Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices 20727 

agency (i.e., law enforcement agency) 

that contributed the questioned 

information, or direct challenge as to the 

accuracy or completeness of any entry 

on the criminal history record to the 

Assistant Director, Federal Bureau of 

Investigation Identification Division, 

Washington, DC 20537–9700 (as set 

forth in 28 CFR 16.30 through 16.34). In 

the latter case, the FBI forwards the 

challenge to the agency that submitted 

the data and requests that agency to 

verify or correct the challenged entry. 

Upon receipt of an official 

communication directly from the agency 

that contributed the original 

information, the FBI Identification 

Division makes any changes necessary 

in accordance with the information 

supplied by that agency. The licensee 

must provide at least 10 days for an 

individual to initiate an action 

challenging the results of a FBI CHRC 

after the record is made available for 

his/her review. The licensee may make 

a final access determination based on 

the criminal history record only upon 

receipt of the FBI’s ultimate 

confirmation or correction of the record. 

Upon a final adverse determination on 

access to an ISFSI, the licensee shall 

provide the individual its documented 

basis for denial. Access to an ISFSI shall 

not be granted to an individual during 

the review process. 

G. Protection of Information 

1. The licensee shall develop, 

implement, and maintain a system for 

personnel information management 

with appropriate procedures for the 

protection of personal, confidential 

information. This system shall be 

designed to prohibit unauthorized 

access to sensitive information and to 

prohibit modification of the information 

without authorization. 

2. Each licensee who obtains a 

criminal history record on an individual 

pursuant to this Order shall establish 

and maintain a system of files and 

procedures, for protecting the record 

and the personal information from 

unauthorized disclosure. 

3. The licensee may not disclose the 

record or personal information collected 

and maintained to persons other than 

the subject individual, his/her 

representative, or to those who have a 

need to access the information in 

performing assigned duties in the 

process of determining suitability for 

unescorted access to the protected area 

of an ISFSI. No individual authorized to 

have access to the information may redisseminate the information to any 

other individual who does not have the 

appropriate need to know. 

4. The personal information obtained 

on an individual from a CHRC may be 

transferred to another licensee if the 

gaining licensee receives the 

individual’s written request to redisseminate the information contained 

in his/her file, and the gaining licensee 

verifies information such as the 

individual’s name, date of birth, social 

security number, sex, and other 

applicable physical characteristics for 

identification purposes. 

5. The licensee shall make criminal 

history records, obtained under this 

section, available for examination by an 

authorized representative of the NRC to 

determine compliance with the 

regulations and laws. 

[FR Doc. 2011–9007 Filed 4–12–11; 8:45 am] 

BILLING CODE 7590–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–29627; File No. 812–13806] 

National Life Insurance Company, et al. 

April 7, 2011. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order pursuant to Section 26(c) of the 

Investment Company Act of 1940 (the 

‘‘1940 Act’’). 

APPLICANTS: National Life Insurance 

Company (‘‘NLIC’’), National Variable 

Annuity Account II (‘‘Annuity 

Account’’), National Variable Life 

Insurance Account (‘‘Life Account’’, and 

together with Annuity Account, 

‘‘Separate Accounts’’). 

SUMMARY OF APPLICATION: Applicants 

request an order of the Commission 

pursuant to Section 26(c) of 1940 Act, 

as amended, approving the substitution 

of shares of the Money Market Portfolio 

(the ‘‘Replacement Portfolio’’) of the 

Variable Insurance Products Fund V 

(‘‘VIPFV’’) for shares of the Money 

Market Fund (the ‘‘Substituted 

Portfolio’’) of the Sentinel Variable 

Products Trust (‘‘SVPT’’) held by the 

Separate Accounts to support variable 

annuity contracts or variable life 

insurance contracts (collectively, the 

‘‘Contracts’’) issued by NLIC. 

FILING DATE: The application was 

originally filed on July 26, 2010 and 

amended on December 13, 2010, and 

March 28, 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 NLIC 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 28, 2011, and should 

be accompanied by proof of service on 

NLIC 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 Lisa F. Muller, Counsel, 

National Life Insurance Company, 

National Life Drive, Montpelier, 

Vermont 05604. 

FOR FURTHER INFORMATION CONTACT: 

Craig Ruckman, Attorney-Adviser, at 

(202) 551–6753 or Michael Kosoff, 

Branch Chief, Office of Insurance 

Products, Division of Investment 

Management, at (202) 551–6754. 

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 an applicant using the 

Company name box, at http:// 

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

calling (202) 551–8090. 

Applicants’ Representations 

1. NLIC is a stock life insurance 

company, all the outstanding stock of 

which is indirectly owned by National 

Life Holding Company, a mutual 

insurance holding company established 

under Vermont law on January 1, 1999. 

NLIC is authorized to transact life 

insurance and annuity business in 

Vermont and in 50 other jurisdictions. 

For purposes of the 1940 Act, NLIC is 

the depositor and sponsor of the 

Annuity Account and the Life Account 

as those terms have been interpreted by 

the Commission with respect to variable 

life insurance and variable annuity 

separate accounts. 

2. Under Vermont law, the assets of 

each Separate Account attributable to 

the Contracts through which interests in 

that Separate Account are issued are 

owned by NLIC but are held separately 

from all other assets of NLIC for the 

benefit of the owners of, and the persons 

entitled to payment under, those 

Contracts. Consequently, the assets in 

each Separate Account equal to the 

reserves and other contract liabilities of 

the Separate Account are not chargeable 

with liabilities arising out of any other 

mstockstill on DSKH9S0YB1PROD with NOTICES

20728 Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices 

1File No. 811–08015 (Annuity Account); File No. 

811–09044 (Life Account). 

2File No. 811–09917. 

3File No. 811–05361. 

4FMR does not manage the sub-advisers for the 

VIPFV Money Market Portfolio pursuant to a 

‘‘manager-of-managers’’ exemption. 

5For the fiscal year ended December 31, 2010, 

Sentinel reimbursed the Substituted Portfolio in an 

amount equal to 0.37% of the Portfolio’s average 

daily net assets. This reimbursement was made to 

avoid the Substituted Portfolio having a negative 

yield in the current very low interest rate 

environment. Sentinel may cease the 

reimbursement at any time and is only providing 

it to the extent necessary to avoid a negative yield. 

business that NLIC may conduct. 

Income, gains and losses, realized or 

unrealized, from assets allocated to each 

Separate Account are credited to or 

charged against that Separate Account 

without regard to the other income, 

gains or losses of NLIC. Each Separate 

Account is a ‘‘separate account’’ as 

defined by Rule 0–1(e) under the 1940 

Act, and is registered with the 

Commission as a unit investment trust.1

3. The Annuity Account is divided 

into sixty-four subaccounts. Each 

subaccount invests exclusively in shares 

of a corresponding investment portfolio 

(a ‘‘Portfolio’’) of one of fifteen seriestype management investment 

companies, including the SVPT. The 

assets of the Annuity Account support 

variable annuity contracts, and interests 

in the Separate Account offered through 

such contracts have been registered 

under the Securities Act of 1933, as 

amended (the ‘‘1933 Act’’), on Form N– 

4 (File No. 333–19583). 

4. The Life Account is divided into 

sixty-eight subaccounts. Each 

subaccount invests exclusively in shares 

of a corresponding investment portfolio 

(also, a ‘‘Portfolio’’) of one of sixteen 

series-type management investment 

companies, including the SVPT. The 

assets of the Life Account support 

variable life insurance contracts, and 

interests in the Separate Account 

offered through such contracts have 

been registered under the 1933 Act on 

Form N–6 (File Nos. 33–91938, 333– 

44723, 333–151535, and 333–67003). 

5. SVPT is registered under the 1940 

Act as a diversified, open-end 

management investment company.2

SVPT currently consists of six 

investment portfolios, including the 

Substituted Portfolio, and issues a 

separate series of shares of beneficial 

interest in connection with each. SVPT 

has registered such shares under the 

1933 Act on Form N–1A (File No. 333– 

35832). 

6. Sentinel Asset Management, Inc. 

(‘‘Sentinel’’) serves as the investment 

adviser to each SVPT Portfolio. Sentinel 

manages the Porfolios’ investments and 

the business operations of the SVPT 

under the overall supervision of the 

SVPT board of trustees. Sentinel has the 

responsibility for making all investment 

decisions for the SVPT Portfolios and 

receives an investment management fee 

from each Portfolio. Sentinel is a 

registered investment adviser. Sentinel 

is an indirect wholly-owned subsidiary 

of National Life Holding Company and 

therefore is under common control with 

NLIC. 

7. VIPFV is registered under the 1940 

Act as a diversified, open-end 

management investment company.3

Currently, VIPFV has 31 investment 

portfolios, one of which—the 

Replacement Portfolio—would be 

involved in the proposed Substitution. 

VIPFV 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. 33–17704). 

8. Fidelity Management & Research 

Company (‘‘FMR’’) serves as the manager 

of each portfolio of VIPFV. As the 

manager, FMR has overall responsibility 

for directing portfolio investments and 

handling the VIPFV’s business affairs. 

FMR receives an investment 

management fee from each portfolio. 

FMR is a registered investment adviser. 

Fidelity Investments Money 

Management, Inc. (‘‘FIMM’’) and other 

affiliates of FMR serve as sub-advisers 

for the Replacement Portfolio. FIMM 

has the day-to-day responsibility of 

choosing investments for the 

Replacement Portfolio. In addition, 

Fidelity Research & Analysis Company 

(‘‘FRAC’’), another affiliate of FMR, 

serves as a sub-adviser for the Portfolio 

and may provide investment research 

and advice for the Portfolio.4 None of 

VIPFV, FMR, FIMM, or FRAC are 

affiliated persons (or affiliated persons 

of affiliated persons) of any of the 

Applicants. Likewise, none of the 

Applicants are affiliated persons (or 

affiliated persons of affiliated persons) 

of VIPFV, FMR, FIMM, or FRAC. 

9. Each Contract permits Contract 

owners to transfer contract value 

between and allocate contract value 

among the subaccounts. Currently, NLIC 

does not assess a transfer charge or limit 

the number of transfers permitted each 

year. However, NLIC reserves the right, 

upon prior notice, to impose a transfer 

charge of $25 for each transfer in excess 

of 12 in any one contract year. NLIC 

does have in place market timing 

policies and procedures that may 

operate to limit transfers. Under the Life 

Account, transfers resulting from loans, 

dollar cost averaging, portfolio 

rebalancing features, or the initial 

reallocation from a money market 

subaccount do not count as transfers for 

the purpose of determining the transfer 

charge. 

10. Pursuant to each Contract, NLIC 

reserves the right to substitute shares of 

one portfolio for shares of another. Each 

Contract’s prospectus discloses that 

NLIC reserves the right to substitute 

shares of one portfolio for shares of 

another if the shares of the portfolio 

should no longer be available for 

investment or, if in NLIC’s judgment 

further investment in such portfolio 

shares should become inappropriate. 

11. NLIC proposes to substitute 

Service Class Shares of the Money 

Market Portfolio of the Variable 

Insurance Products Fund V for shares of 

the Money Market Fund of the Sentinel 

Variable Products Trust (‘‘Substitution’’). 

12. The Applicants assert that the 

Substitution is necessary in order to 

provide the Contract owners with 

continued access to a money market 

portfolio investment option. Currently, 

the only money market portfolio 

investment option offered under the 

Contracts is the Substituted Portfolio. 

The Applicants contend that the 

Substituted Portfolio is small and, 

because it is only offered as an 

investment option under the Contracts, 

there is little prospect of it growing in 

size sufficiently to materially decrease 

its expense ratio or obtain economies of 

scale. In addition, Sentinel has been 

subsidizing the Substituted Portfolio’s 

expenses for some time, but cannot 

continue to do so indefinitely.5

NLIC has determined that Contract 

owners would be better served if the 

Substituted Portfolio is closed and 

replaced as an investment option by 

another, larger, money market fund with 

lower expenses and better prospects for 

future growth and competitive yields. 

13. The table below sets forth the 

name, investment adviser, investment 

objective, principal investment 

strategies, and principal risks of both 

the Substituted Portfolio and the 

Replacement Portfolio. 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices 20729 

Substituted Portfolio Replacement Portfolio 

Name .................................................................. Sentinel Variable Products Trust Sentinel 

Variable Products Money Market Fund.

Variable Insurance Products Fund V Money 

Market Portfolio. 

Investment Adviser (Subadviser) ....................... Sentinel ............................................................ FMR (FIMM, FRAC). 

Investment Objective .......................................... Seeks as high a level of current income as is 

consistent with stable principal values and 

liquidity.

Seeks as high a level of current income as is 

consistent with preservation of capital and 

liquidity. 

Principal Investment Strategies .......................... The Fund invests exclusively in dollar-denominated money market instruments, including 

U.S. government securities, bank obligations, repurchase agreements, commercial 

paper, and other corporate debt obligations. 

All such investments will have remaining 

maturities of 397 days or less.

FMR invests the Fund’s assets in U.S. dollardenominated money market securities of 

domestic and foreign issuers and repurchase agreements. FMR also may enter 

into reverse repurchase agreements for the 

Fund. 

FMR will invest more than 25% of the Fund’s 

total assets in the financial services industries. 

The Fund may also invest up to 10% of its 

total assets in shares of institutional money 

market funds that invest primarily in securities in which the Fund could invest directly.

In buying and selling securities for the Fund, 

FMR complies with industry-standard regulatory requirements for money market funds 

regarding the quality, maturity, and diversification of the fund’s investments. 

The Fund seeks to maintain a net asset value 

of $1.00 per share by using the amortized 

cost method of valuing its securities. The 

Fund is required to maintain a dollarweighted average portfolio maturity of 90 

days or less.

FMR stresses maintaining a stable $1.00 

share price, liquidity, and income. 

The Fund may participate in a securities lending program.

Principal Risks .................................................... • General Fixed-Income Securities Risk .........

• Government Securities Risk .........................

• Interest Rate Charges. 

• Foreign Exposure. 

• Financial Services Exposure. 

• Issuer-Specific Changes. 

14. The table below compares the 

investment management fees, 

distribution fees, other expenses, total 

operating expenses, fee waivers and net 

operating expenses 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 

Sentinel Variable 

Products Trust Sentinel 

Variable Products 

Money Market Fund 

Variable Insurance 

Products Fund V Money 

Market Portfolio 

Management Fee ................................................................................................................. 0.25% 0.18% 

Distribution and Service (12b–1) Fee .................................................................................. None 0.10% 

Other Expenses ................................................................................................................... 0.27% 0.08% 

Total Operating Expenses ................................................................................................... 0.52% 0.36% 

Fee Waivers and Expense Reimbursements 6 .................................................................... 0.37% N/A 

Net Operating Expenses ..................................................................................................... 0.15% 0.36% 

6Fee waivers and expense reimbursements are not contractual and may be terminated at any time. 

The management fee for the 

Replacement Portfolio in the table above 

consists of two components: a so-called 

‘‘group’’ fee of 0.11% and an ‘‘incomerelated’’ fee of 0.07%. The incomerelated fee varies from month to month 

depending on the level of the 

Replacement Portfolio’s monthly gross 

income from an annual rate of 0.05% of 

average daily net assets throughout the 

month when the annualized gross yield 

for the month is 0% to an annual rate 

of 0.27% of average daily net assets 

throughout the month when the 

annualized gross yield for the month is 

15%. The group fee rate is based on the 

average daily net assets for all of the 

mutual funds managed by FMR. The 

group fee is capped at an annual rate of 

0.37% of average daily net assets. 

15. The table below compares the 1- 

year, 5-year, and 10-year average annual 

total return of the Substituted Portfolio 

and Replacement Portfolio, as well as 

the yield for the seven days ending 

December 31, 2010 and the net asset 

values of the Substituted Portfolio and 

Replacement Portfolio as of December 

31, 2010. 

mstockstill on DSKH9S0YB1PROD with NOTICES

20730 Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices 

7One exception to this would be restrictions that 

NLIC may impose to prevent or restrict ‘‘market 

timing’’ activities by Contract owners or their 

agents. 

Substituted Portfolio Replacement Portfolio 

Sentinel Variable Products Trust Sentinel Variable Products Money 

Market Fund 

Variable Insurance Products Fund V Money Market Portfolio 

1-Year Average Annual Return ........................................................................................... 0.00% 0.14% 

5-Year Average Annual Return ........................................................................................... 2.24% 2.69% 

10-Yr Average Annual Return ............................................................................................. 2.07% 2.40% 

7-Day Yield .......................................................................................................................... 0.00% 0.11% 

Net Asset Value ................................................................................................................... $15,290,904 $155,272,000 

As of December 31, 2010. 

16. As of the effective date of the 

Substitution (the ‘‘Effective Date’’), each 

Separate Account will redeem shares of 

the Substituted Portfolio. The proceeds 

of such redemptions will then be used 

to purchase shares of the Replacement 

Portfolio, with the subaccount of the 

applicable Separate Account investing 

the proceeds of its redemption from the 

Substituted Portfolio in the applicable 

Replacement Portfolio. Redemptions 

and purchases will occur 

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 

amount of any Contract owner’s contract 

value or death benefit or in the dollar 

value of his or her investments in the 

money market subaccount of the 

appropriate Separate Account. 

17. 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 NLIC’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 NLIC. 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. NLIC will not exercise 

any right it may have under the 

Contracts to impose restrictions on 

transfers under the Contracts for the 

period beginning on the date the 

Application was filed with the 

Commission through at least thirty (30) 

days following the Effective Date.7

18. For twenty-four months following 

the Effective Date and for those 

Contracts with contract value invested 

in the Substituted Portfolio on the 

Effective Date, NLIC will reimburse, on 

the last business day of each fiscal 

period (not to exceed a fiscal quarter), 

the sub-accounts investing in the 

Replacement Portfolio to the extent that 

the Replacement Portfolio’s net annual 

expenses (taking into account 

contractual fee waivers and expense 

reimbursements) for such period 

exceeds, on an annualized basis, the net 

annual expenses (taking into account 

contractual fee waivers and expense 

reimbursements) of the Substituted 

Portfolio for the fiscal year ended 

December 31, 2010. In addition, for 

twenty-four months following the 

Effective Date, NLIC will not increase 

asset-based fees or charges for Contracts 

outstanding on the Effective Date. 

19. Existing Contract owners as of the 

date the 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 PreSubstitution Notice will state that the 

Applicants filed the Application, set 

forth the anticipated Effective Date, 

explain that contract values attributable 

to investments in the Substituted 

Portfolio would be attributable to the 

Replacement Portfolio as of the Effective 

Date, and state that, from the date the 

Application was first filed with the 

Commission through the date thirty (30) 

days after the Substitution, Contract 

owners may make one transfer of 

contract value from the sub-account 

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 

any contractual transfer limitations. 

20. All Contract owners will receive a 

copy of the most recent prospectus for 

the Replacement Portfolio prior to the 

Substitution. 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 Pre-Substitution 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. 

Legal Analysis 

1. Applicants request an order of the 

Commission pursuant to Section 26(c) 

of the 1940 Act approving the 

Substitution. 

2. Applicants assert that Section 26(c) 

of the 1940 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 1940 Act. 

3. Applicants aver that Section 26(c) 

was intended to provide for 

Commission scrutiny of a proposed 

substitution 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 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices 20731 

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). 

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. 

4. Applicants represent that each 

Contract and its prospectus reserves 

NLIC’s right to substitute shares of one 

portfolio for shares of another. 

5. Applicants contend that based on a 

comparison of the basic characteristics 

of the Replacement Portfolio and the 

Substituted Portfolio, the Substitution 

will provide Contract owners with 

substantially the same investment 

vehicle. 

6. Applicants believe that the 

Replacement Portfolio and the 

Substituted Portfolio have substantially 

the same investment objectives and 

principal investment strategies, thus 

making the Replacement Portfolio an 

appropriate candidate for the 

Substitution. Both the Replacement 

Portfolio and the Substituted Portfolio 

seek a high level of current income as 

is consistent with stable principal 

values and liquidity. However, while 

both the Replacement Portfolio and the 

Substituted Portfolio pursue their 

investment objective by investing in 

U.S. dollar-denominated money market 

securities of domestic issuers as well as 

repurchase agreements, only the 

Replacement Portfolio invests in 

instruments issued by foreign issuers. 

Both the Replacement Portfolio and the 

Substituted Portfolio seek to maintain a 

net asset value of $1.00 per share as well 

as liquidity. Most significantly, both the 

Replacement Portfolio and the 

Substituted Portfolio must comply with 

the diversification and risk-limiting 

conditions of Rule 2a-7 under the Act. 

Notwithstanding one difference in the 

investment strategies, both the 

Replacement Portfolio and the 

Substituted Portfolio emphasize the 

same investment objective and follow 

substantially the same investment 

strategies to pursue those objectives. 

Thus, the Applicants believe that the 

money market investment option 

available to Contract owners will not 

change in any material respect as a 

result of the Substitution. 

7. Applicants represent that the 

Replacement Portfolio entails 

substantially the same investment risks 

as does the Substituted Portfolio. In 

particular, given the diversification and 

risk-limiting conditions of Rule 2a–7 

under the Act, the Replacement 

Portfolio cannot have a materially 

different risk profile than the 

Substituted Portfolio. 

8. Applicants assert that the 

Substitution will result in a reduction in 

overall expenses of the Replacement 

Portfolio as compared to the Substituted 

Portfolio. Although the Service Class 

shares of the Replacement Portfolio are 

subject to a modest Rule 12b–1 

distribution and shareholder service 

plan expense that the Substituted 

Portfolio does not bear, the total annual 

operating expenses for the Replacement 

Portfolio have been significantly less 

than the total annual operating expenses 

for the Substituted Portfolio in recent 

years. 

9. The Applicants believe that 

Contract owners would benefit from the 

significantly larger size of the 

Replacement Portfolio and the 

somewhat higher yields that the 

Replacement Portfolio can be expected 

to provide, as contrasted with the size 

and recent yields of the Substituted 

Portfolio. 

10. Applicants represent that for three 

years from the Effective Date, NLIC and 

persons under common control with 

NLIC will not receive in the aggregate 

any direct or indirect benefits from the 

Replacement Portfolio, its investment 

adviser, or its principal underwriter (or 

their affiliates) in connection with assets 

representing contract values (at the time 

of the substitution) of the Contracts, at 

a higher rate than they had received 

from the Substituted Portfolio, its 

investment adviser, or its principal 

underwriter (or their affiliates) 

including, without limitation: Rule 12b1 fees, shareholder service fees, 

administrative fees or other service fees, 

revenue-sharing payments, or payments 

from other arrangements in connection 

with such assets. 

11. 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 1940 Act was 

amended to include this provision. 

Further, Applicants submit 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 1940 Act and, thus, meets the 

standards necessary to support an order 

pursuant to Section 26(c) of the 1940 

Act. 

Conclusion 

Applicants submit that for the reasons 

summarized above the proposed 

Substitution meets the standards of 

Section 26(c) of the 1940 Act and 

request that the Commission issue an 

order of approval pursuant to Section 

26(c) of the 1940 Act. 

For the Comission, by the Division of 

Investment Management pursuant to 

delegated authority. 

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–8731 Filed 4–12–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[File No. 500–1] 

RINO International Corporation; Order 

of Suspension of Trading 

April 11, 2011. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of RINO 

International Corporation, because the 

company has failed to disclose that: (i) 

The outside law firm and forensic 

accountants hired by the audit 

committee to investigate allegations of 

financial fraud at the company resigned 

on or about March 31, 2011, after 

reporting the results of their 

investigation to management and the 

board; (ii) the chairman of its audit 

committee resigned on March 31, 2011; 

and (iii) the company’s remaining 

independent directors have also 

resigned. Further, questions have arisen 

regarding, among other things: (i) The 

size of the company’s operations and 

number of employees; (ii) the existence 

of certain material customer contracts; 

and (iii) the existence of two separate 

and materially different sets of corporate 

books and accounts. RINO is a Nevada 

corporation with its headquarters and 

operations in the People’s Republic of 

China, which trades on OTC Link under 

the symbol ‘‘RINO.’’ 

The Commission is of the opinion that 

the public interest and the protection of 

investors require a suspension of trading 

in the securities of the above-listed 

company. 

Therefore, it is ordered, pursuant to 

Section 12(k) of the Securities Exchange 

Act of 1934, that trading in the abovelisted company is suspended for the 

period from 9:30 a.m. EDT, April 11, 

2011, through 11:59 p.m. EDT, on April 

25, 2011. 

mstockstill on DSKH9S0YB1PROD with NOTICES