1036 Federal Register / Vol. 72, No. 5 / Tuesday, January 9, 2007 / Notices 

Applicants’ Condition 

Applicants agree that any order 

granting the requested relief shall be 

subject to the following condition: 

Any temporary exemption granted 

pursuant to the application shall be 

without prejudice to, and shall not limit 

the Commission’s rights in any manner 

with respect to, any Commission 

investigation of, or administrative 

proceedings involving or against, 

Covered Persons, including, without 

limitation, the consideration by the 

Commission of a permanent exemption 

from section 9(a) of the Act requested 

pursuant to the application or the 

revocation or removal of any temporary 

exemption granted under the Act in 

connection with the application. 

Temporary Order 

The Commission has considered the 

matter and finds that Applicants have 

made the necessary showing to justify 

granting a temporary exemption. 

Accordingly, it is hereby ordered, 

pursuant to section 9(c) of the Act, that 

the Covered Persons are granted a 

temporary exemption from the 

provisions of section 9(a), effective as of 

the date of the Injunction, solely with 

respect to the Injunction, subject to the 

condition in the application, until the 

date the Commission takes final action 

on an application for a permanent order. 

By the Commission. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. E7–60 Filed 1–8–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Rel. No. IC–27651; File No. 812–13282] 

Sun Life Assurance Company of 

Canada (U.S.), et al., Notice of 

Application 

December 29, 2006. 

AGENCY: Securities and Exchange 

Commission (the ‘‘Commission’’). 

ACTION: Notice of application for an 

order of approval pursuant to Section 

26(c) of the Investment Company Act of 

1940, as amended (the ‘‘Act’’), and an 

order of exemption pursuant to Section 

17(b) of the Act from Section 17(a) of 

the Act. 

APPLICANTS: Sun Life Assurance 

Company of Canada (U.S.) (‘‘Sun Life 

U.S.’’), Sun Life Insurance and Annuity 

Company of New York (‘‘Sun Life 

N.Y.’’) (together with Sun Life U.S., the 

‘‘Companies’’), Keyport Variable 

Account A (‘‘Keyport Account A’’), Sun 

Life of Canada (U.S.) Variable Account 

F (‘‘Account F’’), Sun Life of Canada 

(U.S.) Variable Account I (‘‘Account I’’), 

KBL Variable Annuity Account (‘‘KBL 

Annuity Account’’), KBL Variable 

Account A (‘‘KBL Account A’’), and Sun 

Life (N.Y.) Variable Account C 

(‘‘Account C’’) (collectively, the 

‘‘Applicants’’). Applicants, together 

with Sun Capital Advisers Trust (‘‘Sun 

Capital Trust’’) are ‘‘Section 17(b) 

Applicants.’’

SUMMARY OF APPLICATION: Applicants 

seek an order approving the proposed 

substitutions (the ‘‘Substitutions’’) of 

Class O shares of Alger American 

Growth Portfolio of the Alger American 

Fund and Class A and Class B shares of 

the AllianceBernstein VPS Large Cap 

Growth Portfolio of the 

AllianceBernstein Variable Product 

Series Fund (collectively, the ‘‘Old 

Portfolios’’) with Initial and Service 

Class Shares of the SC FI Large Cap 

Growth Fund of Sun Capital Trust (the 

‘‘New Portfolio’’) under certain variable 

life insurance policies and variable 

annuity contracts (‘‘Contracts’’). Section 

17(b) Applicants also seek an order 

pursuant to Section 17(b) of the Act to 

permit certain in-kind transactions in 

connection with the Substitutions. 

FILING DATE: The application was 

originally filed on April 19, 2006, and 

an amended and restated application 

was filed on December 20, 2006. 

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 January 24, 2007, 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: The Commission: Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090; Applicants: c/o Maura A. 

Murphy, Esq., Sun Life Assurance 

Company of Canada (U.S.), One Sun 

Life Executive Park, Wellesley Hills, 

Massachusetts 02481. 

FOR FURTHER INFORMATION CONTACT: 

Rebecca A. Marquigny, Senior Counsel, 

or Joyce M. Pickholz, Branch Chief, 

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 is 

available for a fee from the Public 

Reference Branch of the Commission, 

100 F Street, NE., Washington, DC 

20549 (202–551–8090). 

Applicants’ and Section 17 Applicants’

Representations 

1. Sun Life U.S. is a stock life 

insurance company ultimately 

controlled by Sun Life Financial Inc. 

(‘‘Sun Life Financial’’), a Canadian 

reporting company under the Securities 

Exchange Act of 1934 (the ‘‘1934 Act’’). 

Pursuant to a 2003 merger, Keyport Life 

Insurance Company (‘‘Keyport’’) was 

merged with and into Sun Life U.S. with 

Sun Life U.S. as the survivor. Sun Life 

U.S. is the depositor and sponsor of 

Keyport Account A, Account F, and 

Account I. 

2. Keyport Account A is registered 

with the Commission under the Act as 

a unit investment trust (File No. 811–

07543) with interests are offered 

through Contracts (the ‘‘Keyport 

Contracts’’) registered under the 

Securities Act of 1933 (‘‘1933 Act’’) on 

Form N–4 (File Nos. 333–114126, 333–

114129, 333–114132, 333–111642, 333–

111645, 333–111646, 333–111647, and 

333–111648). Account F is registered as 

a unit investment trust (File No. 811–

05846); its interests are also offered 

through Contracts (the ‘‘Account F 

Contracts’’) registered under the 1933 

Act on Form N-4 (File Nos. 33–29852, 

33–41628, 333–37907, 333–05227, 333–

82957, 333–30844, 333–31248, 333–

41438, 333–74844, 333–83256, 333–

83362, 333–83364, 333–83516, 333–

74972, 333–115525, and 333–115536). 

Account I, registered as a unit 

investment trust (File No. 811–09137) 

also offers its interests through 

Contracts (the ‘‘Account I Contracts’’) 

registered under the 1933 Act on Form 

N–6 (File Nos. 333–68601, 333–59662, 

333–94359, 333–100831, and 333–

100829). 

3. Sun Life N.Y., a wholly owned 

subsidiary of Sun Life U.S., is a stock 

life insurance company which merged 

with Keyport Benefit Life Insurance 

Company (‘‘KBL’’), a subsidiary of 

Keyport, in 2002. Sun Life N.Y. is the 

depositor and sponsor of the KBL 

Annuity Account, KBL Account A, and 

Account C. 

4. KBL Annuity Account is a 

registered unit investment trust (File 

No. 811–05422) for which interests are 

offered through a Contract (the ‘‘KBL 


ycherry on PROD1PC63 with NOTICES
Federal Register / Vol. 72, No. 5 / Tuesday, January 9, 2007 / Notices 1037 

1Sun Capital Advisers Trust and Sun Capital 

Advisers, Inc., 1940 Act Rel. No. 24401 (April 24, 

2000) (Order), File No. 812–11790; see also Sun 

Capital Advisers Trust and Sun Capital Advisers, 

Inc., 1940 Act Rel. No. 23793 (Apr. 20, 1999) 

(Order), File No. 812-11464. 

Annuity Contract’’) registered under the 

1933 Act on Form N–4 (File No. 333–

102275). KBL Account A is a registered 

unit investment trust (File No. 811–

08635) with interests are offered 

through other Contracts (the ‘‘KBL 

Account A Contracts’’) registered under 

the 1933 Act on Form N–4 (File Nos. 

333–102274, 333–102278, 333–102279, 

and 333–102280). Account C, a 

registered unit investment trust (File 

No. 811–04440), also offers its interests 

through certain Contracts (the ‘‘Account 

C Contracts’’) registered under the 1933 

Act on Form N–4 (File Nos. 33–41629, 

333–05037, 333–67864, 333–100475, 

333–100474, 333–99907, and 333–

107983). 

5. All of the Contracts involved in the 

Substitutions (a) reserve the right to 

substitute shares of one portfolio for 

shares of another; (b) permit transfers of 

contract value among the subaccounts 

pursuant to the limitations of the 

particular Contract, (c) impose or 

reserve the right to impose a transfer 

charge; and (d) are subject to market 

timing policies and procedures that may 

operate to limit transfers. 

6. Applicants represent that: (a) The 

Keyport Contracts involved in the 

Substitutions are no longer offered for 

sale, except to certain employee plans; 

(b) none of the Account I, KBL Account 

A, or KBL Annuity Contracts involved 

in the Substitutions are still offered for 

sale; and (c), the subaccounts investing 

in the Old Portfolios are no longer 

offered as investment options to new 

Contract owners under the Account F 

Contracts and Account C Contracts. 

7. Alger American Growth Portfolio 

(‘‘Alger Growth’’ or ‘‘Old Portfolio’’) is 

a portfolio of Alger American Fund, a 

registered, diversified, open-end 

management investment company (File 

No. 811–05550). Class O and Class S of 

its shares are registered under the 1933 

Act on Form N–1A (File No. 33–21722). 

The shares are the same except Class S 

shares are subject to a distribution and 

shareholder servicing fee while Class O 

shares are not. The portfolio’s 

investment adviser is Fred Alger 

Management, Inc. (‘‘FAM’’). 

8. AllianceBernstein VPS Large Cap 

Growth Portfolio (‘‘AB Large Cap 

Growth’’) is a portfolio of the 

AllianceBernstein Variable Product 

Series Fund, a registered diversified, 

open-end management investment 

company (File No. 811–05398). Class A 

and B shares of AB Large Cap Growth 

(also referred to as ‘‘Old Portfolio’’) are 

registered under the 1933 Act on Form 

N–1A (File No. 33–18647). The shares 

are the same except Class B shares are 

subject to a distribution fee and Class A 

shares are not. AllianceBernstein L.P. 

(‘‘AB L.P.’’) is the portfolio’s investment 

adviser. 

9. SC FI Large Cap Growth Fund (‘‘SC 

Large Cap Growth’’ or ‘‘New Portfolio’’) 

is a portfolio of Sun Capital Trust, a 

registered, diversified, open-end 

management investment company (File 

No. 811–08879). Initial and Service 

Class shares of New Portfolio are 

registered under the 1933 Act on Form 

N–1A (File No. 333–59093); the shares 

are the same except that Service Class 

shares are subject to a distribution fee 

and Initial Class shares are not. 

10. Sun Capital Advisers LLC (‘‘Sun 

Capital’’), an indirect, wholly owned 

subsidiary of Sun Life Financial, is 

investment adviser to all the Sun 

Capital Trust portfolios. Through an 

order from the Commission pursuant to 

Section 6(c) of the Act, Sun Capital is 

exempt from Section 15(a) of the Act 

and Rule 18f–2 thereunder with respect 

to subadvisory agreements (the 

‘‘Manager of Managers Order’’).1

11. Applicants represent that the 

relief granted in the Manager of 

Managers Order extends to New 

Portfolio permitting it to enter into and 

materially amend investment 

subadvisory agreements without 

obtaining shareholder approval. 

Applicants also indicate that the 

prospectus for the New Portfolio 

discloses and explains the existence, 

substance and effect of the Manager of 

Managers Order. 

12. Applicants propose to substitute 

(a) Initial Class shares of New Portfolio 

for Class O shares of Alger Growth; (b) 

Initial Class shares of New Portfolio for 

Class A shares of AB Large Cap Growth; 

and (c) Service Class shares of New 

Portfolio for Class B shares of AB Large 

Cap Growth. Applicants state that the 

proposed Substitutions are part of an 

overall business goal of the Companies 

to make the Contracts more attractive to 

Contract owners by providing a diverse 

array of investment options that are not 

redundant or duplicative in terms of the 

investment types and styles of mutual 

funds underlying such options. 

Applicants assert their belief that: 

(a) Reducing the number of 

nonproprietary funds will provide the 

Companies with more control over fund 

changes that affect their Contracts, 

allowing for appropriate long-term 

strategic planning; 

(b) The New Portfolio better promotes 

their goals of increasing administrative 

efficiency of, and control over, their 

Contracts because the New Portfolio is 

part of their affiliated fund family; 

(c) Streamlining the number of 

nonproprietary funds available through 

the Contracts and altering the available 

portfolios will simplify the 

administration of the Contracts, 

particularly with regard to 

communications with the fund families 

and the preparation of various reports 

and disclosure documents; and 

(d) This streamlining will allow the 

Companies to enhance their 

communication efforts to Contract 

owners and sales representatives 

regarding the available portfolios, and 

may provide for more enhanced and 

timely reporting to the Companies from 

fund families and therefore from the 

Companies to Contract owners. 

13. Regarding Contracts that offer both 

of the Old Portfolios as investment 

options, Applicants assert that a more 

concentrated and streamlined array of 

investment options could result in 

increased operational and 

administrative efficiencies and 

economies of scale for the Companies. 

Applicants note that Contract owners 

could benefit from streamlining 

Contract investment options. 

Specifically, Applicants state that 

Contracts that offer too many similar 

investment options may be 

unnecessarily confusing to Contract 

owners and may increase the 

Companies’ costs of administering the 

Contracts. 

14. Applicants represent that because 

the New Portfolio operates pursuant to 

the Manager of Managers Order, the 

Substitutions would provide protection 

to Contract owners by giving Sun 

Capital the agility and flexibility to 

change the subadviser of the New 

Portfolio should such a change become 

warranted or advisable. In support of 

the Substitutions, Applicants further 

represent that the Substitutions will 

provide Contract owners with 

substantially similar investment 

vehicles. Specifically, Applicants assert 

that the investment objectives, principal 

investment strategies and principal 

investment risks of the New Portfolio 

are substantially similar to those of the 

Old Portfolios. The following 

summarizes the more complete 

comparison of New and Old Portfolios 

provided in the Application. 

15. Alger Growth Substitution. 

Applicants describe the investment 

objective of Alger Growth as ‘‘to seek 

long-term capital appreciation’’ and the 

investment objective of New Portfolio as 

‘‘to seek long-term growth of capital.’’

Applicants state that the principal 

investment strategies of the two 

portfolios are substantially similar 


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1038 Federal Register / Vol. 72, No. 5 / Tuesday, January 9, 2007 / Notices 

2For the descriptions of charges involved in the 

Substitution, all percentages for the Management 

Fees, 12b–1 Fees, Other Expenses, Fee Reductions, 

Total Gross and Net Annual Operating Expenses, 

and Separate Account Fees represent a percentage 

of average annual assets. 

noting that both invest primarily in 

common stocks with an emphasis on 

‘‘growth’’ stocks and the stocks of highly 

capitalized companies. Alger Growth 

invests at least 65% of its total assets in 

equity securities of companies that, at 

the time of purchase, have total market 

capitalization of $1 billion or greater. SC 

Large Cap Growth invests at least 80% 

of its assets in the common stocks of 

companies with large market 

capitalizations. Both portfolios may 

invest up to 20% of the value of their 

total assets in foreign securities (not 

including American Depositary 

Receipts, American Depositary Shares, 

or U.S. dollar denominated securities of 

foreign issuers). Applicants represent 

that both Alger Growth and New 

Portfolio have substantially similar risk 

characteristics and share substantially 

similar risk profiles. 

Charges for Class O of Alger Growth 

include Management Fees of 0.75%, 

Other Expenses of 0.06%, and no 12b–

1 Fee.2 Charges for the Initial Class 

shares of New Portfolio include: 

Management Fees of 0.75% and Other 

Expenses of 0.30%; it does not charge a 

12b–1 Fee. Alger Growth’s total gross 

and net operating expenses are both 

0.81%. Respectively, New Portfolio’s 

total gross and net operating expenses 

are 1.05% and 0.81% (reflecting a 

0.24% contractual fee reduction 

arrangement). 

16. AB Large Cap Growth 

Substitutions. 

Applicants represent that the 

investment objectives of AB Large Cap 

Growth and New Portfolio are identical; 

both portfolios see long-term growth of 

capital. Applicants state that the 

principal investment strategies of the 

two portfolios are substantially similar 

noting that New Portfolio invests at least 

80% of its net assets in common stocks 

of large-capitalization companies based 

on the market capitalization of 

companies in the Russell 1000 Index or 

the S&P 500. Old Portfolio invests an 

identical 80% of its assets in common 

stock of companies with large market 

capitalizations based on the market 

capitalization range of companies 

appearing in the Russell 1000 Growth 

Index. Applicants represent that both 

AB Large Cap Growth and New Portfolio 

have substantially similar risk 

characteristics as both invest in 

substantially similar securities. 

For the proposed substitution 

involving Class A of AB Large Cap 

Growth, charges for Class A of Old 

Portfolio include Management Fees of 

0.75% and Other Expenses of 0.06%. 

Charges for the Initial Class of New 

Portfolio include Management Fees of 

0.75% and Other Expenses of 0.30%. 

Neither imposes a 12b–1 Fee. The Old 

Portfolio’s total gross and net operating 

expenses for Class A shares are both 

0.81%. Respectively, New Portfolio’s 

total gross and net operating expenses 

for Initial Class shares are 1.05% and 

0.81% (reflecting a 0.24% contractual 

fee reduction arrangement). 

For the proposed substitution 

involving Class B of AB Large Cap 

Growth, charges for Class B of Old 

Portfolio include Management Fees of 

0.75%, 12b–1 Fees of 0.25%, and Other 

Expenses of 0.06%. Charges for the 

Service Class of New Portfolio include 

Management Fees of 0.75%, 12b–1 Fees 

of 0.25%, and Other Expenses of 0.30%. 

The Old Portfolio’s total gross and net 

operating expenses for Class B shares 

are both 1.06%. Respectively, New 

Portfolio’s total gross and net operating 

expenses for Service Class shares are 

1.30% and 1.06% (reflecting a 0.24% 

contractual fee reduction arrangement). 

17. Applicants assert that as of the 

effective date of the Substitutions 

(‘‘Effective Date’’), each Separate 

Account will redeem shares of the 

applicable Old Portfolio in-kind. 

Applicants state that if Sun Capital 

declines to accept particular portfolio 

securities of either of the Old Portfolios 

for purchase in-kind of shares of the 

New Portfolio, the applicable Old 

Portfolio will liquidate portfolio 

securities as necessary and shares of the 

New Portfolio will be purchased with 

cash. Applicants represent that in either 

event, the proceeds of such redemptions 

will then be used to purchase shares of 

the corresponding class of the New 

Portfolio, with each subaccount of the 

applicable Separate Account investing 

the proceeds of its redemption from the 

Old Portfolios in the applicable class of 

the New Portfolio. 

18. Applicants further state that 

redemption requests and purchase 

orders will be placed simultaneously so 

that contract values will remain fully 

invested at all times. Applicants 

represent that all redemptions of shares 

of the Old Portfolios and purchases of 

shares of the New Portfolios will be 

effected in accordance with Section 

22(c) of the Act and Rule 22c–1 

thereunder. Applicants state that the 

Substitutions 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 any of the 

subaccounts. Applicants represent that 

Contract owners will receive Service 

Class shares of the New Portfolio in the 

Substitutions only if they are currently 

invested in Class B shares of the AB 

Large Cap Growth, which also imposes 

a distribution fee. 

19. Applicants further represent that 

all expenses incurred in connection 

with the Substitutions, including legal, 

accounting, transactional, and other fees 

and expenses, including brokerage 

commissions, will be paid by Sun Life 

U.S. or Sun Life N.Y. Applicants also 

state that, as a result of the 

Substitutions, Contract owners will not 

incur any additional fees or charges, nor 

will their rights or insurance benefits or 

the Companies’ obligations under the 

Contracts be altered. Applicants assert 

that the Substitutions: (a) Will not 

impose any tax liability on Contract 

owners; and (b) will not cause the 

Contract fees and charges currently 

being paid by existing Contract owners 

to be greater after the Substitutions than 

before the Substitutions. Applicants 

represent that neither Sun Life U.S. nor 

Sun Life N.Y. will exercise any right 

either may have under the Contracts to 

impose restrictions on transfers under 

the Contracts for a period of at least 

thirty days following the Substitutions. 

20. Applicants represent that during 

the twenty-four months following the 

date of the Substitutions, the total net 

operating expenses of the applicable 

class of the New Portfolio (taking into 

account any expense waiver or 

reimbursement) will not exceed the net 

expense level of the corresponding class 

of the Old Portfolio for the fiscal year 

ended December 31, 2005. Applicants 

also state that through the twenty-four 

months following the date of the 

Substitutions, Sun Capital has 

contractually agreed to waive its 

management fee and, if necessary, to 

limit other ordinary operating expenses 

so that total operating expenses, as a 

percentage of average net assets, do not 

exceed 0.81% or 1.06%, as applicable. 

In addition, Applicants represent that 

for twenty-four months following the 

date of the Substitutions, the Companies 

will not increase asset-based fees or 

charges for Contracts outstanding on the 

date of the Substitutions. 

21. Applicants represent that a 

prospectus for the New Portfolio 

containing disclosure about the Manager 

of Managers Order will be provided to 

each Contract owner prior to or at the 

time of the Substitutions. 

Notwithstanding the Manager of 

Managers Order, after the Effective Date 

of the Substitutions, the Applicants 

agree not to change the New Portfolio’s 

subadviser, add a new subadviser, or 


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Federal Register / Vol. 72, No. 5 / Tuesday, January 9, 2007 / Notices 1039 

otherwise rely on the Manager of 

Managers Order without first obtaining 

shareholder approval of either: (1) The 

subadviser change; or (2) the New 

Portfolio’s continued ability to rely on 

the Manager of Managers Order. 

22. Applicants state that Contract 

owners were notified of the initial 

application by means of a prospectus 

supplement for each of the Contracts 

stating that the Applicants filed the 

initial application and seek approval for 

the Substitutions (‘‘Pre-Substitution 

Notice’’). The Pre-Substitution Notice 

set forth the anticipated Effective Date 

and advised Contract owners that 

contract values attributable to 

investments in the Old Portfolios will be 

transferred to the New Portfolios, 

without charge (including sales charges 

or surrender charges) and without 

counting toward the number of transfers 

that may be permitted without charge, 

on the Effective Date. Applicants 

indicate that the Pre-Substitution Notice 

stated that, from the date the initial 

application was filed with the 

Commission through the date thirty 

days after the Substitutions, Contract 

owners may make one transfer of 

contract value from the subaccounts 

investing in the Old Portfolios (before 

the Substitutions) or the New Portfolio 

(after the Substitutions) to one or more 

other subaccount(s) without charge 

(including sales charges or surrender 

charges) and without that transfer 

counting against their contractual 

transfer limitations. 

23. Applicants represent that all 

Contract owners will have received a 

copy of the most recent New Portfolio 

prospectus prior to the Substitutions. 

Applicants also agree that, within five 

days following the Substitutions, 

Contract owners affected by the 

Substitutions will be notified in writing 

that the Substitutions were carried out 

and that this notice will restate the 

information set forth in the PreSubstitution Notice. 

Applicants’ Legal Analysis 

1. Section 26(c) of the Act makes it 

unlawful for any depositor or trustee of 

a registered unit investment trust 

holding the security of a single issuer to 

substitute another security for such 

security unless the Commission 

approves the substitution. The 

Commission may approve such a 

substitution if the evidence establishes 

that it is consistent with the protection 

of investors and the purposes fairly 

intended by the policy and provisions of 

the Act. 

2. Applicants submit that the 

Substitutions meet the standards set 

forth in Section 26(c) and assert that 

replacement of the Old Portfolios with 

the New Portfolio is consistent with the 

protection of Contract owners and the 

purposes fairly intended by the policy 

and provisions of the Act. Applicants 

have reserved the right to make such a 

substitution under the Contracts and 

represent that this reserved right is 

disclosed in the prospectus for the 

Contracts. 

3. Section 17(a)(1) of the Act, in 

relevant part, prohibits any affiliated 

person of a registered investment 

company, or any affiliated person of 

such person, acting as principal, from 

knowingly selling any security or other 

property to that company. Section 

17(a)(2) of the Act generally prohibits 

the persons described above, acting as 

principal, from knowingly purchasing 

any security or other property from the 

registered company. Pursuant to Section 

10(a)(1) of the Act, the Section 17(b) 

Applicants may be considered affiliates 

of one or more of the portfolios involved 

in the Substitutions. Because the 

Substitutions may be effected, in whole 

or in part, by means of in-kind 

redemptions and subsequent purchases 

of shares and by means of in-kind 

transactions, the Substitutions may be 

deemed to involve one or more 

purchases or sales of securities or 

property between affiliates. 

4. Section 17(b) of the Act provides 

that the Commission may, upon 

application, grant an order exempting 

any transaction from the prohibitions 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; the proposed transaction is 

consistent with the policy of each 

registered investment company 

concerned, as recited in its registration 

statement and records filed under the 

Act; and the proposed transaction is 

consistent with the general purposes of 

the Act. 

5. The Section 17(b) Applicants state 

that the terms under which the in-kind 

redemptions and purchases will be 

effected are reasonable and fair and do 

not involve overreaching on the part of 

any person principally because the 

Substitutions will conform with all but 

two of the conditions enumerated in 

Rule 17a–7. Applicants assert that the 

use of in-kind transactions will not 

cause Contract owner interests to be 

diluted. In support, Applicants 

represent that: (a) The proposed 

transactions will take place at relative 

net asset value as of the Effective Date 

in conformity with the requirements of 

Section 22(c) of the 1940 Act and Rule 

22c–1 thereunder 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 investment in any of 

the Separate Accounts; (b) Contract 

owners will not suffer any adverse tax 

consequences as a result of the 

Substitutions; and (c) Fees and charges 

under the Contracts will not increase 

because of the Substitutions. 

6. Further, though the Section 17(b) 

Applicants may not rely on Rule 17a–

7 because they cannot meet all of its 

conditions, the Section 17(b) Applicants 

agree to carry out the proposed in-kind 

purchases in conformity with all of the 

conditions of Rule 17a–7 and the 

procedures adopted thereunder, except 

that: (1) The consideration paid for the 

securities being purchased or sold may 

not be entirely cash; and (2) the Sun 

Capital Trust board will not separately 

review each portfolio security 

purchased by the New Portfolio. 

However, Applicants assert that the 

circumstances surrounding the 

Substitutions will offer the same degree 

of protection to the New Portfolio from 

overreaching that Rule 17a–7 provides 

to it generally in connection with its 

purchase and sale of securities under 

that Rule in the ordinary course of its 

business. 

7. Applicants assert that the Board of 

Sun Capital Trust has adopted 

procedures, as required by Rule 17a–7, 

and that Sun Capital or any subadviser 

to the New Portfolio will review the 

securities holdings of the Old Portfolio 

to determine whether their portfolio 

holdings would be suitable investments 

for the New Portfolio in the overall 

context of its investment objectives and 

policies and consistent with its 

management. Applicants also note that 

the Companies (or any of their affiliates) 

cannot effect the proposed Substitutions 

at a price disadvantageous to the New 

Portfolio. Although the Substitutions 

may not be entirely for cash, Applicants 

represent that each will be effected 

based upon (1) the independent market 

price of the portfolio securities valued 

as specified in paragraph (b) of Rule 

17a–7, and (2) the net asset value per 

share of each portfolio involved valued 

according to the procedures disclosed in 

its registration statement and as 

required by Rule 22c–1 under the Act. 

The Section 17(b) Applicants state that 

securities to be paid out as redemption 

proceeds and subsequently contributed 

to the New Portfolio to effect the in-kind 

purchases of shares will be valued based 

on the normal valuation procedures of 

the redeeming and purchasing 

Portfolios, and redeeming and 

purchasing values will be the same. 

Applicants note that if Sun Capital 


ycherry on PROD1PC63 with NOTICES
1040 Federal Register / Vol. 72, No. 5 / Tuesday, January 9, 2007 / Notices 

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

2 17 CFR 240. 19b–4. 

3See Securities Exchange Act Release No. 54739 

(November 9, 2006), 71 FR 66993 (November 17, 

2006) (SR–Amex–2006–78). 

4 17 CFR 240.19b–4(e). 

5 17 CFR 240.19b–4(c)(1). 6When relying on Rule 19b–4(e), the SRO must 

submit Form 19b–4(e) to the Commission within 

five business days after the exchange begins trading 

the new derivative securities products. See 

Exchange Act Release No. 40761 (December 8, 

1998), 63 FR 70952 (December 22, 1998). 

7See 17 CFR 240.12a–8. 

8See Amex Rule 1000, Commentary .03(a)(A)(5), 

(a)(B)(5) and (a)(C), and Amex Rule 1000A, 

Commentary .02(a)(A)(5), (a)(B)(5) and (a)(C). 

9 17 CFR 242.600. 

declines to accept particular portfolio 

securities of either of the Old Portfolios 

for purchase in-kind of shares of the 

New Portfolio, the applicable Old 

Portfolio will liquidate portfolio 

securities as necessary and purchase 

New Portfolio shares with cash. 

Consistent with Rule 17a–7(d), 

Applicants also agree that no brokerage 

commissions, fees, or other 

remuneration will be paid in connection 

with the in-kind transactions. 

Conclusions 

1. Applicants submit that for the 

reasons and upon the facts set forth in 

their application, the requested order 

meets the standards set forth in Section 

26(c) and should, therefore, be granted. 

2. Section 17 Applicants represent 

that the proposed in-kind transactions 

meet all of the requirements of Section 

17(b) of the Act and that an exemption 

should be granted, to the extent 

necessary, from the provisions of 

Section 17(a). 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Nancy M. Morris, 

Secretary. 

[FR Doc. E7–61 Filed 1–8–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55018; File No. SR–Amex–

2006–109] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Notice 

of Filing and Order Granting 

Accelerated Approval of a Proposed 

Rule Change and Amendment No. 1 

Thereto Relating to Listing Standards 

for Series of Portfolio Depositary 

Receipts and Index Fund Shares 

December 28, 2006. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on November 

21, 2006, the American Stock Exchange 

LLC (‘‘Amex’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been substantially prepared by the 

Exchange. Amex filed Amendment No. 

1 with the Commission on December 20, 

2006. This order provides notice of the 

proposed rule change as modified by 

Amendment No. 1 and approves the 

proposed rule change on an accelerated 

basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to make 

clarifying changes to Amex Rules 1000, 

1002, 1000A and 1002A and minor, 

typographical changes to Amex Rules 

1000, 1002 and 1002A, relating to listing 

standards for series of portfolio 

depositary receipts and index fund 

shares (collectively, ‘‘exchange-traded 

funds’’ or ‘‘ETFs’’). The text of the 

proposed rule change is available at 

Amex, at http://www.amex.com, 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 

Amex 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 III below. The Amex 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to clarify the 

listing standards in Amex Rules 1000, 

1002, 1000A and 1002A governing 

ETFs, amendments to which were 

approved by the Commission on 

November 9, 2006.3 In particular, the 

Commission approved changes to Rules 

1000 and 1000A to include generic 

listing standards for series of ETFs that 

are based on international or global 

indexes. Additionally, the Commission 

approved revisions to Amex Rules 1000 

and 1000A to include generic listing 

standards for ETFs that are based on 

indexes or portfolios previously 

approved by the Commission as an 

underlying benchmark for the trading of 

ETFs, options or other specified indexbased securities. These changes enable 

the Exchange to list exchange-traded 

funds pursuant to Rule 19b–4(e) of the 

Act 4 if each of the conditions set forth 

in Commentary .03 to Rule 1000 or 

Commentary .02 to Rule 1000A is 

satisfied. 

Rule 19b–4(e) provides that the listing 

and trading of a new derivative 

securities product by a self-regulatory 

organization shall not be deemed a 

proposed rule change under Rule 19b–

4(c)(1) of the Act 5 if the Commission 

has approved, pursuant to Section 19(b) 

of the Act, the self-regulatory 

organization’s trading rules, procedures 

and listing standards for the product 

class that would include the new 

derivatives securities product and the 

self-regulatory organization has a 

surveillance program for the product 

class.6

The Commission also approved other 

minor clarifying changes to Amex Rules 

1000, 1002, 1000A and 1002A. 

In connection with those approved 

changes, the Exchange now proposes to 

make additional clarifying changes to 

Rules 1000, 1002, 1000A and 1002A. 

Specifically, the Exchange proposes to 

amend the definition of ‘‘US Component 

Stock’’ in Rules 1000(b)(3) and 

1000A(b)(3). The definition of U.S. 

Component Stock was designed to 

include any equity security that is 

registered under Sections 12(b) or 12(g) 

of the Act, and therefore to comprise all 

securities that are subject to 

Commission oversight through 

registration. This definition was 

intended to include American 

Depositary Receipts (‘‘ADRs’’), the 

underlying security of which is 

registered under Section 12(b) or 12(g) 

of the Act. In the case of listed ADRs, 

it is the equity security underlying an 

ADR that is registered pursuant to 

Section 12 of the Act, not the ADRs.7

Under Amex’s generic listing 

standards,8 the ADR would also be 

required to be listed on a national 

securities exchange and be an NMS 

Stock as defined in Rule 600 of 

Regulation NMS.9 Consequently, the 

Exchange proposes to revise the 

definition of U.S. Component Stock to 

clarify that, while the ADR would be 

considered the U.S. Component Stock 

and therefore the index component for 

purposes of satisfying the eligibility 

criteria, the ADR can only qualify as a 

‘‘US Component Stock’’ if the equity 

security underlying that ADR is 


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