Federal Register / Vol. 62, No. 58 / Wednesday, March 26, 1997 / Notices 97

value of his or her investment in

Variable Account One. Cova life will

redeem shares of the Global Equity

Portfolio in cash and purchase shares of

the International Equity Portfolio with

the proceeds.

15. Contract owners will not incur

any fees or charges as a result of the

proposed substitution, nor will their

rights under the Contracts be altered in

any way. All expenses incurred in

connection with the proposed

substitution, including legal, accounting

and other fees and expenses, will be

paid by Cova Life. The proposed

substitution will not cause the Contract

fees and charges currently being paid by

existing Contract owners to be greater

after the proposed substitution than

before the proposed substitution.

16. Within five days of the

substitution, affected Contract owners

will receive written notice of the

substitution reiterating their right to

make transfers from the International

Equity sub-account to any other subaccount of Variable Account One for a

period of 30 days from the date of the

notice without any limitation or charge

being imposed. Cova Life will include

in such mailing a supplement to the

prospectus of Variable Account One

which describes the substitution.

17. Following the substitution,

Contract owners will be afforded the

same contract rights, including

surrender and other transfer rights with

regard to amounts invested under the

Contracts, as they currently have.

Applicants’ Legal Analysis and

Conditions

1. Section 26(b) of the 1940 Act

provides, in pertinent part, that ‘‘[i]t

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.’’

Applicants assert that the purpose of

Section 26(b) is to protect the

expectation of investors in a unit

investment trust that the unit

investment trust will accumulate the

shares of a particular issuer, and to

prevent unscrutinized substitutions

which in effect might force shareholders

dissatisfied with the substituted security

to redeem their shares, thereby possibly

incurring either a loss of the sales load

deducted from initial purchase

payments, an additional sales load upon

reinvestment of the redemption

proceeds, or both. Section 26(b) affords

this protection to investors by

preventing a depositor or trustee of a

unit investment trust holding the shares

of one issuer from substitution for those

shares the shares of another issuer,

unless the Commission approves that

substitution.

2. Applicants maintain that the

purposes, terms and conditions of the

Substitution are consistent with the

principles and purposes of Section 26(b)

and do not entail any of the abuses that

Section 26(b) is designed to prevent.

Applicant assert that the substitute fund

is a suitable and appropriate investment

vehicle for Contract owners. Applicants

further assert that effecting the proposed

substitution will not result in greater

(aggregate) fees and charges under the

Contracts.

3. Applicants represent that the

proposed substitution will not result in

the type of costly forced redemption

that section 26(b) was intended to guard

against, and is consistent with the

protection of investors and the purposes

fairly intended by the 1940 Act for the

following reasons: prior to the

substitution and for a period of thirty

(30) days thereafter, Contract owners

may transfer Global Equity sub-account

values to any other sub-account of

Variable Account One without any

limitation or charge being imposed; the

investment objective of the substitute

fund is similar to that of the removed

fund; the substitution will be at the net

asset value of the respective portfolio

shares, with no change in a Contract

owner’s contract value or in the dollar

value of the Contract owner’s

investment in Variable Account One;

Contract owners will not incur any fees

or charges as a result of the proposed

substitution, nor will their rights under

the Contracts be altered in any way; all

expenses incurred in connection with

the proposed substitution, including

legal, accounting and other fees and

expenses, will be paid by Cova Life; the

proposed substitution will not impose

any tax liability on Contract owners;

Contract owners may choose to

withdraw amounts credited to them

following the substitution under the

conditions that currently exist, subject

to any applicable deferred sales charge.

4. Applicants assert that the substitute

fund is substantially larger than the

removed fund, and that the substitute

fund should grow further. Applicants

anticipate that, after the proposed

substitution, the substitute fund will

provide Contract owners with

comparable or more favorable

investment results than would be the

case if the proposed substitution did not

take place.

5. Applicants also note that within 5

days after the proposed substitution,

any affected Contract owners will be

sent a written notice informing them

that shares of the International Equity

Portfolio have been substituted for

shares of the Global Equity Portfolio.

Cova Life will include in such a mailing

a supplement to the prospectus of

Variable Account one which describes

the substitution.

Conclusion

For the reasons set forth above,

Applicants represent that the order

requested, approving the proposed

substitution, is necessary and

appropriate in the public interest and

consistent with the protection of

investors and purposes fairly intended

by the policy and provisions of the 1940

Act and should be granted.

For the Commission, by the Division of

Investment management, pursuant to

delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–7645 Filed 3–25–97; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Release No.

22574; 811–7854]

The U.S. Stock Portfolio; Notice of

Application

March 20, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

deregistration under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: The U.S. Stock Portfolio.

RELEVANT ACT SECTION: Section 8(f).

SUMMARY OF APPLICATION: Applicant

requests an order declaring that it has

ceased to be an investment company.

FILING DATE: The application has filed on

February 21, 1997.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicant with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

April 14, 1997, and should be

accompanied by proof of service on the

applicant, 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 SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, NW., Washington, DC 20549.

Applicant, Elizabethan Square, Shedden
98 Federal Register / Vol. 62, No. 58 / Wednesday, March 26, 1997 / Notices

1 In Amendment No. 1, Nasdaq clarifies that the

filing is made on behalf of the NASD and the

Nasdaq Stock Market, Inc. Amendment No. 1 also

includes additional discussion regarding the

statutory basis for the fee increase for Nasdaq Level

1 Service. Finally, Amendment No. 1 corrects

several typographical errors in the original filing.

See letter from Eugene A. Lopez, Assistant General

Counsel, Office of General Counsel, The Nasdaq

Stock Market Inc., to Michael Walinskas, Senior

Special Counsel, Office of Market Supervision,

Division of Market Regulation, Commission, dated

March 17, 1997 (‘‘Amendment No. 1’’). 2 15 U.S.C. 78o–3.

Road, George Town, Grand Cayman,

Cayman Islands, B.W.I.

FOR FURTHER INFORMATION CONTACT:

Diane L. Titus, Paralegal Specialist, at

(202) 942–0584, or H.R. Hallock, Jr.,

Special Counsel, at (202) 942–0564

(Division of Investment Management,

Office of Investment Company

Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee from the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant is an open-end,

diversified management investment

company organized as a trust under the

laws of the State of New York. On July

6, 1993, applicant filed a notification of

registration on Form N–8A and a

registration statement on Form N–1A.

Applicant’s registration statement has

not been declared effective.

2. Applicant has no shareholders,

liabilities or assets. Applicant is not a

party to any litigation or administrative

proceeding.

3. Applicant is not now engaged, nor

does it propose to engage, in any

business activities other than those

necessary for the winding up of its

affairs.

4. Applicant has terminated its

existence under New York law.

For the SEC, by the Division of Investment

Management, under delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–7646 Filed 3–25–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38417; File No. SR–NASD–

97–17]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 Thereto by the

National Association of Securities

Dealers, Inc. Relating to Fees Charged

for the Nasdaq Level 1 Service

March 18, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on March 3, 1997, the

National Association of Securities

Dealers, Inc. (‘‘NASD’’) and the Nasdaq

Stock Market, Inc. (‘‘Nasdaq’’)

(hereinafter referred to collectively as

‘‘Nasdaq’’ or the ‘‘Nasdaq Stock

Market’’) filed with the Securities and

Exchange Commission (‘‘Commission’’

or ‘‘SEC’’) the proposed rule change as

described in Items I, II, and III below,

which Items have been prepared by

Nasdaq. On March 18, 1997, the Nasdaq

Stock Market filed Amendment No. 1 to

the proposal.1 The Commission is

publishing this notice to solicit

comments on the proposed rule change,

as amended, from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change amends

NASD Rule 7010(a) to increase the

monthly fee charged for Nasdaq Level 1

Service. Below is the text of the

proposed rule change. Proposed new

language is italicized and proposed

deletions are bracketed.

Rule 7000. CHARGES FOR SERVICES

AND EQUIPMENT

7010. System Services

(a) Nasdaq Level 1 Service

The charge to be paid by the

subscriber for each terminal receiving

Nasdaq Level 1 Service is $20 [19] per

month. This Service includes the

following data:

* * * * *

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

Nasdaq included statements concerning

the purpose of and basis for the

proposed rule change. The text of these

statements may be examined at the

places specified in Item IV below.

Nasdaq has prepared summaries, set

forth in Sections A, B, and C below, of

the most significant aspects of such

statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The Nasdaq Stock Market proposes to

establish a fee increase for Nasdaq Level

1 Service to reflect the increased value

of the data being disseminated via this

Service. Under the new SEC Order

Handling Rules, Nasdaq quotations now

contain additional information that was

not previously available to subscribers.

That is, pursuant to SEC Rule 11Ac1–4,

customer limit orders are now displayed

in market maker quotations. In addition,

Nasdaq’s Level 1 Service includes price

information from electronic

communications networks (‘‘ECNs’’)

that was not previously available

through this Service. Thus, to reflect the

increased value of the transparency of

Nasdaq quotes under these new rules

and the price discovery information

available in the Nasdaq Stock Market,

Nasdaq believes that the fee for such

service should be increased.

Nasdaq proposes to increase by $1.00

the current monthly fee for the receipt

of Nasdaq quote and trade information,

resulting in a $20 fee per month per

authorized device for Level 1 Service.

As noted above, the Nasdaq Level 1

Service will include limit order

information (i.e., the best priced orders

to buy and sell) and ECN prices. This

information provides valuable

information to investors and other

market participants and helps in price

discovery. However, this fee increase

will not become effective until the latter

of April 1, 1997, or such time when

more than half of Nasdaq securities as

measured by median daily dollar

volume are subject to the new SEC

Order Handling Rules. Nasdaq believes

that it is appropriate to delay the

implementation of the increased fee

until the Level 1 Service reflects a

substantial increase in this new

information. Once Nasdaq’s higher

volume securities are subject to the new

rules, the value of the Level 1 Service

will have substantially increased and

the fee should reflect that added value.

Nasdaq believes that the abovereferenced fee is consistent with the

provisions of Section 15A(b)(5) of the

Act.2 Section 15A(b)(5) specifies that

the rules of a national securities

association shall provide for the

equitable allocation of reasonable dues,

fees and charges among members,

issuers and other persons using any

facility or system that the association

operates or controls. The increased fee

to be charged for this valuable

information results in an equitable

allocation of the cost of providing this

information in a way that the costs are

applied fairly and uniformly to all users

of the system. Nasdaq has attempted to

equitably spread the costs associated

with the information gathered pursuant

to the new SEC Order Handling Rules

over a broad base of end users, as was