[Federal Register Volume 62, Number 147 (Thursday, July 31, 1997)]
[Notices]
[Pages 41108-41116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20048]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-22763; File No. 812-10398]


CUNA Mutual Life Insurance Company, et al.

July 24, 1997.
AGENCY: Securities and Exchange Commission (the ``SEC'' or 
``Commission'').

ACTION: Notice of Application for Exemptions under the Investment 
Company Act of 1940 (the ``1940 Act'').

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APPLICANTS: CUNA Mutual Life Insurance Company (``CUNA Mutual Life''), 
CUNA Mutual Life Variable Account (``Account''), Ultra Series Fund 
(``Fund''), CIMCO, Inc. (``CIMCO''), CUNA Mutual Life Insurance Company 
Pension Plan for Agents, CUNA Mutual Life Insurance Company Pension 
Plan for Home Office Employees, CUNA Mutual Life Insurance Company 
401(k)/Thrift Plan for Agents, CUNA Mutual Life Insurance Company 
401(k)/Thrift Plan for Home Office Employees, CUNA Mutual Pension Plan, 
CUNA Mutual Savings Plan and CUNA Mutual Thrift Plan. (The seven plans 
shall be referred to collectively as the ``Plans.'' CUNA Mutual Life, 
the Account, the Fund, CIMCO and the Plans shall be referred to 
collectively as the ``Applicants.'')

RELEVANT 1940 ACT SECTIONS: Order requested under section 6(c) of the 
1940 Act for exemptions form sections 9(a), 13(a) and 15(b) of the 1940 
Act, and Rule 6e-3(T) thereunder; and an order requested under section 
17(b) of the 1940 Act for exemptions from section 17(a) of the 1940 
Act.

SUMMARY OF APPLICATION: CUNA Mutual Life, the Account and the Fund seek 
an order exempting them and certain other separate accounts established 
in the future by CUNA Mutual Life, or any life insurance company 
affiliate of CUNA Mutual Life (``future affiliated accounts'') and 
other separate accounts established in the future by any other life 
insurance company (``future unaffiliated accounts,''and together with 
the future affiliated accounts, the ``future accounts''), from the 
provisions of sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, 
and Rule 6e-3(T) thereunder, to the extent necessary to permit the 
Account and the future accounts to hold shares of the Fund at the same 
time that the Fund offers its shares to such future accounts, the Plans 
or other qualified pension or retirement plans (the ``unaffiliated 
plans''). In addition, the Plans and CIMCO seek an order exempting them 
from Section 17(a) of the 1940 Act to the extent necessary to permit 
the Plans to purchase certain classes of shares of the Fund with 
investment securities of the Plans.

FILING DATE: The application was filed on October 15, 1996, and amended 
and restated on May 9, 1997 and July 23, 1997.

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 on this application by writing to the 
Secretary of the SEC 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 August 18, 1997, and accompanied by proof of 
service on the Applicants in the form of an affidavit or, for lawyers, 
a certificate of service. Hearing requests should state the nature of 
the interest, the reason for the request and the issues contested. 
Persons may request notification of the date of a hearing by writing to 
the Secretary of the SEC.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549. 
Applicants, Linda L. Lilledahl, Esq., Associate General Counsel, CUNA 
Mutual Group, 5910 Mineral Point Road, Madison, WI 53701-0391.

FOR FURTHER INFORMATION CONTACT: Megan Dunphy, Attorney, or Mark 
Amorosi, 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 SEC.

Applications' Representations

    1. CUNA Mutual Life, former Century Life of America, is principally 
engaged in the offering of life insurance contracts and is the 
depositor and sponsor of the Account. On July 1, 1990, CUNA Mutual Life 
entered into a permanent affiliation with CUNA Mutual Insurance Society 
(``CUNA Mutual''). All of the directors of CUNA Mutual Life are also 
directors of CUNA Mutual and many of the senor executive officers of 
CUNA Mutual Life hold similar positions with CUNA Mutual. However, both 
companies remain separate corporate entities and their respective 
owners retain their voting rights.
    2. The Account, a separate account registered under the 1940 Act as 
a unit investment trust, was established on August 16, 1993 to serve as 
a funding vehicle to support variable life insurance contracts issued 
by CUNA Mutual Life. The Account is divided into subaccounts and 
invests in shares of open-end management investment companies with one 
or more investment portfolios or series, including the Fund.
    3. The future accounts also would need to rely on the exemptions 
requested in the application. Any such future accounts would be 
registered under the 1940 Act as unit investment trusts.

[[Page 41109]]

    4. CUNA Mutual, a mutual life insurance company, is principally 
engaged in the offering of insurance products and related services.
    5. CIMCO is engaged primarily in the business of providing 
investment management and advice to insurance company pension plans, 
investment companies and other organizations. CIMCO is registered under 
the Investment Advisers Act of 1940, is the investment adviser to the 
Fund, and manages certain assets of the Plans. CUNA Mutual Life and 
CUNA Mutual Investment Corporation each own a one-half interest in 
CIMCO. CUNA Mutual Investment Corporation is a wholly-owned subsidiary 
of CUNA Mutual.
    6. The board of directors of CUNA Mutual Life established CUNA 
Mutual Life Insurance Company Pension Plan For Agents, CUNA Mutual Life 
Insurance Company Pension Plan For Home Office Employees, CUNA Mutual 
Life Insurance Company 401(k)/Thrift Plan for Agents, and CUNA Mutual 
Life Insurance Company 401(k)/Thrift Plan for Home Office Employees 
(the ``CUNA Life Mutual Plans''). Participation in a CUNA Mutual Life 
Plan is open to eligible employees of CUNA Mutual Life and its 
subsidiaries or other companies under common control with CUNA Mutual 
Life and which has adopted a CUNA Mutual life Plan. CUNA Mutual Life 
Insurance Company 401(k)/Thrift Plan for Agents and CUNA Mutual Life 
Insurance Company 401(k)/Thrift Plan for Home Office Employees (the 
``CUNA Mutual Life Defined Contribution Plans'') are voluntary defined 
contribution plans. CUNA Mutual Life Insurance Company Pension Plan For 
Agents and CUNA Mutual Life Insurance Company Pension Plan for Home 
Office Employees are defined benefit plans.
    7. The board of directors of CUNA Mutual established CUNA Mutual 
Pension Plan, CUNA Mutual Savings Plan and CUNA Mutual Thrift Plan 
(``CUNA Mutual Plans''). Participation in a CUNA Mutual Plan is open to 
eligible employees of CUNA Mutual and its subsidiaries or other 
companies under common control with CUNA Mutual and which adopted a 
CUNA Mutual Plan. The CUNA Mutual Pension Plan is a defined benefit 
plan. The CUNA Mutual Savings Plan and CUNA Mutual Thrift Plan (the 
``CUNA Mutual Defined Contribution Plans'') are voluntary defined 
contribution plans.
    8. All of the Plans are intended to qualify under sections 401(a) 
and 501(a) of the Internal Revenue Code of 1986, as amended (the 
``Code''). The CUNA Mutual Life Defined Contribution Plans and CUNA 
Mutual Defined Contribution Plans include cash or deferred arrangements 
intended to qualify under section 401(k) of the Code. The Plans also 
are subject to, and have been designed to comply with, the provisions 
of the Employee Retirement Income Security Act of 1977 (``ERISA'').
    9. Each of the Plans is funded by a trust with an institutional 
trustee or by an annuity contract issued by CUNA Mutual Life or CUNA 
Mutual. CUNA Mutual Life and CUNA Mutual retain the right to establish 
different funding arrangements or to appoint other trustees. Each of 
the Plans is managed and administered by a plan committee and other 
fiduciaries appointed by CUNA Mutual Life or CUNA Mutual, as applicable 
(hereinafter, ``plan committees'').
    10. The unaffiliated plans will be pension or retirement plans 
intended to qualify under Section 401(a) and 501(a) of the Code and 
will be subject to, and will be designed to comply with, the applicable 
provisions of ERISA. The unaffiliated plans will not be affiliated 
persons of the Applicants or affiliated persons of such persons. The 
trustees and the other fiduciaries of the unaffiliated plans also will 
not be affiliated persons of the Applicants or affiliated persons of 
such persons.
    11. The CUNA Mutual Thrift Plan offers participants seven 
investment options including, among others, the following: a growth and 
income investment portfolio, a capital appreciation investment 
portfolio, a bond investment portfolio a balanced investment portfolio, 
and a money market investment portfolio. The CUNA Mutual Savings Plan 
offers participants three investment options: a growth and income 
investment portfolio, a bond investment portfolio, and a money market 
investment portfolio. The CUNA Mutual Life Defined Contribution Plans 
offer participants three investment options: a capital appreciation 
investment portfolio, a growth and income investment portfolio and a 
money market investment portfolio. Assets of the other Plans are not 
held as part of separate Plan investment portfolios.
    12. The Fund, an open-end management investment company organized 
as a Massachusetts business trust on September 16, 1983, is a series 
company that consists of six investment portfolios: Capital 
Appreciation Stock Fund, Growth and Income Stock Fund, Balanced Fund, 
Bond Fund, Money Market Fund and Treasury 2000 Fund.
    13. The investment objective of the Capital Appreciation Stock Fund 
is long-term capital growth. The investment objective of the Growth and 
Income Stock Fund is long-term capital growth, with income as a 
secondary consideration. The investment objective of the Balanced Fund 
is to achieve a high total return through the combination of income and 
capital appreciation by investing in a broadly diversified life of 
securities including common stocks, bonds and money market instruments. 
The investment objective of the Bond Fund is to generate a high level 
of current income, consistent with the prudent limitation of investment 
risk, through investment in a diversified portfolio of fixed-income 
securities with maturities of up to 30 years. The investment objective 
of the Money Market Fund is to seek the highest current income 
available from money market instruments consistent with the 
preservation of capital and liquidity by maintaining a dollar weighted 
average portfolio maturity which does not exceed 90 days. The 
investment objective of the Treasury 2000 Fund is to provide safety of 
capital and a relative predictable payout upon portfolio maturity, 
primarily by investing in stripped Treasury securities.
    14. To date, the Fund has offered its shares only to CUNA Mutual 
Life (as seed money investments), the Account, CUNA Mutual Life 
Variable Annuity Account (``Annuity Account''), and CUNA Mutual Life 
Group Variable Annuity Account (``Group Annuity Account''). The Fund 
offers each series of shares to corresponding subaccounts of the 
Account to support variable life insurance contracts (``VLI 
contracts'') and to the Annuity Account and the Group Annuity Account 
to support variable annuity contracts (``VA contracts,'' and together 
with VLI contracts, ``variable contracts'').
    15. Changes in the tax law have created the opportunity for the 
Fund to substantially increase its assets based through the sale of 
Fund shares to the Plans and the unaffiliated plans. Section 817(h) of 
the Code imposes certain diversification standards on the assets 
underlying variable contracts. The Code provides that variable 
contracts shall not be treated as annuity contracts or life insurance 
contracts for any period in which the underlying assets are not, in 
accordance with regulations prescribed by the Treasury Department, 
adequately diversified. On March 2, 1989, the Treasury Department 
issued regulations which established diversification requirements for 
the investment portfolios underlying variable contracts. Treas. Reg. 
Sec. 1.817-5 (1989). The regulations provide that, to meet the 
diversification requirements,

[[Page 41110]]

all of the beneficial interests in the investment company must be held 
by the segregated asset accounts for one or more insurance companies. 
The regulations do, however, contain certain exceptions to this 
requirement, one of which allows shares in an investment company to be 
held by the trustee of a qualified pension or retirement plan without 
adversely affecting the ability of shares in the same investment 
company also to be held by the separate accounts of insurance companies 
in connection with their variable contracts. Treas. Reg. Sec. 1.817-
5(f)(3)(iii). As a result of this exception to the general 
diversification requirement, qualified pension and retirement plans 
(such as the Plans or the unaffiliated plans) may hold Fund shares and 
select an investment portfolio of the Fund as an investment option 
without endangering the tax status of CUNA Mutual Life's VLI contracts 
or VA contracts as life insurance or annuities, respectively.
    16. Applicants propose that, in one or more discrete instances, the 
Plans purchase Fund shares using investment securities held by the 
Plans. The CUNA Mutual Life Defined Contribution Plans and the CUNA 
Mutual Defined Contribution Plans would use investment securities 
constituting a separate Plan investment portfolio, currently available 
to participants as an investment option, to purchase Fund shares, while 
the other Plans would use securities held by the Plan but not as a 
separate Plan investment portfolio.
    17. Applicants state that the CUNA Mutual Defined Contribution 
Plans and the CUNA Mutual Life Defined Contribution Plans will each use 
the assets of their capital appreciation investment portfolios to 
purchase shares of the Fund's Capital Appreciation Stock Fund, use the 
assets of their growth and income investment portfolios to purchase 
shares of the Fund's Growth and Income Stock Fund, use the assets of 
their bond investment portfolios to purchase shares of the Fund's Bond 
Fund, use the assets of their balanced investment portfolio to purchase 
shares of the Fund's Balanced Fund and use the assets of the money 
market investment portfolios to purchase shares of the Fund's Money 
Market Fund. If the proposed consolidations were to occur, the Plans 
would initially acquire a substantial majority of the outstanding 
shares of the Fund's Growth and Income Stock Fund, Bond Fund and Money 
Market Fund as well as a controlling interest in the Fund's Capital 
Appreciation Stock Fund.

Applicants' Legal Analysis

A. Request for Exemptions Under Section 6(c)

(i) General Grounds for Relief
    1. CUNA Mutual Life, the Account and the Fund (the ``Section 6(c) 
Applicants'') request that the Commission issue an order pursuant to 
section 6(c) of the 1940 Act exempting them as well as any future 
accounts and depositors and principal underwriters of any future 
accounts from the provisions of sections 9(a), 13(a), 15(a) and 15(b) 
of the 1940 Act, and Rule 6e-3(T)(b)(15) thereunder, to the extent 
necessary for the Account and any future accounts to hold shares of the 
Fund at the same time that the Plans or the unaffiliated plans hold 
shares of the Fund or for the Account and any unaffiliated future 
account to simultaneously hold shares of the Fund.
    2. CUNA Mutual Life and the Account currently rely on the 
exemptions provided by Rule 6e-3(T)(b)(15) under the 1940 Act, which 
provides partial exemptions from sections 9(a), 13(a), 15(a) and 15(b) 
of the 1940 Act for certain VLI contracts. However, the exemptions 
granted by the rule are available only where: (i) the Fund offers its 
shares exclusively to separate accounts of CUNA Mutual Life or any life 
insurance company affiliate of CUNA Mutual Life offering either 
scheduled premium variable life insurance contracts or flexible premium 
variable life insurance contracts, or both; or (ii) the Fund offers its 
shares to variable annuity separate accounts of CUNA Mutual Life or of 
any life insurance company affiliate of CUNA Mutual Life. The Rule 6e-
3(T)(b)(15) exemptions would not be available to CUNA Mutual Life, the 
Account or any future accounts (affiliated or unaffiliated) if the Fund 
were to sell its shares to the Plans or to unaffiliated plans.
    3. In general, section 9(a) of the 1940 Act disqualifies any person 
convicted of certain offenses, and any company affiliated with that 
person, from acting or serving in various capacities with respect to a 
registered investment company. Section 9(a)(3) provides that it is 
unlawful for any company to serve as investment adviser or principal 
underwriter for any registered open-end investment company if an 
affiliated person of that company is subject to a disqualification 
enumerated in sections 9(a) (1) or (2). However, Rule 6e-3(T)(b)(15) 
(i) and (ii) provide exemptions from section 9(a), under certain 
circumstances and subject to certain conditions that limit the 
application of the eligibility restrictions of Section 9(a) to 
affiliated individuals or companies that directly participate in the 
management of the Fund.
    4. The section 6(c) Applicants assert that the partial relief 
provided by Rule 6e-3(T)(b)(15) effectively limits the amount of 
monitoring of personnel that CUNA Mutual Life and its affiliates (or 
future account depositors and their affiliates) would have to conduct 
to ensure compliance with section 9 to that which is appropriate in 
light of the policy and purposes of section 9. The section 6(c) 
Applicants further assert that the rule recognizes that it is not 
necessary for the protection of investors or the purposes fairly 
intended by the policy and provisions of the 1940 Act to apply to 
provisions of section 9(a) to the many hundreds of individuals in a 
large insurance company complex, most of whom typically have no 
involvement in matters pertaining to investment companies affiliated 
with that organization.
    5. Rule 6e-3(T)(b)(15)(iii) provides partial exemptions from 
sections 13(a), 15(a) and 15(b) of the 1940 Act to permit CUNA Mutual 
Life, under certain limited circumstances, to: (i) disregard the voting 
instructions of VLI contract owners if following such instructions 
would cause CUNA Mutual Life to make (or refrain from making) certain 
investments that would result in changes in the subclassification or 
investment objectives of the Fund; or (ii) (subject to the provisions 
of paragraphs (b)(5)(i) and (b)(7)(ii)(A) of Rule 6e-3(T)) approve or 
disapprove any contract between the Fund and CIMCO (or another 
investment adviser), when such action is mandated by an insurance 
regulatory authority.
    6. The section 6(c) Applicants assert that historically, the 
exclusivity provision in Rule 6e-3(T)(b)(15) evolved from the 
Commission's concern about possible divergent interests between or 
among different classes of investors (e.g., VA owners and VLI owners) 
in mutual funds supporting variable life insurance separate accounts. 
The unit investment trust structure for supporting VLI contracts 
created the opportunity for a mutual fund underlying a trust also to 
offer its shares to a variable annuity separate account (hereinafter, 
``mixed funding''). This structure also created the opportunity for a 
mutual fund underlying such a separate account also to offer its shares 
to separate accounts of two or more insurance companies that are not 
affiliated persons of each other (hereinafter, ``shared funding'').
    7. The section 6(c) Applicants state that the Commission addressed 
its

[[Page 41111]]

concerns about divergent interests among investors when it adopted Rule 
6e-2 (the primary exemptive rule for scheduled premium variable life 
insurance). Rule 6e-2 does not permit mixed or shared funding. Several 
insurers relying on Rule 6e-2 sought and obtained individual exemptions 
to permit mixed funding, subject to certain conditions designed to 
identify and resolve potential or existing conflicts of interest among 
variable contract owners. The section 6(c) Applicants maintain that, 
ultimately, Rule 6e-3(T)(b)(15) was designed to permit a separate 
account supporting both flexible and scheduled premium VLI contracts to 
share the same underlying fund and engage in mixed funding.
    8. The section 6(c) Applicants maintain that qualified retirement 
plan investors in the Fund would have substantially the same interests 
as current variable contract owners. Like variable contract owners, 
qualified retirement plan investors are long-term investors. Therefore, 
most can be expected not to withdraw their assets from the Plans or the 
unaffiliated plans. In addition, since neither variable contract owners 
nor Plan and unaffiliated plan in investors would be taxed on the 
investment return of their respective investments in the Fund, they 
would share a strong interest in the Fund operating in a manner that 
preserves its tax status.
    9. The section 6(c) Applicants represent that the Account and the 
Plans are governed in similar ways as would be future accounts and 
unaffiliated plans. Plan committees (and other plan fiduciaries) have a 
fiduciary duty to participants that is similar to the obligations that 
CUNA Mutual Life or any other life insurance company has to look after 
the interests of variable contract owners.
    10. The section 6(c) Applicants assert that, because investors in 
the Plans and unaffiliated plans would have beneficial interests 
similar to those of current investors, the addition of the Plans and 
unaffiliated plans as shareholders of the Fund and the addition of 
participants as persons having beneficial interests in the Fund should 
not increase the risk of material irreconcilable conflicts among and 
between investors. The section 6(c) Applicants further assert that even 
if a material irreconcilable conflict involving the Plans or the 
unaffiliated plans or their respective participants arose, the 
fiduciaries of the Plans and the trustees (or other fiduciaries) of the 
unaffiliated plans can, if their fiduciary duty to the participants 
requires it, redeem the shares of the Fund held by the Plans or the 
unaffiliated plans and make alternative investments without obtaining 
prior regulatory approval. Similarly, the Plans and most, if not all, 
of the unaffiliated plans may hold cash or other liquid assets pending 
their reinvestment in a suitable alternative investment.
    1. The section 6(c) Applicants maintain that variable contract 
owners would benefit from the expected increase in net assets of the 
Fund's portfolios resulting from additional investments by the Plans 
and unaffiliated plans. Such additional investments should lower some 
of the costs of investing for variable contract owners, promote 
economies of scale, permit increased safety through greater portfolio 
diversification, provide the Fund's investment adviser with greater 
flexibility because of a larger portfolio, and make the addition of new 
portfolios in the future more feasible.
    12. The section 6(c) Applicants note that when the Commission last 
revised Rule 6e-3(T) in 1987, the Treasury Department had not issued 
Treasury Regulation 1.817-5 which permits the Fund to sell shares to 
qualified pension or retirement plans without adversely affecting the 
tax status of variable contracts. The section 6(c) Applicants submit 
that, although proposed regulations had been published, the Commission 
did not envision this possibility when it last examined Rule 6e-
3(T)(b)(15), and might well have broadened the exclusivity provision of 
the rule at that time to include plans such as the Plans (or the 
unaffiliated plans) had this possibility been apparent.
(ii) Voting Rights
    13. The section 6(c) Applicants do not see any inherent conflicts 
arising between or among the interests of variable contract owners, or 
Plan participants because of the potential for the Plans to hold a 
controlling interest in a portfolio of the Fund. If the exemptions 
requested herein are granted, the trustees or the plan committee of 
each Plan would enter into a participation agreement with the Fund that 
contains certain conditions, as discussed below. These conditions would 
serve to enhance the ability of the Fund's board of trustees and CUNA 
Mutual Life as well as depositors of future accounts to protect the 
interests of variable contract owners and minimize any potential for 
material conflicts between or among the interests of plan investors on 
the one hand and variable contract owners on the other.
    14. The section 6(c) Applicants maintain that there is no reason to 
believe that the trustees or the plan committees of the various Plans 
as a group would vote in a manner that would disadvantage variable 
contract owners. Moreover, because a majority of the Fund's trustees 
will not be interested persons of the Fund, the trustees, the plan 
committees and other affiliated persons of the Plans will not be in a 
position to exercise undue influence over the Fund or any of its 
portfolios.
    15. Also, with regard to resolving or remedying possible material 
conflicts of interest related to voting, the Plans' investment in the 
Fund does not present any complications not otherwise occasioned by 
traditional mixed funding as permitted by Rule 6e-3(T)(b)(15). The 
section 6(c) Applicants submit that the interests and opinions of Fund 
investors may differ, but this does not mean that inherent conflicts of 
interest exist between or among such investors.
    16. Section 403(a) of ERISA provides that, with few exceptions, 
trustees of the unaffiliated plans would have the exclusive authority 
and responsibility for exercising voting rights attributable to their 
respective plan's investment securities. Where a named fiduciary 
appoints an investment adviser, the adviser has the authority and 
responsibility to exercise such voting rights unless the authority and 
responsibility is reserved to the trustee(s) or a non-trustee 
fiduciary.
    17. The section 6(c) Applicants generally expect many of the 
unaffiliated plans to have their trustees or other fiduciaries 
exercise, in their discretion, voting rights attributable to investment 
securities held by the unaffiliated plans. Some of the unaffiliated 
plans, however, may provide for the trustee(s), an investment adviser 
(or advisers), or another named fiduciary to exercise voting rights in 
accordance with instructions from participants.
    18. Where unaffiliated plans do not provide participants with the 
right to give voting instructions, the section 6(c) Applicants do not 
see any potential for material irreconcilable conflicts of interest 
between variable contract owners and unaffiliated plan investors with 
respect to voting of Fund shares. In this regard, the section 6(c) 
Applicants submit that investment in the Fund by the unaffiliated plans 
will not create any of the voting complications occasioned by 
traditional mixed and shared funding, or by the Plans' proposed 
investment in the Fund.
    19. Where unaffiliated plans provide participants with the right to 
give voting instructions, the section 6(c) Applicants do not believe 
that participants in unaffiliated plans generally or those in

[[Page 41112]]

a particular unaffiliated plan, either as a single group or in 
combination with participants in other unaffiliated plans, would vote 
in a manner that would disadvantage variable contract owners. The 
purchase of Fund shares by the unaffiliated plans that provide voting 
rights does not present any complications not otherwise occasioned by 
mixed and shared funding.
    20. In light of Treasury Regulation 1.817-5(f)(3)(iii) which 
specifically permits ``qualified pension or retirement plans'' and 
separate accounts to share the same underlying management investment 
company, the section 6(c) Applicants have concluded that neither the 
Code, nor other Treasury Regulations or revenue rulings thereunder, 
would create any inherent conflicts of interest between or among 
participants and variable contract owners.
(iii) Tax Treatment of Distributions
    21. Although there are differences in the manner in which 
distributions from the Plans or the unaffiliated plans and 
distributions from variable contracts are taxed, the section 6(c) 
Applicants maintain that these differences will have no impact on the 
Fund. The Account, any future accounts, the Plans, and the unaffiliated 
plans each will purchase and redeem Fund shares at net asset value in 
conformity with Rule 22c-1 under the 1940 Act.
(iv) Potential Future Conflicts Arising From Tax Law Changes
    22. The section 6(c) Applicants do not see any greater potential 
for material irreconcilable conflicts arising between the interests of 
plan investors and other Fund investors from possible future changes in 
the federal tax laws than that which already exists with regard to such 
conflicts arising between VLI contract owners and VA contract owners.
(v) Grounds for Relief for Shared Funding
    23. The section 6(c) Applicants maintain that the holding of Fund 
shares by separate accounts of unaffiliated insurance companies would 
not entail greater potential for material irreconcilable conflicts 
arising between or among the interests of VLI owners and VA owners than 
does traditional mixed funding. Likewise, the holding of Fund shares by 
separate accounts of unaffiliated insurance companies would not create 
greater potential for material irreconcilable conflicts arising between 
or among the interests of variable contract owners and plan investors 
than would be the case if only separate accounts of CUNA Mutual Life's 
insurance company affiliates and plan investors held Fund shares.
    24. The section 6(c) Applicants assert that shared funding does not 
present any issues that do not already exist where a single insurance 
company is licensed to do business in several, or all, states. The 
section 6(c) Applicants note that where insurers are domiciled in 
different states, it is possible that the state insurance regulatory 
body in a state in which one insurance company is domiciled could 
require action that is inconsistent with the requirements of insurance 
regulators in one or more other states in which other insurance 
companies are domiciled. The section 6(c) Applicants submit that this 
possibility is no different from and no greater than what exists where 
a single insurer and its affiliates offer their insurance products in 
several states.
    25. The section 6(c) Applicants also assert that the right of an 
insurance company to disregard VLI contract owner voting instructions 
does not raise any issues different from those raised by the authority 
of different state insurance regulators over separate accounts. 
Affiliation does not eliminate the potential for divergent judgments by 
such companies as to the advisability or legality of a change in 
investment policies, principal underwriting, or investment adviser of 
an open-end management investment company in which their separate 
account invests. The section 6(c) Applicants assert that the potential 
for disagreement between or among insurance companies is limited by the 
requirement that the insurance company's disregard of voting 
instructions be both reasonable and based on specific good faith 
determinations. Moreover, in the event that a decision of CUNA Mutual 
Life or the depositor of a future account to disregard VLI contract 
owners' instructions represents a minority position or would preclude a 
majority vote at a Fund shareholders meeting, CUNA Mutual Life or such 
depositor could be required, at the election of the Fund, to withdraw 
its investment in that Fund.
(vi) Conditions for Relief
    Applicants represent and agree that if the exemptions required in 
the application pursuant to section 6(c) are granted, CUNA Mutual Life 
and the Account will only rely on such exemptions to purchase and hold 
Fund shares if the following conditions are met:

    1. The board of trustees of the Fund, including a majority of 
those trustees who are not interested persons of the Fund or 
interested persons of such persons, adopts a resolution approving 
the sale of Fund shares to the Plans and the unaffiliated plans. for 
this purpose, interested person means ``interested persons'' as 
defined by Section 2(a)(19) of the 1940 Act, and rules thereunder, 
and as modified by any applicable Commission orders, except that if 
this condition is not met by reason of the death, disqualification, 
or bona fide resignation of any trustee or trustees, then the 
operation of this condition shall be suspended for (a) a period of 
45 days of the vacancy or vacancies may be filled by the remaining 
trustees, (b) a period of 60 days if a vote of shareholders is 
required to fill the vacancy or vacancies, or (c) such longer period 
as the Commission may prescribe by order upon application.
    2. The board of trustees of the Fund, a majority of whom shall 
not be interested persons of the Fund or interested persons of such 
persons, shall monitor the Fund for the existence of any material 
irreconcilable conflicts between or among the interests of VLI 
owners, VA owners and plan investors and determine what action, if 
any, should be taken in response to those conflicts. A material 
irreconcilable conflict may arise for a variety of reasons, 
including: (a) an action by any state insurance regulatory 
authority, (b) a change in applicable federal or state insurance, 
tax, or securities laws or regulations, or (c) a public ruling, 
private letter ruling, no-action or interpretive letter, or any 
similar action by insurance, tax, or securities regulatory 
authorities, (d) the manner in which the investments of any Fund are 
being managed, (e) a difference in voting instructions given by VLI 
owners, VA owners and plan investors, (f) a decision by CUNA Mutual 
Life to disregard variable contract owner voting instructions, and 
(g) a decision by a Plan trustee (or other Plan fiduciary) to 
disregard voting instructions of Plan participants.
    3. CUNA Mutual Life will monitor its operations and those of the 
Fund for the purpose of identifying any material conflicts or 
potential material conflicts between or among the interests of plan 
investors, VA owners and VLI owners.
    4. CUNA Mutual Life and CIMCO will report any such conflicts or 
potential conflicts to the Fund's board of trustees and will provide 
the board at least annually, with all information reasonably 
necessary for the board to consider any issues raised by such 
existing or potential conflicts. CUNA Mutual Life will also assist 
the board in carrying out this obligation including, but not limited 
to: (a) informing the board whenever it disregards VLI owner voting 
instructions, and (b) providing such other information and reports 
as the board may reasonably request. CUNA Mutual Life will carry out 
these obligations with a view only to the interests of VA owners and 
VLI owners.
    5. CUNA Mutual Life will provide ``pass-through'' voting 
privileges to VA owners and VLI owners as long as the Commission 
interprets the 1940 Act to require such privileges in such cases. 
CUNA Mutual Life will vote Fund shares held by it that are not 
attributable to VA contract or VLI contract reserves in the same 
proportion as instructions received in a timely fashion from

[[Page 41113]]

VA owners and VLI owners and shall be responsible for ensuring that 
the Account and the Annuity Account each calculate ``pass-through'' 
votes in a consistent manner.
    6. In the event that a conflict of interest arise between VA 
owners or VLI owners and plan investors, CUNA Mutual Life will, at 
its own expense, take whatever action is necessary to remedy such 
conflict as it adversely affects VA owners or VLI owners up to and 
including (1) establishing a new registered management investment 
company, and (2) withdrawing assets attributable to reserves for the 
VA contracts or VLI contracts subject to the conflict form the Fund 
and reinvesting such assets in a different investment medium 
(including another portfolio of the Fund) or submitting the question 
of whether such withdrawal should be implemented to a vote of all 
affected VA owners or VLI owners, and, as appropriate, segregating 
the asset supporting the contracts of any group of such owners that 
votes in favor of such withdrawal, or offering to such owners the 
option of making such a change. CUNA Mutual Life will carry out the 
responsibility to take the foregoing action with a view only to the 
interests of VA owners and VLI owners. Notwithstanding the 
foregoing, CUNA Mutual Life will not be obligated to establish a new 
funding medium for any group of VA contracts or VLI contracts if an 
offer to do so has been declined by a vote of a majority of the VA 
owners or VLI owners adversely affected by the conflict.
    7. If a material irreconcilable conflict arises because of CUNA 
Mutual Life's decision to disregard the voting instructions of VLI 
owners and that decision represents a minority position or would 
preclude a majority vote at any Fund shareholder meeting, then, at 
the request of the Fund's board of trustees, CUNA Mutual Life will 
redeem the shares of the Fund to which the disregarded voting 
instructions relate. No charge or penalty, however, will be imposed 
in connection with such a redemption.
    8. A majority vote of the disinterested trustees of the Fund 
shall represent a conclusive determination as to the existence of a 
material irreconcilable conflict between or among the interests of 
VLI owners, VA owners and plan participants. A majority vote of the 
disinterested trustees of the Fund shall represent a conclusive 
determination as to whether any proposed action adequately remedies 
any material irreconcilable conflict between or among the interests 
of VLI owners, VA owners and plan participants. The Fund shall 
notify CUNA Mutual Life, depositors of future accounts, Plans and 
unaffiliated plans in writing of any determination of the foregoing 
type.
    9. All reports sent by CUNA Mutual Life, the depositors of the 
future accounts, the Plans or the unaffiliated plans to the board of 
trustees of the Fund or notices sent by the board to CUNA Mutual 
Life, the depositors of the future accounts, the Plans or the 
unaffiliated plans notifying the recipient of the existence of or 
potential for a material conflict between the interests of VA 
owners, VLI owners and plan investors as well as board deliberations 
regarding conflicts or potential conflicts shall be recorded in the 
board meeting minutes of the Fund or other appropriate records, and 
such minutes or other records shall be made available to the 
Commission upon request.
    10. The Fund's prospectus shall disclose that (1) its shares are 
offered in connection with mixed funding, shared funding and to 
401(a) plans, (2) both mixed funding, shared funding and investment 
by 401(a) plans in the Fund may present certian conflicts of 
interest between VA owners, VLI owners and plan investors and (3) 
the Fund's board of trustees will monitor for the existence of any 
material conflict of interest. The Fund shall also notify the Plan 
trustees, the trustees of unaffiliated plans, CUNA Mutual Life and 
the life insurance company depositors of the future accounts that 
similar prospectus disclosure may be appropriate in separate account 
prospectuses or any plan prospectuses or other plan disclosure 
documents.
    11. CUNA Mutual Life and the Account will continue to rely on 
Rule 6e-3(T)(b)(15) and to comply with all of its conditions. In the 
event that Rule 6e-3(T) is amended, or any successor rule is 
adopted, CUNA Mutual Life and the Account will instead comply with 
such amended or successor rule.
    12. Each Plan will execute a participation agreement with the 
Fund requiring the trustees or plan committees of the Plan to: (a) 
monitor the Plan's operations and those of the Fund for the purpose 
of identifying any material conflicts or potential material 
conflicts between or among the interests of plan investors, VA 
owners and VLI owners, (b) report any such conflicts or potential 
conflicts to the Fund's board of trustees, and (c) provide the 
board, at least annually, with all information reasonably necessary 
for the board to consider any issues raised by such existing or 
potential conflicts and any other information and reports that the 
board may reasonably request, (d) ensure that the Plan votes Fund 
shares as required by applicable law and governing Plan documents.
    13. In the event that a conflict of interest arises between plan 
investors and VA owners or other investors in the Fund, each Plan 
will, at its own expense, take whatever action is necessary to 
remedy such conflict as it adversely affects that Plan or 
participants in that Plan up to and including (1) establishing a new 
registered management investment company, and (2) withdrawing Plan 
assets subject to the conflict from the Fund and reinvesting such 
assets in a different investment medium (including another portfolio 
of the Fund) or submitting the question of whether such withdrawal 
should be implemented to a vote of all affected plan participants, 
and, as appropriate, segregating the assets of any group of such 
participants that votes in favor of such withdrawal, or offering to 
such participants the option of making such a change. Each Plan will 
carry out the responsibility to take the foregoing action with a 
view only to the interests of the plan investors in its Plan. 
Notwithstanding the foregoing, no Plan will be obligated to 
establish a new funding medium for any group of participants if an 
offer to do so has been declined by a vote of a majority of the 
Plan's participants adversely affected by the conflict.
    14. If a material irreconcilable conflict arises because of a 
Plan trustee's (or other fiduciary's) decision to disregard the 
voting instructions of Plan participants (if such Plan should 
provide voting rights to its participants) and that decision 
represents a minority position or would preclude a majority vote at 
any shareholder meeting, then, at the request of the Fund's board of 
trustees, the Plan will redeem the shares of the Fund to which the 
disregarded voting instructions relate. No charge or penalty, 
however, will be imposed in connection with such a redemption.
    15. The Fund will comply with all the provisions of the 1940 Act 
relating to security holder (i.e., persons such as VLI owners and VA 
owners or participants in plans that provide participants with 
voting rights) voting including Sections 16(a), 16(b) (when 
applicable) and 16(c) (even though the Fund is not a trust of the 
type described therein).

    Applicants also represent that, with regard to the reliance of the 
future accounts (including their life insurance company depositors) on 
the section (6(c) exemptions requested in the application, the Fund 
will only sell shares to future accounts if the life insurance company 
depositors enter into a participation agreement with the Fund requiring 
the depositor to comply with conditions 3, 4, 5, 6, 7, 8 and 11 in the 
same manner as will CUNA Mutual Life. Likewise, the Fund will only sell 
shares to unaffiliated plans holding 10% or more of the shares of any 
investment portfolio of the Fund if such plans enter into a 
participation agreement with the Fund requiring the trustees or other 
appropriate plan fiduciaries to comply with conditions 8, 12, 13, and 
14 in the same manner as will the Plans.

B. Request for Exemptions Under Section 17(b)

    1. CIMCO and the Plans request that the Commission issue an order 
pursuant to section 17(b) of the 1940 Act exempting them from the 
provisions of section 17(a) of the 1940 Act to the extent necessary to 
permit the Plans to purchase shares of the Fund with investment 
securities of the Plans. Section 17(a)(1) of the 1940 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 1940 Act generally prohibits the persons 
described above, acting as principals, from knowingly purchasing any 
security or other property from the registered investment company.
    2. Section 17(b) of the 1940 Act provides that the Commission may, 
upon application, grant an order

[[Page 41114]]

exempting any transaction from the prohibitions of section 17(a) if the 
evidence establishes that: (i) 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; (ii) the proposed transaction is consistent with the policy 
of each registered investment company concerned, as recited in its 
registration statement and reports filed under the 1940 Act; and (iii) 
the proposed transaction is consistent with the general purposes of the 
1940 Act.
    3. Section 2(a)(3) of the 1940 Act defines the term ``affiliated 
person of another person'' in relevant part as: ``(A) any person 
directly or indirectly owning, controlling, or holding with power to 
vote, 5 per centum or more of the outstanding voting securities of such 
other person; (B) any person 5 per centum or more of whose outstanding 
voting securities are directly or indirectly owned, controlled, or held 
with power to vote, by such person; (C) any person directly or 
indirectly controlling, controlled by, or under common control with, 
such other person.* * *''
    4. CIMCO and the Plans assert that since a person under common 
control with a registered investment company is an affiliated person of 
that investment company, CIMCO and the CUNA Mutual Life Plans are 
affiliated persons of the Fund and of all of its investment portfolios. 
In addition, because CUNA Mutual Life owns of record more than 5% of 
the shares of each of the Fund's investment portfolios, CUNA Mutual 
Life is an affiliated person of the Fund and each of the Fund's 
investment portfolios. The Plans' proposal to purchase Fund shares with 
investment securities would entail the sale of such securities by the 
Plans (or by CIMCO and the Plans), acting as principal, to the Fund and 
therefore would contravene section 17(a).
    5. Because each person who is under common control with a 
registered investment adviser is an affiliated person of that adviser, 
the CUNA Mutual Plans are affiliated persons of an affiliated person of 
the Fund.
    6. CIMCO and the Plans assert that because CUNA Mutual Life owns of 
record all shares of the Fund and because section 2(a)(9) of the 1940 
Act establishes a presumption that a person owning 25% or more of 
another person's outstanding voting securities controls the latter 
person, the Fund and each of its investments portfolios is arguably 
under the control of CUNA Mutual Life notwithstanding the fact that 
variable contract owners may be considered the beneficial owners of any 
such shares. CIMCO and the Plans further submit that, because CIMCO and 
the CUNA Mutual Life Plans are controlled by CUNA Mutual Life, they, 
the Fund, and the Fund's portfolios are under the common control of 
CUNA Mutual Life. Because CIMCO is also controlled by CUNA Mutual as 
are the CUNA Mutual Plans, CIMCO and the CUNA Mutual Plans are under 
common control.
    7. CIMCO and the Plans represent that the terms of the proposed 
transactions as set froth in the application, including the 
consideration to be paid and received: (i) Are reasonable and fair and 
do not involve overreaching on the part of any person concerned; (ii) 
are consistent with the policies of the Fund and of its Capital 
Appreciation Stock Fund, Growth and Income Stock Fund, Balanced Fund, 
Bond Fund and its Money Market Fund, as recited in its current 
registration statement and reports filed under the 1940 Act; and (iii) 
are consistent with the general purposes of the 1940 Act.
    8. Subject to certain enumerated conditions, Rule 17a-7 under the 
1940 Act exempts from the prohibitions of section 17(a) a purchase or 
sale transaction between: (i) Registered investment companies or 
separate series of registered investment companies, which are 
affiliated persons, or affiliated persons of affiliated persons, of 
each other, (ii) between separate series of a registered investment 
company; or (iii) between a registered investment company or a separate 
series of a registered investment company and a person which is an 
affiliated person of such registered investment company (or affiliated 
person of such person) solely by reason of having a common investment 
adviser or investment advisers which are affiliated persons of each 
other, common directors, and/or common officers
    9. CIMCO and the CUNA Mutual Plans submit that they cannot rely on 
Rule 17a-7 because they are not affiliated persons of the Fund (or of 
the Bond Fund, Money Market Fund or the Treasury 2000 fund) solely by 
reason of having acommon investment adviser or affiliated investment 
advisers, common directors, and/or common officers. Likewise, the CUNA 
Mutual Plans cannot rely on Rule17a-7 because they are not affiliated 
persons of an affiliated person of the Fund solely by reason of having 
a common investment adviser or affiliated investment advisers, common 
directors, and/or common officers. Moreover, CIMCO and the Plans also 
note that since the proposed purchase of Fund shares by the Plans 
involves the purchase and sale of securities for securities, the 
proposed transaction does not meet the condition of Rule 17a-7 that the 
transaction be a purchase or a sale for no consideration other than 
cash payment against prompt delivery of a security for which market 
quotations are readily available.
    10. CIMCO and the Plans maintain that the terms of the proposed 
transactions, including the consideration to be received by the Fund, 
are reasonable, fair, and do not involve overreaching by investment 
company affiliates principally because the transactions will conform in 
all material respects with the substance of all but one of the 
conditions enumerated in Rule 17a-7. CIMCO and the Plans assert that 
where, as here, they or the relevant investment company would comply in 
substance with, but cannot literally meet all of the requirements of, 
Rule 17a-7, the Commission should consider the extent to which they 
would meet the Rule 17a-7 or other similar conditions, and issue an 
order if the protections of Rule 17a-7 would be provided in substance.
    11. CIMCO and the Plans submit that the proposed transactions would 
offer to the Fund the same degree of protection from overreaching that 
Rule 17a-7 offers to investment companies generally in connection with 
qualifying non-investment company affiliates of such investment 
companies. Although the transactions will not be for cash, each will be 
effected based upon: (i) The independent market price of the Plans' 
investment securities valued as specified in Rule 17a-7(b), and (ii) 
the net asset value per share of the Capital Appreciation Stock Fund, 
Growth and Income Stock Fund, Balanced Fund, Bond Fund or the Money 
Market Fund, valued in accordance with the procedures disclosed in the 
Fund's registration statement and as required by Rule 22c-1 under the 
1940 Act. CIMCO and the Plans represent that no brokerage commission, 
fee, or other remuneration will be paid to any party in connection with 
the proposed transactions. In addition, although the board of trustees 
of the Fund will not adopt specific procedures to govern the proposed 
transactions (because there will be at most only one such transaction 
for each Plan), it will scrutinize and specifically approve by 
resolution each such transaction, including the price to be paid for 
the Fund's shares and the nature and quality of the securities offered 
in payment for such shares.
    12. CIMCO and the Plans represent that the proposed sale of 
additional shares is consistent with the investment

[[Page 41115]]

policy of the Capital Appreciation Stock Fund, Growth and Income Stock 
Fund, Balanced Fund, Bond Fund and Money Market Fund, as recited in the 
Fund's registration statement, and the sale of shares for investment 
securities, as contemplated by the proposed transactions, is also 
consistent with these investment policies provided that: (i) The shares 
are sold at net asset value, and (ii) the securities are of the type 
and quality that each investment portfolio would have acquired with the 
sale proceeds had the shares been sold for cash. As recited in the 
conditions listed below, the Fund's board of trustees will examine the 
portfolios of each CUNA Mutual Life and CUNA Mutual Defined 
Contribution Plan, capital appreciation stock investment portfolio, 
growth and income stock investment portfolio, balanced investment 
portfolio, bond investment portfolio and money market portfolio as well 
as any securities offered by the other Plans and only approve the 
proposed transactions if they, including a majority of these trustees 
who are not interested persons of the Fund, or interested persons of 
such persons, determine that (i) and (ii) would be met.
    13. The proposed transactions, as described herein, are consistent 
with the general purposes of the 1940 Act as stated in the Findings and 
Declaration of Policy in Section 1 of the 1940 Act. The proposed 
transactions do not present any of the conditions or abuses that the 
1940 Act was designed to prevent.
    14. CIMCO and the Plans also assert that the proposed transactions, 
in addition to meeting the standards of Section 17(b) vis-a-vis the 
Fund, are fair and reasonable to the Plans and are in the best 
interests of the Plan participants as determined by the plan committees 
of each Plan. In particular, CIMCO and the Plans submit that the 
proposed transactions are consistent with the policy and purpose of the 
Plans as recited in each Plan's plan documents, and are consistent with 
the provisions of ERISA (applicable to defined contribution plans) 
regarding reporting and disclosure, participation and vesting, funding, 
fiduciary responsibility, administration and enforcement.
    15. CIMCO and the Plans represent that the plan committee of each 
Plan will determine that the proposed transactions are in the best 
interests of participants in their Plan, and are consistent with the 
policies and purpose of the Plan as recited in the Plans themselves. In 
particular, the plan committee of each CUNA Mutual Life Defined 
Contribution Plan and CUNA Mutual Defined Contribution Plan will 
determine that the Fund's Capital Appreciation Stock Fund has 
substantially the same investment objects as the Plans' capital 
appreciation stock investment portfolio, the Fund's Growth and Income 
Stock Fund has substantially the same investment objects as the Plans' 
growth and income stock investment portfolio, the Fund's Balanced Fund 
has substantially the same investment objectives as the Plans' balanced 
investment portfolio, the Fund's Bond Fund has substantially the same 
investment objectives as the Plans' bond investment portfolio, and that 
the Fund's Money Market Fund has substantially the same investment 
objectives as the Plans' money market investment portfolio.
    16. CIMCO and the Plans represent that Plan participants will 
benefit from the fact that the expense of liquidating Plan assets, 
purchasing Fund shares with cash, and reinvesting the cash in 
substantially the same assets, would be avoided. CIMCO and the Plans 
further represent that, in light of the fact that the plan committees 
of the CUNA Mutual Life and the CUNA Mutual Defined Contribution Plans 
will have determined that the Fund's Capital Appreciation Stock Fund, 
Growth and Income Stock Fund, Balanced Fund, Bond Fund and Money Market 
Fund should replace the Plans' current capital appreciation stock 
investment portfolio, growth and income stock investment portfolio, 
balanced investment portfolio, bond investment portfolio and money 
market investment portfolio, respectively, the proposed transactions 
would greatly diminish the expense of this replacement to Plan 
participants.
    17. CIMCO and the Plans represent that the proposed transactions 
are consistent with the provisions of ERISA applicable to defined 
contribution plans regarding reporting and disclosure, participation 
and vesting, funding, fiduciary responsibility, administration and 
enforcement.
    18. CIMCO and the plans represent and agree that if the exemptions 
requested in the application pursuant to section 17(b) of the 1940 Act 
are granted, the Plans will purchase shares of the Fund with investment 
securities only if the following conditions are met:

    1. The transactions are effected at the ``independent current 
market price'' of the investment securities as that term is defined 
in Rule 17a-7 under the 1940 Act, and at the net asset value of 
appropriate Fund shares next computed after the closing of the 
transaction.
    2. No brokerage commission, fee (except for customary transfer 
fees), or other remuneration is paid in connection with the 
transactions.
    3. The Fund's board of trustees, including a majority of those 
trustees who are not interested persons of the Fund, or interested 
persons of such persons, reviews the terms of the transactions, the 
composition of the investment portfolios of the Plans to be used as 
the purchase price in the transactions, and the value (and the 
valuation method) of the investment securities comprising the 
purchase price in the transactions; and adopts a resolution 
determining separately for each transaction, that the transaction is 
reasonable and fair to the existing investors in the appropriate 
Fund investment portfolio, that the transaction would not subject 
the Fund to overreaching and that the investment securities offered 
by the Plan trustees on behalf of each Plan in that transaction are 
consistent with the investment objective, policies and restrictions 
of the related Fund investment portfolio.
    4. The Fund agrees in writing that it will maintain and preserve 
for a period of not less than six years from the end of the fiscal 
year in which the transaction occurs, the first two years in an 
easily accessible place, a written record of each such transaction 
setting forth a description of the investment securities used as the 
purchase price for Fund shares, the terms of such transaction, and 
the information and materials upon which the determinations 
described in condition 3 above were made.

Conclusion

    1. CIMCO and the Plans request an order of the Commission pursuant 
to section 17(b) of the 1940 Act, exempting them from section 17(a) of 
the 1940 Act to the extent necessary to permit the Plans to purchase 
shares of the Fund with investment securities of the Plans. CIMCO and 
the Plans represent that, for the reasons stated above, the terms of 
the proposed transactions, including the consideration to be paid and 
received, are reasonable and fair to the Fund, to its Capital 
Appreciation Stock Fund, its Growth and Income Stock Fund, its Balanced 
Fund, its Bond Fund and its Money Market Fund, to shareholders and the 
variable contract owners invested in each of these Funds and do not 
involve overreaching on the part of any person concerned. Furthermore, 
the proposed transactions will be consistent with the policies of the 
Fund and of its Capital Appreciation Stock Fund, its Growth and Income 
Stock Fund, its Balanced Fund, its Bond Fund and its Money Market Fund 
as stated in the Fund's current registration statement and reports 
filed under the 1940 Act and with the general purposes of the 1940 Act.
    2. In addition, the section 6(c) Applicants request an order of the 
Commission pursuant to section 6(c) of the 1940 Act, exempting them and 
any future accounts from the provisions of

[[Page 41116]]

sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rule 6e-
3(T)(b)(15) thereunder, to the extent necessary for the Account and any 
future accounts to hold shares of the Fund at the same time that the 
Plans and the unaffiliated plans hold shares of the Fund or for the 
Account and any unaffiliated future account simultaneously hold shares 
of the Fund. The section 6(c) Applicants submit that, for the reasons 
stated above, the requested exemptions are appropriate in the public 
interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the 1940 Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 97-20048 Filed 7-30-97; 8:45 am]
BILLING CODE 8010-01-M