362 Federal Register / Vol. 61, No. 3 / Thursday, January 4, 1996 / Notices

13 17 CFR 200.30–3(a)(12).

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. 552, will be

available for the inspection and copying

at the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of the New York Stock Exchange,

Inc. All submissions should refer to File

No. SR–NYSE–95–40 and should be

submitted by January 25, 1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–80 Filed 1–3–96; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21626; File No. 812–9580–01]

Great-West Life & Annuity Insurance

Company et al.

December 27, 1995.

AGENCY: Securities and Exchange

Commission (the ‘‘SEC’’ or the

‘‘Commission’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘1940 Act’’).

APPLICANTS: Great-West Life & Annuity

Insurance Company (‘‘GWL&A’’),

Maxim Series Account (the ‘‘Separate

Account’’), and The Great-West Life

Assurance Company (‘‘Great-West’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) of the 1940

Act for exemptions from Sections

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

SUMMARY OF THE APPLICATION:

Applicants seek an order permitting the

deduction of mortality and expense risk

charges from: (i) the assets of the

Separate Account in connection with

the offer and sale of certain flexible

premium variable annuity contracts (the

‘‘Contracts’’) issued with a guaranteed

death benefit, and of variable annuity

contracts established in the future (the

‘‘Future Contracts’’) which are

substantially similar in all material

respects to the Contracts (‘‘Future

Contracts’’); and (ii) the assets of

separate accounts (‘‘Future Accounts’’)

established in the future by GWL&A—

which are substantially similar to the

Separate Account—in connection with

the offer and sale of Contracts and

Future Contracts.

FILING DATE: The application was filed

on April 25, 1995. An amended and

restated application was filed on

October 16, 1995.

HEARING OF NOTIFICATION OF THE HEARING:

An order granting the application will

be issued unless the Commission orders

a hearing. Interested persons may

request a hearing on this application by

writing to the Secretary of the

Commission and serving Applicants

with a copy of the request, personally or

by mail. Hearing requests must be

received by the Commission by 5:30

p.m. on January 22, 1996 and should be

accompanied by proof of service on

Applicants in the form of an affidavit or,

for lawyers, by certificate of service.

Hearing requests should state the nature

of the interest, the reason for the

request, and the issues contested.

Persons may request notification of the

date of the hearing by writing to the

Secretary of the Commission.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicants: Beverly A. Byrne, Esq., The

Great-West Life Assurance Company,

8515 East Orchard Road, Englewood,

CO 80111.

FOR FURTHER INFORMATION CONTACT:

Patrice M. Pitts, Special Counsel, Office

of Insurance Products, Division of

Investment Management, at (202) 942–

0670.

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application is

available for a fee from the Public

Reference Branch of the Commission.

Applicants’ Representations

1. GWL&A, a stock life insurance

company, originally was organized

under Kansas law as the National

Interment Association. In 1963, the

company’s name was changed to Ranger

Life Insurance Company, and later was

changed to Insuramerica Corporation; in

February 1982, the company assumed

its current name. In September 1990,

GWL&A redomesticated and now is

organized under the laws of Colorado.

GWL&A is wholly-owned by Great

West, which is a subsidiary of GreatWest Lifeco Inc., an insurance holding

company which, in turn, is a subsidiary

of Power Financial Corporation, a

financial services company.

2. The Separate Account was

established by GWL&A under the laws

of Kansas on June 24, 1981, and now

exists under the laws of Colorado as a

result of the redomestication of GWL&A

in 1990. The Separate Account is a unit

investment trust registered under the

1940 Act. The Separate Account acts as

a funding vehicle for flexible premium

variable annuity contracts—including

the Contracts—which have a guaranteed

death benefit, as well as for other

flexible premium annuity contracts

without a guaranteed death benefit

(‘‘Standard Death Benefit Contracts’’).

3. The Separate Account currently has

fourteen investment divisions, twelve of

which invest solely in corresponding

investment portfolios of Maxim Series

Fund, Inc. (‘‘Maxim’’), and two of which

invest solely in corresponding

investment portfolios of TCI Portfolios,

Inc. (‘‘TCI’’). (Maxim and TCI shall be

referred to herein collectively as the

‘‘Funds.’’) Each investment division is

subdivided into six subaccounts, two of

which are used for allocation under the

Standard Death Benefit Contracts and

the Contracts in connection with

retirement plans (‘‘qualified plans’’) that

qualify for favorable federal income tax

treatment under Sections 401 and 408 of

the Internal Revenue Code as well as

retirement plans not receiving such

favorable tax treatment (‘‘non-qualified

plans’’). The remaining four

subaccounts are used for allocations

under other contracts previously offered

by GWL&A—through the Separate

Account—in connection with qualified

and non-qualified plans. In the future,

GWL&A may establish additional

divisions within the Separate Account

to invest in other portfolios of the Funds

or in other investments, and may issue

other contracts—including Future

Contracts—which may be funded by the

Separate Account or by Future Separate

Accounts.

4. Each of the Funds is a registered

open-end, diversified investment

company under the 1940 Act; each

consists of one or more investment

series or portfolios which pursue

different investment objectives and

policies and have distinct investment

advisers. GWL&A purchases and

redeems portfolio shares for the

corresponding investment divisions of

the Separate account at net asset value.

Shares of the Funds also are offered to

other affiliated or unaffiliated separate

accounts of insurance companies

offering variable annuity contracts or

variable life insurance policies.

5. The principal underwriter of the

Contracts, Great-West, is registered with

the Commission under the Securities

and Exchange Act of 1934 as a brokerdealer, and is a member of the National

Association of Securities Dealers, Inc.

6. The minimum initial purchase

payment for a Contract used in

connection with a non-qualified plan is

$5,000; the minimum initial purchase

payment for a Contract used in

connection with a qualified plan is

$2,000. Additional purchase payments
Federal Register / Vol. 61, No. 3 / Thursday, January 4, 1996 / Notices 363

for both non-qualified plan and

qualified plan Contracts must be at least

$500, except for payments made

through an automatic contribution plan,

which are subject to a $50 minimum.

The Contracts also permit periodic

payments and partial surrenders.

7. Prior to issuance of a Contract, the

Contract owner selects a ‘‘Retirement

Date’’ on which annuity payments are to

begin. All or part of the Contract value

may be placed under one or more of the

annuity payout options available under

the Contract, or the Contract owner may

elect to receive the Contract value in a

lump sum of the Retirement Date.

8. The Contracts provide for the

payment of a death benefit. If the

Annuitant dies before the Retirement

Date, a death benefit will be paid to the

designated beneficiary in an amount

which is the greater of either: (a) the

Contract value as of the date of death,

less premium taxes, if any; or (b) the

guaranteed death benefit, less premium

taxes, if any. The guaranteed death

benefit equals the initial purchase

payment on the date the Contract is

issued, and thereafter is adjusted upon

each purchase payment, partial

surrender, or periodic payment. The

guaranteed death benefit is recalculated

at the end of each calendar year by

adding interest at an annual effective

rate of 5%. At any date (other than the

end of a calendar year) the guaranteed

death benefit equals the lesser of: (a)

The guaranteed death benefit as of the

end of the last calendar year, plus any

subsequent purchase payments, and less

any partial surrenders and periodic

payments; or (b) the result of the

following calculation—Contract value

after the last partial surrender or

periodic payment made during the

calendar year, multiplied by the

guaranteed death benefit prior to such

partial surrender or periodic payment,

divided by the Contract value prior to

such partial surrender or periodic

payment.

9. Various fees and expenses are

deducted under the Contracts. Prior to

the Retirement Date, an annual

maintenance charge of $27 will be

deducted from the Contract value to

compensate GWL&A for administrative

services. The charge will not exceed the

cost of services to be provided over the

life of the Contract, in accordance with

the provisions of Rule 26a–1 under the

1940 Act. GWL&A does not anticipate

any profit from this charge.

10. Any premium or other taxes

levied by any government entity with

respect to the Contracts or the Separate

Account will be paid by GWL&A. If the

Contract value is used to purchase an

annuity under the annuity payout

options, the dollar amount of any

premium tax previously paid or payable

upon annuitization by GWL&A will be

charged against Contract value. The

applicable premium tax rates currently

range from 0% to 2.50%.

11. The Separate Account and its

investment divisions will bear their own

operating expenses and charges for

federal income tax, should such taxes be

incurred by GWL&A in connection with

the operation of the Separate Account.

No charge is made by GWL&A for

transfers of Contract value among

Separate Account investment divisions.

12. No front-end sales load will be

deducted from premium payments

under the Contracts. Rather, upon any

total or partial surrender of Contract

Value prior to the Retirement Date, a

contingent deferred sales charge will be

deducted from purchase payments

which have been credited to a Contract

for fewer than seven years. Once per

year, however, up to 10% of the

Contract value as of December 31 of the

calendar year prior to the year in which

the amount is being surrendered may be

withdrawn without incurring a

contingent deferred sales charge. Total

surrender charges will not exceed 7% of

the purchase payment under the

Contract.

13. A daily charge equal to an

effective annual rate of 1.45% of the net

asset value of the Separate Account

attributable to the Contracts will be

imposed to compensate GWL&A for

bearing certain mortality and expense

risks in connection with the Contracts.

Of this amount, 0.85% is allocable to

the mortality risk apart from that

associated with the guaranteed death

benefit, 0.20% is allocable to the

mortality risk associated with the

guaranteed death benefit, and 0.40% is

allocable to the expense risk. The

mortality and expense risk charge is

guaranteed by GWL&A and cannot be

increased.

14. The annual mortality and expense

risk charge assessed under Future

Contracts will be the same as that

mentioned above. In addition, there will

be no front-end sales charge for Future

Contracts, and the maximum contingent

deferred sales charge will not exceed

7% of the amount distributed.

15. The mortality risk under the

Contract is that, upon selection of an

annuity payout option with a life

contingency, annuitants will live longer

than GWL&A’s actuarial projections

indicate, thereby resulting in higher

than expected annuity payments.

GWL&A also assumes a mortality risk

under the Contract if the death of an

annuitant results in a death benefit

being payable under the Contract.

GWL&A is at risk to the extent that the

amount of the guaranteed death benefit

exceeds the Contract value as of the date

of death.

16. The expense risk borne by

GWL&A under the Contracts is that the

charges for administrative expenses,

which charges are guaranteed for the life

of the Contracts, may be insufficient to

cover the actual costs of issuing and

administering the Contracts.

Applicants’ Legal Analysis

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

deduction of a maximum charge of

1.45% for the assumption of mortality

and expense risks from the assets of: (a)

The Separate Account in connection

with the issuance of the Contracts or

Future Contracts; and (b) any Future

Separate Accounts in connection with

the issuance of Contracts or Future

Contracts. Applicants submit that the

requested exemption 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.

2. Section 6(c) of the 1940 Act

authorizes the Commission to exempt

any person, security, or transaction or

any class or classes of persons,

securities, or transactions from the

provisions of the 1940 Act, and the rules

promulgated thereunder, if and 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.

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

the 1940 Act, as herein pertinent,

prohibit a registered unit investment

trust and any depositor or underwriter

thereof from selling periodic payment

plan certificates unless the proceeds of

all payments are deposited with a

qualified trustee or custodian and are

held under arrangements which prohibit

any payment to the depositor or

principal underwriter. Exception is

made for fees, not exceeding any such

reasonable amounts as the Commission

may prescribe, for performing

bookkeeping and other administrative

services.

4. Applicants submit that their

request would promote competitiveness

in the variable annuity contract market

by eliminating the need for GWL&A to

file redundant exemptive applications,

thereby reducing GWL&A’s

administrative expenses and

maximizing the efficient use of
364 Federal Register / Vol. 61, No. 3 / Thursday, January 4, 1996 / Notices

GWL&A’s resources. Applicants further

submit that the delay and expenses

involved in having to seek exemptive

relief repeatedly would impair

GWL&A’s ability effectively to take

advantage of business opportunities as

they arise. Further, if GWL&A were

required to seek exemptive relief

repeatedly with respect to the issues

addressed in this application, investors

would not receive any benefit or

additional protection thereby. Thus,

Applicants believe that the requested

exemption 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.

5. Applicants represent that the

mortality and expense risk charge of

1.25% (which includes all risk charges

imposed under the Contracts except the

0.20% mortality risk charge for the

guaranteed death benefit) is within the

range of industry practice for variable

annuity contracts which, while not

offering a guaranteed death benefit

feature, are otherwise comparable to the

Contracts. This representation is based

upon Applicants’ analysis of publicly

available information regarding the

aggregate level of the mortality and

expense risk charges under such

comparable variable annuity contracts

currently being offered in the insurance

industry, taking into consideration such

factors as current charge levels, the

manner in which charges are imposed,

the presence of charge-level or annuityrate guarantees, and the markets in

which the contracts will be offered.

Applicants represent that GWL&A will

maintain at the administrative offices at

its headquarters, and make available to

the Commission, a memorandum

detailing the variable annuity products

analyzed in the course of, and the

methodology and results of, its

comparative survey.

6. Applicants represent that before

relying on exemptive relief resulting

from this application in connection with

any Future Contracts funded through

the Separate Account or Future Separate

Accounts, they will determine that the

mortality and expense risk charge of

1.25% imposed under such Future

Contracts (which includes all risk

charges imposed under the Future

Contracts except the 0.20% mortality

risk charge for the guaranteed death

benefit) will be within the range of

industry practice for variable annuity

contracts which, while not offering a

guaranteed death benefit feature, are

otherwise comparable to the Future

Contracts. GWL&A will maintain at the

administrative offices at its

headquarters, and make available to the

Commission, a memorandum detailing

the variable annuity products analyzed

in the course of, and the methodology

and results of, its comparative survey.

7. Applicants also hereby represent

that the mortality risk charge of 0.20%

for the guaranteed death benefit is

reasonable in relation to the additional

mortality risks assumed by GWL&A in

offering a guaranteed death benefit

under the Contracts. This representation

is based upon GWL&A’s examination of

a large number of trials at different issue

ages to determine the expected

additional cost of offering a guaranteed

death benefit. GWL&A fist projected

hypothetical asset returns using

generally accepted actuarial simulation

methods. GWL&A then calculated

hypothetical accumulated values by

applying the projected asset returns to

the initial value in a hypothetical

account for each asset return pattern

generated. GWL&A compared each

accumulated value so calculated to the

amount of the guaranteed death benefit

payable in the event of the hypothetical

annuitant’s death during the year in

question. GWL&A also studies recent

published actuarial statistics regarding

the costs associated with similar

enhanced or guaranteed death benefits,

and sought reinsurance bids in relation

to the guaranteed death benefit. GWL&A

will maintain at the administrative

offices at its headquarters, and make

available to the Commission, a

memorandum detailing the

methodology used in determining that

an additional level cost of 0.20% for the

guaranteed death benefit is reasonable

in relation to the additional risks

assumed by GWL&A in offering such a

death benefit under the Contracts.

8. Before relying on exemptive relief

resulting from this application in

connection with any Future Contracts

funded through the Separate Account or

any Future Separate Accounts, GWL&A

will prepare and maintain at the

administrative office at its headquarters,

and make available to the Commission,

a memorandum detailing the

methodology used in determining that

an additional level cost of 0.20% for a

guaranteed death benefit is reasonable

in relation to the additional risks

assumed by GWL&A in offering such a

death benefit under the Future

Contracts.

9. GWL&A does not believe that the

contingent deferred sales charges

imposed under the Contracts will

necessarily cover the expected costs of

distributing the Contracts. Any

‘‘shortfall’’ will be made up from the

assets of the general account of GWL&A,

which will include amounts derived

from the mortality and expense risk

charges. GWL&A has concluded that

there is a reasonable likelihood that the

distribution financing arrangement

being used in connection with the

Contracts will benefit the Separate

Account and the Contract owners. The

basis for this conclusion is set forth in

a memorandum which will be

maintained by GWL&A at the

administrative offices at its

headquarters, and will be made

available to the Commission.

10. Applicants recognize that the

contingent deferred sales charges that

may be imposed under Future Contracts

may not necessarily be sufficient to

cover the expected costs of distributing

such contracts. Any ‘‘shortfall’’ will be

made up from the assets of the general

account, which will include amounts

derived from the mortality and expense

risk charges imposed under Future

Contracts. Applicants represent that

before relying on exemptive relief

resulting from this application in

connection with the Future Contracts

funded through the Separate Account or

any Future Separate Accounts, GWL&A

will determine that there is a reasonable

likelihood that the distribution

financing arrangements being used in

connection with the Future Contracts

will benefit the Separate Account or any

Future Separate Accounts and their

respective Future Contract owners.

GWL&A will maintain at the

administrative offices at its

headquarters, and make available to the

Commission, a memorandum setting

forth the basis for this conclusion.

11. Applicants also represent that the

Separate Account and any Future

Separate Accounts will invest only in

underlying funds which have

undertaken, in the event they should

adopt a plan for financing distribution

expenses pursuant to Rule 12b–1 of the

1940 Act, to have such a plan

formulated and approved by their board

of directors/trustees, a majority of whom

are not interested persons of any such

funds.

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 purposes fairly intended

by the policy and provisions of the 1940

Act.
Federal Register / Vol. 61, No. 3 / Thursday, January 4, 1996 / Notices 365

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–132 Filed 1–3–96; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Rel. No. 21629;

812–9850]

Mutual Fund Group, et al.; Notice of

Application

December 28, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Mutual Fund Group

(‘‘MFG’’), Mutual Fund Trust, Mutual

Fund Variable Annuity Trust, Growth &

Income Portfolio, Capital Growth

Portfolio, International Equity Portfolio,

Global Fixed Income Portfolio

(collectively, the ‘‘Chase Funds’’);

Atlanta Capital Management Company

(‘‘Atlanta Capital’’); and The Chase

Manhattan Bank, National Association

(the ‘‘Adviser’’).

RELEVANT ACT SECTIONS: Order requested

under section 6(c) for an exemption

from section 15(a).

SUMMARY OF APPLICATION: The Chase

Manhattan Corporation (‘‘Chase’’), the

Adviser’s holding company, will be

merged with Chemical Banking

Corporation (‘‘CBC’’). The merger will

result in the assignment, and thus the

termination, of the Chase Funds’

existing investment advisory and subadvisory contracts with the Adviser and

Atlanta Capital, a sub-adviser.

Applicants request an order to permit

the implementation, without

shareholder approval, of interim

advisory and sub-advisory contracts,

during a period of up to 120 days

following January 31, 1996. The order

also will permit the Adviser and Atlanta

Capital to receive fees earned under the

interim advisory and sub-advisory

contracts following approval by the

Chase Funds’ shareholders.

FILING DATES: The application was filed

on November 6, 1995 and amended on

December 28, 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

January 22, 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 such notification

by writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, NW., Washington, DC 20549.

Applicants: The Chase Manhattan Bank,

National Association, One Chase

Manhattan Plaza, New York, New York

10081; Atlanta Capital Management

Company, Two Midtown Plaza, 1360

Peachtree Street, Suite 1600, Atlanta,

Georgia 30309; all other applicants, 125

West 55th Street, New York, New York

10019.

FOR FURTHER INFORMATION CONTACT:

Marianne H. Khawly, Staff Attorney, at

(202) 942–0562, or Robert A. Robertson,

Branch Chief, at (202) 942–0564

(Division of Investment Management,

Office of Investment Company

Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee from the SEC’s

Public Reference Branch.

Applicant’s Representations

1. The Chase Funds are registered

open-end management investment

companies. The Adviser is a national

banking association and is a whollyowned subsidiary of Chase, a bank

holding company. Each Chase Fund has

entered into a investment advisory

agreement with the Adviser. The

Adviser and Atlanta Capital have

entered into an investment sub-advisory

agreement pursuant to which Atlanta

Capital acts as sub-adviser to a portfolio

of MFG, IEEE Balanced Fund (the subadvisory agreement together with the

investment advisory agreements, the

‘‘Existing Agreements’’).

2. On August 27, 1995, CBC and

Chase entered into an Agreement and

Plan of Merger, pursuant to which

Chase will be merged with and into CBC

(the ‘‘Holding Company Merger’’). CBC

will be the surviving corporation and

will continue its corporate existence

under the name ‘‘The Chase Manhattan

Corporation.’’ The Holding Company

Merger will be effected as a stock

transaction, with the outstanding shares

of Chase common stock being

exchanged for newly issued shares of

CBC common stock at a predetermined

exchange rate. Applicants anticipate

that the Holding Company Merger will

occur on or before January 31, 1996.

Subsequent to the Holding Company

Merger, the Adviser will be merged with

Chemical Bank, a wholly-owned direct

subsidiary of CBC (the ‘‘Bank Merger’’

and together with the Holding Company

Merger, the ‘‘Mergers’’). The surviving

bank will continue operations under the

name ‘‘The Chase Manhattan Bank.’’

3. On December 11, 1995, the

respective shareholders of Chase and

CBC voted to approve the Holding

Company Merger. At a special meeting

held on December 14, 1995, the

respective Boards of Trustees of the

Chase Funds (the ‘‘Boards’’) met to

discuss the Mergers. During this

meeting, the Boards, met to discuss the

Mergers. During this meeting, the

Boards, including a majority of the

Board members who are not ‘‘interested

persons,’’ as that term is defined in the

Act (the ‘‘Independent Trustees’’), of the

respective Chase Funds, with the advice

and assistance of counsel to the

Independent Trustees, made a full

evaluation of interim investment

advisory and sub-advisory agreements

(the ‘‘Interim Agreements’’). In

accordance with section 15(c) of the

Act, the Boards voted to approve the

Interim Agreements. The Boards of each

Chase Fund also voted to recommend

that shareholders of each Chase Fund

approve the Interim Agreements.

4. In approving the Interim

Agreements, the Boards concluded that

payment of the advisory and subadvisory fees during the interim period

would be appropriate and fair because

there will be no diminution in the scope

and quality of services provided to the

Chase Funds, the fees to be paid are

unchanged from the fees paid under the

Existing Agreements, the fees would be

maintained in an interest-bearing

escrow account until payment is

approved or disapproved by

shareholders, and the nonpayment of

fees would be inequitable to the Adviser

(including its successor in the event that

the Bank Merger occurs during the

interim period, the ‘‘Successor’’) and

Atlanta Capital in view of the

substantial services to be provided.

5. Chase and CBC expect a

combination of Chase Funds and

registered investment companies that

are advised by CBC subsidiaries

(collectively, the ‘‘CBC Funds’’) into a

family of mutual funds with consistent

structural characteristics where

appropriate, consolidated management,

consistent share class structures,

rationalized investment objectives and

policies, and consolidated marketing

efforts (the ‘‘Fund Family

Combination’’). Applicants expect that a

number of Chase Funds will

consummate a transaction with (a) an