65364 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Notices

NewCo at cost to NewCo. NewCo will

also determine from time to time that it

is efficient and advantageous to have

certain development activities

performed by its own employees and/or

by unaffiliated third parties. The

arrangements with unaffiliated third

parties will be on a fee-for-service

negotiated basis at market rates.

III. Formation of EWG Subsidiaries of

NewCo

NewCo proposes to acquire securities

or interests in the business of one or

more EWGs, as the term is defined in

the Act (the ‘‘Exempt Subsidiaries’’),

either directly or indirectly through

project companies (‘‘Intermediate

Companies’’).

Intermediate Companies will be

special purpose subsidiaries formed to

engage exclusively in activities to

facilitate the consummation of

investments in EWGs. They may also

engage in development activities.

Intermediate Companies may acquire

interests in, finance the acquisition of

and hold the securities of EWGs.

Intermediate Companies will enhance

the ability of NewCo to respond quickly

to investment opportunities. An

Intermediate Company may be

organized at the time of the making of

bids or proposals to acquire an interest

in any EWG or at any time thereafter in

order to facilitate the bidding and

subsequent consummation of an

acquisition of an interest in an EWG.

Applicants also propose that an

Intermediate Company will issue equity

securities and debt securities to persons

other than NewCo or Southern (and

with respect to which there will be no

recourse to Southern), including banks,

insurance companies and other

financial institutions, exclusively for the

purpose of financing (including any

refinancing) investments in EWGs.

Applicants state that the Intermediate

Companies will issue securities to

Southern and/or NewCo, and Southern

and/or NewCo will acquire the

securities. The investment by Southern

or NewCo in the Exempt Subsidiaries

will take the form of capital stock or

shares, debt securities, trust certificates,

capital contributions, open account

advances without interest and

partnership interests or other equity or

participation interests, bid bonds or

other credit support to secure

obligations incurred by NewCo and/or

Intermediate Companies in connection

with Exempt Subsidiary investments or

of NewCo’s undertaking to contribute

equity to an Intermediate Company.

Southern and NewCo propose, from

time to time through June 30, 2005, to

(1) guarantee the indebtedness or other

obligations of one or more Exempt

Subsidiaries; (2) assume the liabilities of

one or more Exempt Subsidiaries; and/

or (3) enter into guarantees and letters

of credit reimbursement agreements in

support of equity contribution

obligations or otherwise in connection

with project development activities for

one or more Exempt Subsidiaries.

Investments will be made from

Southern to NewCo and/or Intermediate

Companies directly or indirectly. Any

open account advance made by

Southern will have a maturity of not

more than one year.

Applicants propose for Southern to

enter into reimbursement agreements

with banks to support letters of credit

delivered as security for Southern’s or

NewCo’s equity contribution obligation

to an Intermediate Company or

otherwise in connection with an

Intermediate Company’s or Exempt

Subsidiary’s project development

activities.

The investment in Intermediate

Companies and Exempt Subsidiaries is

included in the requested $4.2 billion

total financing authority.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–27975 Filed 10–31–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. IC–24714; File No. 812–12054]

The Variable Annuity Life Insurance

Company, et al.

October 26, 2000.

AGENCY: The Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Notice of application for an

order pursuant to Section 26(b) of the

Investment Company Act of 1940 (the

‘‘Act’’) approving certain substitutions

of securities and an order of exemption

pursuant to Section 17(b) of the Act

from Section 17(a) of the Act.

SUMMARY OF APPLICATION: Applicants

request an order to permit a unit

investment trust to substitute (a) Shares

of North American—Founders Large

Cap Growth Fund for shares of Dreyfus

Founders Growth Fund; (b) Shares of

North American—American Century

Income & Growth Fund for shares of

Neuberger Berman Guardian Trust and

for shares of Scudder Growth and

Income Fund; (c) Shares of North

American—Founders/T. Rowe Price

Small Cap Fund for shares of T. Rowe

Price Small-Cap Fund, Inc. and for

shares of Dreyfus Variable Investment

Fund Small Cap Portfolio (‘‘Dreyfus VIF

Small Cap’’); (d) Shares of North

American—American Century

International Growth Fund for shares of

Templeton International Securities

Fund; (e) Shares of North American—

AG Core Bond Fund for shares of

American General Domestic Bond Fund;

(f) Shares of North American—AG

Moderate Growth Lifestyle Fund for

shares of American General Balanced

Fund; and (g) Shares of North American

International Growth Fund for shares of

American General International Value

Fund. The shares are currently held by

that unit investment trust to support

certain deferred premium variable

annuity contracts (the ‘‘Contracts’’).

APPLICANTS: The Variable Annuity Life

Insurance Company (‘‘VALIC’’); VALIC

Separate Account A (the ‘‘Account’’);

North American Funds Variable Product

Series I (‘‘NAFV I’’) and North American

Funds Variable Product Series II

(‘‘NAFV II’’) (VALIC and the Account

are the ‘‘Substitution Applicants’’;

VALIC, the Account, NAFV I and NAFV

II are the ‘‘Section 17 Applicants’’).

FILING DATE: The application was filed

on March 31, 2000; an amendment

substantially conforming to this Notice

will be filed during the pendencey of

the Notice period.

HEARING OF NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the Commission orders a

hearing. Interested persons may request

a hearing by writing to the Secretary of

the Commission and serving Applicants

with a copy of the request, personally or

by mail. Hearing requests should be

received by the Commission by 5:30

p.m. on November 16, 2000, and should

be accompanied by proof of service on

Applicants, in the form of an affidavit

or, for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons may request notification of a

hearing by writing to the Secretary of

the Commission.

ADDRESSES: Secretary, Securities and

Exchange Commission, 450 Fifth Street,

NW., Washington, DC 20549–0609.

Applicants: Nori Gabert, Esq., The

Variable Annuity Life Insurance

Company, 2929 Allen Parkway,

Houston, Texas 77019, and David C.

Mahaffey, Esq., Sullivan & Worcester

LLP, 1025 Connecticut Avenue, NW.,

Washington, DC 20036.

FOR FURTHER INFORMATION CONTACT:

Keith Carpenter, Branch Chief, or

Rebecca A. Marquigny, Senior Counsel

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Notices 65365

at (202) 942–0670, Office of Insurance

Products, Division of Investment

Management.

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application; the complete application

may be obtained for a fee from the

Public Reference Branch of the

Commission, 450 Fifth Street, N.W.,

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

8090).

Applicant’s Representations

1. VALIC is a stock life insurance

company organized under the Texas

Insurance Code. VALIC is an indirect

wholly-owned subsidiary of American

General Corporation.

2. The Account is registered under the

Act as a unit investment trust (File No.

811–03240). The assets of the Account

support certain Contracts, and interests

in the Account offered through such

Contracts have been registered under

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

on Form N–4.

3. NAFV I and NAFV II are each

registered under the Act as open-end

management investment companies of

the series type (File Nos. 811–03738 and

811–08789). Securities of NAFV I and

NAFV II are also registered under the

1933 Act (File Nos. 2–83631 and 333–

53589).

4. The Account currently has 53 subaccounts, each of which reflects the

investment performance of a series of

NAFV I or NAFV II, or certain other

registered management companies

advised by advisers not affiliated with

VALIC or the Account.

5. Under the Contracts, VALIC

reserves the right to substitute shares of

one fund for shares of another.

6. VALIC proposes, as applicable, to

substitute (a) Shares of North

American—Founders Large Cap Growth

Fund for shares of Dreyfus Founders

Growth Fund; (b) Shares of North

American—American Century Income &

Growth Fund for shares of Neuberger

Berman Guardian Trust and for shares

of Scudder Growth and Income Fund;

(c) Shares of North American—

Founders/T. Rowe Price Small Cap

Fund for shares of T. Row Price SmallCap Stock Fund, Inc. and for shares of

Dreyfus VIF Small Cap; (d) Shares of

North American—American Century

International Growth Fund for shares of

Templeton International Securities

Fund; (e) Shares of North American—

AG Core Bond Fund for shares of

American General Domestic Bond Fund;

(f) Shares of North American—AG

Moderate Growth Lifestyle Fund for

shares of American General Balanced

Fund; and (g) Shares of North American

International Growth Fund for shares of

American General International Value

Fund.

7. Except for North American—AG

Core Bond Fund, North American—AG

Moderate Growth Lifestyle Fund, and

North American International Growth

Fund, each of which is a series of NAFV

II, none of the replacement funds has

commenced operations. The Applicants

have filed an amendment to the

registration statement on Form N–1A of

NAFV I to reflect the addition of the

new funds (the ‘‘New Funds’’), which

became effective on September 29, 2000.

8. Pursuant to an exemptive order

issued to VALIC, NAFV II, and others,

VALIC et al., Inv. Co. Act Rel. No. 23429

(Sept. 9, 1998) (the ‘‘Multi-Manager

Order’’), VALIC is authorized to enter

into and amend sub-advisory

agreements without shareholder

approval under certain conditions.

9. The investment objectives, policies

and restrictions of the replacement

funds are in each case substantially

similar to the investment objectives,

policies and restrictions of the

respective existing funds. The

investment objectives of each existing

and the corresponding replacement

fund are set forth below:

Existing funds Investment objective Replacement funds Investment objective

Dreyfus Founders Growth Fund .... To seek long-term growth of capital. The fund seeks to attain its

objective by investing a substantial portion of its assets in

common stocks of well-established, high-quality growth companies.

North American-Founders Large

Cap Growth Fund.

The same.

Neuberger Berman Guardian Trust To seek long-term growth of capital; current income is a secondary goal. The fund invests

mainly in common stocks of

large capitalization companies.

North American-American Century

Income & Growth Fund.

To seek dividend growth, current

income, and capital appreciation by investing in common

stocks.

Scudder Growth and Income Fund To seek long-term growth of capital, current income and growth

of income.

North American-American Century

Income & Growth Fund.

To seek dividend growth, current

income, and capital appreciation by investing in common

stocks.

T. Rowe Price Small-Cap Stock

Fund, Inc..

To seek long-term capital growth

in investing primarily in stocks

in small companies.

North American-Founders/T.

Rowe Price Small Cap Fund.

To seek long-term capital growth

by investing primarily in stocks

of small companies.

Dreyfus VIF Small Cap .................. To maximize capital appreciation.

The fund focuses on common

stocks of small-cap companies

with market capitalization of

less than $1.5 billion.

North American-Founders/T.

Rowe price Small Cap Fund.

To seek long-term capital growth

by investing primarily in stocks

of small companies.

Templeton International Securities

Fund.

To seek long-term capital growth.

The fund invests primarily in equity securities of companies

outside the United States, including emerging markets.

North American-American Century

International Growth Fund.

To seek capital growth by investing primarily in equity securities

of companies in developed

countries other than the United

States.

65366 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Notices

Existing funds Investment objective Replacement funds Investment objective

American General Domestic Bond

Fund.

To seek the highest possible total

return consistent with conservation of capital through investments primarily in investment

grade fixed-income securities

and other income producing,

securities.

North American-AG Core Bond

Fund.

To seek the highest possible total

return consistent with conservation of capital through investments in medium to high-quality

fixed-income securities.

American General Balanced Fund To seek balanced accomplishment of (i) conservation of principal and (ii) long-term growth

of capital and income through

investment in fixed income and

equity securities.

North American-AG Moderate

Growth Lifestyle Fund.

To seek growth and current income through investments in

other series of NAFV I and

NAFV II.

American General International

Value Fund.

To seek to provide growth of capital and future income through

investments primarily in securities of non-U.S. issuers and securities whose principal markets

are outside the United States.

North American International

Growth Fund.

To seek to provide long-term capital appreciation by investing in

equity securities of non-U.S.

companies, the majority of

which are in developed markets.

10. Applicants assert that the

substitutions are expected to provide

significant benefits to Contract owners,

including improved selection of

portfolio managers and simplification of

fund offerings through elimination of

overlapping offerings. At the same time,

Contract owners will continue to be able

to select among a large number of funds,

with a full range of investment

objectives, investment strategies, and

managers.

11. The expenses of the existing funds

and the pro forma expenses of the

replacement funds are set forth below in

the Appendix.

12. By supplements to the various

prospectus for the Contracts and the

Account, VALIC will notify all owners

of the Contracts of its intention to take

the necessary actions, including seeking

the other requested by this Application,

to substitute shares of the funds as

described therein. The prospectus

supplements for the Account will advise

Contract owners that from the date of

the supplement until the date of the

proposed substitution, owners will be

permitted to make transfers among subaccounts as usual. The supplements will

also inform Contract owners that VALIC

will not exercise any rights reserved

under any Contract to impose additional

restrictions on transfers until at least 30

days after the proposed substitution.

13. Within five business days after the

proposed substitutions, affected

Contract owners will also be provided

with a prospectus for the replacement

funds.

14. The proposed substitutions will

take place at relative net assert value

with no change in the amount of any

Contract owners’s Contract value, cash

value or death benefit or in the dollar

value of his or her investment in any of

the Accounts.

15. The process for accomplishing the

transfer of assets from an existing fund

to its respective replacement fund will

be determined on a case-by-case basis.

In certain cases, it is expected that the

substitutions will be effected by

redeeming shares of an existing fund for

cash and using the cash to purchase

shares of the replacement fund.

16. In certain other cases, it is

expected that the substitutions will be

effected by redeeming the shares of an

existing fund in-kind; these assets will

then be contributed in-kind to the

corresponding replacement fund to

purchase shares of that fund. All in-kind

redemptions from an existing fund of

which any of the Substitution

Applicants is an affiliated person will

be effected in accordance with the

conditions set forth in the Commission’s

no-action letter issued to Signature

Financial Group, Inc. (available Dec. 29,

1999). In-kind purchases of a

replacement fund will be conducted as

described in the Application.

17. Contract owners will not incur

any fees or charges as a result of the

substitutions, nor will their rights or

VALIC’s obligations under the Contracts

be altered in any way. All expenses

incurred in connection with the

proposed substitutions, including

brokerage, legal, accounting and other

fees and expenses, will be paid by

VALIC. In addition, the proposed

substitutions will not impose any tax

liability on Contract owners. The

supplements will also inform Contract

owners that VALIC will not exercise any

rights reserved under any Contract to

impose additional restrictions on

transfers until at least 30 days after the

proposed substitution.

18. In addition to the prospectus

supplements distributed to owners of

Contracts, within five business days

after the proposed substitutions, any

Contract owners who were affected by

the proposed substitutions will be sent

a written notice informing them that the

proposed substitutions were carried out

and that they may make one transfer of

all Contract value or cash value under

a Contract invested in each of the

affected sub-accounts to other available

sub-account(s) without regard to any

limitations on transfers that would

otherwise apply and without charge.

The notice will also reiterate the fact

that VALIC will not exercise any rights

reserved by it under the Contracts to

impose additional restrictions on

transfers until at least 30 days after the

proposed substitutions.

19. Before any of the New Funds may

rely on the Multi-Manager Order, the

operation of the New Fund as a multimanager fund, as described in the

application for the Multi-Manager

Order, will be approved, following the

substitutions proposed in this

Application, by a majority of that New

Fund’s outstanding voting securities.

20. Each of the New Funds (North

American-Founders/T.Rowe Price Small

Cap Fund, North American-American

Century Income & Growth Fund, North

American-American Century

International Growth Fund, and North

American-Founders Large Cap Growth

Fund) have management fees higher

than those of existing funds they will

replace. Each such replacement fund

will hold a shareholder meeting to

approve the investment advisory

contract pursuant to Section 15 of the

Act within 120 after the substitution

occurs. The difference between the

management fee paid by the existing

fund and the fee payable under the new

investment advisory contract will be

held in escrow pending the shareholder

vote. If the shareholders of a New Fund

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Notices 65367

do not approve the advisory contract,

VALIC will return the money held in

escrow to the New Fund, and the

directors will consider alternatives in

the best interests of shareholders.

21. Applicants further agree that for

each of the New Funds, proxy materials

will disclose, on a pro forma basis, the

amount of the proposed management

fee, other fund expenses, and total fund

expenses. Applicants agree that VALIC

will, for two years from the date of the

substitution, limit total fund expenses

for each New Fund to the percentage

levels set forth in the Application and

disclosed in the New Fund’s proxy

materials. Accordingly, annualized total

fund expenses of each New Fund during

the two-year period will be capped at

the following levels.

North American—Founders/T. Rowe

Price Small Cap Fund—.96%.

North American—American Century

Income & Growth Fund—.83%

North American—American Century

International Growth Fund—1.06%

North American—Founders Large Cap

Growth Fund—1.06%

22. In addition, in any case in which

shareholders of a New Fund do not

approve the new investment advisory

contract, VALIC agrees that it will limit

the annualized management fee of the

New Fund to the same level as that of

the existing fund and the total

annualized expenses of the New Fund

to that of the existing fund, adjusted to

reflect any reductions in separate

account charges that take effect in

connection with the substitution. Such

limitation will apply until shareholders

approve a new investment advisory

contract. Accordingly, the total

annualized fund expenses of each New

Fund in such a case would be as

follows:

North American—Founders/T. Rowe

Price Small Cap Fund—.88%

North American—American Century

Income & Growth Fund—.80%

North American—American Century

International Growth Fund—1.13%

North American—Founders Large Cap

Growth Gund—1.08%

23. North American—AG Core Bond

Fund, North American AG Moderate

Growth Lifestyle Fund and North

American International Growth Fund

have advisory fees lower than the

existing funds they will replace. VALIC

will cap each such replacement fund’s

total fund expenses at the same level as

the total fund expenses of the respective

existing fund (net of any waivers or

reimbursements) at least until the end of

the fiscal year ending August 31, 2002.

Accordingly, annualized total fund

expenses will be capped at the

following levels for the period ending

August 31, 2002.

North American AG Core Bond Fund—

.77%

North American AG Moderate Growth

Lifestyle Fund—.80%

North American International Growth

Fund—1.01%

24. Applicants further agree that

VALIC will not increase total separate

account charges (net of any waivers or

reimbursements) for any of the

Contracts involved in the substitution

for a period of two years from the date

of the substitution. Accordingly, total

annualized separate account charges

(net of any waivers or reimbursements)

during the two year period will not

exceed the following levels:

1.00% for North American—Founders/

T.Rowe Price Small Cap Fund, North

American—American Century Income

& Growth Fund, North American—

American Century International

Growth Fund, and North American—

Founders Large Cap Growth Fund.

.75% for North American—AG Core

Bond Fund, North American—AG

Moderate Growth Lifestyle Fund, and

North American International Growth

Fund.

Applicants’ Legal Analysis

1. Section 26(b) of the Act requires the

depositor of a registered unit investment

trust holding the securities of a single

issuer to obtain Commission approval

before substituting the securities held by

the trust. Specifically, Section 26(b)

states:

It shall be unlawful for any depositor or

trustee of a registered unit investment trust

holding the security of a single issuer to

substitute another security for such security

unless the Commission shall have approved

such substitution. The Commission shall

issue an order approving such substitution if

the evidence establishes that it is consistent

with the protection of investors and the

purposes fairly intended by the policy and

provisions of this title.

2. The Substitution Applicants state

that the proposed substitutions appear

to involve substitutions of securities

within the meaning of Section 26(b) of

the Act and request that the

Commission issue an order pursuant to

Section 26(b) of the Act approving the

proposed substitutions.

3. The Contracts expressly reserve for

VLAIC the right, subject to Commission

approval, to substitute shares of another

Management Company for shares of a

Management Company held by a subaccount of the Account.

4. The Substitution Applicants

request an order of the Commission

pursuant to Section 26(b) of the Act

approving the proposed substitutions by

VALIC. The Substitution Applicants

assert that the proposed substitutions

are consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the Act.

5. The Substitution Applicants assert

that each of the proposed substitutions

is not the type of substitution which

Section 26(b) was designed to prevent.

Unlike traditional unit investment trusts

where a depositor could only substitute

an investment security in a manner

which permanently affected all the

investors in the trust, the Contracts

provide that each Contract owner has

the right to exercise his or her own

judgment and transfer Contract or cash

value into other sub-accounts.

Moreover, the Contracts will offer

Contract owners the opportunity to

transfer amounts out of the affected subaccounts into any of the remaining subaccounts without cost or other

disadvantage. The Substitution

Applicants assert that the proposed

substitutions, therefore, will not result

in the type of costly forced redemption

which Section 26(b) was designed to

prevent.

6. The Substitution Applicants assert

that proposed substitutions also are

unlike the type of substitution which

Section 26(b) was designed to prevent in

that by purchasing a Contract, Contract

owners select much more than a

particular investment company in

which to invest their account values.

They also select the specific type of

insurance coverage offered by VALIC

under their Contract as well as

numerous other rights and privileges set

forth in the Contract. Contract owners

may also have considered VALIC’s size,

financial condition, and its reputation

for service in selecting their Contract.

These factors will not change as a result

of the proposed substitutions.

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

relevant part, prohibits any affiliated

person of a registered investment

company, or any affiliated person of

such person, acting as principal, from

knowingly selling any security or other

property to that company. Section

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

the persons described above, acting as

principals, from knowingly purchasing

any security or other property form the

registered company.

8. Section 2(a)(3) of the 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

person; (B) any person 5 per centum or

65368 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Notices

1With respect to the in-kind redemptions of any

shares of the Existing Funds, as previously stated

above, Applicants will make any such in-kind

redemptions only in accordance with the

conditions set out in the Signature no-action letter.

In light of this fact, the Section 17 Applicants are

not requesting relief with respect to those in-kind

redemptions.

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; * * * (E) if

such other person is an investment

company, any investment adviser

thereof * * *.

Section 2(a)(9) of the Act states that

any person who owns beneficially,

either directly or through one or more

controlled companies, more than 25%

of the voting securities of a company

shall be presumed to control such

company.

9. Because shares held by a separate

account of an insurance company are

legally owned by the insurance

company, VALIC owns of record

substantially all of the shares of NAFV

I and NAFV II. Therefore, NAFV I and

NAFV II and their respective funds are

arguably under the control of VALIC

notwithstanding the fact that Contract

owners may be considered the

beneficial owners of those shares held

in the Account. If NAFV I and NAFV II

and their respective funds are under

VALIC control, then VALIC is an

affiliated person of NAFV I and NAFV

II and their respective funds. If NAFV I

and NAFV II and their respective funds

are under VALIC control, then NAFV I

and NAFV II and their respective funds

are affiliated person of each other.

10. Regardless of whether or not

VALIC can be considered to control

NAFV I and NAFV II and their

respective funds, because VALIC owns

of record more than 5% of the shares of

each of them and is each replacement

fund’s investment adviser, VALIC is an

affiliated person of both NAFV I and

NAFV II and their respective Funds.

Likewise, their respective funds are

each an affiliated person of an affiliated

person of each other.

11. Because the substitutions may be

effected, in whole or in part, by means

of in-kind redemptions and purchases,

the substitutions may be deemed to

involve one or more purchases or sales

of securities or property between

affiliated persons or between affiliated

persons of affiliated persons. The

proposed transactions may involve a

transfer of portfolio securities by the

existing funds to the Account;

immediately thereafter, the Account

would purchase shares of the

replacement funds with the portfolio

securities received from the existing

funds. Accordingly, as the Account and

the replacement funds could be viewed

as affiliated persons of one another

under Section 2(a)(3) of the Act, it is

conceivable that this aspect of the

substitutions could be viewed as being

prohibited by Section 17(a).

Accordingly, the Section 17 Applicants

have determined that it is prudent to

seek relief from Section 17(a) in the

context of this Application for the inkind purchases and sales of the

replacement fund shares.1

12. Section 17(b) of the Act provides

that the Commission may, upon

application, grant an order exempting

any transaction from the prohibitions of

Section 17(a) if the evidence establishes

that: (a) 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; (b) the proposed transaction

is consistent with the policy of each

registered investment company

concerned, as recited in its registration

statement and records filed under the

Act, and (c) the proposed transaction is

consistent with the general purposes of

the Act.

13. The Section 17 Applicants submit

that the terms of the proposed in-kind

purchases of shares of the replacement

funds by the Account, including the

consideration to be paid and received,

as described in this Application, are

reasonable and fair and do not involve

overreaching on the part of any person

concerned. The Section 17 Applicants

also submit that the proposed in-kind

purchases by VALIC are consistent with

the policies of each of the replacement

funds. Finally, the Section 17

Applicants submit that the proposed

substitutions are consistent with the

general purposes of the Act.

Conclusion

Applicants assert that, for the reasons

summarized above, the proposed

substitutions and related transactions

meet the standards of Section 26(b) of

the Act and are consistent with the

standards of Section 17(b) of the Act

and that the requested orders should be

granted.

For the Commission, by the Division of

Investment Management pursuant to

delegated authority.

Jonathan G. Katz,

Secretary.

APPENDIX—COMPARISON OF EXPENSES OF EXISTING AND REPLACEMENT FUNDS

Current fund and separate account expenses

(percent of net asset value)

Replacement fund and separate account expenses

(percent of net asset value)

Existing fund

Total

fund assets

(in millions)

Total

fund assets

held by

the account

(in millions)

Mgmt.

fee

Other

fund expenses

M&E

and

A&D expenses

Separate account

reimb.1

Total expenses Replacement fund Mgmt.

fee

Other

fund expenses

M&E

and

A&D expenses

Separate account

reimb.1

Total expenses

Dreyfus VIF Small

Cap.

$1,611.6 $906.8 0.75 0.03 1.25 (0.15) 1.88 North American—

Founders/T.

Rowe Price Small

Cap Stock Fund.

0.90 0.06 1.00 0 1.96

T.Rowe Price Small

Cap Stock Fund.

2,084.2 14.8 0.77 0.19 1.25 0 2.21 Same as above.

Scudder Growth

and Income Fund.

6,079.2 236.7 0.45 0.35 1.25 (0.25) 1.80 North American—

American Century

Income & Growth

Fund.

0.77 0.06 1.00 0 1.83

Neuberger Berman

Guardian Trust.

1,094.7 59.4 0.84 0.04 1.25 (0.25) 1.88 Same as above.

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Notices 65369

APPENDIX—COMPARISON OF EXPENSES OF EXISTING AND REPLACEMENT FUNDS—Continued

Current fund and separate account expenses

(percent of net asset value)

Replacement fund and separate account expenses

(percent of net asset value)

Existing fund

Total

fund assets

(in millions)

Total

fund assets

held by

the account

(in millions)

Mgmt.

fee

Other

fund expenses

M&E

and

A&D expenses

Separate account

reimb.1

Total expenses Replacement fund Mgmt.

fee

Other

fund expenses

M&E

and

A&D expenses

Separate account

reimb.1

Total expenses

Templeton International Securities Fund.

1,756.8 737.6 0.69 0.19 1.25 0 2.13 North American—

American Century

International

Growth Fund.

1.00 0.06 1.00 0 2.06

Dreyfus Founders

Growth Fund.

3,480.0 1,069.1 0.67 0.41 1.25 (0.25) 2.08 North American—

Founders Large

Cap Growth Fund.

1.00 0.60 1.00 0 2.06

American General

Domestic Bond

Fund.

14.5 14.5 0.59 0.18 1.00 (0.25) 1.52 North American—

AG Core Bond

Fund.

0.50 0.25 1.00 (0.25) 1.50

American General

Balanced Fund.

12.8 12.8 0.78 2 0.02 1.00 (0.25) 1.55 North American—

AG Moderate

Growth Lifestyle

Fund.

0.10 3 0.88 1.00 (0.25) 1.73

American General

International

Value Fund.

13.2 13.2 0.97 4 0.04 1.00 (0.25) 1.76 North American

International

Growth Fund.

0.88 5 0.25 1.00 (0.25) 1.88

1VALIC reimburses a subaccount for fees it receives from a fund or its affiliate or distributor for providing the fund administrative or shareholder services. 2VALIC currently waives or reimburses certain fees and expenses of American General Balanced Fund. During the fiscal year ended August 31, 1999, these waivers and reimbursements equaled 0.98% of net assets of the fund. Without these waivers and reimbursements, the total Other Fund Expenses of American General

Balanced Fund would have been 1.00% of net assets. 3These expenses are those of the underlying funds in which the North American—AG Moderate Growth Lifestyle Fund invests.

4VALIC currently waives or reimburses certain fees and expenses of American General International Value Fund. During the fiscal year ended August 31, 1999,

those waivers and reimbursements equaled 0.96% of net assets of the fund. Without these waivers and reimbursements, the total Other Fund Expenses of American

General International Fund would have been 1.00% of net assets. 5VALIC currently waives or reimburses certain fees and expenses of North American International Growth Fund. During the fiscal year ended August 31, 1999,

those waivers and reimbursements equaled 0.77% of net assets of the fund. Without these waivers and reimbursements, the total Other Fund Expenses of North

American International Growth Fund would have been 1.02% of net assets.

[FR Doc. 00–28049 Filed 10–31–00; 8:45 am]

BILLING CODE 8010–01–M

TENNESSEE VALLEY AUTHORITY

Environmental Impact Statement—

Montana Land Company Land

Exchange—Hardin County, Tennessee

AGENCY: Tennessee Valley Authority

(TVA).

ACTION: Notice of Intent.

SUMMARY: This notice is provided in

accordance with the Council on

Environmental Quality’s regulations (40

CFR Parts 1500 to 1508) and TVA’s

procedures implementing the National

Environmental Policy Act. TVA will

prepare an Environmental Impact

Statement (EIS) on alternatives for a

requested land exchange by Montana

Land Company, L. L. C. (MLC) involving

22 acres of TVA land on Pickwick

Reservoir, which is proposed to be

exchanged for 164 acres of property,

also on Pickwick Reservoir, in Hardin

County, Tennessee.

DATES: Comments on the scope of the

EIS must be received on or before

November 30, 2000.

ADDRESSES: Written comments should

be sent to Jon M. Loney, Manager, NEPA

Administration, Environmental Policy

and Planning, Tennessee Valley

Authority, 400 West Summit Hill Drive,

Knoxville, Tennessee 37902–1499.

FOR FURTHER INFORMATION CONTACT:

Harold M. Draper, NEPA Specialist,

Environmental Policy and Planning,

Tennessee Valley Authority, 400 West

Summit Hill Drive, WT 8C, Knoxville,

Tennessee 37902–1499; telephone (865)

632–6889 or e-mail hmdraper@tva.gov.

SUPPLEMENTARY INFORMATION: Pickwick

Reservoir is an impoundment of the

Tennessee River formed by Pickwick

Landing Dam, which is located at

Tennessee River Mile (TRM) 206.7 in

Hardin County, Tennessee. Pickwick

Reservoir is located in parts of three

States—Alabama, Mississippi, and

Tennessee. The Tennessee Valley

Authority (TVA) originally acquired

63,625 acres of land for construction of

the reservoir, which was begun in

December 1934 and completed in

February 1938. TVA has retained 17,358

acres of land lying above full pool

elevation. At full pool, the reservoir is

52.7 miles long, shoreline length is

490.6 miles, and surface area is 43,100

acres.

In the late 1980s, private developers

began construction on a residential and

resort subdivision consisting of 3,000

acres and extending for 11.5 miles along

the shoreline of lower Pickwick

Reservoir. This development was named

Points of Pickwick. The project features

waterfront lots, waterview lots, interior

single family lots, zero lot line

developments, condominium

residences, an 18-hole championship

golf course, underground utilities, a

community marina, and nature trails. In

1995, MLC acquired the property and

has continued subdivision

development. TVA owns land along two

embayments, Lower Anderson Branch

and Haw Branch, which extend into this

development. No private shoreline

access rights exist across the TVA

parcels. Shoreline access rights exist

across a narrow TVA-owned shoreline

band adjoining MLC properties,

including the parcel proposed to be

exchanged with TVA.

In 1999, TVA completed an EIS on

residential shoreline development

impacts throughout the Tennessee

Valley. The Record of Decision (ROD)

was published at 64 FR 30092–30094. In

order to limit the eventual development

of shoreline and accompanying impacts

to aquatic ecology, water quality, scenic

beauty, and other valuable resources,

the ROD indicated that TVA would

adopt a strategy of ‘‘maintaining and

gaining’’ public shoreline. Under this

strategy, TVA agreed to consider