9070 Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Notices

2 17 CFR 200.30–3(a)(12) (1994).

ISCC to enter into a relationship with

entities such as INDEVAL, the Mexican

securities clearing and depository

company. However, ISCC will still be

required to file a proposed rule change

pursuant to Section 19(b) of the Act

before entering into a clearing,

settlement, or custody service

relationship with any entity.

(b) The proposed change will

facilitate the prompt and accurate

clearance and settlement of securities

transactions, and therefore, the

proposed rule change is consistent with

the requirements of the Act, specifically

Section 17A of the Act, and the rules

and regulations thereunder.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

ISCC does not believe that the

proposed rule change will have an

impact on or impose a burden on

competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments have been

solicited or received. ISCC will notify

the Commission of any written

comments received by ISCC.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

the Commission Action

The foregoing rule change has become

effective pursuant to Section 19(b)(3)(A)

of the Act and Rule 19b–4(e)(4)

thereunder in that the proposal effects a

change in an existing service that does

not adversely affect the safeguarding of

securities or funds and does not

significantly affect the respective rights

of the clearing agency or persons using

the service. At any time within sixty

days of the filing of such proposed rule

change, the Commission may summarily

abrogate such rule change if it appears

to the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street NW.,

Washington, D.C. 20549. Copies of the

submission, all subsequent

amendments, all written statements

with respect to the proposed rule

change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. 552, will be

available for inspection and copying in

the Commission’s Public Reference

Room, 450 Fifth Street NW.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the above-mentioned selfregulatory organization. All submissions

should refer to the file number SR–

ISCC–95–01 and should be submitted by

March 9, 1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.2

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–3882 Filed 2–15–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20895; File No. 812–9244]

First SunAmerica Life Insurance

Company, et al.; Notice of Application

February 10, 1995.

AGENCY: Securities and Exchange

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

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘Act’’ or

‘‘1940 Act’’).

APPLICANTS: First SunAmerica Life

Insurance Company (‘‘First

SunAmerica’’), FS Variable Separate

Account (‘‘Separate Account’’), and

SunAmerica Capital Services, Inc.

RELEVANT ACT SECTIONS: Order requested

under Section 6(c) for exemptions from

Sections 26(a)(2) and 27(c)(2).

SUMMARY OF APPLICATION: Applicants

request exemptions from Sections

26(a)(2) and 27(c)(2) of the Act to the

extent necessary to allow first

SunAmerica to deduct from the

Separate Account the mortality and

expense risk charges and the

distribution expense charge imposed

under the individual flexible payment

deferred annuity contracts (‘‘Contracts’’)

to be funded in the Separate Account.

FILING DATE: The application was filed

on September 16, 1994 and amended on

February 3, 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

March 7, 1995, 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, D.C. 20549.

Applicants, c/o Routier, Mackey and

Johnson, P.C., 1700 K Street NW., Suite

1003, Washington, D.C. 20006.

FOR FURTHER INFORMATION CONTACT:

Edward P. Macdonald, Staff Attorney, or

Wendy 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

may be obtained for a fee from the SEC’s

Public Reference Branch.

Applicants’ Representations

1. First SunAmerica is a stock life

insurance company organized under the

laws of the State of New York and is

admitted to conduct a life insurance and

annuity business in that state.

SunAmerica Capital Services, Inc., the

distributor for the Contracts, is a brokerdealer registered under the Securities

Exchange Act of 1934 and is a member

of the National Association of Securities

Dealers, Inc.

2. The Separate Account was

established by First SunAmerica to fund

variable annuity contracts. The

Contracts that are the subject of the

application provide for accumulation of

contract values and payment of annuity

benefits on a fixed and variable basis.

The Contracts will be initially funded

through eighteen portfolios of the

Separate Account; each portfolio will

invest its assets in the shares of one of

four available series of the Anchor

Series Trust or one of fourteen available

series of the SunAmerica Series Trust.

Both the Anchor Series Trust and the

SunAmerica Series Trust are registered

under the 1940 Act as diversified, openend, management investment

companies and the securities they issue

are registered under the Securities Act

of 1933 (the ‘‘1933 Act’’). Additional

underlying funds may become available

in the future. Prior to the issuance of

any Contracts, the Separate Account
Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Notices 9071

1With respect to a given purchase payment, a

Contribution Year is a calendar year starting from

the date of the purchase payment in one calendar

year and ending on the anniversary of such date in

the succeeding calendar year. The Contribution

Year in which a purchase payment is made is

‘‘Contribution Year Zero,’’ and subsequent

Contribution Years are successively numbered.

will be registered under the 1940 Act as

a Unit Investment Trust and the

Contracts thereunder will be registered

under the 1933 Act.

3. The Separate Account and each of

its portfolios is administered and

accounted for as part of the general

business of First SunAmerica, but the

income, gains or losses of each portfolio

are credited to or charged against the

assets held in that portfolio in

accordance with the terms of the

Contracts, without regard to other

income, gains or losses of any other

portfolio or arising out of any other

business First SunAmerica may

conduct.

4. The Contracts are available for both

retirement plans which do and do not

qualify for the special federal tax

advantages available under the Internal

Revenue Code. Purchase payments

under the Contracts may be made to the

general account of First SunAmerica

under one of the Contracts’ fixed

account options (the ‘‘Fixed Account’’),

the Separate Account, or allocated

between them. The minimum initial

purchase payment for a Contract issued

on a non-qualified basis is $5,000 and

additional purchase payments may be

made in amounts of at least $500. The

minimum initial purchase payment for

a Contract issued on a qualified basis is

$2,000, additional purchase payments

may be made in amounts of at least

$250.

5. If the contract owner dies during

the accumulation period, a death benefit

will be payable to the beneficiary upon

receipt by First SunAmerica of due

proof of death.

The standard death benefit is equal to

the greater of:

(1) The contract value at the end of

the valuation period during which due

proof of death (and an election of the

type of payment to the beneficiary) is

received by First SunAmerica; or

(2) The total dollar amount of

purchase payments, minus the sum of:

(a) The total dollar amount of any

partial withdrawals and partial

annuitizations; and

(b) Premium taxes incurred.

In addition, where permitted by state

law, First SunAmerica will provide an

enhanced death benefit after the seventh

contract year. The enhanced death

benefit is: (A) The greater of (1) the

contract value at the end of the

preceding contract year, plus purchase

payments during the current contract

year, or (2) the death benefit on the last

day of the preceding contract year,

minus (B) the total amount of

withdrawals and partial annuitizations

during the current contract year plus

premium taxes incurred.

6. During the accumulation period,

amounts allocated to the Separate

Account may be transferred among the

portfolios and/or the Fixed Account.

The first fifteen transactions effecting

such transfers in any contract year are

permitted without the imposition of a

transfer fee. A transfer fee of $25 is

assessed on the sixteenth and each

subsequent transfer within the contract

year. This fee will be deducted from

contract values which remain in the

portfolio (or the Fixed Account) from

which the transfer was made. If such

remaining contract value is insufficient

to pay the transfer fee, then the fee will

be deducted from transferred contract

values. After the annuity date, contract

values may be transferred from the

Separate Account to the Fixed Account

but not from the Fixed Account to the

Separate Account. Applicants represent

that the transfer fee is at cost with no

anticipation of profit.

7. Although there is a ‘‘free

withdrawal’’ amount, a contingent

deferred sales charge, which is referred

to as the withdrawal charge, may be

imposed upon certain withdrawals.

Withdrawal charges will vary in amount

depending upon the contribution year of

the purchase payment at the time of

withdrawal in accordance with the

withdrawal charge table shown below.

WITHDRAWAL CHARGE TABLE

Contribution year 1

Applicable

Withdrawal

Charge percentage

Zero .......................................... 7

First ........................................... 6

Second ...................................... 5

Third .......................................... 4

Fourth ....................................... 3

Fifth ........................................... 2

Sixth .......................................... 1

Seventh and later ..................... 0

The withdrawal charge is deducted

from remaining contract values so that

the actual reduction in contract value as

a result of the withdrawal will be greater

than the withdrawal amount requested

and paid. For purposes of determining

the withdrawal charge, withdrawals will

be allocated first to investment income,

if any (which generally may be

withdrawn free of withdrawal charge),

and then to purchase payments on a

first-in, first-out basis so that all

withdrawal are allocated to purchase

payments to which the lowest (if any)

withdrawal charge applies.

8. First SunAmerica deducts a

distribution expense charge from each

portfolio of the Separate Account during

each valuation period which is equal,

on an annual basis, to 0.15% of the net

asset value of each portfolio. This

charge is designed to compensate First

SunAmerica for assuming the risk that

the cost of distributing the Contracts

will exceed the revenues from the

withdrawal charge. In no event will this

charge be increased.

The distribution expense charge is

assessed during both the accumulation

period and the annuity period; however,

it is not applied to contract values

allocated to the Fixed Account.

9. The annuity rates may not be

changed under the Contract. For

assuming the risks that (1) the life

expectancy of an annuity will be greater

than that assumed in the guaranteed

annuity purchase rates, (2) for waiving

the withdrawal charge in the event of

the death of the contract owner, and (3)

for providing both a standard and

enhanced death benefit prior to the

annuity date, First SunAmerica deducts

a mortality risk charge from the Separate

Account. The charge is deducted from

each portfolio of the Separate Account

during each valuation period at an

annual rate of 1.02% of the net asset

value of each portfolio. The portion of

the total morality risk charge

attributable to First SunAmerica’s

assuming (1) and (2) and providing a

standard death benefit is 0.9%; the

balance of 0.12% is assessed for

providing the enhanced death benefit. If

the mortality risk charge is insufficient

to cover the actual costs of assuming the

mortality risks, First SunAmerica will

bear the loss; however, if the charge

proves more than sufficient, the excess

will be a gain to First SunAmerica. To

the extent First SunAmerica realizes any

gain, those amounts may be used at its

discretion, including offsetting losses

experienced when the mortality risk

charge is insufficient. The mortality risk

charge may not be increased under the

Contract.

10. A maintenance fee of $30 is

charged against each Contract. The

maintenance fee will be assessed each

contract year on the anniversary of the

issue date of the Contract on or prior to

the annuity date. In the event that a total

surrender of contract value is made

other than on such anniversary, the fee

will be assessed as of the date of

surrender without proration. This fee

reimburses First SunAmerica for

expenses incurred in establishing and

maintaining records relating to the
9072 Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Notices

Contracts. The amount of this fee is

guaranteed and cannot be increased by

First SunAmerica. The maintenance fee

is at cost with no anticipation of profit.

11. First SunAmerica bears to risk that

the maintenance fee will be insufficient

to cover the cost of administering the

Contracts. For assuming this expense

risk, First SunAmerica deducts an

expense risk charge from the Separate

Account. The charge is deducted from

each portfolio of the Separate Account

during each valuation period at an

annual rate of 0.35% of the net asset

value of each portfolio. If the expense

risk charge is insufficient to cover the

actual cost of administering the

Contracts, First SunAmerica will bear

the loss; however, if the charge is more

than sufficient, the excess will be a gain

to First SunAmerica. To the extent First

SunAmerica realizes any gain, those

amounts may be used at its discretion,

including offsetting losses when the

expense risk charge is insufficient. The

expense risk charge may not be

increased under the Contract.

Applicants’ Legal Analysis

1. Pursuant to Section 6(c) of the Act

the Commission may, by order upon

application, conditionally or

unconditionally exempt any person,

security, or transaction, or any class or

classes of persons, securities or

transactions, from any provision or

provisions of the Act or from any rule

or regulation thereunder, if and to the

extent that such 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.

2. Sections 26(a)(2)(C) and 27(c)(2) of

the Act, in pertinent part, prohibit a

registered unit investment trust and any

depositor thereof or underwriter

therefor from selling periodic payment

plan certificates unless the proceeds of

all payments (other than sales load) are

deposited with a qualified bank as

trustee or custodian and held under

arrangements which prohibit any

payment to the depositor or principal

underwriter except a fee, not exceeding

such reasonable amount as the

Commission may prescribe, for

performing bookkeeping and other

administrative services of a character

normally performed by the bank itself.

3. Applicants request an order under

Section 6(c) of the Act exempting them

from Sections 26(a)(2)(C) and 27(c)(2) of

the Act to the extent necessary to permit

the deduction of the mortality and

expense risk charge and distribution

expense charge from the assets of the

Separate Account under Contracts.

4. Applicants assert that the mortality

and expense risk charge of 1.25%

(which includes all risk charges

imposed under the Contracts with the

exception of the 0.12% risk charge for

the enhanced death benefit) is

reasonable in relation to the risks

assumed by First SunAmerica under the

Contracts and reasonable in amount as

determined by industry practice with

respect to comparable annuity products.

Applicants state that these

determinations are based on their

analysis of publicly available

information about similar industry

practices, and by taking into

consideration such factors as current

charge levels and benefits provided, the

existence of expense charge guarantees

and guaranteed annuity rates. First

SunAmerica undertakes to maintain at

its home office a memorandum,

available to the Commission upon

request, setting forth in detail the

methodology used in making these

determinations.

5. Applicants assert that the mortality

risk charge of 0.12% for the enhanced

death benefit is reasonable in relation to

the risks assumed by First SunAmerica

under the Contracts for the enhanced

death benefit. First SunAmerica

undertakes to maintain at its home

office a memorandum, available to the

Commission upon request, setting forth

in detail the methodology used in

determining that the risk charge of

0.12% for the enhanced death benefit is

reasonable in relation to the risks

assumed by First SunAmerica under the

Contracts.

6. First SunAmerica has concluded

that there is a reasonable likelihood that

the Separate Account’s distribution

financing arrangement will benefit the

Separate Account and its investors. First

SunAmerica represents that it will

maintain and make available to the

Commission upon request a

memorandum setting forth the basis of

such conclusion. First SunAmerica

further represents that the assets of the

Separate Account will be invested only

in management investment companies

which undertake, in the event they

should adopt a plan for financing

distribution expenses pursuant to Rule

12b–1 under the 1940 Act, to have such

plan formulated and approved by their

board of directors, the majority of whom

are not ‘‘interested persons’’ of the

management investment company

within the meaning of Section 2(a)(19)

of the 1940 Act.

7. With respect to the distribution

expense charge, Applicants represent

that the amount of any withdrawal

charge imposed when added to any

distribution expense charge previously

paid, will not exceed 9% of purchase

payments and that First SunAmerica

will monitor each Contract owner’s

account for the purpose of ensuring that

this limitation is not exceeded.

Conclusion

For the reasons summarized above,

Applicants represent that the exemptive

relief requested is necessary or

appropriate in the public interest and

otherwise meets the standards of

Section 6(c) of the Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary

[FR Doc. 95–3884 Filed 2–15–95; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Release No.

20894; File No. 811–6228]

Putnam Texas Tax Exempt Income

Fund; Application for Deregistration

February 10, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

deregistration under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: Putnam Texas Tax Exempt

Income Fund.

RELEVANT ACT SECTION: Section 8(f).

SUMMARY OF APPLICATION: Applicant

seeks an order declaring that it has

ceased to be an investment company.

FILING DATES: The application on Form

N–8F was filed on December 9, 1994,

and amended on February 9, 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

March 8, 1995, and should be

accompanied by proof of service on

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 who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 5th

Street NW., Washington, DC 20549.

Applicant, One Post Office Square,

Boston, Massachusetts 02109.

FOR FURTHER INFORMATION CONTACT: