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:
Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Notices 9073

1Rule 17a–8 provides relief from the affiliated

transaction prohibition of section 17(a) of the Act

for a merger of investment companies that may be

affiliated persons of each other solely by reason of

having a common investment adviser, common

directors, and/or common officers.

James J. Dwyer, Staff Attorney, at (202)

942–0581, or C. David Messman, 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.

Applicant’s Representations

1. Applicant is an open-end nondiversified management investment

company that was organized as a

Massachusetts business trust. On

November 26, 1990, applicant registered

under the Act as an investment

company, and filed a registration

statement to register its shares under the

Securities Act of 1933. The registration

statement became effective on March 4,

1992, and applicant’s initial public

offering commenced on that date.

2. At a meeting held on January 7,

1994, applicant’s trustees approved an

agreement and plan of reorganization

(the ‘‘Plan’’) whereby applicant would

transfer all of its assets and liabilities to

Putnam Tax Exempt Income Fund (the

‘‘Income Fund’’), a Massachusetts

business trust registered under the Act,

and subsequently liquidate. Applicant’s

trustees determined that the proposed

reorganization would achieve

economies of scale, including lower

advisory and operating costs, and result

in performance benefits for applicant’s

shareholders.

3. Applicant and Income Fund share

a common investment adviser, officers,

and trustees. Accordingly, applicant and

Income Fund may be deemed to be

affiliated persons of each other.

Applicant therefore relied on the

exemption provided by rule 17a–8

under the Act to effect the

reorganization. Consequently, in

accordance with rule 17a–8, applicant’s

trustees determined on January 7, 1994,

that the purchase of the assets of

applicant by Income Fund was in the

best interests of applicant’s

shareholders, and that such purchase

would not result in any dilution to the

interests of the existing shareholders.1

4. Proxy materials relating to the Plan

were filed with the SEC on March 14,

1994, and mailed to applicant’s

shareholders on March 29, a994.

Applicant’s shareholders voted to

approve the Plan at a special meeting

held on May 5, 1994.

5. As of May 6, 1994, applicant had

1,862,787.75 shares outstanding, having

an aggregate net asset value of

$16,314,742.28 and a per share net asset

value of $8.76. On May 9, 1994,

pursuant to the Plan, applicant

transferred all of its assets and liabilities

to Income Fund in exchange for a

number of full and fractional Class A

shares of Income Fund having an

aggregate net asset value equal to the

value of applicant’s assets attributable to

shares of applicant transferred to

Income Fund. No brokerage

commissions were paid in connection

with such transfer. Applicant then

distributed to its shareholders pro rata

the Income Fund Class A shares it

received, in complete liquidation of

application.

6. The expenses applicable to the

Plan, consisting of accounting, printing,

administrative, and certain legal

expenses, were $76,669. Applicant paid

all expenses in connection with proxy

printing and solicitation. All other

expenses were assumed ratably by

applicant and Income Fund in

proportion to their net assets as of May

6, 1994.

7. Applicant has no shareholders,

assets, or liabilities. Applicant is not a

party to any litigation or administrative

proceeding. Applicant is not engaged in,

nor does it propose to engage in, any

business activities other than those

necessary for the winding up of its

affairs.

8. On August 5, 1994, applicant filed

the necessary documents in

Massachusetts to terminate its existence

as a Massachusetts business trust.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–3883 Filed 2–15–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20896; 811–6433]

Smith Breeden Institutional

Intermediate Duration U.S.

Government Fund; Notice of

Application

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: Smith Breeden Institutional

Intermediate Duration U.S. Government

Fund.

RELEVANT ACT SECTION: Order requested

under section 8(f).

SUMMARY OF APPLICATION: Applicant

seeks an order declaring it has ceased to

be an investment company.

FILING DATES: The application was filed

on November 21, 1994 and amended on

February 6, 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 7, 1995, 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, D.C. 20549.

Applicant, 200 Europa Drive, Suite 200,

Chapel Hill, North Carolina 27514.

FOR FURTHER INFORMATION CONTACT:

Marianne H. Khawly, Staff Attorney, at

(202) 942–0562, or C. David Messman,

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 from the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant is a registered open-end,

diversified, management investment

company under the Act and is organized

as a business trust under the laws of the

Commonwealth of Massachusetts. On

October 8, 1991, applicant filed a

Notification of Registration on Form N–

8A pursuant to section 8(a) of the Act

and a registration statement on Form N–

1A under section 8(b) of the Act. With

respect to the securities issued by

applicant pursuant to the Securities Act

of 1933, a registration statement on

Form N–1A was filed on November 29,

1991. The registration statement became

effective on February 24, 1992, and

applicant’s initial public offering

commenced on March 12, 1992.

2. At a joint meeting held on June 2,

1994, applicant’s Board of Trustee (the

‘‘Trustees’’) unanimously determined

that applicant’s continuation was no

longer in the best interest of applicant

or its shareholders. The Trustees

determined that applicant’s