Federal Register / Vol. 62, No. 238 / Thursday, December 11, 1997 / Notices 65289

located at General Atomics’ site in San

Diego, California.

A copy of the application is available

for public inspection at the

Commission’s Public Document Room,

the Gelman Building, at 2120 L Street,

NW., Washington, DC 20037.

Dated at Rockville, Maryland, this 4th day

of December 1997.

For the Nuclear Regulatory Commission.

Seymour H. Weiss,

Director, Non-Power Reactors and

Decommissioning Project Directorate,

Division of Reactor Program Management,

Office of Nuclear Reactor Regulation.

[FR Doc. 97–32415 Filed 12–10–97; 8:45 am]

BILLING CODE 7590–01–P

RAILROAD RETIREMENT BOARD

Sunshine Act Meeting

Notice is hereby given that the

Railroad Retirement Board will hold a

meeting on December 17, 1997, 9:00

a.m., at the Board’s meeting room on the

8th floor of its headquarters building,

844 North Rush Street, Chicago, Illinois,

60611. The agenda for this meeting

follows:

Portion open to the public:

(1) Request to Post a GS–12 District

Manager Position for the Little Rock,

Arkansas District Office

(2) Federal Ban on Smoking on

Federal Property

(3) Proposed Flexitime/Variable

Workweek Changes

(4) Strategic IRM Plan—1977–2002

(5) Regulations:

A. Part 209.12, Railroad Employers’

Reports and Responsibilities

B. Part 295, Payments Pursuant to

Court Decree or Court-Approved

Property Settlement

(6) Year 2000 Issues

(7) Labor Member Truth in Budgeting

Status Report

Portion closed to the public:

(A) SES Performance Appraisals for

FY-1997—Memo from Chairman, PRB.

(B) SES Recertification for 1997.

The person to contact for more

information is Beatrice Ezerski,

Secretary to the Board, Phone No. 312–

751–4920.

Dated: December 8, 1997.

Beatrice Ezerski,

Secretary to the Board.

[FR Doc. 97–32521 Filed 12–9–97; 10:41 am]

BILLING CODE 7905–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22925; File No. 912–10606]

Dreyfus Variable Investment Fund, et

al.

December 4, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or the

‘‘Commission’’).

ACTION: Notice of application for an

amended order under Section 6(c) of the

Investment Company Act of 1940 (the

‘‘1940 Act’’) for exemptions from

Sections 9(a), 13(a), 15(a) and 15(b) of

the 1940 Act and Rules 6e–2(b)(15) and

6e–3(T)(b)(15) thereunder.

SUMMARY OF APPLICATION: Applicants

seek an amended order to permit shares

of the Dreyfus Variable Investment Fund

and the Dreyfus Life and Annuity Index

Funds, Inc. (d\b\a Dreyfus Stock Index

Fund) to be sold to and held by

qualified pension and retirement plans

outside the separate account context.

APPLICANTS: Dreyfus Variable

Investment Fund (‘‘DVIF’’), Dreyfus Life

and Annuity Index Fund, Inc. (d\b\a

Dreyfus Stock Index Fund) (‘‘DSIF’’)

(together, the ‘‘Funds’’) and The Dreyfus

Corporation (‘‘Dreyfus’’).

FILING DATE: The application was filed

on April 4, 1997, and amended and

restated on October 10, 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,

in person or by mail. Hearing requests

must be received by the Commission by

5:30 p.m., on December 29, 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, 200 Park Avenue, New

York, NY 10166.

FOR FURTHER INFORMATION CONTACT:

Zandra Y. Bailes, Senior Counsel, or

Mark C. Amorosi, Branch Chief,

Division of Investment Management,

Office of Insurance Products, 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, 450 Fifth Street, NW.,

Washington, DC 20549 (tel. (202) 942–

8090).

Applicants’ Representations

1. DVIF is a Massachusetts business

trust registered under the 1940 Act as an

open-end diversified management

investment company. It presently

consists of eleven classes of stock and

may in the future add one or more

additional classes of stock.

2. DSIF is a Maryland corporation

registered under the 1940 Act as an

open-end non-diversified management

investment company. DSIF is a single

portfolio mutual fund that offers only

one class of stock for investment.

3. Dreyfus, an investment adviser

registered under the Investment

Advisers Act of 1940, serves as the

investment adviser for each Fund. Fayez

Sarofim & Co. is the subinvestment

adviser for DVIF’s Capital Appreciation

Portfolio. Mellon Equity Associates is

DSIF’s index fund manager.

4. On December 23, 1987, an order

was issued granting exemptive relief to

permit shares of DVIF to be sold to and

held by variable annuity and variable

life insurance separate accounts of both

affiliated and unaffiliated life insurance

companies (Release No. IC–16188, File

No. 812–6698) (the ‘‘DVIF Order’’).

Similarly, on August 23, 1989, an order

was issued to DSIF granting identical

exemptive relief (Release No. IC–17118,

File No. 812–7253) (the ‘‘DESIF Order’’)

(together, the DVIF Order and the DSIF

Order, the ‘‘Original Orders’’).

5. The Original Orders allow DVIF

and DSIF to offer their shares to

insurance companies as the investment

vehicle for their separate accounts

supporting variable annuity contracts,

schedule premium variable life

insurance contracts and flexible

premium variable life insurance

contracts (collectively, ‘‘Variable

Contracts’’). Separate accounts owning

shares of a Fund and their insurance

company depositors are referred to

herein as ‘‘Participating Separate

Accounts’’ and ‘‘Participating Insurance

Companies,’’ respectively.

6. The Original orders do not

expressly address the sale of shares of

the Funds to qualified pension and

retirement plans outside of the separate

account context (‘‘Qualified Plan’’).

Applicants propose that the Funds be

permitted to offer and sell shares of the

Funds to Qualified Plans.

Applicants’ Legal Analysis

1. Applicants request that the

Commission issue an amended order
65290 Federal Register / Vol. 62, No. 238 / Thursday, December 11, 1997 / Notices

pursuant to Section 6(c) of the 1940 Act,

exempting scheduled premium variable

life insurance separate accounts and

flexible premium variable life insurance

separate accounts of Participating

Insurance Companies (and, to the extent

necessary, any principal underwriter

and depositor of such an account) and

the Applicants from Sections 9(a), 13(a),

15(a) and 15(b) of the 1940 Act, and

rules 6e–2(b)(15) and 6e–3(T)(b)(15)

(and any comparable rule) thereunder,

respectively, to the extent necessary to

permit shares of the Funds to be sold to

and held by qualified Plans.

2. Section 6(c) of the 1940 Act

provides in part that the Commission,

by order upon application, may

conditionally or unconditionally

exempt any person, security or

transaction, or any class or classes of

persons, securities or transactions from

any provisions of the 1940 Act or the

rules or regulations thereunder, if and to

the extent that such exemption is

necessary or 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.

3. In connection with the funding of

scheduled premium variable life

insurance contracts issued through a

separate account registered under the

1940 Act as a unit investment trust,

Rule 6e–2(b)(15) provides partial

exemptions from Section 9(a), 13(a),

15(a) and 15(b) of the 1940 Act. These

exemptions are available, however, only

where the management investment

company underlying the separate

account (‘‘underlying fund’’) offers its

shares ‘‘to variable life insurance

separate accounts of the life insurer, or

of any affiliated life insurance

company.’’ The use of a common

management investment company as the

underlying investment medium for both

variable annuity and variable life

insurance separate accounts of a single

insurance company (or of two or more

affiliated insurance companies) is

referred to as ‘‘mixed funding.’’ The use

of a common management investment

company as the underlying investment

medium for variable annuity and/or

variable life insurance separate accounts

of unaffiliated insurance companies is

referred to as ‘‘shared funding/’’

Therefore, Rule 6e–2 does not permit

either mixed funding or shared funding

because the relief granted by Rule 6e–

2(b)(15) is not available with respect to

a scheduled premium variable life

insurance separate account that owns

shares of an underlying fund that also

offers its shares to a variable annuity or

a flexible premium variable life

insurance separate account of the same

company or of any affiliated life

insurance company. Rule 6e–2(b)(15)

also does not permit the sale of shares

of the underlying fund to Qualified

Plans.

4. In connection with flexible

premium variable life insurance

contracts issued through a separate

account registered under the 1940 Act

as a unit investment trust, Rule 6e–

3(T)(b)(15) also provides partial

exemptions from Sections 9(a), 13(a),

15(a) and 15(b) of the 1940 Act. These

exemptions, however, are available only

where the separate account’s underlying

fund offers its shares ‘‘exclusively to

separate accounts of the life insurer, or

of any affiliated life insurance company,

offering either scheduled contracts or

flexible contracts, or both; or which also

offer their shares to variable annuity

separate accounts of the life insurer or

of an affiliated life insurance company.’’

Therefore, Rule 6e–3(T) permits mixed

funding but does not permit shared

funding and also does not permit the

sale of shares of the underlying fund to

Qualified Plans. As noted above, the

Original Orders granted the Funds

exemptive relief to permit mixed and

shared funding, but did not expressly

address the sale of shares of the Funds

to Qualified Plans.

5. Applicants note that if the Funds

were to sell their shares only to

Qualified Plans, exemptive relief under

Rule 6e–2 and Rule 6e–3(T) would not

be necessary. The relief provided for

under Rule 6e–2(b)(15) and Rule 6e–

3(T)(b)(15) does not relate to qualified

pension and retirement plans or to a

registered investment company’s ability

to sell its shares to such plans.

6. Applicants state that changes in the

federal tax law have created the

opportunity for each Fund to increase

its asset base through the sale of shares

of each Fund Qualified Plans. Section

817(h) of the Internal Revenue Code of

1986, as amended (the ‘‘Code’’), imposes

certain diversification standards on the

assets underlying Variable Contracts.

Treasury Regulations provide that, to

meet the diversification requirements,

all of the beneficial interests in the

underlying investment company must

be held by the segregated asset accounts

of one or more life insurance

companies. Notwithstanding this, the

Treasury Regulations also contain an

exception to this requirement that

permits trustees of a Qualified Plan to

hold shares of an investment company,

the shares of which are also held by

insurance company segregated asset

accounts, without adversely affecting

the status of the investment company as

an adequately diversified underlying

investment of Variable Contracts issued

through such segregated asset accounts

(Treas. Reg. 1.817–5(f)(3)(iii)).

7. Applicants state that the

promulgation Rules 6e–2(b)(15) and 6e–

3(T)(b)(15) under the 1940 Act preceded

the issuance of these Treasury

Regulations. Thus, the sale of shares of

the same investment company to both

separate accounts and Qualified Plans

was not contemplated at the time of the

adoption of Rules 6e–2(b)(15) and 6e–

3(T)(b)(15).

8. Section 9(a) provides that it is

unlawful for any company to serve as

investment adviser or principal

underwriter of any registered open-end

investment company if an affiliated

person of that company is subject to a

disqualification enumerated in Section

9(a) (1) or (2). Rules 6e–2(b)(15) and 6e–

3(T)(b)(15) provide exemptions from

Section 9(a) under certain

circumstances, subject to the limitations

on mixed and shared funding. These

exemptions limit the application of the

eligibility restrictions to affiliated

individuals or companies that directly

participate in the management of the

underlying portfolio investment

company.

9. Applicants state that the relief

granted in Rules 6e–2(b)(15) and 6e–

3(T)(b)(15) from the requirements of

Section 9 limits, in effect, the amount of

monitoring of an insurer’s personnel

that would otherwise be necessary to

ensure compliance with Section 9 to

that which is appropriate in light of the

policy and purposes of Section 9.

Applicants state that those Rules

recognize 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 the

provisions of Section 9(a) to the many

individuals involved in an insurance

company complex, most of whom

typically will have no involvement in

matters pertaining to investment

companies funding the separate

accounts.

10. Applicants previously requested

and received relief from Section 9(a)

and Rules 6e–2(b)(15) and 6e–

3(T)(b)(15) to the extent necessary to

permit mixed and shared funding.

Applicants maintain that the relief

previously granted from Section 9(a)

will in no way be affected by the

proposed sale of shares of the Funds to

Qualified Plans. Those individuals who

participate in the management or

administration of the Funds will remain

the same regardless of which Qualified

Plans use such Funds. Applicants

maintain that the requirements of

Section 9(a) because of investment by

Qualified Plans would not serve any

regulatory purpose. Moreover, Qualified
Federal Register / Vol. 62, No. 238 / Thursday, December 11, 1997 / Notices 65291

Plans, unlike separate accounts, are not

themselves investment companies, and

therefore are not subject to Section 9 of

the 1940 Act. Furthermore, it is not

anticipated that a Qualified Plan would

be an affiliated person of either Fund by

virtue of its shareholders.

11. Applicants state that Rules 6e2(b)(15)(iii) and 6e-3(T)(b)(15)(iii)

provide exemptions from the passthrough voting requirement with respect

to several significant matters, assuming

the limitations on mixed and shared

funding are observed. Rules 6e2(b)(15)(iii)(A) and 6e-3(T)(b)(15)(iii)(A)

provide that the insurance company

may disregard the voting instructions of

its contractowners with respect to the

investments of an underlying fund or

any contract between a fund and its

investment adviser, when required to do

so by an insurance regulatory authority

(subject to the provisions of paragraphs

(b)(5)(i) and (b)(7)(ii)(A) of the Rules).

Rules 6e-2(b)(15)(iii)(B) and 6e3(T)(b)(15)(iii)(A)(2) provide that the

insurance company may disregard

contractowner’s voting instructions if

the contractowners initiate any change

in such company’s investment policies,

principal underwriter or any investment

adviser (provided that disregarding such

voting instructions is reasonable and

subject to the other provisions of

paragraphs (b)(5)(ii) and (b)(7)(ii)(B) and

(C) of the Rules).

12. Applicants assert that Qualified

Plans, which are not registered as

investment companies under the 1940

Act, have no requirement to pass

through the voting rights to plan

participants. Applicable law expressly

reserves voting rights to certain

specified persons. Under Section 403(a)

of the Employment Retirement Income

Security Act (‘‘ERISA’’), shares of a fund

sold to a Qualified Plan must be held by

the trustees of the Qualified Plan.

Section 403(a) also provides that the

trustee(s) must have exclusive authority

and discretion to manage and control

the Qualified Plan with two exceptions.

(1) When the Qualified Plan expressly

provides that the trustee(s) are subject to

the direction of a named fiduciary who

is not a trustee, in which case the

trustees are subject to proper directions

made in accordance with the terms of

the Qualified Plan and not contrary to

ERISA, and (2) when the authority to

manage, acquire or dispose of assets of

the Qualified Plan is delegated to one or

more investment managers pursuant to

Section 402(c)(3) of ERISA. Unless one

of the two above exceptions stated in

Section 403(a) applies, Qualified Plan

trustees have the exclusive authority

and responsibility for voting proxies.

Where a named fiduciary to a Qualified

Plan appoints an investment manager,

the investment manager has the

responsibility to vote the share held

unless the right to vote such shares is

reserved to the trustees or the named

fiduciary. Where a Qualified Plan does

not provide participants with the right

to give voting instructions, the

Applicants do not see any potential for

material irreconcilable conflicts of

interest between or among variable

contract holders and Qualified Plan

investors with respect to voting of the

respective Fund’s shares. Accordingly,

Applicants state that unlike the case

with insurance company separate

accounts, the issue of the resolution of

material irreconcilable conflicts with

respect to voting is not present with

respect to such Qualified Plans since the

Qualified Plans are not entitled to pass

through voting privileges.

13. Even if a Qualified Plan were to

hold a controlling interest in a Fund, the

Applicants argue that such control

would not disadvantage other investors

in such Fund to any greater extent than

is the case when any institutional

shareholder holds a majority of the

voting securities of any open-end

management investment company. In

this regard, the Applicants submit that

investment in a Fund by a Qualified

Plan will not create any of the voting

complications occasioned by mixed

funding or shared funding. Unlike

mixed or shared funding, Qualified Plan

investor voting rights cannot be

frustrated by veto rights of insurers or

state regulators.

14. Applicants state that some of the

Qualified 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.

Where a Qualified Plan provides

participants with the right to give voting

instructions, the Applicants see no

reason to believe that participants in

Qualified Plans generally or those in a

particular Qualified Plan, either as a

single group or in combination with

participants in other Qualified Plans,

would vote in a manner that would

disadvantage Variable Contract holders.

The purchase of shares of the Funds by

Qualified Plans that provide voting

rights does not present any

complications not otherwise occasioned

by mixed or shared funding.

15. Applicants state that they do not

believe that the sale of the shares of the

Funds to Qualified Plans will increase

the potential for material irreconcilable

conflicts of interest between or among

different types of investors. In

particular, Applicants see very little

potential for such conflicts beyond that

which would otherwise exist between

variable annuity and variable life

insurance contractowners.

16. As noted above, Section 817(h) of

the Code imposes certain diversification

standards on the underlying assets of

variable contracts held in an underlying

mutual fund. The Code provides that a

variable contract shall not be treated as

an annuity contract or life insurance, as

applicable, for any period (and any

subsequent period) for which the

investments are not, in accordance with

regulations prescribed by the Treasury

Department, adequately diversified.

17. Treasury Department Regulations

issued under Section 817(h) provide

that, in order to meet the statutory

diversification requirements, all of the

beneficial interests in the investment

company must be held by the segregated

asset accounts of one or more insurance

companies. However, the Regulations

contain certain exceptions to this

requirement, one of which allows shares

in an underlying mutual fund to be held

by the trustees of a qualified pension or

retirement plan without adversely

affecting the ability of shares in the

underlying fund also to be held by

separate accounts of insurance

companies in connection with their

variable contracts (Treas. Reg. 1.817–

5(f)(3)(iii)). Thus, Treasury Regulations

specifically permit ‘‘qualified pension

or retirement plans’’ and separate

accounts to invest in the same

underlying fund. For this reason,

Applicants have concluded that neither

the Code, nor the Treasury Regulations

or revenue rulings thereunder, present

any inherent conflicts of interest.

18. Applicants note that while there

are differences in the manner in which

distributions from Variable Contracts

and Qualified Plans are taxed, these

differences will have no impact on the

Funds. When distributions are to be

made, and a Separate Account or

Qualified Plan is unable to net purchase

payments to made the distributions, the

Separate Account and Qualified Plan

will redeem shares of the Funds at their

respective net asset value in conformity

with Rule 22c-1 under the 1940 Act

(without the imposition of any sales

charge) to provide proceeds to meet

distribution needs. A Qualified Plan

will make distributions in accordance

with the terms of the Qualified Plan.

19. Applicants state that it is possible

to provide an equitable means of giving

voting rights to Participating Separate

Account contractowners and to

Qualified Plans. In connection with any

meeting of shareholders, the Funds will

inform each shareholder, including each

Participating Insurance Company and

Qualified Plan, of information necessary
65292 Federal Register / Vol. 62, No. 238 / Thursday, December 11, 1997 / Notices

for the meeting, including their

respective share of ownership in the

relevant Fund. Each Participating

Insurance Company will then solicit

voting instructions in accordance with

Rules 6e-2 and 6e-3(T), as applicable,

and its participation agreement with the

relevant Fund. Shares held by Qualified

Plans will be voted in accordance with

applicable law. The voting rights

provided to Qualified Plans with respect

to share of the Funds would be no

different from the voting rights that are

provided to Qualified Plans with respect

to share of funds sold to the general

public.

20. Applicants have concluded that

even if there should arise issues with

respect to a state insurance

commissioner’s veto powers over

investment objectives where the

interests of contractowners and the

interests of Qualified Plans are in

conflict, the issues can be almost

immediately resolved since the trustees

of (or participants in) the Qualified

Plans can, on their own, redeem the

shares out of the Funds. Applicants note

that state insurance commissioners have

been given the veto power in

recognition of the fact that insurance

companies usually cannot simply

redeem their separate accounts out of

one fund and invest in another.

Generally, time-consuming, complex

transactions must be undertaken to

accomplish such redemptions and

transfers. Conversely, the trustees of

Qualified Plans or the participants in

participant-directed Qualified Plans can

make the decision quickly and redeem

their interest in the Funds and reinvest

in another funding vehicle without the

same regulatory impediments faced by

separate accounts or, as is the case with

most Qualified Plans, even hold cash

pending suitable investment.

21. Applicants also state that they do

not see any greater potential for material

irreconcilable conflicts arising between

the interests of participants under

Qualified Plans and contractowners of

Participating Separate Accounts from

possible future changes in the federal

tax laws than that which already exist

between variable annuity

contractowners and variable life

insurance contractowners.

22. Applicants state that the sale of

shares of the Funds to Qualified Plans

in addition to separate accounts of

Participating Insurance Companies will

result in an increased amount of assets

available for investment by the Funds.

This may benefit variable

contractowners by promoting economies

of scale, by permitting increased safety

of investments through greater

diversification, and by making the

addition of new portfolios more feasible.

23. Applicants assert that, regardless

of the type of shareholders in each

Fund, Dreyfus is or would be

contractually and otherwise obligated to

manage each Fund solely and

exclusively in accordance with that

Fund’s investment objectives, policies

and restrictions as well as any

guidelines established by the Board of

Directors of such Fund (the ‘‘Board’’).

Dreyfus works with a pool of money and

does not take into account the identify

of the shareholders. Thus, each Fund

will be managed in the same manner as

any other mutual fund. Applicants

therefore see no significant legal

impediment to permitting the sale of

shares of the Funds to Qualified Plans.

Conditions for Relief

Applicants consent to the following

condition:

1. Any Qualified Plan that executes a

fund participation agreement upon

becoming an owner of 10% or more of

the assets of a Fund (a ‘‘Participant’’)

shall report any potential or existing

conflicts to the applicable Board. A

Participant will be responsible for

assisting the Board in carrying out its

responsibilities under these conditions

by providing the Board with all

information reasonably necessary for the

Board to consider any issues raised. If

pass-through voting is applicable, this

includes, but is not limited to, an

obligation by each Participant to inform

the Board whenever it has determined

to disregard the voting instructions of its

participants. The responsibility to report

such conflicts and information, and to

assist the Board will be the contractual

obligations of the Participant under its

agreement governing participation in

the Fund and such agreement shall

provide that such responsibilities will

be carried out with a view only to the

interests of participants in such

Qualified Plan.

2. Each Board will monitor its

respective Fund for the existence of any

material irreconcilable conflict among

the interests of the contractowners of all

the separate accounts investing in the

Fund and participants in Qualified

Plans investing in the Funds. 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 a

public ruling, private letter ruling, noaction or interpretive letter, or any

similar action by insurance, tax or

securities regulatory authorities; (c) an

administrative or judicial decision in

any relevant proceeding; (d) the manner

in which the investments of the Fund

are being managed; (e) a difference in

voting instructions given by variable life

insurance contract-owners; (f) a decision

by a Participating Insurance Company to

disregard the voting instructions of

contractowners; or (g) if applicable, a

decision by a Qualified Plan to

disregard the voting instructions of its

participants.

3. If it is determined by a majority of

a Board of a Fund, or by a majority of

its disinterested trustees or directors,

that a material irreconcilable conflict

exists, the relevant Qualified Plans

shall, at their expense and to the extent

reasonably practicable (as determined

by a majority of a the disinterested

trustees or directors), take whatever

steps are necessary to remedy or

eliminate the material irreconcilable

conflict. Such steps could include: (a)

Withdrawing the assets allocable to

some or all of the Qualified Plans from

the Fund or any portfolio thereof and

reinvesting such assets in a different

investment medium, which may include

another portfolio of a Fund; and (b)

establishing a new registered

management investment company or

managed separate account.

4. If a material irreconcilable conflict

arises because of a Qualified Plan’s

decision to disregard its participants’

voting instructions, if applicable, and

that decision represents a minority

position or would preclude a majority

vote, the Qualified Plan many be

required, at the election of the Funds, to

withdraw its investment in such Fund,

and no charge or penalty will be

imposed as a result of such withdrawal.

To the extent permitted by applicable

law, the responsibility of taking

remedial action in the event of a Board

determination of a material

irreconcilable conflict and bearing the

cost of such remedial action, will be a

contractual obligation of all Participants

under their agreements governing

participation in the Fund, and these

responsibilities, will be carried out with

a view only to the interests of

participants in such Qualified Plans. For

purposes of this condition, a majority of

the disinterested members of the

applicable Board will determine

whether or not any proposed action

adequately remedies any material

irreconcilable conflict, but in no event

will the relevant Fund, or Dreyfus be

required to establish a new funding

medium for any Variable Contract.

Further, no Qualified Plan shall be

required by this condition to establish a

new funding medium for any Qualified

Plan if: (a) A majority of its participants

materially and adversely affected by the
Federal Register / Vol. 62, No. 238 / Thursday, December 11, 1997 / Notices 65293

irreconcilable material conflict vote to

decline such offer or (b) pursuant to

governing Qualified Plan documents

and applicable law, the Qualified Plan

makes such decision without a vote of

its participants.

5. Any Board’s determination of the

existence of a material irreconcilable

conflict and its implications will be

made known promptly and in writing to

all Qualified Plans.

6. Each Qualified Plan will vote as

required by applicable law governing

Qualified Plan documents.

7. All reports of potential or existing

conflicts received by a Board and all

Board actions with regard or

determining the existence of a conflict

of interest, notifying Qualified Plans of

a conflict, and determining whether any

proposed action adequately remedies a

conflict, will be properly recorded in

the minutes of the appropriate Board or

other appropriate records, and such

minutes or other records shall be made

available to the Commission upon

request.

8. Each Fund will disclose in its

prospectus that: (a) Shares of the Fund

may be offered to insurance company

separate accounts on a mixed and

shared basis and to Qualified Plans; (b)

materials irreconcilable conflicts may

arise between the interests of various

contractowners participating in the

Fund and the interests of Qualified

Plans investing in the Fund; and (c) the

Board of such Fund will monitor events

in order to identify the existence of any

material conflict and determine what

action, if any, should be taken in

response to such material irreconcilable

conflict.

9. No less than annually, the

Participants shall submit to each Board

such reports, materials or data as the

Board may reasonably request so that

the Board may carry out fully the

obligations imposed upon it by the

conditions contained in the application.

Such reports, materials and data shall be

submitted more frequently if deemed

appropriate by the Board. The

obligations of the Participants to

provide these reports, material and data

shall be a contractual obligation of all

Participants under the agreements

governing their participation in the

Funds.

10. Neither Fund will accept a

purchase order from a Qualified Plan if

such purchase would make the

Qualified Plan shareholder an owner of

10% or more of the assets of such Fund

unless such Qualified Plan executes a

fund participation agreement with the

relevant Fund including the conditions

set forth herein to the extent applicable.

A Qualified plan will execute a

shareholder application containing an

acknowledge of this condition at the

time of its initial purchase of shares of

such Fund.

Conclusion

For the reasons summarized above,

Applicants assert that the requested

exemptions are appropriate in the

public interest and consistent with the

protection of investors of 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.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–32366 Filed 12–10–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22926; File No. 812–10782]

PBHG Insurance Series Fund, Inc., et

al.; Notice of Application

December 4, 1997.

AGENCY: Securities and Exchange

Commission (the ‘‘SEC’’ or the

‘‘Commission’’).

ACTION: Notice of application for an

order pursuant to Section 6(c) of the

Investment Company Act of 1940 (the

‘‘1940 Act’’).

SUMMARY OF APPLICATION: Applicants

seek an order pursuant to Section 6(c)

of the 1940 Act for exemptions from the

provisions of Sections 9(a), 13(a), 15(a)

and 15(b) of the 1940 Act and Rules 6e2(b)(15) and 6e-3(T)(b)(15) thereunder to

the extent necessary to permit shares of

any current or future series of the Fund

and shares of any other investment

company that is designed to fund

variable insurance products and for

which the Adviser, or any of its

affiliates, may serve now or in the

future, as investment adviser,

administrator, manager, principal

underwriter or sponsor (the Fund and

such other investment companies

referred to collectively as the ‘‘Insurance

Products Funds’’) to be offered and sold

to, and held by variable annuity and

variable life insurance separate accounts

of both affiliated and unaffiliated life

insurance companies (‘‘Participating

Insurance Companies’’) and qualified

pension and retirement plans outside of

the separate account context (‘‘Qualified

Plans’’ or ‘‘Plans’’).

APPLICANTS: PBHG Insurance Series

Fund, Inc. (the ‘‘Fund’’) and Pilgrim

Baxter & Associates, Ltd. (the

‘‘Adviser’’).

FILING DATE: The application was filed

on September 15, 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,

in person or by mail. Hearing requests

must be received by the Commission by

5:30 p.m. on December 29, 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 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 SEC.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, D.C. 20549.

Applicants, 1255 Drummers Lane, Suite

300, Wayne, PA 19087–1590.

FOR FURTHER INFORMATION CONTACT:

Megan L. 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, 450 Fifth Street, N.W.,

Washington, D.C. 20549 (tel. (202) 942–

8090).

Applicants’ Representations

1. The Adviser is registered as an

investment adviser under the

Investment Advisers Act of 1940 and

serves as the investment adviser for the

Fund.

2. The Fund, an open-end

management investment company, is a

Maryland corporation. The Fund

currently consists of six separate series

and may in the future issue shares of

additional series.

3. Shares of the Fund are currently

offered to separate accounts of

Participating Insurance Companies to

serve as investment vehicles for variable

annuity and variable life insurance

contracts (including single premium,

scheduled premium, modified single

premium and flexible premium

contracts) (collectively, ‘‘Variable

Contracts’’). These separate accounts

either will be registered as investment

companies under the 1940 Act or will

be exempt from such registration.

4. The Participating Insurance

Companies will establish their own