

amount the Portfolio originally invested. 

Certain exchange-traded derivatives 

may be difficult or impossible to buy or 

sell at the time that the seller would like 

or at the price that the seller believes the 

derivative is currently worth. Privately 

negotiated derivatives may be difficult 

to terminate or otherwise offset. 

Derivatives used for hedging may 

reduce losses but also reduce or 

eliminate gains and cause losses if the 

market moves in a manner different 

from that anticipated by the Portfolio. 

Furthermore, commodity-linked 

derivative instruments may be more 

volatile than the prices of investments 

in traditional equity and debt securities. 

• Equity Securities Risk. There is a 

risk that the value or price of a 

particular stock or other equity or 

equity-related security owned by the 

Portfolio could go down. In addition to 

an individual stock losing value, the 

value of the equity markets or a sector 

of those markets in which the Portfolio 

invests could go down. 

• Expense Risk. The actual cost of 

investing in the Portfolio may be higher 

than the expenses shown in the Annual 

Portfolio Operating Expenses. 

• Foreign Investment Risk. 

Investment in foreign securities 

generally involves more risk than 

investing in securities of U.S. issuers. 

Changes in currency exchange rates may 

affect the value of foreign securities held 

by the Portfolio. Securities of issuers 

located in emerging markets tend to 

have volatile prices and may be less 

liquid than investments in more 

established markets. Moreover, foreign 

markets generally are more volatile than 

U.S. markets, are not subject to 

regulatory requirements comparable to 

those in the U.S., and are subject to 

differing custody and settlement 

practices. Foreign financial reporting 

standards usually differ from those in 

the U.S., and foreign exchanges are 

smaller and less liquid than the U.S. 

market. Political developments may 

adversely affect the value of a Portfolio’s 

foreign securities, and foreign holdings 

may be subject to special taxation and 

limitations on repatriating investment 

proceeds. 

• Industry/Sector Risk. A portfolio 

that invests in a single market sector or 

industry can accumulate larger 

positions in a single issuer or an 

industry sector. As a result, the 

Portfolio’s performance may be tied 

more directly to the success or failure of 

a small group of portfolio holdings. 

• Liquidity and Valuation Risk. From 

time to time, the Portfolio may hold one 

or more securities for which there are no 

or few buyers and sellers or which are 

subject to limitations on transfer. The 

Portfolio also may have difficulty 

disposing of those securities at the 

values determined by the Portfolio for 

the purpose of determining the 

Portfolio’s net asset value, especially 

during periods of significant net 

redemptions of Portfolio shares. 

• Market and Management Risk. 

Markets in which the Portfolio invests 

may experience volatility and go down 

in value, and possibly sharply and 

unpredictably. All decisions by an 

adviser require judgment and are based 

on imperfect information. Additionally, 

the investment techniques, risk analysis 

and investment strategies used by an 

adviser in making investment decisions 

for the Portfolio may not produce the 

desired results. 

• Non-diversification Risk. As a nondiversified portfolio, the Portfolio may 

hold larger positions in single issuers 

than a diversified fund. Because the 

Portfolio is not required to meet 

diversification requirements that are 

applicable to some funds, there is an 

increased risk that the Portfolio may be 

adversely affected by the performance of 

relatively few securities or the securities 

of a single issuer. 

15. The following charts compare the 

investment management fees and total 

operating expenses (before and after any 

waivers and reimbursements) for the 

year ended December 31, 2010, 

expressed as an annual percentage of 

average daily net assets, of the 

Substituted Portfolio and the 

Replacement Portfolio. 

Substituted portfolio Replacement portfolio 

Credit Suisse Trust commodity return strategy 

portfolio 

Prudential series fund natural resources 

portfolio (Class II) 

Investment Management Fees ........................... 0.50% 4 ............................................................. 0.45% 

Distribution and Service (12b–1) Fee ................ 0.25% ............................................................... 0.25% 

Administration Fees ............................................ None ................................................................. None 

Other Expenses .................................................. 0.34% ............................................................... 0.20% 

Total Operating Expenses .................................. 1.09% ............................................................... 0.90% 

Less Expense Waivers and Reimbursements ... 0.14% 5 ............................................................. N/A 

Total Net Operating Expenses .................... 0.95% ............................................................... 0.90% 

16. The following charts compare the 

average annual total returns of the 

Substituted Portfolio and the 

Replacement Portfolio for the one-year, 

five-year, and ten-year (or since 

inception) periods ended December 31, 

2010. 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 59 / Monday, March 28, 2011 / Notices 17171 

5Credit Suisse Management has voluntarily 

agreed to waive fees and reimburse expenses so that 

total operating expenses will not exceed 1.05% of 

the portfolio’s average daily net assets. 

Substituted portfolio Replacement portfolio 

Credit Suisse Trust commodity return strategy 

portfolio 

Prudential fund series natural resources 

portfolio 

Average Annual Total Return for One Year ....... +16.66% ........................................................... +27.48% 

Average Annual Total Return for Five Years ..... N/A ................................................................... 13.61% 

Average Annual Total Return for Ten Years or, 

if less, Since Inception.

2.99% (Date of Inception: February 28, 2006) +20.28% (Date of Inception: April 28, 2005) 

17. The following charts compare the 

levels of net assets (rounded to the 

nearest thousand) of the Substituted 

Portfolio and the Replacement Portfolio 

on December 31, 2010 and the prior four 

calendar years, as well as the levels of 

net assets of the Separate Accounts 

invested in the Substituted Portfolio for 

the same time period and the percentage 

of the Substituted Portfolio’s total net 

assets represented by the investments of 

the Separate Accounts. 

Substituted portfolio Replacement portfolio 

Credit Suisse trust commodity return strategy portfolio Prudential fund 

series natural 

Total separate resources portfolio 

account assets 

invested in the 

portfolio 

% of portfolio total net 

assets represented by 

separate account 

investment 

Total net assets 

(in thousands) Total net assets 

(in thousands) 

On 12/31/2010 ................................................ $1,671,571 ................. 1.34% ......................... $124,550 .................... $1,360,056 

On 12/31/2009 ................................................ 1,713,589 ................... 1.58% ......................... 108,211 ...................... 1,079,600 

On 12/31/2008 ................................................ 424,299 ...................... 0.61% ......................... 69,919 ........................ 677,400 

On 12/31/2007 ................................................ 21,813 ........................ 0.04% ......................... 56,624 ........................ 1,669,900 

On 12/31/2006 ................................................ 287 ............................. 0.0002% ..................... 145,907 6 .................... 1,193,000 

On 12/31/2005 ................................................ N/A ............................. N/A ............................. N/A ............................. 1,016,300 

18. Applicants represent that the 

Substitution is part of an overall 

business goal of TC LIFE to make the 

Contracts more attractive to Contract 

owners and to assure a consistency in 

the range of overall investment options 

provided by the Contracts. Pursuant to 

this goal, TC LIFE has engaged in a 

thorough review of the efficiencies and 

structures of all of the investment 

options it offers under the Contracts. 

This review involved an evaluation of 

the investment objectives and strategies, 

asset sizes, expense ratios, investment 

performance, investment process, and 

investment teams responsible for the 

management of each investment option, 

with a view to past performance as well 

as future expectations. Based on this 

evaluation, TC LIFE has determined that 

the Substituted Portfolio warrants 

replacement. In particular, due to a 

recent change in the management of the 

Substituted Portfolio that resulted in 

changes in the investment strategies of 

two other Credit Suisse portfolios 

offered in the Contracts, TC LIFE 

believes there may be some question 

regarding the continuity of management, 

the application of a continuing 

investment process, and the dedication 

of resources to the Substituted Portfolio. 

19. Applicants represent that TC LIFE 

reviewed all of the underlying fund 

options with the goal of ensuring that 

Contract owners would be provided 

with investment options under their 

Contracts following the Substitution 

that are similar to the investment 

options under their Contracts before the 

Substitution. Based in particular on a 

better performance record and lower 

total expenses of the Replacement 

Portfolio, TC LIFE believes that the 

adviser to the Replacement Portfolio is 

better positioned overall to provide 

exposure to the asset classes that were 

originally selected as well as being able 

to offer the potential for consistent 

above-average performance for the 

Portfolio than is the adviser to the 

Substituted Portfolio. The Replacement 

Portfolio also is considerably larger than 

the Substituted Portfolio, thus offering 

better economies of scale with a larger 

asset base over which to spread the 

various portfolio costs ultimately passed 

on to Contract owners. As such, TC LIFE 

believes that effecting the Substitution 

will provide Contract owners with a 

Replacement Portfolio that has a 

comparable investment objective to the 

Substituted Portfolio but is, overall, less 

expensive, consistent with the desired 

asset class exposure, better positioned to 

provide consistent above-average 

performance, and with greater 

expectations for growth. Moreover, TC 

LIFE maintains that the investment 

objective and policies of the 

Replacement Portfolio are sufficiently 

similar to those of the Substituted 

Portfolio so that Contract owners will 

have reasonable continuity in 

investment expectations. 

20. Applicants seek the Commission’s 

approval under Section 26(c) to engage 

in the substitution transaction described 

below. Pursuant to its authority under 

the respective Contracts and the 

prospectuses describing the same, and 

subject to the approval of the 

Commission under Section 26(c) of the 

Act, TC LIFE proposes to substitute 

shares of the Commodity Return 

Strategy Portfolio of the Credit Suisse 

Trust for Class II Shares of the Natural 

Resources Portfolio of The Prudential 

Series Fund. 

21. Applicants represent that TC LIFE 

will effect the Substitution as soon as 

practicable following the issuance of the 

requested order as follows. As of the 

effective date of the Substitution (the 

‘‘Effective Date’’), shares of the 

Substituted Portfolio will be redeemed 

for cash and that cash will be used to 

purchase shares of the Replacement 

Portfolio. Redemption requests and 

purchase orders will be placed 

simultaneously so that contract values 

will remain fully invested at all times. 

All redemptions of shares of the 

Substituted Portfolio and purchases of 

shares of the Replacement Portfolio will 

be effected in accordance with Section 

22(c) of the Act and Rule 22c–1 

thereunder. The Substitution will take 

place at relative net asset value as of the 

Effective Date with no change in the 


Emcdonald on DSK2BSOYB1PROD with NOTICES
17172 Federal Register / Vol. 76, No. 59 / Monday, March 28, 2011 / Notices 

7One exception to this would be restrictions that 

TIAA–CREF may impose to prevent or restrict 

‘‘market timing’’ activities by Contract owners or 

their agents. 

8House Comm. Interstate Commerce, Report of 

the Securities and Exchange Commission on the 

Public Policy Implications of Investment Company 

Growth, H.R. Rep. No. 2337, 89th Cong. 2d Session 

337 (1966). 

amount of any Contract owner’s contract 

value or death benefit or in the dollar 

value of his or her investments in any 

of the subaccounts. 

22. Applicants represent that contract 

values attributable to investments in the 

Substituted Portfolio will be transferred 

to the Replacement Portfolio without 

charge (including sales charges or 

surrender charges) and without 

counting toward the number of transfers 

that may be permitted without charge. 

Contract owners will not incur any 

additional fees or charges as a result of 

the Substitution, nor will their rights or 

TC LIFE’s obligations under the 

Contracts be altered in any way, and the 

Substitution will not change Contract 

owners’ insurance benefits under the 

Contracts. All expenses incurred in 

connection with the Substitution, 

including legal, accounting, 

transactional, and other fees and 

expenses, including brokerage 

commissions, will be paid by TC LIFE. 

In addition, the Substitution will not 

impose any tax liability on Contract 

owners. The Substitution will not cause 

the Contract fees and charges currently 

paid by existing Contract owners to be 

greater after the Substitution than before 

the Substitution. TC LIFE will not 

exercise any right it may have under the 

Contracts to impose a transfer charge or 

restrictions on transfers under the 

Contracts for the period beginning on 

the date the initial application was filed 

with the Commission through at least 

thirty (30) days following the Effective 

Date for transfers of contract value from 

the subaccount investing in the 

Substituted Portfolio (before the 

Substitution) or the Replacement 

Portfolio (after the Substitution) to one 

or more other subaccount(s).7

23. The Applicants represent that they 

will not receive, for three years from the 

date of the Substitution, any direct or 

indirect benefits from the Replacement 

Portfolio, its advisors or underwriters 

(or their affiliates), in connection with 

assets attributable to Contracts affected 

by the Substitution, at a higher rate than 

Applicants have received from the 

Substituted Portfolio, its advisors or 

underwriters (or their affiliates), 

including without limitation Rule 12b– 

1 fees, shareholder service, 

administration, or other service fees, 

revenue sharing, or other arrangements 

in connection with such assets. 

Applicants represent that the 

Substitution and the selection of the 

Replacement Portfolio were not 

motivated by any financial 

consideration paid or to be paid to TC 

LIFE or its affiliates by the Replacement 

Portfolio, its advisors, underwriters, or 

their respective affiliates. 

24. The Applicants assert that the 

procedures to be implemented are 

sufficient to assure that each Contract 

owner’s cash values immediately after 

the Substitution shall be equal to the 

cash value immediately before the 

Substitution. 

25. The Applicants represent that 

Existing Contract owners as of the date 

the initial application was filed, and 

new Contract owners who have 

purchased or who will purchase a 

Contract subsequent to that date but 

prior to the Effective Date, have been or 

will be notified of the proposed 

Substitution by means of a prospectus 

or prospectus supplement for each of 

the Contracts (‘‘Pre-Substitution 

Notice’’). The Pre-Substitution Notice: 

• States that the Applicants filed the 

application to seek approval of the 

Substitution; 

• Sets forth the anticipated Effective 

Date; 

• Explains that contract values 

attributable to investments in the 

Substituted Portfolio would be 

transferred to the Replacement Portfolio 

on the Effective Date; and 

• States that, from the date the initial 

application was filed with the 

Commission through the date thirty (30) 

days after the Substitution, Contract 

owners may transfer contract value from 

the subaccount investing in the 

Substituted Portfolio (before the 

Substitution) or the Replacement 

Portfolio (after the Substitution) to one 

or more other subaccount(s) without a 

transfer charge and without that transfer 

counting against their contractual 

transfer limitations. 

Further, all Contract owners will have 

received a copy of the most recent 

prospectus for the Replacement 

Portfolio prior to the Substitution. 

26. Finally, the Applicants represent 

that within five (5) days following the 

Substitution, Contract owners affected 

by the Substitution will be notified in 

writing that the Substitution was carried 

out. This notice will restate the 

information set forth in the PreSubstitution Notice, and will also 

explain that the contract values 

attributable to investments in the 

Substituted Portfolio were transferred to 

the Replacement Portfolio without 

charge (including sales charges or 

surrender charges) and without 

counting toward the number of transfers 

that may be permitted without charge. 

27. Applicants represent that Section 

26(c) of the Act prohibits any depositor 

or trustee of a unit investment trust that 

invests exclusively in the securities of a 

single issuer from substituting the 

securities of another issuer without the 

approval of the Commission. Section 

26(c) provides that such approval shall 

be granted by order of the Commission, 

if the evidence establishes that the 

substitution is consistent with the 

protection of investors and the purposes 

of the Act. Section 26(c) was intended 

to provide for Commission scrutiny of 

proposed substitutions which could, in 

effect, force shareholders dissatisfied 

with the substitute security to redeem 

their shares, thereby possibly incurring 

a loss of the sales load deducted from 

initial premium, an additional sales 

load upon reinvestment of the proceeds 

of redemption, or both.8 The section 

was designed to forestall the ability of 

a depositor to present holders of interest 

in a unit investment trust with 

situations in which a holder’s only 

choice would be to continue an 

investment in an unsuitable underlying 

security, or to elect a costly and, in 

effect, forced redemption. For the 

reasons described below, the Applicants 

submit that the Substitution meets the 

standards set forth in Section 26(c) and 

that, if implemented, the Substitution 

would not raise any of the 

aforementioned concerns that Congress 

intended to address when the Act was 

amended to include this provision. In 

addition, the Applicants submit that the 

proposed Substitution meets the 

standards that the Commission and its 

Staff have applied to substitutions that 

have been approved in the past. 

28. Applicants represent that the 

replacement of the Substituted Portfolio 

with the Replacement Portfolio is 

consistent with the protection of 

Contract owners and the purposes fairly 

intended by the policy and provisions of 

the Act and, thus, meets the standards 

necessary to support an order pursuant 

to Section 26(c) of the Act. 

29. The Applicants assert that the 

investment objective and principal 

investment strategies of the 

Replacement Portfolio are substantially 

similar to those of the Substituted 

Portfolio. The Commodity Return 

Strategy Portfolio seeks total return 

relative to the performance of the DJ– 

UBS Index, and the Natural Resources 

Portfolio seeks long-term growth of 

capital. Applicants submit that these are 

substantially similar investment 

objectives and, while the Portfolios’ 

principal investment strategies are 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 59 / Monday, March 28, 2011 / Notices 17173 

somewhat different, there is nonetheless 

a high correlation between the two sets 

of investment strategies. The 

Commodity Return Strategy Portfolio is 

designed to achieve positive total return 

relative to the performance of the DJ– 

UBS Index by investing in commoditylinked derivative instruments and fixed 

income securities, whereas the Natural 

Resources Portfolio normally invests at 

least 80% of its net assets in common 

stocks and convertible securities of 

natural resource companies and 

securities that are related to the market 

value of some natural resource. 

However, the companies in which the 

Natural Resources Portfolio invests 

derive the vast majority of their 

respective revenue from commodities. 

In other words, the valuation of the 

companies in which the Natural 

Resources Portfolio invests move 

directly with the underlying 

commodities that represent these firms’ 

primary businesses. As such, there is a 

high correlation between the Natural 

Resources Portfolio’s performance to the 

price changes in the DJ–UBS Index 

which underlies the Commodity Return 

Strategy Portfolio’s investment strategy. 

This high correlation is demonstrated by 

comparing the performance of 

investments in natural resources 

companies (as measured by the S&P 

North American Natural Resources 

Index) and commodities (as measured 

by DJ–UBS Index), for which the 

correlation (as reported by Morningstar) 

exceeds 80% over both the trailing 

three-year and five-year periods. Given 

the high correlation between the 

performance of the Natural Resources 

Portfolio and the Commodity Return 

Strategy Portfolio, the Applicants 

believe that the Natural Resources 

Portfolio is a suitable replacement for 

the Commodity Return Strategy 

Portfolio. While the holdings of 

companies in which the Natural 

Resources Portfolio invests, with their 

resultant capital structures, tax 

exposures, and idiosyncratic risks, do 

not provide a perfect correlation to a 

spot commodities index, Applicants 

believe the same is true with a portfolio 

comprised of structured notes tied to 

commodities futures. Accordingly, the 

Applicants believe that the close 

approximation of the Natural Resources 

Portfolio to the commodities sector 

exposure supports a determination that 

the Natural Resources Portfolio will 

provide Contract owners currently 

invested in the Commodity Return 

Strategy Portfolio an acceptable level of 

exposure to the commodities sector and, 

given the uncertainty posed by the 

change of control of management of the 

Commodity Return Strategy Portfolio, is 

a reasonable substitution for the 

Commodity Return Strategy Portfolio. 

30. The Applicants represent that, 

although not identical, the principal 

investment risks of the Natural 

Resources Portfolio are comparable to 

those of the Commodity Return Strategy 

Portfolio. Both Portfolios use 

derivatives, exposing each Portfolio to a 

number of specific derivative-related 

risks such as the possibility that the 

counterparty to the transaction is unable 

to honor its financial obligation; using 

derivatives may also subject each 

Portfolio to other more general risks 

including commodity risk, correlation 

risk, liquidity risk, interest-rate risk, 

market risk, and credit risk. Because 

both Portfolios may invest in foreign 

securities, they also are subject to 

increased risk relating to currency 

exchange rate fluctuations, price 

volatility, adverse political 

developments, etc. Both Portfolios also 

are subject to market risk relating to 

increased and/or unpredictable 

fluctuations in the market value of the 

securities in which they invest, as well 

as to liquidity risk. Finally, both the 

Natural Resources Portfolio and the 

Commodity Return Strategy Portfolio 

are non-diversified investment 

companies, and therefore may invest in 

fewer issuers and be more greatly 

affected by the performance of relatively 

few securities. Further, the Applicants 

do not believe that overall the Natural 

Resources Portfolio is exposed to greater 

risk than the Commodity Return 

Strategy Portfolio, despite the fact that 

certain enumerated risks of the Natural 

Resources Portfolio are not explicitly 

detailed as principal investment risks in 

the prospectus for the Commodity 

Return Strategy Portfolio. For example, 

the Applicants believe that the 

Commodity Return Strategy Portfolio, 

like the Natural Resources Portfolio, is 

subject to commodity price risk, 

expense risk, industry/sector risk, and 

valuation risk—all typical risks that are 

generally present for most portfolios 

that invest in the commodity and 

natural resources asset categories. 

Moreover, the Natural Resources 

Portfolio is not subject to the specific 

derivative, tax, and focus risks the 

Commodity Return Strategy Portfolio is 

exposed to as a result of the latter’s 

primary investment in commoditylinked instruments. Lastly, because the 

Commodity Return Strategy Portfolio 

invests in the Credit Suisse Cayman 

Commodity Fund II, Ltd., the Portfolio 

also is indirectly exposed to the risks 

associated with that portfolio’s 

investments. 

31. The Applicants represent that the 

investment management fee of the 

Natural Resources Portfolio is lower 

than that of the Commodity Return 

Strategy Portfolio, and each Portfolio 

imposes a 12b–1 fee of 0.25%. 

Moreover, total operating expenses of 

the Natural Resources Portfolio were 

lower than those of the Commodity 

Return Strategy Portfolio as of December 

31, 2010. 

32. The Applicants represent that the 

Natural Resources Portfolio 

outperformed the Commodity Return 

Strategy Portfolio for the one-year 

period ending December 31, 2010 and 

since inception. In addition, the assets 

of the Natural Resources Portfolio have 

been consistently (and significantly) 

higher than those of the Commodity 

Return Strategy Portfolio as of December 

31, 2010 and for each of the prior four 

calendar years. 

33. For purposes of the approval 

sought pursuant to Section 26(c) of the 

Act, the Applicants represent that the 

Substitution will not be completed 

unless all of the following conditions 

are met. 

• The Commission shall have issued 

an order approving the Substitution 

under Section 26(c) of the Act as 

necessary to carry out the transactions 

described in the Application. 

• Each Contract owner will have been 

sent (i) prior to the Effective Date, a 

copy of the effective prospectus for the 

Replacement Portfolio, (ii) prior to the 

Effective Date, a Pre-Substitution Notice 

describing the terms of the Substitution 

and the rights of the Contract owners in 

connection with the Substitution, and 

(iii) within five (5) days after the 

Substitution occurs, a notice informing 

Contract owners affected by the 

Substitution that the Substitution was 

carried out (this notice will restate the 

information set forth in the PreSubstitution Notice, and also explain 

that the contract values attributable to 

investments in the Substituted Portfolio 

were transferred to the Replacement 

Portfolio without charge (including 

sales charges or surrender charges) and 

without counting toward the number of 

transfers that may be permitted without 

charge). 

• The Applicants have satisfied 

themselves that (i) The Contracts allow 

the substitution of the Portfolios in the 

manner contemplated by the 

Substitution and related transactions 

described herein, (ii) the transactions 

can be consummated as described in the 

Application under applicable insurance 

laws, and (iii) any applicable regulatory 

requirements in each jurisdiction where 

the Contracts are qualified for sale have 


Emcdonald on DSK2BSOYB1PROD with NOTICES
17174 Federal Register / Vol. 76, No. 59 / Monday, March 28, 2011 / Notices 

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

2 17 CFR 240.19b–4. 

3 In addition to FLEX Options, FLEX currency 

options are also traded on the Exchange. These 

flexible index, equity, and currency options provide 

investors the ability to customize basic option 

features including size, expiration date, exercise 

style, and certain exercise prices; and may have 

expiration dates within five years. See Rule 1079. 

FLEX currency options traded on the Exchange are 

also known as FLEX World Currency Options 

(‘‘WCO’’) or Foreign Currency Options (‘‘FCO’’). The 

pilot program discussed herein does not encompass 

FLEX currency options. 

4 17 CFR 240.19b–4(f)(6)(iii). 

5Market index options and industry index 

options are broad-based index options and narrowbased index options, respectively. See Rule 

1000A(b)(11) and (12). 

6Subsection (a)(8)(A) also provides a third 

alternative: (iii) 50 contracts in the case of FLEX 

currency options. However, this alternative is not 

part of the Pilot Program. 

been complied with to the extent 

necessary to complete the transaction. 

34. The Applicants acknowledge that 

reliance on exemptive relief, if granted, 

depends upon compliance with all of 

the representations and conditions set 

forth in the Application. 

Conclusion: 

Applicants assert that, for all the 

reasons stated in the Applicant, the 

Substitution is consistent with the 

protection of investors and the purposes 

fairly intended by the policy of the 

Contracts and provisions of the Act and 

that the requested order should be 

granted. 

For the Commission, by the Division of 

Investment Management pursuant to 

delegated authority. 

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7152 Filed 3–25–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold an Open Meeting 

on March 30, 2011 at 10 a.m., in the 

Auditorium, Room L–002. 

The subject matters of the Open 

Meeting will be: 

Item 1: The Commission will consider 

whether to propose joint rules with 

other Agencies to implement Section 

941(b) of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

relating to credit risk retention by 

securitizers of asset-backed securities. 

Item 2: The Commission will consider 

whether to propose a new rule and rule 

amendments to implement Section 952 

of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act, which 

requires the Commission to direct the 

national securities exchanges and 

national securities associations to adopt 

certain listing standards with respect to 

compensation committees and 

compensation advisers. Section 952 also 

requires the Commission to adopt new 

disclosure rules concerning the use of 

compensation consultants and conflicts 

of interest. 

Commissioner Casey, as duty officer, 

determined that no earlier notice thereof 

was possible. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: March 24, 2011. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–7342 Filed 3–24–11; 4:15 pm] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64108; File No. SR–Phlx– 

2011–35] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NASDAQ 

OMX PHLX LLC To Extend the FLEX 

No Minimum Value Pilot Program 

March 22, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

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

notice is hereby given that on March 15, 

2011, NASDAQ OMX PHLX LLC (‘‘Phlx’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I and II, 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing with the 

Commission a proposal to extend a pilot 

program that eliminates minimum value 

sizes for FLEX index options and FLEX 

equity options (together known as 

‘‘FLEX Options’’).3

The Exchange requests that the 

Commission waive the 30-day operative 

delay period contained in Exchange Act 

Rule 19b-4(f)(6)(iii).4

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http:// 

nasdaqomxphlx.cchwallstreet.com/ 

NASDAQOMXPHLX/Filings/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this proposed rule 

change is to amend Phlx Rule 1079 

(FLEX Index, Equity and Currency 

Options) to extend a pilot program that 

eliminates minimum value sizes for 

FLEX Options (the ‘‘Pilot Program’’ or 

‘‘Pilot’’). 

Rule 1079 deals with the process of 

listing and trading FLEX equity, index, 

and currency options on the Exchange. 

Rule 1079(a)(8)(A) currently sets the 

minimum opening transaction value 

size in the case of a FLEX Option in a 

newly established (opening) series if 

there is no open interest in the 

particular series when an Request-forQuote (‘‘RFQ’’) is submitted (except as 

provided in Commentary .01 to Rule 

1079): (i) $10 million underlying 

equivalent value, respecting FLEX 

market index options, and $5 million 

underlying equivalent value respecting 

FLEX industry index options; 5 (ii) the 

lesser of 250 contracts or the number of 

contracts overlying $1 million in the 

underlying securities, with respect to 

FLEX equity options (together the 

‘‘minimum value size’’).6

Presently, Commentary .01 to Rule 

1079 states that by virtue of the Pilot 

Program ending March 28, 2011, there 

shall be no minimum value size 

requirements for FLEX Options as noted 


Emcdonald on DSK2BSOYB1PROD with NOTICES