Federal Register / Vol. 60, No. 247 / Tuesday, December 26, 1995 / Notices 66807

and will conservatively lower the

amount of effluents that can be released.

Therefore, it will not cause an increase

in individual or cumulative

occupational radiation exposures. The

new settling pond limit is based on that

quantity which would not exceed the

effluent concentrations of 10 CFR Part

20, Appendix B, Table 2, Column 2, at

the nearest potable water supply if an

uncontrolled release of settling pond

inventory should occur. The effluent

concentration limits in 10 CFR Part 20,

Appendix B, Table 2, are more

conservative than the current limits in

the licensee’s TS. Thus the change

proposed by the licensee results in a net

decrease in the maximum quantity of

radioactive material permitted in the

settling ponds.

The change will not increase the

probability or consequences of

accidents, no changes are being made in

the types of any effluents that may be

released offsite, and there is no

significant increase in the allowable

individual or cumulative occupational

radiation exposure. Accordingly, the

Commission concludes that there are no

significant radiological environmental

impacts associated with the proposed

action.

With regard to potential

nonradiological impacts, the proposed

action does not affect nonradiological

plant effluents and has no other

environmental impact. Accordingly, the

Commission concludes that there are no

significant nonradiological

environmental impacts associated with

the proposed action.

Alternatives to the Proposed Action

Since the Commission has concluded

there is no measurable environmental

impact associated with the proposed

action, any alternatives with equal or

greater environmental impact need not

be evaluated. As an alternative to the

proposed action, the staff considered

denial of the proposed action. Denial of

the application would result in no

change in current environmental

impacts. The environmental impacts of

the proposed action and the alternative

action are similar.

Alternative Use of Resources

This action does not involve the use

of any resources not previously

considered in the Final Environmental

Statement for the Virgil C. Summer

Nuclear Station, Unit No. 1.

Agencies and Persons Consulted

In accordance with its stated policy,

on October 26, 1995 the staff consulted

with the South Carolina State official,

Mr. Virgil Autry of the Bureau of Solid

and Hazardous Waste Management,

Department of Health and

Environmental Control, regarding the

environmental impact of the proposed

action. The State official had no

comments.

Finding of No Significant Impact

Based upon the environmental

assessment, the Commission concludes

that the proposed action will not have

a significant effect on the quality of the

human environment. Accordingly, the

Commission has determined not to

prepare an environmental impact

statement for the proposed action.

For further details with respect to the

proposed action, see the licensee’s letter

dated February 21, 1995, as

supplemented by letters dated August

31, 1995, and December 4, 1995, which

are available for public inspection at the

Commission’s Public Document Room,

The Gelman Building, 2120 L Street,

NW., Washington, DC, and at the local

public document room located at the

Fairfield County Library, 300

Washington Street, Winnsboro, SC.

Dated at Rockville, Maryland, this 19th day

of December 1995.

For the Nuclear Regulatory Commission.

Frederick J. Hebdon,

Director, Project Directorate II–3, Division of

Reactor Projects—I/II Office of Nuclear

Reactor Regulation.

[FR Doc. 95–31253 Filed 12–22–95; 8:45 am]

BILLING CODE 7590–01–P

[Docket No. 50–245]

Northeast Utilities, Millstone Nuclear

Power Station, Unit 1; Issuance of

Director’s Decision Under 10 CFR

2.206

Notice is hereby given that the

Director, Office of Nuclear Reactor

Regulation, has taken action with regard

to a Petition dated January 8, 1995, by

Mr. Anthony J. Ross. The Petition

pertains to Millstone Nuclear Power

Station, Unit 1.

In the Petition, the Petitioner raised

concerns regarding the Millstone station

site paging and site siren evacuation

alarm system at Millstone Unit 1. The

Petitioner requested that the U.S.

Nuclear Regulatory Commission (NRC)

institute at least three sanctions against

his department manager and institute

sanctions against the Petitioner’s

coworker and maintenance first-line

supervisor for engaging in deliberate

misconduct in violation of 10 CFR 50.5.

As grounds for this request, the

Petitioner alleged that on numerous

occasions since January 1994, his

department manager had instructed the

Petitioner’s coworkers to shut off or turn

down the volume on the site paging and

site siren evacuation alarm system in

the Unit 1 maintenance shop, and the

Petitioner’s first-line supervisor and

coworker had complied with this

request, in violation of Technical

Specification 6.8.1 and NUREG–0654.

The Director of the Office of Nuclear

Reactor Regulation has determined to

deny the Petition. The reasons for this

denial are explained in the ‘‘Director’s

Decision Pursuant to 10 CFR 2.206’’

(DD–95–23), the complete text of which

follows this notice and is available for

public inspection at the Commission’s

Public Document Room, the Gelman

Building, 2120 L Street, NW.,

Washington, DC, and at the local public

document room located at the Learning

Resources Center, Three Rivers

Community-Technical College, 574 New

London Turnpike, Norwich, CT 06360.

A copy of the Decision will be filed

with the Secretary of the Commission

for the Commission’s review in

accordance with 10 CFR 2.206(c) of the

Commission’s regulations. As provided

by this regulation, the Decision will

constitute the final action of the

Commission 25 days after the date of

issuance unless the Commission, on its

own motion, institutes a review of the

Decision in that time.

Dated at Rockville, Maryland, this 19th day

of December 1995.

For the Nuclear Regulatory Commission.

William T. Russell,

Director, Office of Nuclear Reactor

Regulation.

[FR Doc. 95–31255 Filed 12–22–95; 8:45 am]

BILLING CODE 7590–01–P

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–21605; File No. 812–9334]

New England Variable Life Insurance

Company, et al.

December 18, 1995.

AGENCY: Securities and Exchange

Commission (the ‘‘SEC’’ or the

‘‘Commission’’).

ACTION: Notice of application for an

order of approval under the Investment

Company Act of 1940 (the ‘‘1940 Act’’).

APPLICANTS: New England Variable Life

Insurance Company (‘‘NEVLICO’’), New

England Variable Annuity Separate

Account (‘‘NEVLICO Account’’), New

England Mutual Life Insurance

Company (‘‘New England’’), The New
66808 Federal Register / Vol. 60, No. 247 / Tuesday, December 26, 1995 / Notices

England Variable Account (‘‘TNE

Account’’) and New England Securities

Corporation (‘‘New England

Securities’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 11(c).

SUMMARY OF APPLICATION: Applicants

seek an order approving offers to owners

of certain variable annuity contracts

supported by the TNE Account (the

‘‘Old Contracts’’) to exchange the Old

Contracts for certain variable annuity

contracts supported by the NEVLICO

Account (the ‘‘New Contracts’’).

FILING DATE: The application was filed

on November 18, 1994 and amended on

August 16, 1995.

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

January 12, 1996, 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, NW., Washington, DC 20549.

Applicants, 501 Boylston Street, Boston

Massachusetts 02117.

FOR FURTHER INFORMATION CONTACT:

Joyce Merrick Pickholz, Senior Counsel,

or Wendy Finck Friedlander, Deputy

Chief, 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 is

available for a fee from the Public

Reference Branch of the SEC.

Applicant’s Representations

1. NEVLICO, a stock life insurance

company organized in 1980 under

Delaware law, is a wholly-owned

subsidiary of New England, a mutual

life insurance company organized in

Massachusetts in 1835.

2. The NEVLICO Account and the

TNE Account (‘‘Accounts’’), separate

accounts within the meaning of Section

2(a)(37) of the 1940 Act, are registered

under the 1940 Act as unit investment

trusts. The Accounts are divided into

subaccounts each of which invests in a

designated portfolio of the New England

Zenith Fund or the Variable Insurance

Products Fund. Sub-accounts may be

added to or deleted from the Accounts

from time to time.

3. New England Securities serves as

the distributor and principal

underwriter for the Old Contracts and

will serve as distributor and principal

underwriter for the New Contracts. New

England Securities is a wholly-owned

subsidiary of New England.

4. According to the Applicants, the

Old Contracts and the New Contracts

are similar. However, the New Contracts

offer an enhanced death benefit, a more

flexible systematic withdrawal feature,

alternative annuity options and waivers

of charges in certain situations. Fewer

investment options are offered under

the New Contracts.

5. Comparison of Contract Features:

a. Forms in Which Issued. Both the

Old Contracts and the New Contracts

are issuable as flexible and single

purchase payment deferred variable

annuity contracts.

b. Purchase Payments. The initial

purchase payment for the Old Contracts

must be at least $25 for a flexible

payment contract and $5,000 for a single

payment contract. Subsequent purchase

payments must be at least $25. In three

states, premium taxes are deducted from

payments before investment under an

Old Contract. The initial purchase

payment for a New Contract must be at

least $2,000 for certain tax-qualified

contracts and $5,000 for all other

contracts. Subsequent purchase

payments must be $250 and no

purchase payments may be made after a

contract owner reaches age 86. No

premium taxes are deducted from

purchase payments before investment

under a New Contract, however, such

taxes will be deducted upon a full or

partial surrender. Under both the Old

and New Contracts, New England and

NEVLICO reserve the right to limit

purchase payments made in any year or

in total under the Contracts.

c. Allocations and Transfers. Both the

Old and New Contracts permit

allocations to up to 10 accounts

including one or more subaccounts and/

or the Fixed Account. 17 subaccounts

are available under the Old Contracts,

whereas 12 are available under the New

Contracts. Minimum transfer amounts

are $25 under the Old Contracts and

$100 under the New Contracts subject to

a maximum of $5,000 under both

contracts. Dollar cost averaging is

permitted under both contracts.

d. Annuity Payments. Under the Old

Contracts, the owner could select a

maturity date at issue, subject to certain

limits. The maturity date under the New

Contracts is the date that the owner or

annuitant reaches age 95 (or the

maximum permitted under state law).

Three annuity options are the same

under both contracts. However, the Old

Contracts offer three options not

available under the New Contracts: life

income, installment refund; investment;

and specified amount of income and the

New Contracts offer one annuity option

not available under the Old Contracts,

namely, income until the payee teaches

100. All options are available under the

Old Contracts in fixed form, and all

except investment and specified amount

of income options are available in

variable form. All options under the

New Contracts are available in fixed and

variable form. Under the New Contracts,

the payee under the variable form of a

life contingency payment option with a

period certain may withdraw the

commuted value of the remaining

payments payable during the period

certain.

e. Death Proceeds. Under the Old

Contracts, the death benefit is the

greater of the Contract value next

determined after receipt of proof of

death or election of payment form and

the sum of all purchase payments less

surrenders. Under the New Contracts,

the death benefit is the Contract value

next determined after receipt of proof of

death or election of payment form and

the guaranteed minimum death benefit.

On the date of issue, the guaranteed

minimum benefit is the initial purchase

payment. On the seventh contract

anniversary and every seven years

thereafter until the owner’s (or, if

applicable, annuitant’s) 76th birthday (if

joint owners, the 71st birthday of the

eldest owner), the guaranteed minimum

is recalculated and becomes the greater

of the Contract value on the date of the

recalculation or the guaranteed

minimum applicable just before the

recalculation. Between recalculations,

adjustments are made for interim

purchase payments and surrenders.

f. Surrenders. After a partial

surrender, the remaining Contract value

must be at least $500 under an Old

Contract and $1,000 under a New

Contract. Otherwise, except for a

deduction for premium taxes under a

New Contract, the surrender rights and

privileges are the same under he Old

and New Contracts.

g. Systematic Withdrawals. Prior to

annuitization, the owner of an Old

Contract may withdraw a specified

portion of Contract value periodically.

The New Contracts permit withdrawal

of either a fixed dollar amount or the

investment gain under the contract,

provided the withdrawal is at least

$100.

6. Comparison of Contract Charges:
Federal Register / Vol. 60, No. 247 / Tuesday, December 26, 1995 / Notices 66809

a. Administration Contract Charges.

This fee is $30 under the Old Contracts;

under the New Contracts, the fee is the

lesser of $30 or 2% of the Contract

value. Under the New Contracts, the fee

is waived if Contract value is at least

$50,000 at year end or if Contract value

was $25,000 at the end of the prior year

and purchase payments of at least

$1,000 (net of surrenders) were made

during the year.

b. Asset-Based Charges. The aggregate

asset-based charges under both contracts

is 1.35% which is composed of (1) an

administrative services charge of .40%

under the Old Contracts and .10%

under the New Contracts and (2) a

mortality and expense risk charge under

the Old Contracts of .95% and 1.25%

under the New Contracts.

c. Transfer Charge. A $10 charge is

imposed under both Contracts on

transfers in excess of 12 per year. The

charge may be increased under the New

Contracts and the number of free

transfers may be reduced under both

Contracts (to 4 under the Old Contracts

and 0 under New Contracts).

d. Contingent Deferred Sales Charge.

No sales charges are deducted from

purchase payments under either the Old

or New Contracts, but a contingent

deffered sales charge (‘‘CDSC’’) may

apply to the following events (a) full or

partial surrenders of Contract value, (b)

the application of Contract exceeds to

certain annuity options prior to the

maturity date and, for new Contracts (c)

the withdrawal of the commuted value

of proceeds applied to an annuity

option if no CDSC was deducted at

annuitization and (d) in states where the

maximum maturity age is less than 95,

the maturity date, if a purchase payment

was made less than seven years before

the withdrawal.

Under the Old Contracts, a declining

CDSC applies during the first ten

Contract years, to withdrawals in excess

of 10% of Contract value on the date of

the first withdrawal in the Contract

year. Under the New Contracts, a

declining CDSC applies to the

withdrawal of purchase payments

invested less than seven years. There is

a few withdrawal amount under the

New Contracts equal to the greater of

10% of the Contract value at the

beginning of the year, or the excess of

Contract value over premiums subject to

a CDSC on the withdrawal date. The

CDSC under both the New and Old

Contracts may not exceed 8% of the first

$50,000 of purchase payments and 6.5%

of payments exceeding $50,000.

CDSC UNDER THE OLD CONTRACTS

Contract year

Percent

of contract

value

withdrawn

(after)

10% free

amount

(percent)

1 .................................................... 6.5

2 .................................................... 6.0

3 .................................................... 5.5

4 .................................................... 5.0

5 .................................................... 4.5

6 .................................................... 4.0

7 .................................................... 3.5

8 .................................................... 3.0

9 .................................................... 2.0

10 .................................................. 1.0

11 and after .................................. 0

CDSC UNDER THE NEW CONTRACTS

Years purchase payment has

been invested

Charge

as percentage

of purchase

payment

(percent)

1 .................................................... 7

2 .................................................... 6

3 .................................................... 5

4 .................................................... 4

5 .................................................... 3

6 .................................................... 2

7 .................................................... 1

Thereafter ..................................... 0

7. The Exchange Offer:

a. Applicants propose to offer owners

of Old Contracts the opportunity to

exchange their contracts for New

Contracts (the ‘‘Exchange Offer’’) by

means of disclosure included in the

prospectus for the New Contracts. The

disclosure would note relevant

differences between the Old and New

Contracts and explain how the death

benefit and CDSC would be calculated

in New Contracts issued in exchange for

Old Contracts. In particular, the

disclosure will explain how an owner of

an Old Contract contemplating an

Exchange could minimize the

applicable contingent deferred sales

charge depending on whether the

payment is made on or before the

Exchange or after the Exchange is

affected.

b. No purchase payment would be

required in connection with an

Exchange (except if necessary to meet

the minimum initial premium

requirement for the New Contracts). A

pro rata portion of the annual

administration contract charge would be

deducted on the date the Exchange is

effected (the ‘‘Exchange Date’’) because

Contract years will thereafter be based

on the Exchange Date rather than the

issue date of the Old Contract. However,

no sales charge would be deducted in

connection with an Exchange nor would

commissions be paid to New England

Securities or any of its registered

representatives. Applicants state that

they believe that an Exchange would not

result in adverse tax consequences to

owners of Old Contracts.

c. According to the Application, the

Contract value (‘‘Exchange Value’’) of

the Old Contracts (together with any

additional payments submitted with an

application for the New Contract) on the

Exchange Date would be applied to the

New Contract as the Contract value as

of the Exchange Date. If a charge was

deducted under the Old Contract for

premium taxes, Applicants represent

that a credit will be applied to the New

Contract on the Exchange Date in an

amount calculated to offset the premium

tax charge, if any, that would apply to

the Exchanged Value upon

annuitization, surrender or payment of

the Death Proceeds under the New

Contract.

d. If the Exchange Value is allocated

among Eligible Funds not available

under the New Contracts, the owner

would be required to reallocate the

Exchanged Value to available eligible

funds. Applicants represent that any

such reallocation would not be counted

toward the 12 free transfers permitted in

the first New Contract year.

e. The Exchange Date would be the

issue date of the new Contract for

purposes of determining contract years

and anniversaries after the Exchange

Date and the maturity date would be set

at age 95 of the older of the contract

owner or annuitant or the maximum age

allowable by law. A new minimum

death benefit would be calculated for

the New Contract equal to the greater of

purchase payments made on the Old

Contract (adjusted for withdrawals) or

the Exchange Value. The guaranteed

minimum death benefit would be

recalculated on each seven-year

anniversary of the Exchange Date.

f. Withdrawals after the Exchange

Date would be governed by the terms of

the New Contract for purposes of

calculating any CDSC. Accordingly, the

Exchange Value would be treated as the

oldest purchase payment and would be

withdrawn first, after the free

withdrawal amount was calculated.

However, withdrawals of Exchange

Value will be subject to the CDSC

percentage applicable under the Old

Contracts taking into account the

number of years the Old Contract had
66810 Federal Register / Vol. 60, No. 247 / Tuesday, December 26, 1995 / Notices

1With respect to the CDSC waiver, Applicants

state that they intend to rely on Rule 22d–1 under

the 1940 Act and undertake to disclose the terms

of the sales load variation in the prospectus for the

New Contracts.

been in effect, rather than the CDSC

under the New Contracts.

g. In most years the CDSC percentage

under the Old Contracts will be slightly

higher than for the New Contracts.

Applicants submit that the sales charge

schedule under the Old Contracts was

designed to cover the costs associated

with the original sale of those Contracts

and, it is believed that, if the original

sales schedule is not preserved for the

Exchange Value, some owners might

exchange contracts with the intent to

then surrender the New Contract and

incur a lower CDSC.

h. Because a CDSC is assessable under

an Old Contract for the first ten contract

years, the applicant of the Old

Contract’s CDSC schedule to the

Exchange Value from an Old Contract

outstanding less than three years would

subject the Exchange Value to a CDSC

for a longer period after the Exchange

Date than a purchase payment made

immediately after the Exchange Date.

However, Applicants will waive any

CDSC on Exchange Value that would

otherwise be imposed more than seven

years after the Exchange Date.1

i. Applicants submit that the

application of the original CDSC

schedule of the Old Contract to any

purchase payments submitted with the

application for the New Contract is to

the advantage of owners of Old

Contracts outstanding more than three

full contract years before the Exchange

Date because the CDSC rate under the

Old Contracts is in most cases less, and

never more than, the CDSC rate

applicable to purchase payments made

immediately after the Exchange Date.

Whether there is a benefit from the

application of the original CDSC to the

Exchange Value of Old Contracts held

less than three years, depends on

whether there is a surrender during the

first seven years. During the first few

years of the seven year period the

applicable CDSC rate under the Old

Contracts is slightly lower than under

the New Contracts, but the reverse is

true during the later years of the seven

year period. Applicants believe that the

treatment of additional purchase

payments submitted with an exchange

application as part of Exchange Value

results in the fairest treatment for the

broadest class of owners of Old

Contracts and that the waiver of any

applicable CDSC more than seven years

after the Exchange Date will minimize

any inequity to owners of contracts

outstanding less than three years of the

Exchange Date. Also, Applicants

undertake to include in the prospectus

for the New Contracts, disclosure

identifying the circumstances in which

it would be advantageous or

disadvantageous to submit a purchase

payment with the application or

immediately after the issuance of the

New Contract.

Applicants’ Legal Analysis

1. Section 11(a) of the 1940 Act

provides in relevant part that it shall be

unlawful for any registered open-end

management investment company

(‘‘fund’’) or its principal underwriter to

make an offer to a shareholder of that

fund or of another fund to exchange his

security for a security in the same or

another fund on any basis other than the

relative net asset values of the securities

to be exchanged, unless the terms of the

offer have first been submitted to and

approved by the Commission or the

offer complies with the Commission’s

rules. Section 11(c) provides that the

provisions of subsection (a) apply,

irrespective of the basis of exchange, to

any offer of exchange of a security of a

fund for the securities of a unit

investment trust and to any type of offer

of exchange of the securities of a

registered unit investment trust for the

securities of any other investment

company. Therefore, prior Commission

approval is required for exchange offers

subject to Section 11(c) even if made on

the basis of relative net asset values.

2. Rule 11a–2 under the 1940 Act,

permits exchange offer without prior

Commission approval by registered

insurance company separate accounts

and their principal underwriters to

holders of variable contracts supported

by separate accounts having the same or

an affiliated insurance company

depositor or sponsor provided, in

essence, that the exchange is made on

the basis of the relative net asset values

of the securities to be exchanged (less

administrative fees disclosed in the

offering account’s registration

statement), and any sales loads imposed

is calculated and deducted in

accordance with the terms and

conditions of Rule 11a–2. Paragraph

(d)(1) of Rule 11a–2 provides that,

where both the exchanged and acquired

securities are subject to deferred sales

loads, any deferred sales load imposed

on the acquired security shall be

calculated as if the holder of the

acquired security had been the holder of

that security from the date on which he

became the holder of the exchanged

security, and purchase payments made

for the exchanged security had been

made for the acquired security on the

date on which they were made for the

exchanged security. Applicants state

that Rule 11a–2(d)(1), on its face,

appears to require that any CDSC

deducted on a surrender made after the

exchange be deducted in accordance

with the CDSC schedule of the acquired

contract.

3. No CDSC would be imposed at the

time of the exchange of an Old Contract

for a New Contract. However, on

surrender of the New Contract, the

Exchanged Value would be subject to

the CDSC provided for by the Old

Contract rather than the CDSC provided

for in the New Contract. Taking into

account the rate at which the CDSC

declines under each Contract, the CDSC

rate applied to Exchange Value

withdrawn more than two years after

the Old Contract was issued, would be

higher under the Old Contract’s CDSC

schedule than under the New Contract’s

CDSC schedule for the same number of

years of investment. Therefore,

Applicants submit that the Exchange

Offer does not appear to comply with

the terms of Rule 11a–2 and prior

approval of the Exchange Offer by the

Commission, pursuant to Section 11(c)

of the 1940 Act, is required.

4. According to Applicants, the public

policy underlying Section 11 may be

inferred from Section 1(b)(1) of the 1940

Act, which states that the national

public interest and the interests of

investors are adversely affected when,

among other things, investors exchange

securities issued by investment

companies without adequate, accurate

and explicit information, fairly

presented, concerning the character of

such securities and the circumstances,

policies and financial responsibility of

such companies and their management.

Also, according to the legislative history

of the 1940 Act, the purpose of Section

11(a) is to provide Commission review

of the terms of certain exchange offers,

to assure that an offer is not being

proposed solely for the purpose of

exacting additional selling charges and

profits from investors by switching them

from one security to another.

5. Applicants submit that the owners

of the Old Contracts will receive

adequate, accurate and explicit

information, fairly presented,

concerning the Exchange Offer in the

prospectus for the New Contracts which

will be given to any owner of an Old

Contract considering the Exchange

Offer.

6. Applicants assert that the Exchange

Offer does not impose additional sales

load but preserves the old sales charge

schedule for Exchange Value. No sales

charge would be deducted on the

Exchange Date, and, for purposes of any

CDSC applicable after the exchange,
Federal Register / Vol. 60, No. 247 / Tuesday, December 26, 1995 / Notices 66811

1Applicant received an order under section 26(b)

of the Act that approved the substitution of shares

of the Fund for applicant’s shares and under section

17(b) exempting applicant from section 17(a) for

certain affiliated transactions between applicant

and the Fund. See Investment Company Act Release

Nos. 17892 (Nov. 30, 1990) (notice) and 17922 (Dec.

18, 1990) (order).

credit would be given for the time that

the Old Contract was in effect.

7. Applicants submit that the history

for Rule 11a–2 does not reflect any

policy basis for the apparent

requirement that the sales load schedule

for the acquired security be applied to

Contract values carried over from the

exchanged security. Provisions of Rule

11a–2 relevant to exchanges of variable

annuity contracts with front-end sales

load structures effectively permit the

deduction of an aggregate sales load

based on the highest sales load rate

applicable to either the exchanged

security or acquired security.

Applicants submit that there is no

policy reason for permitting the highest

sales load rate to apply in the context of

contracts with a front-end sales load

structure, but not contracts with a

deferred sales load structure. Further,

Applicants note that Rule 11a–3, which

applies to exchange offers involving

mutual fund shares, prohibits the

deduction of a deferred sales load on an

exchanged security at the time of

exchange, but permits the deduction of

that sales load when the acquired

security is redeemed, provided that,

among other things, credit is given for

the time the acquired security was held.

Thus, Applicants state that Rule 11a–3

would permit the CDSC deductions as

contemplated in the Exchange Offer and

cite examples 4 and 5 in the appendix

to the Commission release adopting

Rule 11a–3 (Inv. Co. Act Rel. No. 17097)

in support of their view. Applicants

submit that there is no policy reason for

applying different rules to mutual fund

exchange offers than are applied to

separate account exchange offers.

Applicants’ Conclusion

For the reasons set forth above,

Applicants submit that the Exchange

Offer complies with the general

principals of Section 11(a) and Rules

11a–2 and 11a–3 and does not present

any of the abuses that Section 11 was

intended to prevent. Accordingly,

Applicants request approval pursuant to

Section 11(c) of the 1940 Act to the

extent necessary to permit the Exchange

Offer to be made to owners of the Old

Contracts as described above.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–31220 Filed 12–22–95; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Release No.

21606; 811–4649]

Shearson Lehman Series Fund

December 19, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Deregistration under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: Shearson Lehman Series

Fund.

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 was filed

on September 12, 1995.

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

January 16, 1996 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 5th

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

Applicant, 388 Greenwich Street, New

York, New York 10013.

FOR FURTHER INFORMATION CONTACT:

Sarah A Buescher, Staff Attorney, at

(202) 942–0573, or Alison E. Baur,

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 or a fee from the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant is an open-end

management investment company

organized as a Massachusetts business

trust. Applicant has five portfolios:

Money Market Portfolio, High Income

Bond Portfolio, Government Securities

Portfolio, Total Return Portfolio, and

Appreciation Portfolio. On April 25,

1986, applicant filed a Notification of

Registration on Form N–8A and a

registration statement on Form N–1A

pursuant to section 8(b) of the Act and

the Securities Act of 1933. The

registration statement became effective

on October 10, 1986, and the initial

public offering commenced shortly

thereafter.

2. On January 17, 1990, applicant’s

board of trustees approved a proposal

(the ‘‘Plan’’) whereby applicant would

be replaced with the IDS Life Series

Fund, Inc. (the ‘‘Fund’’) as the

investment vehicle for the single

premium variable life insurance policies

issued by IDS Life Insurance Company

of New York and IDS Life Insurance

Company. The Plan called for

applicant’s sole shareholder, IDS Life

Variable Account for Shearson Lehman,

to redeem all of its shares of applicant.1

3. On December 28, 1990, applicant’s

sole shareholder redeemed its shares of

applicant and applicant distributed to

its shareholder applicant’s assets in

kind. The distribution had a net asset

value of $18,779,858. No redemption fee

or sales charge was imposed in

connection with the transaction.

Applicant transferred all of its

remaining assets and liabilities to the

Fund.

4. In connection with its liquidation,

applicant incurred minimal expenses,

consisting of accounting, administrative,

and legal expenses, all of which were

paid by IDS Life Insurance Company of

New York and IDS Life Insurance

Company. At the time of its liquidation,

applicant had amortized all but

approximately $46,155 of its

organizational expenses. This amount

was absorbed by Shearson Lehman

Brothers Inc., applicant’s sponsor.

5. As of the date of this application,

applicant has no outstanding debts or

liabilities. Applicant has no

shareholders and is not a party to any

litigation or administrative proceeding.

Applicant is not presently engaged, nor

does it propose to engage, in any

business activities other than those

necessary for the winding-up of its

affairs.

6. Applicant intends to file the

appropriate notice of termination

required to terminate its existence as a

Massachusetts business trust.