14044 Federal Register / Vol. 60, No. 50 / Wednesday, March 15, 1995 / Notices

11See Exchange Act Release No. 34925, supra

note 4.

12 15 U.S.C. 78s(b)(2) (1988).

13 17 CFR 200.30–3(a)(12) (1994).

1Applicants have undertaken to amend their

application during the Notice Period to include the

representation that Future Contracts will be

substantially similar ‘‘in all material respects’’ to

the Contract.

2Applicants are not requesting Commission

review of whether the Fixed Interest Option or any

other Credited Interest Option under the Contracts

are securities required to be registered under the

1933 Act. Applicants will not consider any order

issued as a result of this application to be an

expression of any view by the Commission on this

issue.

Commission approved the trading of

Customized FCOs.11

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,12 that the

proposed rule change (SR–Phlx–95–03)

is hereby approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–6352 Filed 3–14–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20948; No. 812–9074]

Aetna Insurance Company of America,

et al.

March 9, 1995.

AGENCY: Securities and Exchange

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

ACTION: Notice of application for an

order under the Investment Company

Act of 1940 (‘‘1940 Act’’).

APPLICANTS: Aetna Insurance Company

of America (‘‘Aetna’’); Variable Annuity

Account I of Aetna (‘‘Account I’’),

Variable Annuity Account II of Aetna

(‘‘Account II’’), and any other Separate

Accounts established in the future by

Aetna (‘‘Future Accounts,’’ and together

with Accounts I and II, ‘‘Separate

Accounts’’) to support certain group and

individual deferred variable annuity

contracts (‘‘Contracts’’) or other variable

annuity contracts that are substantially

similar in all material respects to the

Contracts (‘‘Other Contracts’’) and that

may be issued in the future by Aetna; 1

Aetna Life Insurance and Annuity

Company (‘‘ALIAC’’), the principal

underwriter of the Contracts; and Any

Member Broker-Dealer of the National

Association of Securities Dealers, Inc.

(‘‘NASD’’) That May In The Future

Serve As Principal Underwriter For The

Contracts (‘‘Future Underwriters’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) of the 1940

Act granting exemptions from the

provisions of Sections 26(a)(2)(C) and

27(c)(2) of the 1940 Act.

SUMMARY OF APPLICATION: Applicants

seeking an order permitting the

deduction of a mortality and expense

risk change from the assets of the

Separate Accounts in connection with

the issuance and sale of the Contracts or

Other Contracts.

FILING DATE: The application was filed

on June 24, 1994, and amended on

December 23, 1994 and February 23,

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 April 3, 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 NW., Washington, DC 20549.

Applicants, c/o Aetna Insurance

Company of America, 151 Farmington

Avenue, Hartford, Connecticut 06156.

FOR FURTHER INFORMATION CONTACT:

Yvonne M. Hunold, Assistant Special

Counsel, or Wendy F. 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. Aetna, a stock life insurance

company, is a wholly-owned subsidiary

of Aetna Life Insurance and Annuity

Company (‘‘ALIAC’’), which is, in turn,

a wholly-owned subsidiary of Aetna

Life and Casualty Company. Aetna is in

the process of qualifying to do business

and obtaining licenses to sell insurance

in all jurisdictions except New York.

2. The Separate Accounts are or will

be established by Aetna for the purpose

of funding variable annuity contracts.

The Separate Accounts are or will be

registered under the 1940 Act as unit

investment trusts. Assets of the Separate

Accounts will be allocated among the

shares of one or more registered openend investment companies (‘‘Funds’’),

some of which may be managed by

ALIAC or its affiliates.

3. ALIAC is the principal underwriter

of the Contracts and may act as

investment adviser to some of the

Funds. ALIAC is registered as a brokerdealer under the Securities Exchange

Act of 1934 and as an investment

adviser under the Investment Advisers

Act of 1940. ALIAC is a member of

NASD.

4. Non-tax qualified Contracts are

funded through Account I and Contracts

purchased and used in connection with

retirement plans under Sections 401(a)

or 403(b) of the Internal Revenue Code,

as amended (‘‘Code’’) are funded

through Account II. Individual

Contracts qualifying for favorable

federal income tax treatment under

Section 408 of the Code and Contracts

purchased by deferred compensation

plans under Section 457 of the Code

may be funded through either Account

I or Account II.

5. The Contracts may provide for,

among other things single or installment

premium payments, or a combination of

the two, and deferred or immediate

annuity payments on a fixed or variable

basis beginning on a date elected by the

Contract owners and in no event later

than certain contractually established

dates (‘‘Retirement Date’’). Additionally,

Contract owners may allocate premium

payments to: (a) One or more of the

Funds available under a Contract; (b) in

some Contracts to a fixed Interest

Option, which is part of Aetna’s general

account; and (c) in some Contracts to a

Credited Interest Option, with or

without a market value adjustment upon

redemption prior to the end of a

guaranteed term, and assets attributable

to such an option may be held in

Aetna’s general account or in a noninsulated, none-utilized separate

account of Aetna.2

6. The Contracts provide for the

payment of a standard death benefit

equal to the greater of (i) the cash value

of the Contract account, or (ii) the sum

of purchase payments less any

withdrawals, or (iii) the contract

holder’s account value at the most

recent seventh year anniversary of the

Contract adjusted for purchase

payments, withdrawals and amounts

applied to an annuity option. The

Contracts also provide for the payment

of an enhanced death benefit equal to

the greater of (i) the cash value of the

Contract account, or (ii) during the first

year of the Contract, the amount of

premiums paid (adjusted for any

withdrawals and any amount paid to an

annuity option), or (iii) during

subsequent years of the Contract, an
Federal Register / Vol. 60, No. 50 / Wednesday, March 15, 1995 / Notices 14045

3The death benefit calculations in (iii) under the

standard death benefit and in (ii), (iii) and (iv)

under the enhanced death benefit apply until the

Certificate Holder or annuitant reaches the death

benefit maximum age shown in the Contract.

Thereafter, the death benefit is only adjusted for

purchase payments, withdrawals and amounts

applied to annuity options. Currently, there is no

limitation on the maximum death benefit payable

under the standard death benefit or the enhanced

death benefit; however, Aetna reserves the right in

the future to impose a limitation on the maximum

allowable death benefit under (iii) under the

standard and under (ii), (iii) and (iv) under the

enhanced death benefit.

amount determined by increasing

premiums paid in prior years by a

contractually-determined factor

(adjusted for any withdrawals or any

amounts paid for an annuity option), or

(iv) cash value on the most recent

seventh year anniversary of the

Contract, adjusted for purchase

payments, withdrawals and amounts

applied to an annuity option.3

7. Various fees and charges are

deducted under the Contracts. Aetna

may impose a maximum annual

maintenance charge of $35 under the

Contracts for administrative services

provided to Contract holders. Aetna

currently deducts a $30 annual

maintenance charge from Cash Value on

the Contract date, on each Contract

Anniversary prior to the Retirement

Date, and upon termination of the

Contract. In addition, Aetna reserves the

right to deduct a daily administrative

expense charge of up to 0.25%, on an

annual basis, of the net asset value of

the Separate Accounts, to cover its

administrative expenses during the

accumulation period and the annuity

period. Of the 0.25% maximum

administrative expense charge, Aetna

currently deducts 0.15% annually of the

average daily net assets of the Separate

Accounts during the accumulation

period. An administrative charge

currently is not imposed during the

annuity period.

8. No charge currently is made for

transfers of cash values among the

Funds or from a Fund to a Fixed or

Credited Interest Option during the

accumulation period. Aetna reserves the

right to establish a minimum amount for

transfers and to impose a transfer charge

of up to $10 for each transfer request

after the first twelve requests in each

Contract year to reimburse Aetna for its

transfer administrative costs during the

accumulation period. No transfer fees

are charged during the annuity period.

9. No profit is anticipated from the

maintenance charge, transfer fee and

administrative expense charges, which

will not be greater than Aetna’s average

expected cost of the services to be

provided, defined in accordance with

Rule 26a–1 under the 1940 Act.

Applicants intend to rely on Rules 26a–

1 and 6c–8(c) under the 1940 Act for the

necessary exemptive relief to permit

imposition of these fees. Aetna

represents that it will monitor its

administrative expenses and the

proceeds of these charges on at least an

annual basis to ensure compliance with

Rule 26a–1 under the 1940 Act.

10. No charge currently is deducted

for premium taxes. Aetna reserves the

right, however, to deduct such taxes

from cash value under the Contracts at

the time such taxes are payable. Aetna

reserves the right to offer Other

Contracts that permit the deduction of

premium taxes from cash values or

purchase payments. No charges

currently are made for federal, state or

local taxes, other than premium taxes,

that Aetna incurs or that may be

attributable to a Separate Account or the

Contracts. Aetna reserves the right to

deduct such taxes in the future for any

such tax or economic burden from any

sales load payable to Aetna with respect

to the Contracts. Aetna will not deduct

any such taxes from the assets of the

Separate Accounts unless it has been

specifically authorized to do so by the

Commission. Applicants intend to rely

on Rule 26a–2(d) under the 1940 Act to

permit the deduction of taxes from the

assets of a Separate Account.

11. No sales charge is deducted from

premium payments. Aetna reserves the

right to deduct a contingent deferred

sales charge (‘‘CDSC’’) of up to 9% of

the amount withdrawn, on partial or full

Contract surrenders and withdrawals of

Account Value, and upon election of

certain annuity payment options, to

compensate Aetna for its distribution

expenses. The CDSC is applied to

purchase payments and not to any

increases in Account Value. The

maximum CDSC currently is 7%,

decreasing by up to 1% per year after

payment of a purchase payment until it

reaches zero after seven years. The

aggregate CDSC is guaranteed never to

exceed 8.5% of aggregate premium

payments. The CDSC may be waived

under certain specified circumstances.

Amounts attributable to purchase

payments are considered withdrawn

before amounts attributable to income,

and the oldest purchase payments are

considered withdrawn first when

determining the amount of CDSC that

should be applied.

12. Aetna anticipates that the CDSC

will not generate revenues that will be

sufficient to pay all its distribution

costs. Excess distribution costs, thus,

would be paid out of Aetna’s general

assets, which may include profits

derived from the mortality and expense

risk charge assessed under the

Contracts. Applicants will rely on Rule

6c–8 under the 1940 Act to deduct the

CDSC.

13. A daily charge will be deducted

from the net assets of the Separate

Accounts to compensate Aetna for

assuming certain mortality and expense

risks. Aetna currently charges 0.35% for

the expense risk, 0.75% for standard

mortality risks, and 0.15% for the

enhanced death benefit, or a current

total charge of 1.25%. Aetna reserves

the right to charge up to .90% on an

annual basis for standard mortality

risks, in which event the charge for

mortality and expense risks would be at

a maximum annual rate of 1.40% of net

assets.

14. The mortality risk arises from

Aetna’s contractual obligation to make

annuity payments (in accordance with

the annuity tables and other provisions

in the Contracts) regardless of how long

any individual annuitant or all

annuitants may live. The mortality risk

is that an annuitant will live longer than

predicted by Aetna’s actuarial

projections, thereby resulting in higher

than expected annuity payments. This

undertaking assures that neither an

annuitant’s own longevity, nor an

improvement in general life expectancy,

will adversely affect the monthly

annuity payments that the annuitant

will receive under the Contracts. Aetna

also assumes a mortality risk in that

Aetna may be obligated to pay either a

standard death benefit or an enhanced

death benefit in excess of a contract

holder’s account value.

15. The expense risk assumed by

Aetna is the risk that charges for

administration expenses, which are

guaranteed not to increase for the life of

the Contracts, may be insufficient to

cover the actual costs of issuing and

administering the Contracts or Other

Contracts.

16. Aetna currently anticipates that,

under ordinary circumstances, the

mortality and expense risk charge will

be more than sufficient to cover its

costs. Accordingly, any excess will be

profit to Aetna and may be available to

pay distribution costs for the Contracts

that are not covered by funds derived

from the CDSC.

Applicants’ Legal Analysis

1. Applicants request exemptions

under Section 6(c) from Sections

26(a)(2)(C) and 27(c)(2) of the 1940 Act

to the extent necessary to permit the

deduction of a mortality and expense

risk charge from the assets of the

Separate Accounts in connection with

funding the Contracts and Other

Contracts. Applicants further request

that such exemptive relief be extended
14046 Federal Register / Vol. 60, No. 50 / Wednesday, March 15, 1995 / Notices

4Applicants have undertaken to amend their

application during the Notice Period to include this

representation.

5Applicants have undertaken to amend their

application during the Notice Period to include this

representation.

6Applicants have undertaken to amend their

application during the Notice Period to include

these representations.

to ALIAC as principal underwriter for

the Aetna Contracts and to Future

Underwriters, a class consisting of

broker-dealers who may, in the future,

act as principal underwriters of the

Contracts. Applicants submit 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 state that the terms of

the relief requested with respect to any

Other Contracts funded by the Separate

Accounts or distributed by any Future

Underwriter are consistent with the

standards set forth in Section 6(c) of the

1940 Act. Without the requested relief,

exemptive relief would have to be

requested for each new separate account

established to fund the Other Contracts

or for each Future Underwriter. Such

additional requests for exemptive relief

would present no issues under the 1940

Act not already addressed in this

application. The requested relief would

eliminate the need for the filing of

redundant exemptive applications,

thereby reducing administrative

expenses, maximizing efficient use of

resources and, thus, promoting

competitiveness in the variable annuity

market. Both the delay and the expense

of repeatedly seeking exemptive relief

would, Applicants assert, impair

Aetna’s ability to effectively take

advantage of business opportunities as

they arise. If Aetna were repeatedly to

seek exemptive relief with respect to the

same issues addressed in this

application, investors would not receive

additional protection or benefit and

could be disadvantaged by Aetna’s

increased overhead. Applicants submit,

therefore, that the requested relief is

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.

3. Section 6(c) of the 1940 Act

authorizes the Commission to grant an

exemption from any provision, rule or

regulation of the 1940 Act to the extent

that it 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 submit that Aetna is

entitled to reasonable compensation for

its assumption of mortality and expense

risks. Applicants represent that the

mortality and expense risk charge under

the Contracts with the standard death

benefit is a reasonable and proper

insurance charge to compensate Aetna

for assuming certain risks under the

Contracts, including the risk that: (a)

annuitants under the Contracts will live

longer as a group than has been

anticipated in setting the annuity rates

guaranteed in the Contracts; (b) the cash

value will be less than the death benefit;

and (c) administrative expenses will be

greater than amounts derived from the

administrative charges. Thus,

Applicants assert that this charge is

consistent with the protection of

investors.

6. Aetna represents that the annual

charge of 1.25% of net assets for

mortality and expense risks (.90% and

.35%, respectively) assumed by it in

connection with the standard death

benefit is within the range of industry

practice for comparable annuity

contracts. This representation is based

upon Aetna’s analysis of publicly

available information about similar

industry products, taking into

consideration such factors as current

charge levels, the existence of charge

level guarantees, and guaranteed

annuity rates. Applicants represent that

Aetna will maintain at its principal

offices, available to the Commission, a

memorandum setting forth in detail the

products analyzed in the course of, and

the methodology and results of, its

comparative survey.4

7. Applicants further represent that

the additional mortality risk charge of

0.15% for the enhanced death benefit is

reasonable in relation to the risks

assumed under the Contracts. Based on

an actuarial analysis of the cost of

providing an enhanced death benefit, it

was determined that the additional

mortality risk charge of up to 0.15% was

a reasonable charge for providing the

enhanced death benefit in relation to the

risks assumed by Aetna under the

Contracts. Aetna will maintain at its

principal offices,5 available to the

Commission, upon request, a

memorandum setting forth in detail the

methodology used in determining that

the additional risk charge of up to

0.15% for the enhanced death benefit is

reasonable in relation to the risks

assumed by Aetna under the Contracts.

8. Similarly, prior to making available

any Other Contracts through the

Separate Accounts, Applicants

represent that the mortality and expense

risk charges under such Other Contracts

will be within the range of industry

practice for comparable contracts. Aetna

undertakes to maintain at its principal

offices, available to the Commission

upon request, memoranda setting forth

in detail the products analyzed in the

course of, and the methodology and

results of, of its comparative surveys

and analyses in reaching these

determinations.

9. Applicants acknowledge that, if a

profit is realized from the mortality and

expense risk charge, all or a portion of

such profit may be available to pay

distribution expenses not reimbursed by

the CDSC deducted under the Contracts.

Aetna has concluded that there is a

reasonable likelihood that the proposed

distribution financing arrangements will

benefit the Separate Accounts and the

Contract holders. The basis for that

conclusion is set forth in a

memorandum which will be maintained

by Aetna at its administrative offices

and will be available to the

Commission.

10. Applicants represent that Other

Contracts will be offered only if Aetna

concludes that the proposed

distribution financing arrangement will

benefit such Other Contracts and the

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 Aetna at its administrative offices

and will be made available to the

Commission, upon request.6

11. Accordingly, Applicants assert

that the deduction for the assumption of

mortality and expense risks is 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.

12. Aetna also represents that the

Separate Accounts will only invest in

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
Federal Register / Vol. 60, No. 50 / Wednesday, March 15, 1995 / Notices 14047

1 Investment Company Act Release No. 17096

(Aug. 3, 1989) (proposing amendments to rule

12d3–1).

majority of whom are not ‘‘interested

persons’’ of the company, formulate and

approve any such plan in accordance

with Rule 12b–1.

Conclusion

For the reasons set forth above,

Applicants represent that the

exemptions requested to permit the

daily deduction from the assets of the

Separate Accounts of the charge for

assumption of mortality and expense

risks, including an enhanced death

benefit, at a maximum annual rate of

1.40% of net assets, 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.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–6354 Filed 3–14–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. IC–20946; 812–9318]

The First Trust Special Situations

Trust, et al.; Notice of Application

March 8, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: The First Trust Special

Situations Trust, Target Equity Trust,

Value Ten Series 1 and subsequent

series, and Nike Securities L.P.

(‘‘Nike’’).

RELEVANT ACT SECTIONS: Order requested

under sections 6(c) and 17(b) from

section 17(a).

SUMMARY OF APPLICATION: Applicants

request an order to permit a terminating

series of a unit investment trust to sell

portfolio securities to a new series of the

trust.

FILING DATE: The application was filed

on November 3, 1994, and was amended

on March 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

April 3, 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 request, 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, DC 20549.

Applicants, c/o Nike Securities L.P.,

1001 Warrenville Road, Suite 3000,

Lisle, Illinois 60532.

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.

Applicants’ Representations

1. The First Trust Special Situations

Trust (the ‘‘Trust’’), a unit investment

trust registered under the Act, consists

of a number of series (‘‘Series’’), each of

which will be similar but separate and

designated by a different series number.

Target Equity Trust, Value Ten Series 1

is of one of the Series of the Trust. Nike

is the sponsor for each Series (the

‘‘Sponsor’’). Applicants request that the

relief sought herein apply to any future

Series that has the characteristics

described below and in the application.

2. Each Series will have a portfolio

which contains equity securities

(‘‘Equity Securities’’) which are (i)

actively traded (i.e., have had an average

daily trading volume in the preceding

six months of at least 500 shares equal

in value to at least 25,000 United States

dollars) on an exchange (an

‘‘Exchange’’) which is either (a) a

national securities exchange which

meets the qualifications of section 6 of

the Securities Exchange Act of 1934 or

(b) a foreign securities exchange that

meets the qualifications set out in the

proposed amendment to rule 12d3–

1(d)(6) under the Act, as proposed by

the Commission,1 and that releases

daily closing prices, and (ii) included in

a published index (an ‘‘Index’’).

3. The investment objective of each

Series is to seek a greater total return

than the stocks comprising an entire

related Index (e.g., the Dow Jones

Industrial Average (‘‘DJIA’’), the Hang

Seng Index, or the Financial Times

Industrial Ordinary Share Index).

Certain of the Series will acquire

approximately equal values of a

designated number of stocks in the DJIA

having the highest dividend yields as of

a specified date and will hold those

stocks for a designated period. Other

Series will create their portfolios in a

similar manner using securities that are

included in other Indices. The Sponsor

of the Series intends that, as each Series

terminates, a new Series (‘‘New Series’’)

based on the appropriate Index will be

offered for the next period.

4. Each Series has or will have a

contemplated date (a ‘‘Rollover Date’’)

on which holders of units in that Series

(the ‘‘Rollover Series’’) may at their

option redeem their units in the

Rollover Series and receive in return

units of a New Series which is created

on or about the Rollover Date.

5. There is normally some overlap

from year to year in the stocks having

the highest dividend yields in an Index

and, therefore, between the portfolios of

each Rollover Series and the

corresponding New Series. For example,

of the ten securities selected for

inclusion in Value Ten Series 5 on

September 7, 1994, eight were still

among the top ten dividend yielding

stocks in the DJIA as of the date of the

amended application.

6. In connection with its termination,

each Rollover Series sells all of its

portfolio securities on an Exchange as

quickly as practicable, but over a period

of time so as to minimize any adverse

impact on the market price. Similarly, a

New Series acquires its portfolio

securities in purchase transactions on

an Exchange. This procedure creates

brokerage commissions on portfolio

securities of the same issue that are

borne by the holders of units of both the

Rollover Series and the New Series.

Applicants, therefore, request an

exemptive order to permit any Rollover

Series to sell portfolio securities to a

New Series and a New Series to

purchase those securities.

7. In order to minimize overreaching,

the Sponsor will certify to the trustee of

the Rollover Series and the New Series,

within five days of each sale from a

Rollover Series to a New Series, (a) that

the transaction is consistent with the

policy of both the Rollover Series and

the New Series, as recited in their

respective registration statements and

reports filed under the Act, (b) the date

of such transaction, and (c) the closing

sales price on the Exchange for the sale

date of the securities subject to such

sale. The trustee will then countersign

the certificate, unless, in the unlikely

event that the trustee disagrees with the

closing sales price listed on the

certificate, the trustee immediately

informs the Sponsor orally of any such

disagreement and returns the certificate

within five days to the Sponsor with

corrections duly noted. Upon the

Sponsor’s receipt of a corrected

certificate, if the Sponsor can verify the