32266 Federal Register / Vol. 63, No. 113 / Friday, June 12, 1998 / Notices

1Applicants also request relief with respect to

future Portfolios of the Fund.

withdraw the above specified security

(‘‘Security’’) from listing and

registration on the American Stock

Exchange, Inc. (‘‘Amex’’ or

‘‘Exchange’’).

The reasons cited in the application

for withdrawing the Security from

listing and registration include the

following:

The Security has been listed for

trading on the Amex and, pursuant to

Registration Statement on Form 8–A

which became effective March 23, 1998,

the New York Stock Exchange, Inc.

(‘‘NYSE’’). Trading in the Security

commenced on the NYSE on March 27,

1998, and concurrently therewith such

Security was suspended from trading on

the Amex. In addition, a Registration

Statement on Form 8–A was filed with

respect to the Preferred Stock Purchase

Rights which are currently attached and

do not trade separately from the

Security.

The Company has complied with

Amex Rule 18 by filing with the

Exchange a certified copy of the

resolutions adopted by the Company’s

Board of Directors authorizing the

withdrawal of the Security from listing

and registration on the Amex and by

setting forth in detail to the Exchange

the reasons and facts supporting the

withdrawal.

In making the decision to withdraw

its Security from listing and registration

on the Amex, the Company believes that

the NYSE offers enhanced visibility and

will enable the Company to further

broaden its institutional shareholder

base.

By letter dated March 17, 1998, the

Amex informed the Company that it had

no objection to the withdrawal of the

Company’s Security from listing and

registration on the Amex.

By reason of Section 12(b) of the Act

and the rules and regulations

thereunder, the Company shall continue

to be obligated to file reports with the

Commission and the NYSE under

Section 13 of the Act.

Any interested person may, on or

before June 30, 1998, submit by letter to

the Secretary of the Securities and

Exchange Commission, 450 Fifth Street,

NW, Washington, DC 20549, facts

bearing upon whether the application

has been made in accordance with the

rules of the Exchange and what terms,

if any, should be imposed by the

Commission for the protection of

investors. The Commission, based on

the information submitted to it, will

issue an order granting the application

after the date mentioned above, unless

the Commission determines to order a

hearing on the matter.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 98–15705 Filed 6–11–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Release No. 23242;

812–10814]

Jefferson Pilot Variable Fund, Inc. and

Jefferson Pilot Investment Advisory

Corporation; Notice of Application

June 5, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application under

section 6(c) of the Investment Company

Act of 1940 (the ‘‘Act’’) for an

exemption from section 15(a) of the Act

and rule 18f–2 under the Act, and from

certain disclosure requirements under

the Act.

SUMMARY OF APPLICATION: Applicants

request an order that would permit

applicants to hire subadvisers and

materially amend subadvisory

agreements without shareholder

approval, and would grant relief from

certain disclosure requirements

regarding advisory fees paid to

subadvisers.

APPLICANTS: Jefferson Pilot Variable

Fund, Inc. (‘‘Fund’’) (formerly Chubb

America Fund, Inc.) and Jefferson-Pilot

Investment Advisory Corporation

(‘‘Manager’’) (formerly Chubb

Investment Advisory Corporation).

FILING DATES: The application was filed

on October 9, 1997, and amended on

May 29, 1998. Applicants have agreed to

file an additional amendment, the

substance of which is incorporated in

this notice, during the notice period.

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 applicants with a

copy of the request, personally or by

mail. Hearing requests should be

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

June 30, 1998, 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 who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicants, One Granite Place, Concord,

N.H. 03301.

FOR FURTHER INFORMATION CONTACT:

Annmarie J. Zell, Staff Attorney, at (202)

942–0532 or Mary Kay Frech, Branch

Chief, 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 at the SEC’s

Public Reference Branch, 450 Fifth

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

(tel. 202–942–8090).

Applicants’ Representations

1. The Fund is a Maryland

corporation registered under the Act as

an open-end management investment

company. The Fund is composed of

eleven separately managed portfolios

(‘‘Portfolios’’), each of which has its

own investment objective, policies and

restrictions.1 The Portfolios serve as

funding vehicles for variable annuity

contracts (‘‘Contracts’’) and variable life

insurance policies (‘‘Policies’’) offered

through separate accounts (‘‘Separate

Accounts’’) of Jefferson Pilot Financial

Insurance Company, Jefferson Pilot

LifeAmerica Insurance Company,

Alexander Hamilton Life Insurance and

Jefferson-Pilot Life Insurance Company.

Owners of the Contracts and Policies

(‘‘Owners’’) will be able to select subaccounts of the Separate Accounts that

invest in the Portfolios to fund the

Contracts and Policies. Shares of the

Portfolios will not be sold directly to the

public, but may be sold to qualified

pension plans under the Internal

Revenue Code of 1986, as amended.

2. The Manager, a wholly-owned

subsidiary of Jefferson-Pilot

Corporation, is registered as an

investment adviser under the

Investment Advisers Act of 1940

(‘‘Advisers Act’’). The Manager serves as

investment adviser to the Fund

pursuant to an investment advisory

agreement (‘‘Management Agreement’’)

and is paid a fee for its services based

on the value of the average daily net

assets of each Portfolio.

3. Pursuant to the Management

Agreement and subject to the

supervision of the board of directors of

the Fund (‘‘Board’’), the Manager (i)

selects and contracts at its own expense

with investment advisers registered

under the Advisers Act (‘‘Advisers’’) to

manage the purchase, retention, and

disposition of the investments,
Federal Register / Vol. 63, No. 113 / Friday, June 12, 1998 / Notices 32267

securities and cash of each Portfolio; (ii)

supervises and monitors the

performance of the Advisers, including

their termination and replacement; and

(iii) allocates a Portfolio’s assets

between and among its Advisers, where

more than one Adviser will perform

investment management services for a

particular Portfolio. The Manager also

provides the Portfolios with overall

administrative services, generally

monitors the Fund’s compliance with

federal and state statutes, supervises the

Fund’s relationship with other service

providers, carries out the directives of

the Board, and provides necessary office

space, equipment, and personnel.

4. The Advisers serve as subadvisers

to the Portfolios pursuant to separate

subadvisory agreements with the

Manager (‘‘Advisory Agreements’’).

Subject to the general supervision and

direction of the Manager, each Adviser

furnishes a continuous investment

program for the Portfolio it advises (or

the portion for which it provides

investment advice), makes investment

decisions for the Portfolio, and places

all orders to purchase and sell securities

on behalf of the Portfolio. The Manager

pays each Adviser out of the

management fees received from each of

the Portfolios. Currently, each Portfolio

is advised by a single Adviser but, in the

future, the Portfolios may be advised by

two or more Advisers.

5. Applicants request an exemption

from section 15(a) of the Act and rule

18f–2 under the Act to permit the

Manager to enter into and make material

changes to Advisory Agreements

without obtaining shareholder approval.

The requested relief will not extend to

an Adviser that is an ‘‘affiliated person,’’

of either the Fund or the Manager, as

defined in section 2(a)(3) of the Act,

other than by reason of serving as an

Adviser to one or more of the Portfolios

(‘‘Affiliated Adviser’’). Applicants also

request an exemption to permit the

Portfolios to disclose (both as a dollar

amount and as a percentage of a

Portfolio’s net assets): (a) aggregate fees

paid to the Manager; and (b) aggregate

fees paid to Advisers other than

Affiliated Advisers (‘‘Aggregate Fee

Disclosure’’). Aggregate Fee Disclosure

also will include separate disclosure of

any advisory fees paid to any Affiliated

Adviser.

Applicants’ Legal Analysis

Shareholder Voting

1. Section 15(a) of the Act makes it

unlawful for any person to act as

investment adviser to a registered

investment company except pursuant to

a written contract that has been

approved by a majority of the

investment company’s outstanding

voting securities. Rule 18f–2 under the

Act provides that each series or class of

stock in a series company affected by a

matter must approve the matter if the

Act requires shareholder approval.

2. Section 6(c) of the Act provides that

the SEC may exempt any person,

security, or transaction from any

provision of the Act, if and to the extent

that the 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 Act. Applicants request relief under

section 6(c) from section 15(a) of the Act

and rule 18f–2 under the Act.

3. Applicants submit that by

purchasing a Contract or Policy an

Owner is indirectly hiring the Manager

to manage the assets of the Portfolios by

using external portfolio managers, rather

than the Manager’s own personnel.

Applicants point out that the Fund’s

prospectus, on which prospective

Owners rely in making their subaccount investment decisions, specifies

that the Manager is principally

responsible for selecting, evaluating,

and terminating Advisers, and that the

Manager is compensated for this service.

Applicants believe that requiring Owner

approval of every change of Advisers or

change in an Advisory Agreement,

would frustrate Owners’ expectation

that the Manager is to perform these

duties.

4. Applicants state that relief is

appropriate in the public interest

because it would allow the Manager to

more efficiently perform its principal

functions of selecting, monitoring, and

making changes in the role of Advisers

by permitting the Manager to promptly

replace an Adviser that is not

performing its duties adequately.

Applicants also submit that the relief is

consistent with the protection of

investors because it permits the Fund to

avoid the administrative burden and

expenses associated with a formal proxy

solicitation, while providing adequate

disclosure to investors. Applicants note

that the Fund’s prospectus will disclose

information concerning the identity,

ownership, and qualifications of the

Advisers in full compliance with Form

N–1A (except with respect to the

Aggregate Fee Disclosure) and if a new

Adviser is retained, the Manager will

furnish Owners, within 60 days, all the

information that would have been

provided in a proxy statement (except

with respect to Aggregate Fee

Disclosure).

5. Applicants believe that the

requested relief will continue to provide

protection for prospective Owners

because (i) a Portfolio will not rely on

the requested order unless the operation

of the Portfolio in the manner described

in the application is approved by a

majority of its outstanding voting

securities and disclosed in the Fund’s

prospectus; (ii) the Manager and its

selection of Advisers is subject to

oversight by the Board; and (iii) the

Management Agreement will remain

fully subject to the requirements of

section 15(a) and rule 18f–2 under the

Act.

Fee Disclosure

6. Items 2, 5(b) (iii), and 16(a)(iii) of

Form N–1A (and after the effective date

of the amendments to Form N–1A, items

3, 6(a)(1)(ii), and 15(a)(3)), the

registration statement used by open-end

investment companies, require

disclosure of the method and amount of

the investment adviser’s compensation.

7. Item 3 of Form N–14, the

registration form for business

combinations involving open-end

investment companies, requires the

inclusion of a ‘‘table showing the

current fees for the registrant and the

company being acquired and pro forma

fees, if different, for the registrant after

giving effect of the transaction.’’

8. Rule 20a–1 under the Act requires

proxies solicited with respect to an

investment company to comply with

Schedule 14A under the Securities

Exchange Act of 1934 (‘‘Exchange Act’’).

Item 22(a)(3)(iv) of Schedule 14A

requires a proxy statement for a

shareholder meeting at which a new fee

will be established or an existing fee

increased to include a table of the

current and pro forma fees. Items

22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8), and

22(c)(9), taken together, require a proxy

statement for a shareholder meeting at

which the advisory contract will be

voted upon to include the ‘‘rate of

compensation of the investment

adviser,’’ the ‘‘aggregate amount of the

investment adviser’s fees,’’ a description

of ‘‘the terms of the contract to be acted

upon,’’ and, if a change in the advisory

fee is proposed, the existing and

proposed fees and the difference

between the two fees.

9. Form N–SAR is the semi-annual

report filed with the SEC by registered

investment companies. Item 48 of Form

N–SAR requires investment companies

to disclose the rate schedule for fees

paid to investment advisers.

10. Regulation S–X specifies the

requirements for financial statements

required to be included as part of the

investment company registration

statements and shareholder reports filed

with SEC. Sections 6–07(2)(a), (b) and
32268 Federal Register / Vol. 63, No. 113 / Friday, June 12, 1998 / Notices

(c) of Regulation S–X require that

investment companies include in their

financial statements certain information

about investment advisory fees.

11. Applicants request relief from the

above disclosure requirements under

section 6(c). Applicants argue that, with

the information provided in the

Aggregate Fee Disclosure, Owners will

have adequate information to compare

the management and advisory fees of

the Portfolios with those of other funds.

Applicants believe that, while the

amount of the total fees retained by the

Manager is relevant to the Owners’

determination of the value of the

Manager’s services, the specific portion

of the total fee paid to an individual

adviser provides no useful information

since the Owner has engaged the

Manager to select, monitor, and

compensate the Advisers. Applicants

also believe that because most

investment advisers price their services

based on ‘‘posted’’ fee rates, the

Manager, without the requested relief,

may only be able to obtain a specific

Adviser’s services by paying higher fee

rates than if would otherwise be able to

negotiate if the rates paid were not

disclosed publicly.

Applicants’ Conditions

Applicants agree that the order

granting the requested relief will be

subject to the following conditions:

1. Before a Portfolio may rely on the

requested order, the operation of the

Portfolio as described in the application

will be approved by a majority of its

outstanding voting securities, as defined

in the Act, pursuant to voting

instructions provided by Owners with

assets allocated to any sub-account of a

registered Separate Account for which a

Portfolio serves as a funding medium or,

in the case of a new Portfolio whose

shareholders (i.e., Separate Accounts)

purchased shares on the basis of a

prospectus containing the disclosure

contemplated by condition 2 below, by

the sole initial shareholder before

offering shares of that Portfolio to

prospective Owners through a Separate

Account.

2. The Fund will disclose in its

prospectus the existence, substance, and

effect of any order granted pursuant to

the application. In addition, the Fund

will hold itself out to the public as

employing the management structure

described in the application. The

prospectus relating to the Fund will

prominently disclosure that the

Manager has ultimate responsibility to

oversee Advisers and recommend their

hiring, termination, and replacement.

3. Within 60 days of the hiring of any

new Adviser, Owners with assets

allocated to any sub-account of any

registered Separate Account for which a

Portfolio serves as a funding medium

will be furnished all information about

a new Adviser or Advisory Agreement

that would be included in a proxy

statement, except as modified by the

order to permit Aggregate Fee

Disclosure. This information will

include Aggregate Fee Disclosure and

any change in such disclosure caused by

the addition of a new Adviser. The

Manager will meet this condition by

providing these Owners with an

information statement meeting the

requirements of Regulation 14C and

Schedule 14C under the Exchange Act

and item 22 of Schedule 14A under the

Exchange Act.

4. The Manager will not enter into an

Advisory Agreement with any Affiliated

Adviser without that Advisory

Agreement, including the compensation

to be paid under that agreement, being

approved by the Owners with assets

allocated to any sub-account of a

Separate Account for which the

applicable Portfolio serves as a funding

medium.

5. At all times, a majority of the Board

will not be ‘‘interested persons’’ of the

Fund as defined in section 2(a)(19) of

the Act (‘‘Independent Directors’’), and

the nomination of new or additional

Independent Directors will continue to

be at the discretion of the then existing

Independent Directors.

6. When an Adviser change is

proposed for a Portfolio with an

Affiliated Adviser, the Board, including

a majority of the Independent Directors,

will make a separate finding, reflected

in the Board’s minutes, that the change

is in the best interests of the Portfolio

and Owners with assets allocated to any

sub-account of a separate account for

which a Portfolio serves as a funding

medium and does not involve a conflict

of interest from which the Manager or

the Affiliated Adviser derives an

inappropriate advantage.

7. Independent counsel

knowledgeable about the Act and the

duties of Independent Directors will be

engaged to represent the Independent

Directors of the Fund. The selection of

such counsel will be within the

discretion of the Independent Directors.

8. The Manager will provide the

Board, no less frequently than quarterly,

with information about the Manager’s

profitability on a per-Portfolio basis.

This information will reflect the impact

on profitability of the hiring or

termination of any Adviser during the

applicable quarter.

9. Whenever an Adviser is hired or

terminated, the Manager will provide

the Board information showing the

expected impact on the Manager’s

profitability.

10. The Manager will provide general

management services to the Fund and

its Portfolios, including overall

supervisory responsibility for the

general management and investment of

each Portfolio’s securities portfolio, and,

subject to review and approval by the

Board, will: (i) set each Portfolio’s

overall investment strategies; (ii) select

Advisers; (iii) allocate and, when

appropriate, reallocate a Portfolio’s

assets among multiple Advisers; (iv)

monitor and evaluate the performance

of Advisers; and (v) implement

procedures reasonably designed to

ensure that the Advisers comply with

the Portfolio’s investment objective,

policies, and restrictions.

11. No director or officer of the Fund

or director or officer of the Manager will

own directly or indirectly (other than

through a pooled investment vehicle

that is not controlled by that director or

officer) any interest in an Adviser,

except for: (i) ownership of interests in

the Manager or any entity that controls,

is controlled by, or is under common

control with the Manager; or (ii)

ownership of less than 1% of the

outstanding securities of any class of

equity or debt of a publicly traded

company that is either an Adviser or an

entity that controls, is controlled by, or

is under common control with an

Adviser.

12. The Fund will disclose in its

registration statement the Aggregate Fee

Disclosure.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–15631 Filed 6–11–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–23241; File No. 812–10948]

PFL Endeavor Target Account, et al.;

Notice of Application

June 5, 1998.

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: The

Applicants seek an order pursuant to

Section 6(c) of the 1940 Act exempting

the Applicants and future separate