Federal Register / Vol. 60, No. 48 / Monday, March 13, 1995 / Notices 13499

13The Commission notes that the amendment

does not add any compliance burden that is not

imposed under the current version of rule G–37. 14 15 U.S.C. § 78o–4.

Smith Barney also opposes this

amendment. The Smith Barney Letter

objects to the MSRB deeming a branch

manager and a branch manager’s

supervisor to be municipal finance

professionals if a retail sales person in

that branch office was soliciting

municipal securities business. It notes

that the MSRB is concerned about

situations in which retail sales persons

are soliciting municipal securities

business at the request of, or at least

with the knowledge of, their

supervisors; Smith Barney does not

consider those reasons sufficient to

justify the apparent breadth of the

amendment. Smith Barney states that a

simpler approach would be to interpret

solicitation as asking others to solicit,

and that the MSRB should not be

concerned about supervisors who

simply know that their sales persons are

soliciting municipal securities business.

The Commission believes that, while

Smith Barney may be correct in theory,

as a practical matter, Smith Barney’s

solution will make enforcement of the

rule much more difficult. It believes that

the practical difficulties of enforcing the

rule if it were amended as Smith Barney

suggests outweigh any compliance

burdens imposed by the amendment.

The Commission thus believes that the

need for a prophylactic provision also

outweighs the concerns expressed by

Arter & Hadden concerning the burden

imposed upon branch managers.13

B. Designation as a Municipal Finance

Professional

Chemical and Artemis also express

support for requiring each person

designated by a dealer as a municipal

finance professional to retain this

designation for two years after the last

activity or position which gave rise to

the designation. The Chemical Letter

states that the two year designation

period matches the two year

disqualification length contained in rule

G–37(b) and provides clarity.

NBD opposes this amendment. NBD

states that this amendment will create

an undue reporting burden and would

be unworkable from a supervisory

standpoint. The NBD Letter reasons that

if the designated municipal finance

professional left the firm at which the

professional engaged in the activity that

gave rise to the designation, then that

firm no longer would maintain any

supervisory control over that individual,

and therefore, any political activities of

the individual would no longer benefit

that firm and would be impossible to

monitor. The NBD Letter also argues

that if an employee is transferred to

another department, then supervisory

authority is severed. NBD regards it as

‘‘unlikely’’ that an employee would be

transferred to another department in

order to circumvent rule G–37.

With respect to the issue of

monitoring municipal finance

professionals who have left a firm, the

Commission notes that rule G–37 does

not require a firm to monitor the

activities of a municipal finance

professional that it no longer employs.

With respect to the issue of whether a

firm receives any continuing benefits

from a municipal finance professional

no longer employed by that firm, the

Commission believes that whether or

not a firm benefits from the political

activities of an individual that occur

after the individual leaves the firm, or

is transferred, a firm may continue to

enjoy the benefits that flow from that

employee’s activities even after that

employee left the firm or was

transferred. Rule G–37 reflects a

reasoned judgment that certain activities

may corrupt the awarding of municipal

securities business, not only at the time

of the activity, but for a certain period

of time thereafter.

C. Miscellaneous Comments

Chemical and Artemis expressed

support for the remainder of the rule

change.

The PSA believes that the MSRB

should further amend rule G–37 to:

• establish a threshold percentage of

commissions below which a registered

representative would not be considered

a municipal finance professional;

• establish guidelines concerning

how frequently they must review their

records to identify registered

representatives as municipal finance

professionals;

• clarify that the MSRB will not

retroactively apply the municipal

finance professional designation to

persons who were not initially

identified by the broker, dealer or

municipal securities dealer as a

registered representative, but

subsequently engage in activities that

would trigger application.

• codify procedures for brokers,

dealers and municipal securities dealers

to follow to ensure that municipal

finance professionals are being

identified.

The Commission believes that the

MSRB may address these comments in

the context of a separate proposed rule

change filed with the Commission. It

does not believe that these comments

must be addressed in the context of this

rule change.

IV. Discussion and Findings

The Commission finds that the rule

change is consistent with the provisions

of Section 15B(b)(2)(C) 14 of the Act,

which provides that the Board’s rules

shall be designed to prevent fraudulent

and manipulative acts and practices, to

promote just and equitable principles of

trade, to foster cooperation and

coordination with persons engaged in

regulating, clearing, settling, processing

information with respect to, and

facilitating transactions in municipal

securities, to remove impediments to

and perfect the mechanism of a free and

open market in municipal securities,

and, in general, to protect investors and

the public interest. The Commission

believes that the rule change is in the

public interest and removes

impediments to and perfects the

mechanism of a free and open market in

municipal securities in that the

amendments: (i) tailor the application of

rule G–37 to those persons who may be

in a position to make political

contributions for the purpose of

influencing the awarding of municipal

securities business by issuer officials;

(ii) require disclosure of certain

payments which may have the effect of

influencing the awarding of municipal

securities business; and (iii) eliminate

the restrictions imposed by rule G–37

with respect to certain transactions and

practices which are not likely to

influence the awarding of municipal

securities business by issuer officials.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act, that File No.

SR–MSRB–94–14 be, and hereby is,

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority, 17 CFR 200.30–3(a)(12).

Jonathan G. Katz,

Secretary.

[FR Doc. 95–6029 Filed 3–10–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20941; No. 812–9232]

Security Benefit Life Insurance

Company, et al.

March 6, 1995.

AGENCY: Securities and Exchange

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

ACTION: Notice of Application for an

Order under the Investment Company

Act of 1940 (the ‘‘1940 Act’’).

APPLICANTS: Security Benefit Life

Insurance Company (‘‘SBL’’), T. Rowe

Price Variable Annuity Account (‘‘SBL

Separate Account’’), Pioneer National
13500 Federal Register / Vol. 60, No. 48 / Monday, March 13, 1995 / Notices

Life Insurance Company (‘‘SBL–NY,’’

together with SBL, the ‘‘Insurance

Companies’’), T. Rowe Price Variable

Annuity Account of First Security

Benefit Life Insurance and Annuity

Company of New York (‘‘NY–Separate

Account,’’ together with SBL Separate

Account, the ‘‘Accounts’’) and T. Rowe

Price Investment Services, Inc.

(‘‘Investment Services’’).

RELEVANT 1940 ACT SECTIONS: Order

requested pursuant to Section 6(c)

granting exemptions from the provisions

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

pursuant to Section 11 approving the

terms of a payment arrangement.

SUMMARY OF APPLICATION: Applicants

seek an order (1) pursuant to Section

6(c) of the 1940 Act, permitting the

deduction of a mortality and expense

risk charge from the assets of: (a) the

Accounts in connection with the offer

and sale of certain variable annuity

contracts (‘‘Current Contracts’’); (b) the

Accounts in connection with the

issuance of variable annuity contracts

that are substantially similar in all

material respects to the Current

Contracts (‘‘Future Contracts,’’ together

with Current Contracts, the

‘‘Contracts’’); and (c) any other separate

account established in the future by the

Insurance Companies in connection

with the issuance of Contracts; and (2)

pursuant to Section 11 of the 1940 Act,

approving the terms of a payment

arrangement involving certain mutual

funds and variable annuity contracts.

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 Commission orders a

hearing. Interested persons may request

a hearing by writing to the

Commission’s Secretary and serving the

Applicants with a copy of the request,

personally or by mail. Hearing requests

should be received by the Commission

by 5:30 p.m. on March 31, 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 may request

notification of a hearing by writing to

the Commission’s Secretary.

ADDRESSES: Secretary, SEC, 450 5th

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

Applicants, c/o Roger K. Viola, Esq.,

Security Benefit Life Insurance

Company, 700 Harrison Street, Topeka,

Kansas 66636, and Nancy M. Morris,

Esq., T. Rowe Price Investment Services,

Inc., 100 East Pratt Street, Baltimore,

Maryland 21202. Copies of Jeffrey S.

Puretz, Esq., Dechert Price & Rhoads,

1500 K Street, N.W., Suite 500,

Washington, D.C. 20005 and Steven B.

Boehm, Esq., Sutherland, Asbill &

Brennan, 1275 Pennsylvania Avenue,

N.W., Suite 800, Washington, D.C.

20004.

FOR FURTHER INFORMATION CONTACT:

Kevin Kirchoff, Senior Attorney, or

Wendy Friedlander, Deputy Chief, at

(202) 942–0670, Office of Insurance

Products (Division of Investment

Management).

SUPPLEMENTARY INFORMATION: Following

is a summary of the application; the

complete application is available for a

fee from the Commission’s Public

Reference Branch.

Applicants’ Representations

1. SBL is a mutual life insurance

company organized under the laws of

the State of Kansas. SBL–NY is a

domestic stock life insurance company

organized under the laws of the State of

Kansas. All of SBL–NY’s outstanding

stock is owned by Pioneer National

Corporation, a Kansas corporation

(‘‘PNC’’), which is a wholly-owned

subsidiary of Security Benefit Group,

Inc., (‘‘SBG’’), a wholly-owned

subsidiary of SBL. SBL–NY will be

merged into a newly-formed New York

insurance company in the near future

with the resulting entity to be named

the ‘‘First Security Benefit Life

Insurance and Annuity Company of

New York’’ for the purpose of marketing

a form of the Contracts in New York.

2. The Accounts are separate

investment accounts established by the

Insurance Companies for the purpose of

investing purchase payments received

under the Contracts. Each of the

Accounts is a unit investment trust

which has filed a registration statement

on Form N–4 under the Securities Act

of 1933 to register the offering of the

Contracts.

Each Account is currently divided

into five Subaccounts that will invest

exclusively in shares of the

corresponding portfolio of one of the

following mutual funds: (1) T. Rowe

Price International Series, Inc.; (2) T.

Rowe Price Equity Series, Inc.; and (3)

T. Rowe Price Fixed Income Series, Inc.

(collectively the ‘‘Funds’’). Each of the

Funds is a Maryland corporation and is

currently registered under the 1940 Act

as an open-end management investment

company. The shares of the Funds are

purchased by the Insurance Companies

for the Subaccounts at the Fund’s net

asset value per share.

The Insurance Companies may in the

future establish additional separate

accounts to support variable annuity

contracts substantially similar in all

material respects to the Contracts.

3. T. Rowe Price Associates, Inc. (‘‘T.

Rowe Price’’) serves an investment

adviser to each Fund, except the T.

Rowe Price International Series, Inc.

Rowe Price-Fleming International, Inc.

(‘‘Price-Fleming’’), an affiliate of T.

Rowe Price, serves as investment

adviser to the T. Rowe Price

International Services, Inc. Each of T.

Rowe Price and Price-Fleming is

registered with the Commission as an

investment adviser pursuant to the

Investment Advisers Act of 1940.

4. Investment Services will be the

principal underwriter of the Contracts.

Investment Services is a wholly-owned

subsidiary of T. Rowe Price. Investment

Services is a broker-dealer registered

under the Securities Exchange Act of

1934 and is a member of the National

Association of Securities Dealers, Inc.

Investment Services receives no

compensation for acting as principal

underwriter under distribution

agreements with the Insurance

Companies. Investment Services also is

the distributor of shares of the T. Rowe

Price Public Funds, currently consisting

of 36 open-end management investment

companies. Each such fund is offered

directly to the public and is managed by

T. Rowe Price, Price Fleming, or an

affiliate thereof.

5. The Contracts are available for

purchase as non-tax qualified retirement

plans. The Contracts are also eligible for

use in connection with tax qualified

retirement plans that meet the

requirements of Sections 403(b) and 408

of the Internal Revenue Code of 1986, as

amended (the ‘‘Code’’). The minimum

initial premium is $10,000 ($5,000 if

made pursuant to an automatic

investment program) to purchase a

Contract in connection with a non-tax

qualified retirement plan and $2,000

($25 if made pursuant to an automatic

investment program) to purchase a

Contract in connection with a qualified

plan. Subsequent premium payments

are flexible, although they must be for

at least $1,000 ($200 if made pursuant

to a automatic investment program) for

Contracts purchased in connection with

a non-tax qualified retirement plan, and

$500 ($25 if made pursuant to an

automatic investment program) for

Contracts purchased in connection with

a tax qualified plan. The Insurance

Companies may reduce the minimum

premium requirements under certain

circumstances, such as for group or

sponsored arrangements.

6. Premiums that are intended to

accumulate on a variable basis may be

allocated to one or more of the
Federal Register / Vol. 60, No. 48 / Monday, March 13, 1995 / Notices 13501

1Applicants have undertaken to amend their

application during the notice period to include

these representations.

Subaccounts of the Accounts with

respect to the Contracts. Premiums that

are allocated to a Subaccount are

invested exclusively in shares of the

corresponding portfolio of the Funds.

Amounts held in a Subaccount will

increase or decrease in dollar value

depending on the investment

performance of the corresponding

portfolio of the Fund in which the

Subaccount invests. The Owner bears

the investment risk for amounts

allocated to a Subaccount.

Premiums that are intended to

accumulate on a fixed basis may be

allocated to the Insurance Company’s

Fixed Account. Amounts allocated to

the Fixed Account earn interest at a

guaranteed annual effective rate of at

least 3%, compounded daily.

7. Contract owners may change the

allocation of Contract Value up to six

times a year. Additional changes in

allocation may be made under

allocation programs made available in

connection with the Contracts. Contract

owners may make partial withdrawals

within limits and surrender their

Contracts at any time before the annuity

date. Each partial withdrawal must be

for at least $500 and, after the

withdrawal, the remaining value in the

Contract must be at least $2,000.

8. Contract owners may apply their

Contract Value to any of the several

annuity options offered under the

Contracts. Both fixed and variable

options are available.

9. The Contracts also provide for the

payment of a death benefit. If the Owner

(or Annunitant, if the Owner is not a

natural person) dies during the

Accumulation Period, the Insurance

Companies will pay death benefit

proceeds to the Beneficiary upon receipt

of due proof of the Owner’s death and

instructions regarding payment to the

Beneficiary.

10. The death benefit proceeds will be

the death benefit reduced by any

outstanding Contract debt and any

uncollected premium taxes. If the

Owner dies during the Accumulation

Period and the issue age of each Owner

was 75 or younger on the date the

Contract was issued, the amount of the

death benefit will be the greater of (1)

the Contract’s value as of the date that

due proof of death and instructions

regarding payment are received by an

Insurance Company at its Home Office,

(2) the aggregate premium payments

received less any reductions caused by

previous withdrawals, or (3) the

stepped-up death benefit. The steppedup death benefit is (a) the highest death

benefit on any annual Contract

anniversary that is both an exact

multiple of five and occurs prior to the

oldest Owner attaining age 76, plus (b)

any purchase payments made since the

applicable fifth annual Contract

anniversary, less (c) any withdrawals

since the applicable fifth annual

Contract anniversary. If the Owner dies

during the Accumulation Period and the

Contract was issued after age 75, the

amount of the death benefit will be the

Contract’s value as of the date that due

proof of death and instructions

regarding payment are received by an

Insurance Company at its Home Office.

On the death of any Owner on or after

the annuity payout date, any guaranteed

payments remaining unpaid will

continue to be paid to the Annuitant

pursuant to the Annuity Option in force

at the date of death. No death benefit

will be paid if the Owner dies after the

annuity payout date.

11. The Insurance Companies will

deduct a daily charge from the assets of

the Accounts for mortality and expense

risks and costs assumed by them under

the Current Contracts. The mortality and

expense charge under the Current

Contracts is equal to an annual rate not

to exceed .55% of the average daily net

assets of each Subaccount that funds the

Contracts. The .55% charge consists of

approximately .30% for mortality risk

and .25% for expense risk and costs.

This charge is intended to compensate

the Insurance Companies for certain

mortality and expense risks and costs

the Insurance Companies assume in

offering and administering the Current

Contracts and in operating the

Accounts.

The mortality risk borne by the

Insurance Companies is the risk that the

persons on whose lives annuity

payments depend, as a group, will live

longer than the Insurance Companies’

actuarial tables predict. In this event,

the Insurance Companies guarantee that

annuity payments will not be affected

by a change in mortality experience that

results in the payment of greater annuity

income than assumed under the

Annuity Options in the Contract. The

Insurance Companies also assume a

mortality risk in connection with the

death benefit under the Contract.

The Contracts do not include charges

for administrative expenses. All

administrative charges related to the

Contracts are paid by the Insurance

Companies. The Insurance Companies

expect a profit from the mortality and

expense risk charge that may be used to

pay administrative costs. The expense

risk borne by the Insurance Companies

is that the anticipated profits from the

mortality and expense risk charge will

be insufficient to pay for the

administrative expenses.1

12. The mortality and expense risk

charge under the Current Contracts is

equal to an annual rate of .55% of the

average daily net assets of each

subaccount that funds the Contracts.

The Insurance Companies may issue

Future Contracts with a mortality and

expense risk charge not exceeding

1.00%.

13. The Insurance Companies may

realize a profit from this charge to the

extent it is not needed to cover mortality

and administrative expenses, but the

Insurance Companies may realize a loss

to the extent the charge is not sufficient.

The Insurance Companies may use any

profit derived from this charge for any

lawful purpose, including payment of

any distribution expenses.

14. Contract purchasers and owners

may own shares of a T. Rowe Price

Public Fund(s), and may desire to

transfer funds from a T. Rowe Price

Public Fund(s) to a Contract as a

premium payment. In addition, Contract

owners may desire to invest proceeds

from a redemption, withdrawal or

surrender under the Contracts or

annuity payments payable thereon, in

shares of a T. Rowe Price Public

Fund(s). Investment Services proposes

to accommodate such investors with a

payment arrangement facilitating such

transfers. Use of this arrangement would

be entirely elective; no Contract owner

or purchaser would be required to use

the payment arrangement to purchase a

Contract or shares of a T. Rowe Price

Public Fund.

15. Because neither the T. Rowe Price

Public Funds nor the Contracts impose

sales load charges, there is no

possibility that any sales load would be

deducted in connection with the

application of redemption proceeds

from a T. Rowe Price Public Fund to

premium payments on a Contract, or the

application of redemption proceeds or

annuity payments from a Contract to the

purchase of shares of T. Rowe Price

Public Fund. However, applicable

premium taxes may be deducted in

connection with the first annuity

payment or the payment of redemption

proceeds under the Contract.

Applicants’ Legal Analysis and

Conditions

1. Applicants request an order of the

Commission under Section 6(c) for

exemptions from Sections 26(a)(2)(C)

and 27(c)(2) of the 1940 Act to the

extent necessary to permit the
13502 Federal Register / Vol. 60, No. 48 / Monday, March 13, 1995 / Notices

2Applicants have undertaken to amend their

application during the notice period to include

these representations.

deduction of a maximum charge of

1.00% for the assumption of mortality

and expense risks from the assets of: (a)

the Accounts in connection with the

issuance of the Current Contracts; (b)

the Accounts in connection with the

issuance of any Future Contracts; and

(c) any other separate account

established in the future by the

Insurance Companies in connection

with the issuance of Future Contracts.

Applicants believe that the requested

exemptions are necessary and

appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the 1940 Act.

2. Applicants submit that their

request for exemptive relief for

deduction of a maximum 1.00%

mortality and expense risk charge from

the assets of the Accounts, or any other

separate account established by the

Insurance Companies in the future, in

connection with the issuance of Future

Contracts, would promote

competitiveness in the variable annuity

contract market by eliminating the need

for the Insurance Companies to file

redundant exemptive applications,

thereby reducing the Insurance

Companies’ administrative expenses

and maximizing the efficient use of their

resources. Applicants further submit

that the delay and expense involved in

having repeatedly to seek exemptive

relief would impair the Insurance

Companies’ ability effectively to take

advantage of business opportunities as

they arise. Further, if the Insurance

Companies were required repeatedly to

seek exemptive relief with respect to the

same issues regarding a mortality and

expense risk charge addressed in this

Application, investors would not

receive any benefit or additional

protection thereby. Thus, Applicants

believe that the requested exemptions

regarding a mortality and expense risk

charge are appropriate in the public

interest and consistent with the

protection of investors and purposes

fairly intended by the policy and

provisions of the 1940 Act.

3. Section 6(c) of the 1940 Act

authorizes the Commission, by order

upon application, to conditionally or

unconditionally grant an exemption

from any provision, rule or regulation of

the 1940 Act 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 1940 Act.

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

the 1940 Act, in relevant part, prohibit

a registered unit investment trust, its

depositor or principal underwriter, from

selling periodic payment plan

certificates unless the proceeds of all

payments, other than sales loads, are

deposited with a qualified bank and

held under arrangements which prohibit

any payment to the depositor or

principal underwriter except a

reasonable fee, as the Commission may

prescribe, for performing bookkeeping

and other administrative duties

normally performed by the bank itself.

5. Applicants represent that the

maximum 1.00% mortality and expense

risk charge under the Contracts is

within the range of industry practice for

comparable annuity contracts. This

representation is based upon

Applicants’ analysis of similar industry

products, taking into account such

factors as annuity purchase rate

guarantees, death benefit guarantees,

other contract charges, the frequency of

charges, the administrative services

performed by the companies with

respect to the contracts, the means of

promotion, the market for the contracts,

investment options under the contracts,

and the tax status of the contracts.

Applicants represent that the Insurance

Companies will maintain at their home

offices, available to the Commission, a

memorandum setting forth in detail the

products analyzed in the course of, and

the methodology and results of, their

comparative survey.

6. Applicants acknowledge that, if a

profit is realized from the mortality and

expense risk charge under the Contracts,

all or a portion of such profit may be

available to pay distribution expenses.

The Insurance Companies have

concluded that there is a reasonable

likelihood that the proposed

distribution financing arrangements will

benefit the Accounts and the Contract

owners. The basis for that conclusion is

set forth in a memorandum which will

be maintained by the Insurance

Companies at their home offices and

will be made available to the

Commission. Applicants represent that

Future Contracts will be offered only if

the Insurance Companies conclude that

the proposed distribution financing

arrangement will benefit such Future

Contracts and the Accounts or other

separate accounts established in

connection with their issuance and the

Contract owners. The basis for such

conclusion will be set forth in a

memorandum which will be maintained

by the Insurance Companies at their

home offices and will be made available

to the Commission.2

7. Applicants also represent that the

Accounts will invest only in underlying

open-end management investment

companies which undertake, in the

event they should adopt a plan under

Rule 12b–1 to finance distribution

expenses, to have a board of directors or

trustees, a majority of whom are not

‘‘interested persons’’ of such company

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

of the 1940 Act, formulate and approve

any such plan.

8. Section 11(a) of the 1940 Act makes

it unlawful, in relevant part, for a

registered open-end investment

company or any of its principal

underwriters:

To make or cause to be made an offer to

the holder of a security of such company or

of any other open-end investment company

to exchange his security for a security in the

same or another such company on any basis

other than the relative net asset values of the

respective securities to be exchanged, unless

the terms of the offer have first been

submitted to and approved by the

Commission or are in accordance with such

rules and regulations as the Commission may

have prescribed in respect of such offers

which are in effect at the time such offer is

made.

9. Section 11(c) of the 1940 Act

provides that, irrespective of the basis of

exchange, subsection (a) shall be

applicable:

(1) to any offer of exchange of any security

of a registered open-end investment company

for a security of a registered unit investment

trust * * *; and (2) to any type of offer of

exchange of the securities of registered unit

investment trusts * * * for the securities of

any other investment company.

10. The Commission has promulgated

Rules 11a–2 and 11a–3 under Section

11, each of which permits the making of

certain exchange offers without prior

Commission approval provided that

specified conditions are met.

Rule 11a–2 permits offers of exchange

to be made by registered insurance

company separate accounts to holders of

variable contracts supported by separate

accounts having the same or an

affiliated insurance company depositor

or sponsor, provided that, with respect

to variable annuity contracts, (1) the

exchange is made on the basis of the

relative net asset values of the securities

to be exchanged (less any administrative

fee disclosed in the offering account’s

registration statement); and (2) any sales

loads which may be imposed are

calculated and deducted in accordance

with the terms and conditions of Rule

11a–2.

Rule 11a–3 permits a fund or its

principal underwriter to make exchange

offers to shareholders in that fund or

another fund in the same group of funds
Federal Register / Vol. 60, No. 48 / Monday, March 13, 1995 / Notices 13503

on a basis other than net asset value.

The rule permits the imposition of

certain sales loads and/or other fees in

connection with the exchange, provided

that (1) any administrative fee or

scheduled variation thereof is applied

uniformly to all security holders of the

specified class; (2) any redemption fee

or scheduled variation thereof is applied

uniformly and does not exceed the

redemption fee applicable to the

redemption of the exchanged security in

the absence of an exchange; (3) adequate

disclosure is made with respect to the

fees charged and the limitations and any

rights of termination applicable to an

exchange offer; and (4) sales loads are

calculated and deducted in accordance

with the terms and conditions of Rule

11a–3.

Rule 11a–2 thus permits offers of

exchange between insurance company

separate accounts having the same or

affiliated depositor or sponsor and Rule

11a–3 permits certain exchange offers

between funds in the same group of

funds. However, neither rule permits

exchanges between a publicly-offered

management investment company and a

separate account.

11. Applicants state that, because

neither the T. Rowe Price Public Funds

nor the Contracts impose sales load

charges, no sales load will be deducted

in connection with the application of

redemption proceeds from a T. Rowe

Price Public Fund to premium payments

on a Contract, or the application of

redemption proceeds or annuity

payments from a Contract to the

purchase of shares of T. Rowe Price

Public Fund. Thus, there is no

possibility of the abuse contemplated by

Section 11(a) (i.e., offers of exchange

made solely for the purpose of assessing

additional selling charges). The

payment arrangement is consistent with

the intent and purposes of Rules 11a–2

and 11a–3 and would satisfy the

conditions established by those rules if

the Applicants were eligible to rely on

them.

12. Applicants believe that exemptive

relief is necessary, appropriate and fully

consistent with the purpose of Section

11 of the 1940 Act, and that the

payment arrangement would not result

in any of the abuses the section was

enacted to prevent. The payment

arrangement provides substantial

benefits to Contract purchasers and

owners by providing a convenient

means of making premium payments

and of investing proceeds from a

redemption, withdrawal or surrender

under the Contracts. The payment

arrangement is consistent with the

protection of investors and with the

purposes fairly intended by the policy

and provisions of the 1940 Act.

Conclusion

For the reasons set forth above,

Applicants represent that the

exemptions requested are necessary and

appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the 1940 Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 95–6030 Filed 3–10–95; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Airbus Industrie Proposal To Establish

a Maximum Passenger Capacity for the

Model A321 Airplane Without Conduct

of a Full-Scale Evacuation

Demonstration; Public Meeting

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Notice of public meeting.

SUMMARY: This notice announces a

public meeting which is being held by

the Federal Aviation Administration

(FAA) for the purpose of soliciting and

reviewing information from the public

on a proposal by Airbus Industrie to

establish a maximum passenger capacity

for the model A321 airplane without

conduct of a full-scale evacuation

demonstration. Interested parties are

invited to make presentations or submit

material for the record.

DATES: The public meeting is scheduled

for Friday, April 14, 1995. On-site

registration will begin at 7:30 a.m., and

the public meeting will begin at 8:30

a.m.

REGISTRATION: Persons planning to

attend the public meeting should

preregister by contacting the person

identified later in this notice as the

contact for further information.

Arrangements for oral presentations

must be made by March 25, 1995.

ADDRESSES: The public meeting will be

held at the Holiday Inn, SeaTac

International Airport, 17338

International Blvd., Seattle, Washington

98188.

FOR FURTHER INFORMATION CONTACT:

Jeff Gardlin, FAA, Transport Standards

Staff, Transport Airplane Directorate,

1601 Lind Avenue SW., Renton, WA

98055–4056; telephone (206) 227–2136.

SUPPLEMENTARY INFORMATION: Pursuant

to section 10(a)(2) of the Federal

Advisory Committee Act (Pub. L. 92–

463; 5 U.S.C. App. II), notice is given of

a public meeting to be held on April 14,

1995 at the Holiday Inn, SeaTac

International Airport in Seattle,

Washington. The purpose of this

meeting is to hear comments from the

general public regarding a proposal by

Airbus Industrie to establish the

maximum passenger capacity for the

A321 airplane, without conduct of a

full-scale evacuation demonstration.

This proposal includes utilization of

previous full-scale evacuation data from

a similar airplane model, in

combination with partial evacuation

testing and analysis. This approach

would represent a departure from

previous FAA-approval methods for

new airplane models, although the

European Joint Aviation Authorities

have already approved the airplane

using this method. The A321 is a

derivative of the A320 airplane, and

includes replacement of the two Type III

overwing exits with two pairs of

improved Type I exits. While this

subject is being addressed by the

Emergency Evacuation Issues Group of

the Aviation Rulemaking Advisory

Committee (ARAC), that group has not

yet reached a consensus on the

procedures to follow in such a case. In

the absence of a formal recommendation

from ARAC, the FAA is inviting the

interested public to comment on the

Airbus proposal. The FAA will consider

information presented at the public

meeting in the course of making its

decision on the acceptability of the

Airbus proposal.

The agenda for the meeting will

include:

Regulatory Background

Certification Test Procedures

Airbus Presentation of Proposed

Compliance Method

Presentations from the Public

Attendance is open to the interested

public, but will be limited to the space

available.

Requests To Be Heard

Persons planning to present data or

comments at the public meeting are

requested to provide the FAA an

abstract of their presentation by March

25, 1995. The abstract should include an

estimate of the time needed to make the

presentation, and should be mailed to

the person identified earlier in this

notice as the contact for further

information. Following each

presentation, a discussion period will be

allowed and all persons will be given

the opportunity to open discussions on

the presentation.