Federal Register / Vol. 60, No. 67 / Friday, April 7, 1995 / Notices 17835

2An amendment will be filed during the notice

period to confirm that the Board of Directors will

formulate and approve any plan adopted under rule

12b–1.

9. If the charges for the mortality and

expense risks prove insufficient to cover

mortality, administration and

maintenance costs, then the excess of

the expenses over the charges made for

these expenses will result in a loss, and

such loss will be borne by Skandia Life.

Conversely, if the charges prove more

than sufficient to cover such costs, the

excess will result in a profit to Skandia

Life.

Applicants’ Legal Analysis

1. Applicants request exemptive

relief, pursuant to Section 6(c) of the

1940 Act from the provisions of

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

Act to permit the deduction of a

mortality and expense risk charge from

the assets of the Account or Future

Accounts with respect to the Contracts

and Future Contracts that are

substantially similar in all material

respects to the Contracts. Applicants

also request that the exemptive relief

granted to SLESCO extend to any other

National Association of Securities

Dealers member broker-dealer

controlling, controlled by, or under

common control with Skandia Life that

may serve in the future as principal

underwriter for the Contracts or Future

Contracts.

2. Section 26(a)(2)(C) provides that no

payment to the depositor of, or principal

underwriter for a registered unit

investment trust shall be allowed the

trustee or custodian as an expense

except compensation, not exceeding

such reasonable amount as the

Commission may prescribe, for

performing bookkeeping and other

administrative duties normally

performed by the trustee or custodian.

Section 27(c)(2) prohibits a registered

investment company or a depositor or

underwriter for such company from

selling periodic payment plan

certificates unless the proceeds of all

payments, other than sales loads, on

such certificates are deposited with a

trustee or custodian having the

qualifications prescribed in Section

26(a)(1), and are held by such trustee or

custodian under an agreement

containing substantially the provisions

required by Sections 26(a)(2)(C) and

26(a)(3) of the 1940 Act. Applicants

request exemption from those

provisions to the extent necessary to

permit the assessment of the charge for

mortality and expense risks under the

Contracts and Future Contracts.

3. Applicants submit that their

request for an order that applies to

Future Contracts, Future Accounts and

Skandia Life Broker-Dealers is necessary

and appropriate in the public interest.

Applicants assert that the issuance of

the requested order on a prospective

basis would promote competitiveness in

the variable annuity contract market by

eliminating the need to file redundant

exemptive applications, thereby

reducing administrative expenses,

maximizing the efficient use of Skandia

Life’s resources, and enabling Skandia

Life to take advantage of business

opportunities as they arise. Further, if

Skandia Life were required repeatedly

to seek exemptive relief with respect to

the same issues addressed in this

Application, investors would not

receive any benefit or additional

protection thereby.

4. Applicants submit that Skandia

Life is entitled to reasonable

compensation for its assumptions of

mortality and expense risks and that the

charge provided for in the Contracts is

a reasonable and proper insurance

charge. Skandia Life further represents

that the charge of 1.25% for mortality

and expense risks assumed by Skandia

Life is within the range of industry

practice with respect to comparable

annuity products. This representation is

based on Skandia Life’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. Skandia Life will

maintain at its administrative 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.

5. Similarly, prior to making available

any Future Contracts through the

Account, or through other Future

Accounts, Applicants will represent that

the mortality and expense risk charge

under any such Future Contracts will be

within the range of industry practice for

comparable contracts. Applicants

represent that Skandia Life will

maintain at its administrative 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. Further, such

mortality and expense risk charge

would not exceed 1.25% of the daily net

assets of the Account or Future

Accounts.

6. Applicants acknowledge that the

CDSC may be insufficient to cover all

costs relating to the distribution of the

Contracts and that if a profit is realized

from the mortality and expense risk

charge all or a portion of such profit

may be viewed as being offset by

distribution expenses. Nevertheless,

Skandia Life has concluded that the

proposed distribution financing

arrangements will benefit the Account

and the Contract owners. The basis for

such conclusion is set forth in a

memorandum which will be maintained

by Skandia Life at its administrative

offices and will be available to the

Commission. Skandia Life also will

maintain and make available to the

Commission memoranda setting forth

the basis for the same representation

with respect to Future Contracts offered

by the Account or Future Accounts.

7. Skandia Life represents that the

Account, and all Future Accounts, shall

invest only in management investment

companies which undertake to have a

Board of Directors, the majority of

whom are not ‘‘interested persons’’ of

such company as that term is used

under Section 2(a)(19) of the Act,

formulate and approve any plan

adopted under Rule 12b–1 of the 1940

Act.2

Conclusion

Applicants submit that the exemptive

relief requested 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.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–8544 Filed 4–6–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20980; File No. 812–9362]

American Skandia Life Assurance

Corporation, et al.

March 31, 1995.

AGENCY: Securities and Exchange

Commission (the ‘‘Commission’’ or the

‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘1940 Act’’

or ‘‘Act’’).

APPLICANTS: American Skandia Life

Assurance Corporation (‘‘Skandia Life’’);

American Skandia Life Assurance

Corporation Variable Account B (Class 1

Sub-Accounts) (the ‘‘Account’’); and

Skandia Life Equity Sales Corporation

(‘‘SLESCO’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) for
17836 Federal Register / Vol. 60, No. 67 / Friday, April 7, 1995 / Notices

1An amendment will be filed during the notice

period to confirm this representation.

exemption from Sections 26(a)(2)(C) and

27(c)(2) of the Act.

SUMMARY OF APPLICATION: Applicants

seek an order to permit the deduction of

a mortality and expense risk charge

from the assets of the Account with

respect to certain flexible premium

deferred variable annuity contracts

(‘‘Contracts’’) and contracts offered in

the future that are substantially similar

in all material respects to the Contracts

(‘‘Future Contracts’’) that are issued

through the Account or any other

Accounts established in the future by

Skandia Life (‘‘Future Accounts’’).

Applicants also request that the

exemptive relief granted to SLESCO

extend to any other National

Association of Securities Dealers

member broker-dealer controlling,

controlled by, order common control

with Skandia Life (‘‘Skandia Life

Broker-Dealers’’), that may serve in the

future as distributor and/or principal

underwriter for the Contracts or Future

Contracts.

FILING DATES: The application was filed

on December 12, 1994 and amended on

February 27, 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 on this application, or ask to

be notified if a hearing is ordered, by

writing to the Commission’s Secretary

and serving the Applicants with a copy

of the request, either personally or by

mail. Hearing requests must be received

by the SEC by 5:30 p.m., on April 25,

1995 and should be accompanied by

proof of service on the Applicants,

either by affidavit, or, for lawyers, by

certificate of service. Hearing requests

should state the nature of the writer’s

interest, the reason for the request, and

the issues contested.

ADDRESSES: Secretary, Securities and

Exchange Commission, 450 Fifth Street,

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

Applicants, c/o American Skandia Life

Assurance Corporation, One Corporate

Drive, P.O. Box 883, Shelton,

Connecticut 06484–9932, Attention:

Jeffrey M. Ulness, Esq.

FOR FURTHER INFORMATION CONTACT:

Joyce Merrick Pickholz, Senior Counsel,

or Wendy Finck Friedlander, Deputy

Chief, at (202) 942–0670, Office of

Insurance Products, Division of

Investment Management.

SUPPLEMENTARY INFORMATION: Following

is a summary of the application. The

complete application is available for a

fee from the SEC’s Public Reference

Branch.

Applicants’ Representations

1. Skandia Life is a stock life

insurance company incorporated under

the laws of Connecticut. It is wholly

owned by American Skandia Investment

Holding Corporation (‘‘AHIHC’’) which

in turn is ultimately wholly owned by

Skandia Insurance Company Ltd., a

Swedish Corporation.

2. The Account was established by

Skandia Life as a unitized separate

account under the laws of Connecticut

and is registered with the Commission

under the Act as a unit investment trust.

3. SLESCO, a wholly owned

subsidiary of AHIHC, will serve as the

distributor and principal underwriter of

the Contracts. SLESCO is registered

under the Securities Exchange Act of

1934 and with the National Association

of Securities Dealers, Inc. as a brokerdealer.

4. The Contracts are flexible premium

deferred variable annuities. Contract

owners may allocate premium payments

or account value to one or more subaccounts of the Account which will

invest in shares of corresponding

investment portfolios of American

Skandia Trust or such other investment

company as may be made available in

the future.

5. During the accumulation phase, a

death benefit is generally payable upon

the death of the first Contract owner to

die (if the Contract is held by one or

more natural persons) or upon the death

of the annuitant. If death occurs prior to

the 90th birthday of the individual upon

whose death the benefit is payable, the

death benefit is the greater of a

Contract’s Account Value or the

minimum death benefit (which is the

sum of all Purchase Payments less the

sum of all withdrawals). If death occurs

on or after the 90th birthday of the

individual on whose death the benefit is

payable, the death benefit is the

Account Value.

6. Prior to the annuity date and upon

surrender, Skandia Life will deduct a

maintenance fee of the lesser of 2% of

Account Value or $30 per annuity year

from the sub-account holdings

attributable to any particular Contract in

the same proportion that each subaccount holding bears to the Account

Value of such Contract. Skandia Life

states that this fee for maintaining the

Contracts will not be greater than the

anticipated costs. Also, during the

accumulation period, Skandia Life will

deduct from the Account, on a daily

basis, an administration fee at the rate

of 0.15% per annum of the average daily

total value of assets of the Account.

Applicants assert 1 that a relationship

does not necessarily exist between the

administration charge and maintenance

fee upon a particular Contract and the

expenses attributable to that particular

Contract, however, the total

administrative charge assessed against

the Account will not be greater than the

total anticipated cost of services to be

provided over the life of the Contract(s)

in accordance with the applicable

standards in Rule 26a–1 under the 1940

Act. The administration and

maintenance fees can be increased only

for contracts issued subsequent to the

effective date of any such change. In

addition, Skandia Life deducts an

amount equal to any premium taxes due

either prior to allocation to the subaccounts or upon annuitization. Finally,

a charge of $10 is assessable for each

transfer in excess of twelve transfers in

each Annuity Year.

7. No deduction or charge will be

made from Purchase Payments for sales

or distribution expenses. However, a

contingent deferred sales charge

(‘‘CDSC’’) may be assessed on surrender

or withdrawal. The Contract offers a free

withdrawal privilege that, under certain

circumstances, permits a Contract

owner to withdraw funds without any

CDSC being imposed. For purposes of

the CDSC, amounts withdrawn as a free

withdrawal are not considered a

liquidation of purchase payments. For

withdrawals of unliquidated new

premiums that exceed the free

withdrawal amount, the CDSC under

the Contracts begins at 7.5% and

declines to 0% in year eight in

accordance with a schedule set forth in

the application. However, Applicants

represent that in no event will the total

CDSC for a particular Contract or Future

Contract exceed 9% of purchase

payments under the Contract or Future

Contract. CDSC’s will be used to

compensate Skandia Life for sales

commissions and other promotional or

distribution expenses incurred by

Skandia Life which are associated with

the marketing of the Contracts. Skandia

Life does not anticipate that the CDSC

will be sufficient to permit it to recoup

all its sales and distribution expenses.

To the extent the CDSC is not sufficient,

Skandia Life will pay these expenses

from its general assets which may

include proceeds (if available) from the

mortality and expense risk charges.

8. A mortality and expense risk charge

will be deducted daily from the net

asset value of the Account attributable

to the Contracts at a rate of 1.25% per

annum of the daily net assets in the
Federal Register / Vol. 60, No. 67 / Friday, April 7, 1995 / Notices 17837

2An amendment will be filed during the notice

period to confirm that the Board of Directors will

formulate and approve any plan adopted under

Rule 12b–1.

Account. Of that amount, approximately

0.90% is allocable to Skandia Life’s

assumption of mortality risks and 0.35%

is allocable to Skandia Life’s

assumption of administration and

expense risks. The annuity rates

incorporated in any issued Contracts

cannot be changed. Skandia Life’s

assumption of mortality risks guarantees

that the variable annuity payments

made to Contract owners will not be

affected by the mortality experience of

persons receiving such payments or of

the general population. Skandia Life

assumes this risk by virtue of the

annuity rates incorporated in the

Contracts which cannot be changed.

Additional mortality risks are assumed

when the sub-accounts decline in value

resulting in losses to Skandia Life on

paying death benefits. The expense risk

undertaken by Skandia Life is that the

administration and maintenance fees,

which are guaranteed for current

Contract owners, may be insufficient to

cover the actual costs of maintaining the

Contracts and the Account.

9. If the charges for the mortality and

expense risks prove insufficient to cover

mortality, administration and

maintenance costs, then the excess of

the expenses over the charges made for

these expenses will result in a loss, and

such loss will be borne by Skandia Life.

Conversely, if the charges prove more

than sufficient to cover such costs, the

excess will result in a profit to Skandia

Life.

Applicants’ Legal Analysis

1. Applicants request exemptive

relief, pursuant to Section 6(c) of the

1940 Act from the provisions of

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

Act to permit the deduction of a

mortality and expense risk charge from

the assets of the Account or Future

Accounts with respect to the Contracts

and Future Contracts that are

substantially similar in all material

respects to the Contracts. Applicants

also request that the exemptive relief

granted to SLESCO extend to any other

National Association of Securities

Dealers member broker-dealer

controlling, controlled by, or under

common control with Skandia Life that

may serve in the future as principal

underwriter for the Contracts or Future

Contracts.

2. Section 26(a)(2)(C) provides that no

payment to the depositor of, or principal

underwriter for a registered unit

investment trust shall be allowed the

trustee or custodian as an expense

except compensation, not exceeding

such reasonable amount as the

Commission may prescribe, for

performing bookkeeping and other

administrative duties normally

performed by the trustee or custodian.

Section 27(c)(2) prohibits a registered

investment company or a depositor or

underwriter for such company from

selling periodic payment plan

certificates unless the proceeds of all

payments, other than sales loads, on

such certificates are deposited with a

trustee or custodian having the

qualifications prescribed in Section

26(a)(1), and are held by such trustee or

custodian under an agreement

containing substantially the provisions

required by Sections 26(a)(2)(C) and

26(a)(3) of the 1940 Act. Applicants

request exemption from those

provisions to the extent necessary to

permit the assessment of the charge for

mortality and expense risks under the

Contracts and Future Contracts.

3. Applicants submit that their

request for an order that applies to

Future Contracts, Future Accounts and

Skandia Life Broker-Dealers is necessary

and appropriate in the public interest.

Applicants assert that the issuance of

the requested order on a prospective

basis would promote competitiveness in

the variable annuity contract market by

eliminating the need to file redundant

exemptive applications, thereby

reducing administrative expenses,

maximizing the efficient use of Skandia

Life’s resources, and enabling Skandia

Life to take advantage of business

opportunities as they arise. Further, if

Skandia Life were required repeatedly

to seek exemptive relief with respect to

the same issues addressed in this

Application, investors would not

receive any benefit or additional

protection thereby.

4. Applicants submit that Skandia

Life is entitled to reasonable

compensation for its assumptions of

mortality and expense risks and that the

charge provided for in the Contracts is

a reasonable and proper insurance

charge. Skandia Life further represents

that the charge of 1.25% for mortality

and expense risks assumed by Skandia

Life is within the range of industry

practice with respect to comparable

annuity products. This representation is

based on Skandia Life’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. Skandia Life will

maintain at its administrative 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.

5. Similarly, prior to making available

any Future Contracts through the

Account, or through other Future

Accounts, Applicants will represent that

the mortality and expense risk charge

under any such Future Contracts will be

within the range of industry practice for

comparable contracts. Applicants

represent that Skandia Life will

maintain at its administrative 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. Further, such

mortality and expense risk change

would not exceed 1.25% of the daily net

assets of the Account or Future

Accounts.

6. Applicants acknowledge the CDSC

may be insufficient to cover all costs

relating to the distribution of the

Contracts and that if a profit is realized

from the mortality and expense risk

charge all or a portion of such profit

may be viewed as being offset by

distribution expenses. Nevertheless,

Skandia Life has concluded that the

proposed distribution financing

arrangements will benefit the Account

and the Contract owners. The basis for

such conclusion is set forth in a

memorandum which will be maintained

by Skandia Life at its administrative

offices and will be available to the

Commission. Skandia Life also will

maintain and make available to the

Commission memoranda setting forth

the basis for the same representation

with respect to Future Contracts offered

by the Account or Future Accounts.

7. Skandia Life represents that the

Account, and all Future Accounts, shall

invest only in management investment

companies which undertake to have a

Board of Directors, the majority of

whom are not ‘‘interested persons’’ of

such company as that term is used

under Section 2(a)(19) of the Act,

formulate and approve any plan

adopted under Rule 12b–1 of the 1940

Act.2

Conclusion

Applicants submit that the exemptive

relief requested 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.
17838 Federal Register / Vol. 60, No. 67 / Friday, April 7, 1995 / Notices

1There are 576,124 units of general and limited

partnership interests of Pitcairn issued and

outstanding, approximately 70% of which are held

in irrevocable trusts for members of the Pitcairn

family, and approximately 30% of which are owned

directly by family members and their churches. The

units are registered under section 12 of the

Securities Exchange Act of 1934, but there is no

market for the units, and there are generally fewer

than ten transfers per year. These transfers typically

arise from terminating trusts or estates, interfamily

gifts, or similar transactions involving one or more

members of the Pitcairn family or trusts for their

benefit.

2Pitcairn was the sole initial limited partner of

Moreland and One Place; it spun off its interests in

the partnerships to the owners of its Units in 1992.

As a result, ownership of Pitcairn, Moreland, and

One Place is nearly identical.

3The only connection of the Separating Members

with the remaining unitholders after consummation

of the transactions described herein will be that two

of the Separating Members will serve as trustees of

trusts holding Units. These two Separating

Members will continue to serve as trustees at the

request of the beneficiaries of those trusts,

notwithstanding their status as Separating

Members.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–8545 Filed 4–6–95; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Rel. No. 20982;

812–9166]

Pitcairn Group L.P., et al.; Notice of

Application

March 31, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (‘‘Act’’).

APPLICANTS: Pitcairn Group L.P.

(‘‘Pitcairn’’), and Johnstone L.P.

(‘‘Johnstone’’).

RELEVANT ACT SECTIONS: Exemption

requested under section 23(c)(3) from

the provisions of section 23(c), and

under section 57(c) from the provisions

of section 57(a)(2).

SUMMARY OF APPLICATION: Applicants

seek an order permitting Pitcairn to

acquire 221,954 (approximately 39%) of

its limited partnership units (the

‘‘Units’’) from Johnstone, a limited

partnership formed by former Pitcairn

unitholders to liquidate their ownership

interests in Pitcairn, in exchange for a

pro rata portion of the total assets of

Pitcairn (the ‘‘Redemption’’). The order

also would permit Johnstone to acquire

assets from Pitcairn in the Redemption

and to acquire a pro rata portion of the

total assets of Moreland L.P.

(‘‘Moreland’’), a limited partnership

controlled by Pitcairn, in exchange for

the 222,553 Moreland limited

partnership units owned by Johnstone

(the ‘‘Related Transaction’’).

FILING DATES: The application was filed

on August 15, 1994, and amended on

December 9, 1994, and March 29, 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 25, 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 such notification

by writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicants: Pitcairn, One Pitcairn Place,

Suite 3000, 165 Township Line Road,

Jenkintown, Pennsylvania 19046;

Johnstone, 75 James Way, Southampton,

Pennsylvania 18966.

FOR FURTHER INFORMATION CONTACT:

Courtney S. Thornton, Senior Attorney,

at (202) 942–0583, or Barry D. Miller,

Senior Special Counsel, 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.

Applicants’ Representations

1. Pitcairn, a Delaware limited

partnership that has elected to be

regulated as a business development

company (‘‘BDC’’) under section 54 of

the Act, was organized in 1986 as a

vehicle for private investments for the

Pitcairn family. It was capitalized with

assets derived from the liquidation of

The Pitcairn Company, a Delaware

corporation formed in 1923 by members

of the Pitcairn family to hold and

manage the estate of John Pitcairn, one

of the founders of Pittsburgh Plate Glass

Company. Units in Pitcairn were

distributed to the former shareholders of

The Pitcairn Company.1

2. Pitcairn is the sole shareholder of

Pitcairn Company (‘‘Pitco’’), an

investment adviser formed in 1986 and

registered under the Investment

Advisers Act of 1940. Pitco serves as the

managing general partner of Pitcairn.

Pitcairn also has four individual general

partners, each of whom is a member of

the Pitcairn family. In addition, Pitco

serves as the general partner of

Moreland, a Pennsylvania limited

partnership that owns undeveloped

land in and near the Borough of Bryn

Athyn, Pennsylvania (where a large

number of Pitcairn family members

reside), and One Place L. P. (‘‘One

Place’’), a Pennsylvania limited

partnership that owns the land and

building in which the offices of Pitcairn,

Pitco, and Pitcairn Trust Company

(‘‘PTC’’) (a Pennsylvania chartered trust

company formed as a subsidiary of Pitco

in 1987 to provide trust and related

services to the Pitcairn family and other

high net worth individuals) are

situated.2

3. As a result of general change in the

Pitcairn family and divergence of points

of view as to investment philosophy,

among other things, it became apparent

in the early 1990s that a separation of

family members from the family

partnerships would occur.

Consequently, in February 1993, the

board of directors of Pitco asked its

management to recommend a plan for a

buy-out of the interests of certain

Pitcairn family members in certain

family assets. This recommendation,

through arms’ length negotiations,

resulted in the proposed Redemption

and Related Transaction.

4. The series of transactions

contemplated by the Redemption and

the Related Transaction are as follows:

a. Four individuals formed Johnstone,

a Pennsylvania limited partnership, for

the purpose of receiving, with the intent

to liquidate, their and other Pitcairn

family members’ (collectively, the

‘‘Separating Members’’) limited

partnership interests in Pitcairn,

Moreland, and One Place. The

Separating Members, together with their

spouses and related trusts, are no longer

clients of PTC and have contributed

their limited partnership interests in

Pitcairn, Moreland, and One Place to

Johnstone in exchange for limited

partnership interests in Johnstone.3

Accordingly, Johnstone has become a

substitute limited partner in Pitcairn,

Moreland, and One Place, owning

approximately 39%, 38.6%, and 39%,

respectively, of the limited partnership

units. Assets received by Johnstone in

the Redemption and the Related

Transaction are intended to be held by

Johnstone only until they can be

liquidated and the proceeds distributed

to the Separating Members.

b. In the Redemption, Johnstone will

transfer to Pitcairn all of the Units