27112 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices

premium payments be treated as ‘‘sales

load.’’

7. Rule 6e–3(T)(c)(4) defines ‘‘sales

load’’ during a period as the excess of

any payments made during that period

over certain specified charges and

adjustments, including a deduction for

state premium taxes. Under a literal

reading of paragraph (c)(4) of the Rule,

a deduction for an insurer’s increased

federal tax burden does not fall squarely

into those itemized charges or

deductions, arguably causing the

proposed tax burden charge to be

treated as part of ‘‘sales load.’’

8. Applicants submit that the Rule 6e–

3(T)(c)(4)(v) limitation of the premium

tax exclusion from the definition of

‘‘sales load’’ to state premium taxes

probably is an historical accident

related to that fact that when Rule 6e–

3(T) was adopted in 1984, and when it

was amended in 1987, the additional

Code Section 848 tax burden

attributable to the receipt of premiums

did not exist. Applicants further submit

that nothing in the administrative

history of Rule 6e–3(T) suggests that the

exclusion from the definition of sales

load of deductions for tax liabilities

attributable to the amount of premium

payments received was tied to the type

of government entity imposing such

taxes.

9. Applicants also request exemptions

for any Future Accounts that Aetna may

establish to support the Current Policies

or any Future Policies, as well as for

each Future Broker-Dealer that may

distribute the Current Policies or Future

Policies.

10. Applicants assert that the

standards of Section 6(c) are satisfied

because the requested relief is

appropriate in the public interest and

consistent with the purposes of the 1940

Act and the protection of investors. The

exemptive relief would eliminate the

need for Aetna to file additional

exemptive applications for each Current

Policy or Future Policy to be issued

through a Future Account with respect

to the same issues under the 1940 Act

that have been addressed in this

application, as well as for each Future

Broker-Dealer that distributes the

Current Policy or Future Policy, and

thus would promote competitiveness in

the variable life insurance market by

avoiding delay, reducing administrative

expenses, and maximizing efficient use

of resources. Applicants further assert

that the exemptive relief would enhance

Aetna’s ability to effectively take

advantage of business opportunities as

they arise. If Aetna were required to

seek exemptive relief repeatedly with

respect to the same issues addressed in

this application, investors would not

receive any benefit or additional

protection thereby and might be

disadvantaged as a result of increased

overhead expenses.

11. Applicants believe that a charge of

1.25% of premium payments would

reimburse Aetna for the impact of

Section 848 of the Code, as currently

written on its federal income tax

liabilities. Aetna believes, however, that

it may have to increase this charge if

any change in, or interpretation of,

Section 848 or any successor provision

results in a further increased federal

income tax burden due to the receipt of

premiums. Such an increase could

result from a change in corporate federal

income tax rate, a change in the 7.7%

figure, or a change in the amortization

period.

Conditions for Relief

1. Aetna will monitor the

reasonableness of the 1.25% charge.

2. The registration statement for each

Policy under which the 1.25% tax

burden charge is deducted will: (a)

disclose the charge; (b) explain the

purpose of the charge; and (c) state that

the charge is reasonable in relation to

Aetna’s increased federal tax burden

under Section 848 of the Code.

3. The registration statement for each

Policy providing for the 1.25% tax

burden charge will contain as an exhibit

an actuarial opinion as to: (a) the

reasonableness of the charge in relation

to Aetna’s increased federal tax burden

under Section 848 of the Code resulting

from the receipt of premiums; (b) the

reasonableness of the targeted rate of

return that is used in calculating such

charge; and (c) the appropriateness of

the factors taken into account by Aetna

in determining such targeted rate of

return.

Conclusion

For the reasons and upon the facts set

forth above, Applicants submit that the

requested exemptions from Section

27(c)(2) of the 1940 Act and Rule 6e–

3(T)(c)(4)(v) thereunder, are 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. 96–13544 Field 5–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21978; 812–10162]

Lord Abbett Global Fund, Inc., et al.;

Notice of Application

May 23, 1996.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Lord Abbett Global Fund,

Inc. (the ‘‘Fund’’), Lord, Abbett & Co.

(‘‘Lord Abbett’’), and Dunedin Fund

Managers Limited (‘‘Dunedin’’).

RELEVANT ACT SECTIONS: Order requested

under section 6(c) of the Act for an

exemption from section 15(a) of the Act.

SUMMARY OF APPLICATION: Applicants

request an order that would permit the

implementation, without shareholder

approval, of a new sub-advisory

agreement (the ‘‘New Sub-Advisory

Contract’’) for a period of up to 120 days

following the termination of the former

sub-advisory contract on March 19,

1996 (‘‘Former Sub-Advisory Contract’’)

(the ‘‘Interim Period’’). The order also

would permit the sub-adviser to receive

from the Fund fees earned during the

Interim Period after shareholders have

approved the New Sub-Advisory

Contract.

FILING DATE: The application was filed

on May 21, 1996.

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

June 17, 1996, and should be

accompanied by proof of service on

applicants, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicants: The Fund and Lord Abbett,

767 Fifth Avenue, New York, New York

10153 and Dunedin, Dunedin House, 25

Ravelston Terrace, Edinburgh EH4 3EX,

Scotland.

FOR FURTHER INFORMATION CONTACT:

Elaine M. Boggs, Staff Attorney, at (202)

942–0572, or Alison E. Baur, Branch

Chief, at (202) 942–0564 (Division of

Investment Management, Office of

Investment Company Regulation).
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices 27113

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 Fund is an open-end

management investment company

registered under the Act and consists of

two series, the Equity Series and the

Income Series. Lord Abbett, a registered

investment adviser, serves as

investment adviser to the Fund and has

engaged Dunedin to serve as sub-adviser

to both series pursuant to the Former

Sub-Advisory Contract. Dunedin is a

Scottish corporation that is registered

under the Investment Adivisers Act of

1940 as an investment adviser and is a

wholly-owned subsidiary of DFM

Holdings Limited (‘‘DFM Holdings’’).

2. Prior to March 19, 1996, 50.5% of

the outstanding capital of DFM

Holdings was owned by the British

Linen Bank Group, Limited, with the

remaining interests held by four

investment trusts (the ‘‘Vendors’’). On

February 15, 1996, the Vendors entered

into a sale and purchase agreement (the

‘‘Sale Agreement’’) pursuant to which

Edinburgh Fund Managers Group plc

(‘‘Edinburgh’’) agreed to acquire all of

the outstanding capital shares of DFM

Holdings, contingent upon certain

events. All Dunedin clients were

notified of the proposed sale on

February 16, 1996. Representatives of

Edinburgh and Dunedin met with

representatives of Lord Abbett and the

Fund on February 28, 1996 to discuss

the possible continuation of the

advisory relationship between Dunedin

and the Fund. At that time, Edinburgh

was told that Lord Abbett would make

a recommendation to the Fund’s board

of directors (the ‘‘Board’’) to be

considered at a meeting of the Board to

be held on March 14, 1996.

3. On March 14, 1996, the Board

approved the New Sub-Advisory

Contract with respect to the Equity

Series. As the same time, the Board

determined that the Former SubAdvisory Contract with respect to the

Income Series was no longer desirable

and determined not to approve a new

contract. The Board also concluded that

it was in the best interests of the Equity

Series and its shareholders to continue

to retain Dunedin as sub-adviser during

the Interim Period in order to minimize

the disruption in advisory services to

the Equity Series. The Board also voted

to recommend to shareholders of the

Equity Series that they approve the New

Sub-Advisory Contract.

4. On March 18, 1996, a preliminary

proxy statement was filed with the SEC

for a shareholder meeting to vote on the

New Sub-Advisory Contract. It is

anticipated that the shareholder meeting

will be held on June 19, 1996. The terms

and conditions of the New SubAdvisory Contract are identical to those

of the Former Sub-Advisory Contract,

except that the dates of execution and

commencement have changed, and

references to the Income Series has been

eliminated. The Sale Agreement was

consummated on March 19, 1996,

immediately after which the Former

Sub-Advisory Contract terminated.

5. Among other things, the Board was

advised at its March 14th meeting the

fact that it is anticipated that most of

Dunedin’s investment personnel will

continue to work for Dunedin after the

acquisition and that Edinburgh, has

substantial experience in the provision

of advisory and management services to

U.K. institutions. The Board was also

advised that the advisory and other

services to be provided to the Equity

Series under the New Sub-Advisory

Contract would be of a scope and

quality equivalent to the scope and

quality of services provided to the

Equity Series by Dunedin pursuant to

the Former Sub-Advisory Contract. At a

subsequent meeting held on April 17,

1996, the Board concluded that it would

be appropriate for Dunedin to receive

compensation for its services during the

Interim Period.

6. The Fund and Dunedin propose to

enter into a separate agreement

providing that amounts otherwise

payable to Dunedin under the New SubAdvisory Contract will be held by an

unaffiliated escrow agent pending

shareholder consideration of the New

Sub-Advisory Contract. Amounts in the

account will be paid to Dunedin only

upon shareholder approval and in

accordance with the requested order.

Applicants’ Legal Analysis

1. Applicants seek an exemption

pursuant to section 6(c) from section

15(a) of the Act to permit the

implementation, without shareholder

approval, of the New Sub-Advisory

Contract during the Interim Period.

Applicants also request relief so that

Dunedin may receive all fees earned

under the New Sub-Advisory Contract

during the Interim Period if and to the

extent they are approved by the

shareholders of the Equity Series.

2. Section 15(a) prohibits an

investment adviser from providing

investment advisory services to a

registered investment company except

under a written contract that has been

approved by a majority of the voting

securities of such investment company.

Section 15(a) further requires that such

written contract provide for its

automatic termination in the event of an

assignment. Section 2(a)(4) defines

‘‘assignment’’ to include any direct or

indirect transfer of a contract by the

assignor. The consummation of the Sale

Agreement resulted in an ‘‘assignment,’’

within the meaning of section 2(a)(4), of

the Former Sub-Advisory Contract,

thereby resulting in the termination of

the Former Sub-Advisory Contract,

according to its terms.

3. Section 6(c) provides, in relevant

part, that the SEC may, conditionally or

unconditionally, by order, exempt any

person or class of persons from any

provision of the Act or from any rule

thereunder, if such exemption is

necessary or appropriate in the public

interest, consistent with the protection

of investors, and consistent with the

purposes fairly intended by the policy

and provisions of the Act. Applicants

submit that the requested relief meets

this standard.

4. Applicants state that they will take

all appropriate actions to prevent any

diminution in the scope or quality of

services provided to the Equity Series.

Applicants state that obtaining

shareholder approval prior to the

consummation of the Sales Agreement

was not possible because the Fund did

not have sufficient advance notice of the

acquisition, the terms and timing of

which were wholly determined by the

Vendors in response to a number of

factors substantially unrelated to the

Fund or Lord Abbett. In addition,

applicants state that the terms of the

New Sub-Advisory Contract are

substantially similar to that of the

Former Sub-Advisory Contract.

Applicants believe that to deprive

Dunedin of advisor fees under the New

Sub-Advisory Contract during the

Interim Period for no reason other than

the fact that the acquisition (over which

Dunedin had no direct control) resulted

in an assignment of the Former SubAdvisory Contract would be an unduly

harsh and unreasonable penalty.

Applicants’ Condition

Applicants agree as conditions to the

issuance of the requested exemptive

order that:

1. The New Sub-Advisory Contract

will have the same terms and conditions

as the Former Sub-Advisory Contract,

except that the dates of execution and

commencement have changed, and

references to the Income Series have

been eliminated.

2. Fees earned by Dunedin during the

Interim Period under the New SubAdvisory Contract will be maintained in

an interest bearing escrow account, and

the amounts in such account (including
27114 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices

1The Pacifica Trusts received an SEC exemptive

order permitting them to implement interim

advisory contracts with FICM without shareholder

approval for up to 120 days following the

consummation of the merger. Investment Company

Act Release Nos. 21794 (March 1, 1996) (notice) and

21860 (March 27, 1996) (order).

interest earned on such amounts) will

be paid (a) to Dunedin only upon

approval of the shareholders of the

Equity Series or (b) in the absence of

such approval, to the Fund.

3. The fund will hold a special

meeting of shareholders to vote on the

approval or disapproval of the New SubAdvisory Contract, on or before the

120th day following March 19, 1996. It

is expected that the special meeting will

be held June 19, 1996, but it will be held

no later than July 17, 1996.

4. Dunedin or Edinburg will bear the

costs of preparing and filing this

application and the costs of a special

meeting relating to the solicitation of the

approvals of the Fund’s shareholders of

the New Sub-Advisory Contract

necessitated by the acquisition.

5. Dunedin will take all appropriate

actions to ensure that the scope and

quality of advisory and other services

provided to the Equity Series under the

New Sub-Advisory Contract will be at

least equivalent, in the judgment of the

Board, including the independent

directors, to the scope and quality of

services previously provided. In the

event of any material change in

personnel providing services pursuant

to the New Sub-Advisory Contract,

Dunedin will apprise and consult the

Board to assure that the Board,

including the independent directors, are

satisfied that the services provided by

Dunedin will not be diminished in

scope and quality.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–13546 Filed 5–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21979; 812–10074]

Stagecoach Funds, Inc., et al.; Notice

of Application

May 23, 1996.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Stagecoach Funds, Inc.

(‘‘Stagecoach’’), Life & Annuity Trust

(collectively with Stagecoach, the

‘‘Companies’’), and Wells Fargo Bank,

N.A. (‘‘Wells Fargo Bank’’).

RELEVANT ACT SECTIONS: Order requested

under section 6(c) of the Act for an

exemption from section 15(f)(1)(A) of

the Act.

SUMMARY OF APPLICATION: Applicants

request an order that would permit

Stagecoach to retain its present directors

following a reorganization involving

other registered investment companies.

Without the requested exemption,

Stagecoach would have to reconstitute

its board of directors after the

reorganization to meet the 75 percent

non-interested director requirement of

section 15(f)(1)(A) in order to comply

with the safe harbor provisions of

section 15(f).

FILING DATES: The application was filed

on April 3, 1996, and amended on May

21, 1996.

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

June 17, 1996, and should be

accompanied by proof of service on

applicants, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicants: the Companies, 111 Center

Street, Little Rock, Arkansas 72201 and

Wells Fargo, 420 Montgomery Street,

San Francisco, CA 94105.

FOR FURTHER INFORMATION CONTACT:

Elaine M. Boggs, Staff Attorney, at (202)

942–0572, or Alison E. Baur, Branch

Chief, at (202) 942–0564 (Division of

Investment Management, Office of

Investment Company Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch.

Applicants’ Representations

1. Each of the Companies is a

registered open-end management

investment company. Wells Fargo Bank,

a wholly-owned subsidiary of Wells

Fargo & Company (‘‘Wells Fargo’’),

currently serves as investment adviser

to each series of the Companies.

2. On April 1, 1996, Wells Fargo

acquired First Interstate Bancorp

(‘‘Interstate’’) and its indirect whollyowned subsidiary of Interstate, First

Interstate Capital Management, Inc.

(‘‘FICM’’) (the ‘‘Holding Company

Merger’’). Interstate shareholders

received consideration in connection

with the Holding Company Merger. The

Holding Company Merger, whereby

FICM became an indirect wholly-owned

subsidiary of Wells Fargo, constituted a

change in control of FICM.

3. FICM currently serves as

investment adviser to the Pacifica Funds

Trust and Pacifica Variable Trust

(collectively, the ‘‘Pacifica Trusts’’). The

Holding Company Merger caused an

automatic termination of FICM’s then

current advisory agreements with the

Pacifica Trusts. At meetings in February

and March 1996, the boards of trustees

of the Pacifica Trusts approved the

interim continuation of the Pacifica

Trusts’ advisory relationship with FICM

following the Holding Company Merger,

subject to shareholder ratification and

approval.1

4. Several new and existing series of

Stagecoach propose to acquire the assets

of each series of the Pacific Funds Trust

(the ‘‘Reorganization’’). The

Reorganization is intended to

consolidate the operations of separate

mutual fund families into fewer separate

companies. Among other things, it is

believed that the Reorganization will

improve efficiency, eliminate duplicate

shareholder costs and market overlap,

facilitate the consolidation of mutual

fund investment advisory capabilities

by Wells Fargo Bank, and provide

potentially enhanced investment

returns.

5. At meetings held in late April and

mid-May, the Pacifica Funds Trust

board of trustees and the Stagecoach

board of directors (collectively, the

‘‘Boards’’), determined, after reviewing

and evaluating relevant information,

that (a) participation in the

Reorganization is in the best interest of

the particular series and (b) the interests

of existing shareholders will not be

diluted as a result of participating in the

Reorganization.

6. The Pacifica Funds Trust Board has

called a special meeting of the Pacifica

Funds Trust shareholders to be held in

July 1996, for the purpose of

considering the Reorganization.

Approval of a particular series’

participation in the Reorganization will

require approval by a majority of the

outstanding shares of such series

entitled to vote at the meeting, voting

separately on a series-by-series basis. If

required by its declaration of trust or by

state law, approval may also be required