36178 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Notices

AEFC will pay the expenses of the

Reorganization.

5. The Boards, including a majority of

the Independent Directors, determined

that participation in the Reorganization

is in the best interests of each Fund, and

that the interests of existing

shareholders of each Fund will not be

diluted as a result of the Reorganization.

In assessing the Reorganization, the

Boards considered a number of factors,

including: (a) The terms and conditions

of the Reorganization; (b) the tax-free

nature of the Reorganization; (c) the

identical investment objectives,

policies, and restrictions of the

Acquired Funds and the Acquiring

Funds; (d) that the shareholders of the

Acquired Funds will be able to make

future purchases of shares of the

Acquiring Funds on a no-load basis; (e)

that the expense ratio for each

Acquiring Fund will be lower than the

expense ratio of each Acquired Fund;

and (f) the costs of the Reorganization

will be borne by AEFC.

6. The Reorganization is subject to a

number of conditions precedent,

including that: (a) The shareholders of

the Acquired Funds will have approved

the Agreement; (b) the Funds will have

received an opinion of tax counsel that

the proposed Reorganization will be taxfree for the Funds and their

shareholders; (c) applicants will have

received from the Commission any

exemption necessary to carry out the

Reorganization; and (d) a registration

statement on Form N–14 will have been

filed with the Commission and declared

effective for each of the Acquired

Funds. The Agreement and the

Reorganization may be terminated and

abandoned by resolutions of the Boards

at any time prior to the Closing Date.

The Agreement may be terminated in

the event that a material condition is not

fulfilled, a material covenant is not

fulfilled, or there is a material breach of

the Agreement. Applicants agree not to

make any material changes to the

Agreement without prior Commission

approval.

7. A prospectus/proxy statement was

filed with the Commission on March 13,

2000 and was mailed to the Acquired

Funds shareholders the week of April

17, 2000. The shareholders of the

Acquired Funds considered and

approved the Agreement on May 9,

2000.

Applicants’ Legal Analysis

1. Section 17(a) of the Act generally

prohibits an affiliated person of a

registered investment company, or an

affiliated person of such a person, acting

as principal, from selling any security

to, or purchasing any security from, the

company. Section 2(a)(3) of the Act

defines an ‘‘affiliated person’’ of another

person to include: (a) Any person

directly or indirectly owning,

controlling, or holding with power to

vote 5% or more of the other person; (b)

any person 5% or more of whose

securities are directly or indirectly or

indirectly owned, controlled, or held

with power to vote by the other person;

(c) any person directly or indirectly

controlling, controlled by, or under

common control with the other person;

and (d) if the other person is an

investment company, any investment

adviser of that company. Applicants

state that the Funds may be deemed

affiliated persons and thus the

Reorganization may be prohibited by

section 17(a).

2. Rule 17a–8 under the Act exempts

from the prohibitions of section 17(a)

mergers, considations, purchases or

sales of substantially all of the assets of

registered investment companies that

are affiliated persons, or affiliated

persons of an affiliated person, solely by

reason of having a common investment

adviser, common directors, and/or

common officers, provided that certain

conditions set forth in the rule are

satisfied. Applicants state that they may

not rely on rule 17a–8 because the

Funds may be deemed to be affiliated

for reasons other than those set forth in

the rule. Applicants state that AEFC or

American Express Company owns more

than 25% of the outstanding shares of

each of the Acquired Funds and one of

the Acquiring Funds and each of these

Funds is an affiliated person of AEFC.

AEFC is an affiliated person of the

Funds because of its role as investment

adviser to the Master Funds. Thus, each

of the Acquired funds might be deemed

to be an affiliated person of an affiliated

person of an Acquiring Fund, other than

by virtue of a common investment

adviser.

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

in relevant part, that the Commission

may exempt a transaction from the

provisions of section 17(a) if the

evidence establishes that the terms of

the proposed transaction, including the

consideration to be paid or received, are

reasonable and fair and do not involve

overreaching on the part of any person

concerned, and that the proposed

transaction is consistent with the policy

of each registered investment company

concerned and with the general

purposes of the Act.

4. Applicants request an order under

section 17(b) of the Act exemption them

from section 17(a) of the Act to the

extent necessary to permit applicants to

complete the proposed Reorganization.

Applicants submit that the

Reorganization satisfies the standards of

section 17(b) of the Act. Applicants state

that the terms of the proposed

Reorganization are fair and reasonable

and do not involve overreaching and

that the Funds have identical

investment objectives and policies.

Applicants also state that the Boards,

including a majority of the Independent

Directors, have found that participation

in the Reorganization is in the best

interests of each Fund, and that the

interests of the existing shareholders

will not be diluted as a result of the

Reorganization. In addition, applicants

state the Reorganization will be based

on the Funds’ relative net asset values.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14279 Filed 6–6–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–24485; File 812–11666]

Nationwide Life Insurance Company, et

al.

May 31, 2000.

AGENCY: The Securities and Exchange

Commission (the ‘‘Commission’’).

ACTION: Notice of Application for an

Order of Approval pursuant to Section

26(b) of the Investment Company Act of

1940 (the ‘‘1940 Act’’).

Summary of the Applicant:

Applicants seek an Order approving the

proposed substitution of the American

Century VP Balanced Portfolio (‘‘VP

Balanced’’), a series fund of American

Century Variable Portfolios, Inc.

(‘‘ACVP, Inc.’’), for another fund of

ACVP, Inc., the American Century VP

Advantage Portfolio (‘‘VP Advantage’’),

currently held in the separate accounts.

Applicants: Nationwide Life

Insurance Company (‘‘NWL’’) and

Nationwide Life and Annuity Insurance

Company (‘‘NWLAIC’’) (collectively the

‘‘Companies’’); Nationwide Multi-Flex

Variable Account, Nationwide VA

Separate Account-A, Nationwide

Variable Account-5, Nationwide VL

Separate Account-A, Nationwide VLI

Separate Account-3 (collectively the

‘‘Separate Accounts’’); and Nationwide

Advisory Services, Inc. (NAS) (all

collectively the ‘‘Applicants’’).

Filing Date: The application was filed

on June 18, 1999, and was amended on

March 30, 2000.

Hearing or Notification of Hearing: An

Order granting the Application will be

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Notices 36179

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 should be

received by the Commission by 5:30

p.m. on June 26, 2000, and should be

accompanied by proof of service on

Applicants in the form of an affidavit,

or, for lawyers, a certificate of service.

Hearing requests should state the nature

of the requester’s interest, the reason for

the request, and the issues contested.

Persons may request notification of a

hearing by writing to the Secretary of

the Commission.

ADDRESSES:

Secretary, Securities and Exchange

Commission, 450 Fifth Street NW,

Washington, DC 20549–0609.

Applicants, Elizabeth A. Davin,

Nationwide Life Insurance Company,

One Nationwide Plaza, 1–35–10,

Columbus, OH 43215.

FOR FURTHER INFORMATION CONTACT:

Lorna MacLeod, Senior Attorney, or

Keith Carpenter, Branch Chief, Office of

Insurance Products, Division of

Investment Management, at (202) 942–

0670.

SUPPLEMENTARY INFORMATION: Following

is a summary of the Application; the

complete Application is available for a

fee from the Public Reference Branch of

the Commission, 450 Fifth Street NW,

Washington, DC 20549–0102 (tel. (202)

942–8090).

Applicants’ Representations

1. NWL, a stock life insurance

company organized under Ohio law, is

a wholly owned subsidiary of

Nationwide Financial Services, Inc.

(‘‘NFS’’). NFS is ultimately controlled

by Nationwide Mutual Insurance

Company (95.24%) and Nationwide

Mutual Fire Insurance Company

(4.76%). NWL is the depositor and

sponsor of the Nationwide Multi-Flex

Variable Account, Nationwide Variable

Account-5 and Nationwide VLI Separate

Account-3.

2. NWLAIC, a stock life insurance

company organized under Ohio law, is

a wholly owned subsidiary of NWL.

NWLAIC is the depositor and sponsor of

Nationwide VA Separate Account-A and

Nationwide VL Separate Account-A.

3. Each of the Separate Accounts is

registered under the 1940 Act as a unit

investment trust (File Nos. 811–3338,

811–8692, 811–6140, 811–5606 and

811–6137). Nationwide Multi-Flex

Variable Account, Nationwide Variable

Account-5 and Nationwide VA Separate

Account-A issue flexible premium

variable annuity contracts that are

registered under the Securities Act of

1933 (the ‘‘1933 Act’’) on Form N–4

(File Nos. 2–75174, 33–71440 and 33–

22940). Nationwide VL Separate

Account-3 and Nationwide VL Separate

Account-A issue flexible premium and

single premium variable life insurance

contracts. Nationwide VL Separate

Account-A also issues multiple payment

variable life insurance contracts. The

contracts issued by both separate

accounts are registered under the 1933

Act on Form S–6 (File Nos. 33–44296,

33–44790, 33–44300, 33–44792 and 33–

35775).

4. Each Separate Account maintains

multiple sub-accounts each of which

invests exclusively in the shares of a

single portfolio that is a series of an

open-end management investment

company registered on Form N–1A. All

Separate Accounts maintain subaccounts that invest in shares of VP

Advantage and VP Balanced. The two

sub-accounts are included among the

investment options available under all

contracts issued by any of the Separate

Accounts (the ‘‘Contracts’’).

5. The Contracts reserve to NWL and

NWLAIC, as relevant, the right, subject

to Commission approval, to substitute

shares of another open-end management

investment company for the shares of an

open-end management investment

company held by any sub-account. The

reservation is disclosed in the

prospectus for the Contracts.

6. Although the Contracts reserve to

Nationwide the right to restrict transfer

privileges, Contract Owners currently

may make transfers among the subaccounts once per business day without

the imposition of any transfer charge.

The substitution will not count as a

transfer among the sub-accounts for the

purpose of the daily transfer limit.

7. Within 45 days of receiving the

Order of Approval requested by the

application, Applicants propose to

substitute shares of VP Balanced for

shares of VP Advantage. On the date

that the substitution is effected (the

‘‘Exchange Date’’), all shares held by the

Separate Accounts in VP Advantage will

be redeemed and, contemporaneously

with the redemption, the Separate

Accounts will purchase shares in VP

Balanced. All shares will be purchased

and redeemed at prices based on the

current net asset values per share in a

manner consistent with Rule 22c–1

under the 1940 Act.

8. The investment objective of VP

Advantage is to seek long-term growth

and current income. The fund achieves

its objective by investing approximately

40% of its assets in equity securities,

40% in fixed income securities and the

remaining 20% in cash and cash

equivalents.

9. The investment objective of VP

Balanced is to seek long-term growth

and current income. The fund achieves

its objectives by investing

approximately 60% of its assets in

equity securities and the remainder in

bonds and other fixed income securities.

10. American Century Investment

Management, Inc., the adviser VP

Advantage and VP Balanced, has

informed Applicants that its wishes to

halt all management and operations

associated with VP Advantage because

the fund, since its inception on June 4,

1987, has not attracted sufficient assets

to grow to an efficient size.

Furthermore, because VP Advantage is

not being actively marketed, it is not

expected to attain economies of scale.

American Century Investment

Management, Inc. has informed

Applicants that as of January 10, 2000,

VP Advantage had assets totaling

$21,832,751.26. As of the same date, VP

Balanced had assets of $281,394,733.05.

11. The following table shows the

average annual total returns for VP

Advantage and VP Balanced for periods

of one, three and five years and since

inception as well as expense ratios for

the funds for the year ended December

31, 1999.

Management feesOther expenses

Average annual total returns (performance) 1

1 year 3 year 5 year Since

inception

VP Advantage (in percent)(inception: 8/1/91) ................. 1.00 0.00 14.5 12.3 12.0 9.4

VP Balanced 2 (in percent) (inception: 5/1/91) ................ 0.99 0.00 11.4 12.4 13.3 10.8

1Performance as of September 30, 1999.

2With expense reimbursement, the management fees and other expenses were 0.97% and 0.00% respectively.

36180 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Notices

1 17 CFR 240.11Aa3–2.

2OPRA is a National Market System Plan

approved by the Commission pursuant to Section

11A of the Act and Rule 11Aa3–2 thereunder. See

Securities Exchange Act Release No. 17638 (Mar.

18, 1981).

The OPRA Plan provides for the collection and

dissemination of last sale and quotation information

on options that are traded on the member

exchanges. The six exchanges that are participants

to the OPRA Plan are the American Stock Exchange

(‘‘AMEX’’); the Chicago Board Options Exchange

(‘‘CBOE’’); the International Securities Exchange

(‘‘ISE’’); the New York Stock Exchange (‘‘NYSE’’);

the Pacific Exchange (‘‘PCX’’); and the Philadelphia

Stock Exchange (‘‘PHLX’’).

3The current temporary allocation program is

embodied in an amendment to the OPRA Plan

proposed by OPRA and approved by the

Commission. Securities Exchange Act Release No.

42779 (May 12, 2000), 65 FR 31950 (May 19, 2000)

(order approving File No. SR–OPRA–00–04). As

proposed by OPRA, that program was to expire by

its terms on May 25, 2000. However, in its approval

order the Commission modified the OPRA Plan

12. On September 27, 1999,

Nationwide supplemented the separate

account prospectuses informing all

existing and prospective Contract

Owners that it is the process of applying

for approval from the Commission to

effect a substitution of VP Balanced for

VP Advantage. In addition, the

prospectus supplements state that

Nationwide will not exercise any right

reserved by it under the Contracts to

impose an restriction or fee on transfers

until at least 30 days after the proposed

substitutions.

13. All Contract Owners have

received a copy of the prospectus for VP

Balanced because the portfolio is

currently offered as an investment

option under all contracts issued

through the Separate Accounts.

14. Following the establishment of the

Exchange Date, Contract Owners with

interests remaining VP Advantage will

be advised that the fund will be

replaced on the Exchanged Date and

that they are free to make any allocation

change changes among the available

investment options in advance of the

Exchange Date.

15. Within five days of the Exchange

Date, all Contract Owners affected by

the substitution will receive a written

confirmation of the substitution. The

confirmation will state that Contract

Owners may transfer all cash value in

the affected sub-account to any other

available sub-account(s). The

confirmation will reiterate that

Nationwide will not exercise any right

reserved by it under the Contracts to

impose any restriction or fee on

transfers until at least 30 days after the

proposed substitution.

16. The proposed substitution will

take place at relative net asset value

with no increase or decrease in the

amount of any Contract Owner’s policy

value. The substitution will not result in

any additional fees for Contract Owners

nor will current charges increased.

Contract Owners will not bear any

added cost or expense, including any

additional brokerage costs or expenses,

associated with the proposed

substitution. None of the contractual

obligations currently assumed by

Nationwide will in any way be abridged

or modified as a result of the

substitution. The proposed substitution

will in no way alter a Contract Owner’s

right to surrender the contract at any

time prior to or after the substitution in

accordance with the terms of the

contract. Finally, the substitution

should in no way affect whatever tax

benefits Contract Owners currently

enjoy and will not engender any adverse

tax consequences.

Applicants’ Legal Analysis

1. Section 26(b) of the 1940 Act

requires the depositor of a registered

unit investment trust holding the

securities of a single issuer to obtain

Commission approval before

substitution of the securities held by the

trust. The section further provides that

the Commission shall issue an order

approving such substitution if the

evidence establishes that the

substitution is consistent with the

protection of investors and the purposes

fairly intended by the policies and

provisions of the 1940 Act.

2. Applicants assert that the proposed

substitution meets the standards that the

Commission has applied to past

substitutions.

3. Applicants assert that the

investment objectives and policies of VP

Advantage and VP Balanced are

sufficiently comparable that the

investment strategies currently

employed by Contract Owners may be

maintained after the substitution. Both

funds seek to provide investors with the

benefits of a balanced portfolio of fixed

income and equity securities that serves

as a more conservative alternative to

traditional growth funds and as a more

aggressive alternative to traditional

bond funds.

4. Applicants further assert that

Contract Owners will benefit from the

proposed substitution because VP

Balanced has greater assets than VP

Advantage. Accordingly, VP Balanced

should continue to have lower expenses

as a percentage of net asset than does VP

Advantage, creating the opportunity for

better performance.

Conclusion

Applicants assert, for the reasons

stated above, that the proposed

substitution is consistent with the

protection of investors and the purposes

fairly intended by the policy and

provisions of the 1940 Act and the

requested order approving the

substitution should be granted.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14247 Filed 6–6–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42849; File No. SR–OPRA–

00–05]

Options Price Reporting Authority;

Notice of Filing and Order Granting

Accelerated Effectiveness of

Amendment to OPRA Plan Adopting a

Temporary Capacity Allocation Plan

May 26, 2000.

Pursuant to Rule 11Aa3–2 under the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

May 18, 2000, the Options Price

Reporting Authority (‘‘OPRA’’) 2

submitted to the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) an amendment to the

Plan for Reporting of Consolidated

Options Last Sale Reports and

Quotation Information (‘‘OPRA Plan’’).

The proposed OPRA Plan amendment

would modify the current temporary

capacity allocation plan for peak usage

periods, which minimize the likelihood

that during this period the total number

of messages generated by the OPRA

participant exchanges will exceed the

processor’s (i.e., Securities Industry

Automation Corporation (‘‘SIAC’’))

aggregate message handling capacity.

The Commission is publishing this

notice and order to solicit comments

from interested persons on the proposed

OPRA Plan amendment and to grant

accelerated approval to the proposed

OPRA Plan amendment.

I. Description and Purpose of the

Amendment

OPRA proposes to modify the most

recent amendment allocating the

message handling capacity of its

processor among the participant

exchanges.3 This modification will