77396 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Notices

institutional investors or lenders under

one or more term-loan agreements. The

Notes will mature in not less than nine

months nor more than ten years and

will have a fixed or fluctuating rate of

interest, or a combination of both. The

actual rate of interest of each Note shall

be subject to negotiation between

Wheeling and the lender, but any fixed

rate of interest will not exceed 500 basis

points over the yield, at issuance, of

U.S. Treasury obligations with

comparable maturity dates, and a

fluctuating rate will not exceed 500

basis points over the prime rate as

announced from time to time by a major

bank. If a bank or financial institution

arranges financing with a third party,

the institution may charge a placement

fee not in excess of 1% of the principal

amount of the borrowing. Wheeling will

use the proceeds from the sale of the

Notes to repay its long- and short-term

debt.

Wheeling also seeks authorization to

enter into hedging transactions,

including anticipatory hedges, with

respect to its indebtedness in order to

manage and minimize interest rate costs

and to lock-in current interest rates.

Wheeling requests authority to enter

into, perform, purchase and sell

financial instruments intended to

manage the volatility of interest rates,

including but not limited to interest rate

swaps, caps, floors, collars and forward

agreements or any other similar

agreements. Wheeling would employ

interest rate derivatives as a means of

prudently managing the risk associated

with any of its outstanding debt issued

under the authority requested in this

application or an applicable exemption

by, in effect, synthetically (1) converting

variable rate debt to fixed rate debt; (2)

converting fixed rate debt to variable

rate debt; and (3) limiting the impact of

changes in interest rates resulting from

variable rate debt. In no case would the

notional principal amount of any

interest rate swap exceed that of the

underlying debt instrument and related

interest rate exposure. The transactions

would be for fixed periods. Interest rate

hedges would only be entered into with

counterparties (‘‘Approved

Counterparties’’) whose senior debt

ratings, as published by a national

recognized rating agency are greater

than or equal to ‘‘BBB’’, or an equivalent

rating.

In addition, Wheeling requests

authorization to enter into interest rate

hedging transactions with respect to

anticipated debt offerings

(‘‘Anticipatory Hedges’’), subject to

certain limitations and restrictions.

Anticipatory Hedges would only be

entered into with Approved

Counterparties, and would be utilized to

fix and/or limit the interest rate risk

associated with any new issuance

through (1) a forward sale of exchangetraded Hedge Instruments (each a

‘‘Forward Sale’’); (2) the purchase of put

options on Hedge Instruments (a ‘‘Put

Options Purchase’’); (3) a Put Options

Purchase in combination with the sale

of call options on Hedge Instruments (a

‘‘Zero Cost Collar’’); (4) transactions

involving the purchase or sale,

including short sales, of Hedge

Instruments; or (5) some combination of

a Forward Sale, Put Options Purchase,

Zero Cost Collar and/or other derivative

or cash transactions, including, but not

limited to structured notes, caps and

collars, appropriate for the Anticipatory

Hedges. Anticipatory Hedges may be

executed on-exchange (‘‘On-Exchange

Trades’’) with brokers through the

opening of futures and/or options

positions traded on the Chicago Board

of Trade, the opening of over-thecounter positions with one or more

counterparties (‘‘Off-Exchange Trades’’),

or a combination of On-Exchange

Trades and Off-Exchange Trades.

Wheeling will determine the optimal

structure of each Anticipating Hedge

transaction at the time of execution.

Wheeling may decide to lock in interest

rates and/or limit its exposure to

interest rate increases. Wheeling states

that it will comply with standards

relating to accounting for derivative

transactions as are adopted and

implemented by the Financial

Accounting Standards Board (‘‘FASB’’).

In addition, these financial instruments

will qualify for hedge accounting

treatment under FASB rules.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–31379 Filed 12–8–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–24784; File No. 812–12090]

American United Life Insurance

Company, et al.

December 4, 2000.

AGENCY: 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

‘‘1940 Act’’) approving certain

substitutions of securities.

Applicants: American United Life

Insurance Company (‘‘AUL’’) and AUL

American Unit Trust (‘‘AUL Account’’)

(collectively referred to herein as the

‘‘Applicants’’).

SUMMARY OF APPLICATION: Applicants

request an order to permit a registered

unit investment trust to substitute

shares of the State Street Equity 500

Index Fund (‘‘State Street 500 Fund’’), a

series of State Street Institutional

Investment Trust (‘‘State Street Trust’’),

for shares of the Index 500 Portfolio

(‘‘Fidelity 500 Portfolio’’), a series of

Variable Insurance Products Fund II

(‘‘VIP II’’) currently held by that unit

investment trust.

Filing Date: The application was filed

on May 5, 2000, and amended and

restated on November 30, 2000.

Hearing Or Notification Of Hearing:

An order granting the application will

be issued unless the Commission orders

a hearing. Interested persons may

request a hearing by writing to the

Secretary of the Commission and

serving Applicants with a copy of the

request, personally or by mail. Hearing

requests should be received by the

Commission by 5:30 p.m. on December

26, 2000, and should be accompanied

by proof of service on Applicants, in the

form of an affidavit or, for lawyers, a

certificate of service. Hearing requests

should state the nature of the 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: c/o Richard A. Wacker,

Esq., American Untied Life Insurance

Company, One American Square,

Indianapolis, Indiana 46282. Copies to:

Ruth S. Epstein, Esq., Dechert, 1775 Eye

Street, NW., Washington, DC 20006–

2401.

FOR FURTHER INFORMATION CONTACT:

Lorna MacLeod, Branch Chief, at (202)

942–0684, 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, NW.,

Washington, DC 20549–0102, (tel. (202)

942–8090).

Applicant’s Representations

1. AUL is an Indiana mutual life

insurance company. AUL is the

depositor and sponsor of the AUL

Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Notices 77397

Account, a separate investment account

established under Indiana law.

2. The AUL Account is registered

with the Commission under the 1940

Act as a unit investment trust. The

assets of the AUL Account support

certain group annuity contracts

(collectively, the ‘‘Contracts’’). Certain

Contracts may allow ongoing

contributions that can vary in amount

and frequency, while other Contracts

may allow only a single contribution to

be made. All of the Contracts provide

for the accumulation of values on a

variable basis, a fixed basis, or both. The

Contracts also provide several options

for fixed annuity payments to begin on

a future date.

3. The AUL Account is currently

divided into thirty-five (35) subaccounts referred to as Investment

Accounts. Each Investment Account

invests exclusively in shares of AUL

American Series Fund, Inc., Alger

American Fund, American Century

Mutual Funds, Inc., American Century

Quantitative Equity Funds, American

Century Variable Portfolios, Inc.,

American Century World Mutual Funds,

Inc., Calvert Variable Series, Variable

Insurance Products Fund, VIP II,

Invesco Dynamics Fund, Inc., Janus

Aspen Series, PBHG Insurance Series

Fund, Inc., SAFECO Resource Series

Trust, State Street Trust, T. Rowe Price

Equity Series, Inc., and Vanguard

Explorer Fund, Inc. (collectively,

‘‘Funds’’) or in shares of specific series

of a Fund. Contributions may be

allocated to one or more Investment

Accounts available under a Contract.

Not all of the Investment Accounts may

be available under a particular Contract

and some of the Investment Accounts

are not available for certain types of

Contracts.

4. VIP II is organized as a

Massachusetts business trust and is

registered as an open-end management

investment company under the 1940

Act. VIP II is a series investment

company, as defined by Rule 18f–2

under the 1940 Act, and currently offers

shares of fourteen separate series. Only

the Fidelity 500 Portfolio would be

involved in the proposed substitution.

5. State Street Trust is organized as a

Massachusetts business trust and is

registered as an open-end management

investment company under the 1940

Act. As of the date of this application,

it has not commenced operations. State

Street Trust is a series investment

company, as defined by Rule 18f–2

under the 1940 Act, and currently

intends to offer five separate series of

shares (each, a ‘‘Feeder’’). Each Feeder

currently intends to invest all of its

assets in a corresponding series of State

Street Master Funds (each, a ‘‘Master’’)

that has the same investment objective

as, and investment policies that are

substantially similar to those of, the

corresponding Feeder. As long as a

Feeder remains completely invested in

a Master (or any other investment

company), State Street Bank and Trust

Company (‘‘State Street’’), acting

through its division, State Street Global

Advisors (the ‘‘Adviser’’) is not entitled

to receive any investment advisory fee

with respect to the Feeder. A Feeder

may withdraw its investment from the

related Master at any time if State Street

Trust’s Board of Trustees determines

that it is in the best interests of the

Feeder and its shareholders to do so.

State Street Trust has retained the

Adviser as investment adviser to

manage a Feeder’s assets in the event

that the Feeder withdraws its

investment from its corresponding

Master. Only the State Street 500 Fund

would be involved in connection with

the substitution transactions described

below.

6. Each of the Contracts expressly

reserves to the Applicants the right,

subject to compliance with applicable

law, to change or add investment

companies. The prospectuses describing

the Contracts contain appropriate

disclosure of this right.

7. The AUL Account imposes no

limitations on the number of transfers

between investment accounts available

under a contract or the fixed account

and no charges on transfers. AUL

reserves the right, however, at a future

date, to assess transfer charges and to

limit the number and frequency of

transfers.

8. Applicants propose to substitute

Class A shares issued by the State Street

500 Fund for the Initial Class shares

issued by the Fidelity 500 Portfolio (the

‘‘Substitution’’).

9. The chart below shows the

investment objectives of the State Street

500 Fund and the Fidelity 500 Portfolio.

Removed portfolio Investment objective Substituted portfolio Investment objective

Fidelity 500 Portfolio .... Seeks investment results that correspond to

the total return of common stocks publicly

traded in the United States, as represented

by the Standard & Poor’s 500 Composite

Stock Price Index (‘‘S&P 500’’).

State Street 500 Fund Seeks to provide an investment return matching, as closely as possible before expenses, the performance of the S&P 500.

10. The chart below shows: (1) the management fees, operating expenses and total expenses for Initial Class shares

of the Fidelity 500 Portfolio for the year ending December 31, 1999; and (b) the estimated management fees, 12b–

1 fees, operating expenses and total expenses of Class A shares of the State Street 500 Fund following the proposed

substitutions. The fees and expenses in the chart are presented as a percentage of average daily net assets.

Replaced

fund—fidelity

500 (percent)

Sustituted

fund—state

street 500 1

(percent)

Management Fee ..................................................................................................................................................... 0.24 0.045

Distribution and Service (12b–1) Fee ...................................................................................................................... 0.00 0.150

Other Expenses ....................................................................................................................................................... 0.10 0.050

Total Annual Operating Expenses:

(Before Expense waivers and reimbursements) .......................................................................................... 0.34 0.25

Minus expense waivers or reimbursements ................................................................................................. 0.06 0.000

Total Annual Operating Expenses:

77398 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Notices

Replaced

fund—fidelity

500 (percent)

Sustituted

fund—state

street 500 1

(percent)

(After expense waivers and reimbursements) .............................................................................................. 2 0.28 0.245

1The feeder fund imposes a Rule 12b–1 fee of 15 basis points and estimates other expenses of 5 basis points. The master imposes an annual unitary management fee of 4.5 basic points, which compensates State Street for its services as adviser, custodian and transfer agent, and

for assuming ordinary operating expenses, including ordinary legal and audit expenses. By investing in the master fund, the feeder pays a pro

rata share of the master fund expenses, based on the net asset value of its investment in the master. In other words, the State Street 500 Fund

will pay the fee with respect to its pro rata share of the total assets invested in the State Street 500 Master. 2Effective April 18, 1998, FMR has voluntarily agreed to reimburse Initial Class Shares of the Fidelity 500 Portfolio to the extent that total operating expenses (excluding interest, taxes, securities lending costs, brokerage commissions and extraordinary expenses), as a percentage of average net assets, exceed 0.28%. This arrangement can be discontinued by FMR at any time.

11. Applicants provided, or will

provide, a notice of the Substitution (the

‘‘First Notice’’) to Contract Owners and

Participants, which describes the

proposed substitution and discloses that

AUL will not exercise any rights

reserved under the contract to impose

additional restrictions on transfers until

at least thirty (30) days after the date of

the substitution.

12. Upon effectiveness of the

registration statement of State Street

Trust, and approval of this application

by the Commission, the Applicants will

send Contract Owners further detailed

notice concerning the proposed

substitutions (the ‘‘Second Notice’’).

The Second Notice will inform Contract

Owners and Participants that the

substitutions will be carried out,

identify the anticipated date of the

substitutions and inform Contract

Owners and Participants that AUL will

not exercise any rights reserved under

the Contract to impose additional

restrictions on transfers until at least

thirty (30) days after the date of the

substitution. Together with this

disclosure, all such existing Contract

Owners and Participants also will be

sent to prospectus for the State Street

500 Fund. New purchasers of Contracts

also will be provided with the Contract

prospectuses, the Second Notice, and a

prospectus for the State Street 500

Fund.

13. Applicants will mail a

confirmation of the substitutions to

affected Contract Owners within five

days after the substitutions are affected.

The Confirmation will disclose (a) that

the substitution was carried out and (b)

that AUL will not exercise any rights

reserved under the contract to impose

additional restrictions on transfers until

at least thirty (30) days after the date of

the substitution.

14. Applicants make the following

representations regarding the significant

terms of the Substitution:

a. The State Street 500 Fund has

investment objectives, investment

strategies, and anticipated risks that are

substantially similar in all material

respects to those of the Fidelity 500

Portfolio.

b. At the time of the substitution, the

aggregate fees and expenses of the State

Street 500 Fund will be lower than

those of the Fidelity 500 Portfolio.

Applicants agree that AUL will not

increase total separate account charges

(net of any waivers or reimbursements)

of the Investment Account that invests

in the State Street Fund for those

Contract Owners who were Contract

Owners on the Substitution Date for a

period of two years from the

Substitution Date. Applicants further

agree that if the total operating expenses

for the State Street 500 Fund (taking

into account expense waivers and

reimbursements) (‘‘State Street

Expenses’’) for any fiscal quarter during

the two-year period following the

Substitution Date exceed on an

annualized basis 0.28% of average daily

net assets (the expense ratio for the

Fidelity 500 Portfolio for the fiscal year

ended December 31, 1999), AUL will

make adjustments to the separate

account charges of the Investment

Account that invests in the State Street

Fund for those Contract Owners who

were Contract Owners on the

Substitution Date, such that the State

Street Expenses together with separate

account expenses paid during that

period will not exceed, on an

annualized basis, 0.28% of average daily

net assets plus the separate account

expenses for the corresponding

Investment Account during the fiscal

year ending December 31, 1999.

c. Contract Owners and Participants

may transfer assets from one Investment

Account to another Investment Account

available under their Contract without

the imposition of any fee, charge or

other penalty that might otherwise be

imposed from the date of the First

Notice through a date at least thirty days

following the Substitution Date.

d. The substitutions, in all cases, will

be affected at the net asset value of the

respective shares of the Fidelity 500

Portfolio and the State Street 500 Fund

in conformity with Section 22(c) of the

1940 Act and Rule 22c–1 thereunder,

without the imposition of any transfer

or similar charge by the Applicants, and

with no change in the amount of any

Contract Owner’s Contract value or in

the dollar value any Contract Owner’s or

Participant’s investment in such

Contract.

e. Contract Owners and Participants

will not incur any fees or charges as a

result of the proposed substitutions, nor

will their rights or AUL’s obligations

under the Contracts be altered in any

way. AUL will bear all expenses

incurred in connection with the

proposed substitutions and related

filings and notices, including legal,

accounting and other fees and expenses.

The proposed substitutions will not

cause the Contract fees and charges

currently being paid by existing

Contract Owners or Participants to be

greater after the proposed substitutions

than before the proposed substitutions.

f. Redemptions in-kind and

contributions in-kind will be done in a

manner consistent with the investment

objectives, policies and diversification

requirements of the Fidelity 500

Portfolio and State Street 500 Fund.

Consistent with Rule 17a–7(d) under the

1940 Act, no brokerage commissions,

fees (except customary transfer fees) or

other remuneration will be paid in

connection with the in-kind

transactions.

g. The substitutions will not be

counted as new investment selections in

determining the limit, if any, on the

total number of Funds that Contract

Owners or Participants can select during

the life of a Contract.

h. The substitutions will not alter in

any way the tax benefits, life insurance

and other Contracts benefits, or any

Contract obligations of the Applicants,

under the Contracts.

i. Contract Owners and Participants

may withdraw amounts under the

Contracts or terminate their interest in

a Contract, under the conditions that

currently exist, including payment of

any applicable withdrawal or surrender

charge.

Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Notices 77399

j. Contract Owners and Participants

affected by the substitutions will be sent

written confirmation of the substitutions

that identify each substitution made on

behalf of that Contract Owner or

Participant within five days following

the Substitution Date.

Applicants’ Legal Analysis And

Conditions

1. Section 26(b) of the 1940 Act

provides that 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; and 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 policies and provisions

of the 1940 Act. Section 26(b) protects

the expectation of investors that the unit

investment trust will accumulate shares

of a particular issuer and is intended to

insure that unnecessary or burdensome

sales loads, additional reinvestment

costs or other charges will not be

incurred due to unapproved

substitutions of securities.

2. Applicants request an order

pursuant to Section 26(b) of the 1940

Act approving the Substitution.

Applicants assert that the purposes,

terms, and conditions of the

Substitution are consistent with the

protections for which Section 26(b) was

designed. The Applicants assert the

Substitution will benefit Contract

Owners because the State Street 500

Fund will enjoy lower expenses than

the Fidelity 500 Portfolio. Given the

similarities in investment strategies

between the Fidelity 500 Portfolio and

the State Street 500 Fund, Applicants

assert that the lower expense ratio of the

State Street 500 Fund is likely to result

in higher investment returns than those

obtained by the Fidelity 500 Portfolio.

3. Contract Owners and Participants

who do not want their assets allocated

to the State Street 500 Fund will be able

to transfer assets to any one of the other

Investment Accounts available under

their Contract without any transfer

charge.

4. Applicants represent that the

Substitution and related redemptions in

kind and purchases will not result in

any change in the amount of any

Contract Owner’s or participant’s

Contract value or in the dollar value of

his or her investment in such Contract,

or the life benefits, tax benefits or any

contractual obligation of the Applicants

under the Policies. Contract Owners

will not incur any fees, expenses or

charges as a result of the proposed

transactions. Furthermore, the proposed

transactions will not result in any

change to the Contract fees and charges

currently being paid by existing

Contract Owners.

5. The Applicants will not complete

the Substitution as described in the

application unless all of the following

conditions are met:

a. The Commission will have issued

an order approving the Substitution

under Section 26(b) of the 1940 Act.

b. The registration statement for State

Street Trust shall have become effective.

c. Each Contract Owner and

Participant will have been mailed the

First Notice, the Second Notice and

effective prospectuses for the Contracts

and the State Street 500 Fund.

d. The Applicants will have satisfied

themselves, based on advice of counsel

familiar with insurance laws, that the

Contracts allow the substitution of

portfolios as described in this

application, and the transactions can be

consummated as described herein under

applicable insurance laws and under the

Contracts.

e. The Applicants will have complied

with any regulatory requirements they

believe are necessary to complete the

transactions in each jurisdiction where

the Contracts have been qualified for

sale.

Conclusion

Applicants assert that, for the reasons

summarized above, the requested order

approving the Substitution should be

granted.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–31381 Filed 12–8–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–24785; File No. 812–11332]

AIG Life Insurance Company, et al.

December 5, 2000.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’).

ACTION: Notice of application for an

order pursuant to Section 26(b) of the

Investment Company Act of 1940, as

amended (‘‘1940 Act’’) approving

certain substitution of securities, and

pursuant to Section 17(b) of the 1940

Act exempting related transactions from

Section 17(a) of the 1940 Act.

APPLICANTS: AIG Life Insurance

Company (‘‘AIG’’), AIG Life Insurance

Company Varible Account I (‘‘Variable

Account I’’), American International

Life Insurance Company of New York

(‘‘American’’), American International

Assurance Company of New York

Variable Account A (‘‘Variable Account

A’’), ReliaStar Life Life Insurance

Company of New York (‘‘ReliaStar,’’ and

together with AIG and American, the

‘‘Variable Insurers’’ or the ‘‘Insurance

Company Applicants’’), ReliaStar Life

Insurance Company of New York

Variable Annuity Fund P (‘‘Variable

Annuity Fund P’’), ReliaStar Life

Insurance Company of New York

Variable Annuity Fund Q (‘‘Variable

Annuity Fund Q,’’ and together with

Variable Annuity Fund P, the ‘‘ReliaStar

Separate Accounts’’) (collectively, with

Variable Account I and Variable

Account A, the ‘‘Separate Accounts’’)

and Alliance Variable Products Series

Fund, Inc. (‘‘AVP’’).

SUMMARY OF APPLICATION: Applicants

request an order permitting (1) the

substitution of shares of AVP’s Total

Return Portfolio (‘‘Total Return

Portfolio’’) for shares of AVP’s

Conservative Investors Portfolio

(‘‘Conservative Investors Portfolio’’) and

AVP’s Growth Investors Portfolio

(‘‘Growth Investors Portfolio’’, and (2)

the substitution of shares of AVP’s

Money Market Portfolio (‘‘Money

Market Portfolio’’) and shares of the

Oppenheimer Money Market Fund VA

(‘‘Money Fund’’) for shares of AVP’s

Short-Term Multi Market Portfolio

(‘‘Multi Market Portfolio’’), (The

Conservative Investors Portfolio, Growth

Investors Portfolio and Multi-Market

Portfolio are referred to herein as the

‘‘Replaced Portfolios.’’ The Total Return

Portfolio, Money Market Portfolio and

Money Fund are referred to herein as

the ‘‘Substitute Portfolios.’’ The

Replaced Portfolios and the Substitute

Portfolios are referred to, collectively, as

the ‘‘Affected Portfolios.’’) AIG, Variable

Account I, American, Variable Account

A and AVP also seek relief from Section

17(a) for purposes of effecting certain of

the substitutions partially in-kind.

FILING DATE: The application was filed

on May 1, 2000, and amended and

restated on October 19, 2000.

Applicants represent that they will file

an amended and restated application

during the notice period to conform to

the representations set forth herein.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the Commission orders a

hearing. Interested persons may request

a hearing by writing to the Secretary of

the Commission and serving Applicants