66806 Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Notices 

registered broker-dealers makes an 

estimated 45 annual responses, for an 

aggregate total of 4,995 responses per 

year. Each response takes approximately 

0.5 hours to complete. Thus, the total 

compliance burden per year is 2,498 

burden hours. The approximate cost per 

hour is $59, resulting in a total cost of 

compliance for the respondents of 

approximately $147,382 (2,498 hours @ 

$59 per hour). 

Written comments are invited on: (a) 

Whether the collection of information is 

necessary for the proper performance of 

the functions of the agency, including 

whether the information shall have 

practical utility; (b) the accuracy of the 

agency’s estimate of the burden of the 

proposed collection of information; (c) 

ways to enhance the quality, utility, and 

clarity of the information to be 

collected; and (d) ways to minimize the 

burden of the collection of information 

on respondents, including through the 

use of automated collection techniques 

or other forms of information 

technology. Consideration will be given 

to comments and suggestions submitted 

in writing within 60 days of this 

publication. 

Please direct your written comments 

to: Jeffrey Heslop, Acting Chief 

Information Officer, Securities and 

Exchange Commission, c/o Remi PavlikSimon, 6432 General Green Way, 

Alexandria, Virginia 22312 or send an email to: PRA_Mailbox@sec.gov. 

Dated: October 25, 2010. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–27366 Filed 10–28–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29486; File No. 812–13648] 

Nationwide Life Insurance Company, et 

al., Notice of Application 

October 25, 2010. 

AGENCY: Securities and Exchange 

Commission (the ‘‘Commission’’). 

ACTION: Notice of application for an 

order of approval pursuant to Section 

26(c) of the Investment Company Act of 

1940, as amended (the ‘‘Act’’), and an 

order of exemption pursuant to Section 

17(b) of the Act from Section 17(a) of 

the Act. 

Applicants: Nationwide Life 

Insurance Company (‘‘NWL’’), 

Nationwide Life and Annuity Insurance 

Company (‘‘NLAIC’’) (together with 

NWL, the ‘‘Insurance Companies’’), 

Nationwide Variable Account-II 

(‘‘Account II’’), Nationwide Variable 

Account-6 (‘‘Account 6’’), Nationwide 

Variable Account-7 (‘‘Account 7’’), 

Nationwide Variable Account-8 

(‘‘Account 8’’), Nationwide Variable 

Account-9 (‘‘Account 9’’), Nationwide 

Variable Account-10 (‘‘Account 10’’), 

Nationwide Variable Account-14 

(‘‘Account 14’’), Nationwide VLI 

Separate Account-2 (‘‘VLI Account 2’’), 

Nationwide VLI Separate Account-4 

(‘‘VLI Account 4’’), Nationwide VLI 

Separate Account-7 (‘‘VLI Account 7’’), 

Nationwide Provident VA Separate 

Account 1 (‘‘Account P–1’’), Nationwide 

Provident VLI Separate Account 1 (‘‘VLI 

Account P–1’’); Nationwide VA Separate 

Account-B (‘‘Account B’’), Nationwide 

VL Separate Account-G (‘‘Account G’’), 

Nationwide Provident VA Separate 

Account A (‘‘Account P–A’’), and 

Nationwide Provident VLI Separate 

Account A (‘‘VLI Account P–A’’) 

(together with Accounts II, 6, 7, 8, 9, 10, 

14, P–1, B, G, and P–A along with VLI 

Accounts 2, 4, 7, and P–1, the ‘‘Separate 

Accounts’’) and Nationwide Variable 

Insurance Trust. The Insurance 

Companies and the Separate Accounts 

are referred to collectively as the 

‘‘Applicants.’’ The Applicants, together 

with Nationwide Variable Insurance 

Trust are referred to as the ‘‘Section 

17(b) Applicants.’’ 

SUMMARY: Summary of Application: 

Applicants seek an order approving the 

proposed substitutions (the 

‘‘Substitutions’’) of certain series of 

Nationwide Variable Insurance Trust 

(the ‘‘Trust’’ or ‘‘NVIT’’) for shares of 

series of other unaffiliated registered 

investment companies held by the 

Separate Accounts under certain 

variable annuity contracts and/or 

variable life insurance policies issued 

by the Insurance Companies 

(collectively, the ‘‘Contracts’’). Section 

17(b) Applicants also seek an order 

pursuant to Section 17(b) of the Act to 

permit certain in-kind transactions in 

connection with the Substitutions. 

DATES: Filing Date: The application was 

filed on April 2, 2009, and amended and 

restated on July 15, 2010 and October 

21, 2010. 

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 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 November 19, 2010, 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 requester’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 Secretary of the 

Commission. 

ADDRESSES: The Commission: Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090; Applicants: c/o Jamie Ruff 

Casto, Esq., Nationwide Life Insurance 

Company, One Nationwide Plaza, 1–34– 

201, Columbus, Ohio 43215. 

FOR FURTHER INFORMATION CONTACT: 

Rebecca A. Marquigny, Senior Counsel, 

or Joyce M. Pickholz, Branch Chief, 

Office of Insurance Products, Division of 

Investment Management, at (202) 551– 

6795. 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or for an applicant using the 

Company name box, at http:// 

www.sec.gov/search/search.htm, or by 

calling (202) 551–8090. 

Applicants’ and Section 17(b) 

Applicants’ Representations 

1. NWL and NLAIC are stock life 

insurance companies organized under 

the laws of the State of Ohio. NLAIC is 

wholly owned by NWL which is wholly 

owned by Nationwide Financial 

Services, Inc. (‘‘NFS’’). NWL is the 

depositor and sponsor of Accounts II, 6, 

7, 8, 9, 10, 14 and P–1 and VLI Accounts 

2, 4, 7, and P–1. NLAIC is the depositor 

and sponsor of B, G, and P–A and VLI 

Account P–A. 

2. All of the Separate Accounts are 

registered unit investment trusts used to 

issue one or more Contracts together 

with their respective Insurance 

Company. The file numbers for each 

Separate Account’s registration under 

the Act and each Contract’s registration 

under the Securities Act of 1933, as 

amended (‘‘1933 Act’’) are set forth in 

the Application. 

3. NVIT is registered under the Act as 

an open-end management investment 

company of the series type, and it 

securities are registered under the 1933 

Act on Form N–1A (File Nos. 811– 

03213 and 002–73024). Two of these 

series, the NVIT—American Century 

NVIT Multi-Cap Value Fund and 

NVIT—Oppenheimer NVIT Large Cap 

Growth Fund (each an ‘‘NVIT Fund’’), 

are the replacement funds (‘‘New Funds’’ 

or ‘‘New Portfolios’’) in the proposed 

Substitutions. 

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1 In the Matter of Nationwide Investing 

Foundation, et al., 1940 Act Rel. No. 23133 (April 

28, 1998) (Order), File No. 812–10764. 

4. Nationwide Fund Advisors (‘‘NFA’’) 

currently serves as investment adviser 

to each of the NVIT Funds. NFA 

employs a subadvisory structure as part 

of its advisory strategy with respect to 

the NVIT Funds. Through an order from 

the Commission pursuant to Section 

6(c) of the Act, NVIT is exempt from 

Section 15(a) of the Act and Rule 18f– 

2 thereunder with respect to 

subadvisory agreements (the ‘‘Manager 

of Managers Order’’).1

5. Applicants represent that the relief 

granted in the Manager of Managers 

Order extends to New Funds permitting 

NFA to enter into and materially amend 

investment subadvisory agreements 

without obtaining shareholder approval. 

Applicants indicate that the 

prospectuses for the New Funds 

disclose and explain the existence, 

substance and effect of the Manager of 

Managers Order. They also represent 

that if a new Subadviser is retained for 

a Fund, Contract owners 

(‘‘Contractowners’’) would receive all 

information about the new Subadviser 

that would be included in a proxy 

statement, including any change in 

disclosure caused by the addition of a 

new Subadviser. 

6. All of the Contracts involved in the 

Substitutions (i) permit transfers of 

contract value among the subaccounts 

pursuant to the limitations of the 

particular Contract, and (ii) are subject 

to market timing policies and 

procedures that may operate to limit 

transfers. Applicants represent that to 

the extent that the Contracts contain 

restrictions, limitations or transfer fees 

on a Contractowner’s right to transfer, 

such restrictions, limitations, and 

transfer fees will not apply in 

connection with the proposed 

Substitutions. 

7. Each Contract’s prospectus contains 

provisions reserving Insurance 

Company Applicants’ right to substitute 

shares of one Investment Option for 

shares of another Investment Option 

already purchased or to be purchased in 

the future if: (i) Shares of a current 

underlying mutual fund are no longer 

available for investment by the Separate 

Account; or (ii) in the judgment of 

Insurance Company Applicants’ 

management, further investment in such 

Investment Option is inappropriate in 

view of the purposes of the Contract. 

Each Insurance Company Applicant’s 

management has determined that 

further investment in the New Funds is 

no longer appropriate in view of the 

purposes of the Contracts. 

8. Applicants represent that all of the 

portfolios involved in the Substitutions 

are currently available as underlying 

investment options in the Contracts. 

9. Each Insurance Company, on its 

behalf and on behalf of the Separate 

Accounts proposes to make certain 

substitutions of various classes of shares 

of 6 funds currently available under the 

Contracts (the ‘‘Old Funds’’ or ‘‘Old 

Portfolios’’) for shares of the following 

classes of the corresponding NVIT New 

Funds: 

No. Old fund Old class NVIT New fund New class 

1 ......................... American Century Variable Portfolios, 

Inc.—American Century VP Value Fund 

(‘‘Old Value Fund’’).

Class I ...................... NVIT—American Century NVIT Multi Cap 

Value Fund (‘‘New Multi Cap Value 

Fund’’).

Class I 

2 ......................... Old Value Fund .......................................... Class II ..................... New Multi Cap Value Fund ........................ Class II 

3 ......................... Fidelity Variable Insurance Products 

(‘‘VIP’’) Fund—VIP Contrafund Portfolio 

(‘‘Old Contrafund Portfolio’’).

Initial Class .............. NVIT—Oppenheimer NVIT Large Cap 

Growth Fund (‘‘New Large Cap Growth 

Fund’’).

Class I 

4 ......................... Old Contrafund Portfolio ............................ Service Class ........... New Large Cap Growth Fund .................... Class I 

5 ......................... Old Contrafund Portfolio ............................ Service Class 2 ........ New Large Cap Growth Fund .................... Class II 

6 ......................... Fidelity VIP Fund—VIP Growth Opportunities Portfolio (‘‘Old Growth Opps. Fund’’).Initial Class .............. New Large Cap Growth Fund .................... Class I 

7 ......................... Old Growth Opps. Fund ............................. Service Class ........... New Large Cap Growth Fund .................... Class I 

8 ......................... Old Growth Opps. Fund ............................. Service Class 2 ........ New Large Cap Growth Fund .................... Class II 

9 ......................... Oppenheimer Variable Account Funds— 

Oppenheimer Capital Appreciation 

Fund/VA (‘‘Old Cap Appreciation Fund’’).

Non-Service Shares New Large Cap Growth Fund .................... Class I 

10 ....................... Old Cap Appreciation Fund ....................... Service Shares ........ New Large Cap Growth Fund .................... Class II 

11 ....................... T. Rowe Price Equity Series, Inc.—T. 

Rowe Price Blue Chip Growth Portfolio 

(‘‘Old Blue Chip Fund’’).

Class II ..................... New Large Cap Growth Fund .................... Class I 

12 ....................... Old Blue Chip Fund ................................... Class II ..................... New Large Cap Growth Fund .................... Class II 

13 ....................... T. Rowe Price Equity Series, Inc.—T. 

Rowe Price Equity Income Portfolio 

(‘‘Old Equity Income Fund’’).

Class II ..................... New Multi Cap Value Fund ........................ Class I 

14 ....................... Old Equity Income Fund ............................ Class II ..................... New Multi Cap Value Fund ........................ Class II 

10. Applicants state that the proposed 

Substitutions are part of each Insurance 

Company’s overall business plan to 

make the Contracts more attractive to 

purchasers and more efficient to 

administer and oversee. 

11. Applicants assert their belief that 

the Substitutions will: (i) Consolidate 

investment options resulting in a less 

confusing menu of investment options 

for investors, greater efficiency in 

administration of the Contracts and the 

capacity to add other types of 

investment options; (ii) make the 

investment decision process more 

manageable for the investor through 

consistent disclosure format and 

terminology making it easier for 

Contractowners to analyze fund 

information and make informed 

investment decisions relating to 

allocation of his or her Contract value; 

(iii) enable the Insurance Companies to 

reduce certain costs that they incur in 

administering the Contracts by 

removing overlapping investment 

options; (iv) lower administrative costs 

for the Insurance Companies which 

could result in resources being 

reallocated to providing other 

contractowner services and support, and 

an overall more efficient and customerfriendly product offering. (v) enable the 

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Trust’s sub-advised strategy and 

augment the Insurance Companies’ goal 

of efficiently offering a continuously 

competitive menu of investment options 

to its existing and prospective 

contractowners; (vi) provide investors 

with a more favorable and less 

confusing overall investment 

experience; and (vii) reduce the number 

and potential for variation of trading 

policies that contractowners must 

navigate and understand. 

12. Applicants submit that each 

Substitution provides an alternate 

investment option that has the same or 

lower net operating expenses as the Old 

Fund. The applicable management fees, 

12b-1 fees, other expenses, contractual 

waiver or reimbursement values and 

total operating expenses for each Old 

and New Fund are presented in detail 

in the Application and summarized 

below: 

No. New/Old fund Class Advisor fees 

(percent) 

12b-1 Fees 

(percent) 

Other 

expenses 

(percent) 

Waiver/ 

reimburs’t 

(percent) 

Total 

expenses 

(percent) 

1 ..................... Old Value Fund ................................. Class I .......... 0.97 N/A 0.00 0.00 0.97 

New Multi Cap Value Fund ............... Class I .......... 0.57 N/A 3.10 2.75 0.92 

2 ..................... Old Value Fund ................................. Class II ......... 0.87 0.25 0.00 0.00 1.12 

New Multi Cap Value Fund ............... Class II ......... 0.57 0.25 3.10 2.83 1.09 

3 ..................... Old Contrafund Portfolio ................... Initial ............. 0.56 N/A 0.11 0.00 0.67 

New Large Cap Growth Fund ........... Class I .......... 0.50 N/A 3.51 3.36 0.65 

4 ..................... Old Contrafund Portfolio ................... Service ......... 0.56 0.10 0.11 0.00 0.77 

New Large Cap Growth Fund ........... Class I .......... 0.50 N/A 3.51 3.36 0.65 

5 ..................... Old Contrafund Portfolio ................... Class 2 ......... 0.56 0.25 0.11 0.00 0.92 

New Large Cap Growth Fund ........... Class II ......... 0.50 0.25 3.51 3.36 0.90 

6 ..................... Old Growth Opps. Fund .................... Initial ............. 0.56 N/A 0.16 0.00 0.72 

New: Large Cap Growth Fund .......... Class I .......... 0.50 N/A 3.51 3.36 0.65 

7 ..................... Old Growth Opps. Fund .................... Service ......... 0.56 0.10 0.16 0.00 0.82 

New Large Cap Growth Fund ........... Class I .......... 0.50 N/A 3.51 3.36 0.65 

8 ..................... Old Growth Opps. Fund .................... Service 2 ...... 0.56 0.25 0.17 0.00 0.98 

New Large Cap Growth Fund ........... Class II ......... 0.50 0.25 3.51 3.36 0.90 

9 ..................... Old Cap Appreciation Fund .............. Non-Service 0.66 N/A 0.12 0.00 0.78 

New Large Cap Growth Fund ........... Class I .......... 0.50 N/A 3.51 3.36 0.65 

10 ................... Old Cap Appreciation Fund .............. Service ......... 0.66 0.25 0.13 0.00 1.04 

New Large Cap Growth Fund ........... Class II ......... 0.50 0.25 3.51 3.36 0.90 

11 ................... Old Blue Chip Fund .......................... Class II ......... 0.85 0.25 0.00 0.00 1.10 

New Large Cap Growth Fund ........... Class I .......... 0.50 N/A 3.51 3.36 0.65 

12 ................... Old Blue Chip Fund .......................... Class II ......... 0.85 0.25 0.00 0.00 1.10 

New Large Cap Growth Fund ........... Class II ......... 0.50 0.25 3.51 3.36 0.90 

13 ................... Old Equity Income Fund ................... Class II ......... 0.85 0.25 0.00 0.00 1.10 

New Multi Cap Value Fund ............... Class I .......... 0.57 N/A 3.10 2.75 0.92 

14 ................... Old Equity Income Fund ................... Class II ......... 0.85 0.25 0.00 0.00 1.10 

New Multi Cap Value Fund ............... Class II ......... 0.57 0.25 3.10 2.83 1.09 

The following summarizes the more 

complete comparison of New and Old 

Funds provided in the Application. 

13. Substitutions #1 & #2: Old Value 

Fund Verses New Multi Cap Value 

Fund. Applicants represent that both 

Old Value Fund and New Multi Cap 

Value Fund have similar investment 

objectives and substantially similar 

policies and risks. Specifically, 

Applicants state that both ‘‘seek longterm capital growth or appreciation, and 

secondarily income * * * [and] seek to 

meet their objectives by investing in 

equity securities, using a value 

investment strategy that looks for 

companies that are undervalued or are 

temporarily out of favor in the market.’’ 

Both funds allow for the use of 

derivatives securities, preferred stock, 

convertible and foreign securities 

without limitation. Applicants 

acknowledge that differences in the 

funds’ risks and investment objectives 

and strategies exist, but assert the belief 

that these differences are immaterial 

and do not introduce Contractowners to 

materially greater risks than before the 

Substitution. 

14. Substitutions #3–#5: Old 

Contrafund Portfolio Verses New Large 

Cap Growth Fund. Applicants represent 

that both the Old Contrafund Portfolio 

and the New Large Cap Growth Fund 

‘‘have similar investment objectives and 

substantially similar policies and risks. 

Both funds seek long-term capital 

growth or appreciation, and both invest 

at least 80% of their respective net 

assets in common stocks. Both funds 

diversify among a variety of industries 

and sectors.’’ Applicants acknowledge 

that differences in the funds’ risks and 

investment objectives and strategies 

exist, but assert the belief that these 

differences are immaterial and do not 

introduce Contractowners to materially 

greater risks than before the 

Substitution. 

15. Substitutions #6–#8: Old Growth 

Opps. Fund Verses New Large Cap 

Growth Fund. Applicants represent that 

both Old Growth Opps. Fund and New 

Large Cap Growth Fund have similar 

investment objectives and substantially 

similar policies and risks. Both funds 

seek capital growth, investing primarily 

in common stocks. Both funds employ 

a growth style of investing, seeking 

companies with above-average growth 

potential or whose earnings are 

expected to grow consistently faster 

than those of other companies. 

Applicants also note that New Large 

Cap Growth Fund has a diversification 

policy affirmatively seeking to limit risk 

which Old Growth Opps. Fund does not 

share. Applicants assert that both funds 

have similar investment objectives and 

substantially similar policies and risks. 

Applicants state that while the funds’ 

investment objectives are not identical, 

any distinction between them is 

immaterial, since both funds are 

intended for long-term investment and 

represent that any differences in their 

investment objectives do not introduce 

Contract Owners to greater risks than 

before the Substitution. 

16. Substitutions #9 & #10: Old Cap 

Appreciation Fund Verses New Large 

Cap Growth Fund. Applicants represent 

that Old Cap Appreciation Fund and 

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New Large Cap Growth Fund have 

similar investment objectives and 

substantially similar policies and risks, 

seek capital growth or appreciation by 

investing in common stocks using a 

growth style investment strategy, 

diversify broadly among companies and 

industries, and invest in a similar 

percentage of foreign securities. 

Applicants state that both funds look for 

companies in businesses that have 

above-average growth potential, growth 

rates the portfolio manager believes are 

sustainable over time, and stocks with 

reasonable valuations relative to their 

growth potential. Applicants represent 

that immaterial differences in risks, 

investment objectives and strategies 

exist but do not expose Contractowners 

to materially greater risks postSubstitution. 

17. Substitutions #11 & #12: Old Blue 

Chip Fund Verses New Large Cap 

Growth Fund. Applicants believe Old 

Blue Chip Fund and New Large Cap 

Growth Fund have similar investment 

objectives and substantially similar 

policies and risks. Both funds seek longterm capital growth and invest at least 

80% of their net assets in stocks of 

established companies using a growth 

style of investing. Applicants believe 

that the differences in risks, investment 

objectives and strategies are immaterial, 

and the risks to Contractowners will not 

be materially greater after the 

Substitutions. 

18. Substitutions #13 & #14: Old 

Equity Income Fund Verses New Multi 

Cap Value Fund. Applicants state their 

belief that Old Equity Income Fund and 

New Multi Cap Value Fund have similar 

investment objectives and substantially 

similar policies and risks. Both funds 

seek capital appreciation and dividend 

income, although seeking current 

income is a secondary objective of New 

Multi Cap Value Fund. Applicants 

represent that both funds invest at least 

80% of their respective net assets in 

common stocks of companies of any 

size, employing a value style of 

investing, and allow foreign securities, 

preferred stocks, convertible securities 

and derivatives to be used as principal 

strategies. Applicants assert that 

immaterial differences in risks and 

investment objectives and strategies 

exist, but believe these differences do 

not introduce Contractowners to 

materially greater risks after the 

Substitutions. 

19. Substitution Procedure: In-Kind 

Transactions. Applicants assert that as 

of the effective date of the Substitutions 

(‘‘Substitution Date’’), a portion of the 

securities of the Old Funds will be 

redeemed in-kind and those securities 

received will be used to purchase shares 

of the New Funds. Applicants assert 

that redemption requests and purchase 

orders will be placed simultaneously so 

that contract values will remain fully 

invested at all times. They further 

represent that all redemptions of shares 

of the Old Portfolios and purchases of 

shares of the New Portfolios will be 

effected will take place at relative net 

asset value determined on the 

Substitution Date in accordance with 

Section 22(c) of the Act and Rule 22c– 

1 thereunder with no change in the 

amount of any Contractowner’s Contract 

value, cash value, death benefit, or 

dollar value of his or her investment in 

the Separate Accounts. 

20. Likewise, Section 17(b) 

Applicants represent that: (i) The New 

Fund shares sold in-kind will be of the 

type and quality that a New Fund could 

have acquired with the proceeds from 

the sale of its shares had the shares been 

sold for cash; and (ii) NFA and the 

relevant subadviser(s) will analyze the 

portfolio securities being offered to each 

relevant New Fund and will retain only 

those securities that it would have 

acquired for each such fund in a cash 

transaction. 

Whether NFA or relevant Subadviser 

of a New Fund accepts or declines to 

accept a particular portfolio security inkind, Applicants represent that each 

Substitution will be effected by 

redeeming shares of the Existing Fund 

in cash and/or in-kind on the 

Substitution Date and using the 

proceeds of those redemptions to 

purchase shares of the New Fund at 

their net asset value on the same date. 

21. Substitution Costs and Fund 

Expenses. Applicants state that the 

Insurance Companies have agreed to 

bear all expenses incurred in connection 

with the Substitutions and related 

filings and notices, including legal, 

accounting, brokerage, and other fees 

and expenses. In addition, Applicants 

assert that Contractowners will have the 

same or lower net operating expenses 

after the Substitutions as prior to the 

Substitutions. 

22. With respect to those who are 

Contractowners on the Substitution 

Date, Applicants specifically represent 

the following: On the last business day 

of each fiscal period (not to exceed a 

fiscal quarter) during the twenty-four 

(24) months following the Substitution 

Date, the Insurance Companies will 

reimburse those Contractowners with 

Contract value allocated to a subaccount 

corresponding to an New Fund to the 

extent that, for that period, the New 

Fund’s net operating expenses (taking 

into account fee waivers and expense 

reimbursements) and subaccount 

expenses (asset based fees and charges 

deducted on a daily basis from subaccount assets and reflected in the 

calculation of sub-account unit values) 

exceed, on an annualized basis, the sum 

of the Old Fund’s net operating 

expenses (taking into account fee 

waivers and expense reimbursements) 

and subaccount expenses (asset based 

fees and charges deducted on a daily 

basis from sub-account assets and 

reflected in the calculation of subaccount unit values) for fiscal year 2009. 

23. Contract Charges and Benefits. 

Applicants represent that the Insurance 

Companies will not increase the 

Contract fees and charges that would 

otherwise be assessed under the terms 

of the Contracts for a period of at least 

two (2) years following the Substitution 

Date. To the extent the Contracts 

contain restrictions, limitations or fees 

for transfers, Applicants represent such 

provisions will not apply in connection 

with the proposed Substitutions, and 

each Substitution redemption and 

purchase will not be treated as a transfer 

for purposes of assessing transfer 

charges or computing the number of 

permissible transfers under the 

Contracts. Applicants state that 

Contractowners will not incur any fees 

or charges as a result of the proposed 

Substitutions, nor will their rights or 

insurance benefits or the Insurance 

Companies’ obligations under the 

Contracts be altered in any way. 

Applicants also affirm that the 

Substitutions will not result in adverse 

tax consequences to Contractowners and 

will not alter any tax benefits associated 

with the Contracts. 

24. Manager of Managers Order. 

Applicants further represent that, after 

the Substitution Date, the New Funds 

will not change a Subadviser, add a new 

Subadviser, or otherwise rely on the 

Manager of Managers Order without 

first obtaining shareholder approval of 

the change in Subadviser, the new 

Subadviser, or the Fund’s ability add or 

to replace a subadviser in reliance on 

Manager of Managers Order. In addition, 

before the Substitutions, Applicants 

state that each Contractowner will have 

been provided with a New Portfolio 

prospectus describing the existence, 

substance and effect of the Manager of 

Managers Order. 

25. Notice Procedures. Applicants 

represent that prospectus supplements 

for the Contracts will be delivered to 

Contractowners at least thirty (30) days 

before the Substitution Date. Applicants 

state that the supplement (‘‘PreSubstitution Notice’’) will: (i) Notify all 

Contractowners of the Insurance 

Company’s intent to implement the 

Substitutions, that this Amended 

Application has been filed to obtain the 

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necessary orders to do so, and indicate 

the anticipated Substitution Date; (ii) 

advise Contractowners that from the 

date of the supplement until the 

Substitution Date, Contractowners are 

permitted to transfer Contract value out 

of any Old Fund sub-account to any 

other sub-account(s) offered under the 

Contract without the transfer being 

treated as a transfer for purposes of 

transfer limitations and fees otherwise 

applicable under the terms of the 

Contract; (iii) instruct Contractowners 

how to submit transfer requests in light 

of the proposed Substitutions; (iv) 

advise Contractowners that any Contract 

value remaining in an Old Fund subaccount on the Substitution Date will be 

transferred to the corresponding New 

Fund sub-account, and that the 

Substitutions will take place at relative 

net asset value without charge 

(including sales charges or surrender 

charges) and without counting toward 

the number of transfers that may be 

permitted without charge; (v) inform 

Contractowners that for at least thirty 

(30) days following the Substitution 

Date, the Insurance Companies will 

permit Contractowners to make transfers 

of Contract value out of each New Fund 

sub-account to any other sub-account(s) 

offered under the Contract without the 

transfer being treated as a transfer for 

purposes of transfer limitations and fees 

that would otherwise apply under the 

terms of the Contract; and (vi) inform 

Contractowners that, except as 

described in the market timing 

provision of the relevant prospectus, the 

respective Insurance Company will not 

exercise any rights reserved by it under 

the Contracts to impose additional 

restrictions on transfers out of a New 

Fund for at least thirty (30) days after 

the Substitution Date. 

26. Applicants also represent that: (i) 

Prior to the Substitutions; all existing 

Contractowners will have received the 

appropriate prospectus supplements 

containing this disclosure and the most 

recent prospectus and/or supplement 

for the New Portfolios (ii) new 

purchasers will be provided the 

prospectus supplement, contract 

prospectus, and the prospectus and/or 

supplement for the New Funds in 

accordance with all applicable legal 

requirements; and (iii) prospective 

Contract purchasers will be provided 

the prospectus supplement and the 

Contract prospectus. Applicants also 

represent that, within five (5) business 

days after the Substitution Date, 

Contractowners will be sent a written 

confirmation of the Substitutions which 

will restate the information set forth in 

the Pre-Substitution Notice. 

Applicants’ Legal Analysis 

1. Applicants request that the 

Commission issue an order pursuant to 

Section 26(c) of the Act approving the 

Substitutions. 

2. Section 26(c) of the Act makes it 

unlawful for any depositor or trustee of 

a registered unit investment trust 

holding the security of a single issuer to 

substitute another security for such 

security unless the Commission 

approves the substitution. The 

Commission shall approve such a 

substitution if the evidence establishes 

that it is consistent with the protection 

of investors and the purposes fairly 

intended by the policy and provisions of 

the Act. 

3. Applicants state that the right to 

make such a substitution has been 

reserved under the Contracts and is 

disclosed in the prospectus for the 

related Contracts. Applicants declare 

that, in all material respects, each New 

Fund and its corresponding Old Fund 

have similar, substantially similar, or 

identical investment objectives and 

strategies, and that each proposed 

Substitutions retains for Contractowners 

the investment flexibility and expertise 

in asset management features of the 

Contracts. They assert that after the 

Substitution Date, Contractowners 

invested in a New Fund will have the 

same or lower net operating expense 

ratio(s) as before the Substitution. 

Further, Applicants have agreed to 

certain expense limits to ensure affected 

Contractowners do not incur higher 

expenses as a result of a Substitution for 

a period of twenty four (24) months after 

the Substitution. 

4. Applicants submit that the 

proposed Substitutions meet the 

standards set forth in Section 26(c) and 

assert that replacement of the Old 

Portfolios with the New Portfolios is 

consistent with the protection of 

Contractowners and the purposes fairly 

intended by the policy and provisions of 

the Act. Specifically, they argue that the 

Substitutions will not result in the type 

of costly forced redemption that Section 

26(c) was designed to prevent. Rather, 

Applicants conclude that ‘‘[a]ny impact 

on the investment programs of affected 

Contractowners should be negligible,’’ 

and affirm the Substitutions will have 

no impact on other aspects of the 

Contracts including the annuity, life, or 

tax benefits they afford affected 

Contractowners. 

5. Section 17(b) Applicants request 

that the Commission issue an order 

pursuant to Section 17(b) of the 1940 

Act exempting them from the provisions 

of Section 17(a) of the 1940 Act to the 

extent necessary to permit them to carry 

out the in-kind Substitution transactions 

(‘‘In-Kind Transactions’’). 

6. Section 17(a)(1) of the Act, in 

relevant part, prohibits any affiliated 

person of a registered investment 

company, or any affiliated person of 

such person, acting as principal, from 

knowingly selling any security or other 

property to that company. Section 

17(a)(2) of the Act generally prohibits 

the persons described above, acting as 

principal, from knowingly purchasing 

any security or other property from the 

registered company. Pursuant to Section 

17(a)(1) of the Act, the Section 17(b) 

Applicants may be considered affiliates 

of one or more of the portfolios involved 

in the Substitutions. Because the 

Substitutions may be effected, in whole 

or in part, by means of in-kind 

redemptions and subsequent purchases 

of shares and by means of In-Kind 

Transactions, the Substitutions may be 

deemed to involve one or more 

purchases or sales of securities or 

property between affiliates. 

7. Section 17(b) of the Act provides 

that the Commission may, upon 

application, grant an order exempting 

any transaction from the prohibitions of 

Section 17(a) if the evidence establishes 

that: the terms of the proposed 

transaction, including the consideration 

to be paid or received, are reasonable 

and fair and do not involve 

overreaching on the part of any person 

concerned; the proposed transaction is 

consistent with the policy of each 

registered investment company 

concerned, as recited in its registration 

statement and records filed under the 

Act; and the proposed transaction is 

consistent with the general purposes of 

the Act. 

8. Based on the facts presented above, 

Section 17(b) Applicants submit that the 

terms of the In-Kind Transactions, 

including the consideration to be paid 

and received, are reasonable, fair, and 

do not involve overreaching because: (i) 

The Contractowners’ Contract values 

will not be adversely impacted or 

diluted; and (ii) Section 17(b) 

Applicants agree to carry out the InKind Transactions in conformity with 

all of the conditions of Rule 17a–7 and 

the procedures adopted thereunder, 

except that the consideration paid for 

the securities being purchased or sold 

may not be entirely cash. Thus, Section 

17(b) Applicants conclude that the 

purposes intended by implementation 

of the rule are met by the terms of the 

In-Kind Transactions. 

9. In support of this position Section 

17(b) Applicants assert that the 

proposed In-Kind Transactions will be 

effected based upon the independent 

current market price of the portfolio 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Notices 66811 

1 15 U.S.C. 78s(b)(1) 

2 17 CFR 240.19b–4. 

securities as specified in Rule 17a–7(b) 

and will include only securities for 

which market quotations are readily 

available on the Substitution Date. In 

accordance with Rule 17a–7(c), Section 

17(b) Applicants assert that the 

proposed In-Kind Transactions will be 

consistent with the policy of each 

registered investment company and 

separate series thereof participating in 

the In-Kind Transactions, as recited in 

the relevant registered investment 

company’s registration statement and 

reports. As specified in Rule 17a–7(d), 

the Application states that no brokerage 

commission, fee (except for any 

customary transfer fees), or other 

remuneration will be paid in connection 

with the proposed In-Kind Transactions. 

Likewise, Section 17(b) Applicants 

represent that Trust’s Board of Trustees 

has adopted and implemented the fund 

governance and oversight procedures as 

required by Rule 17a–7(e) and (f). The 

Application also states, ‘‘pursuant to 

Rule 17a–7(e)(3), during the calendar 

quarter following the quarter in which 

any In-Kind Transactions occur, the 

Trust’s Board of Trustees will review 

reports submitted by NFA in respect of 

such In-Kind Transactions in order to 

determine that all such In-Kind 

Transactions made during the preceding 

quarter were effected in accordance 

with the representations stated herein.’’ 

Finally, Applicants represent that a 

written record of the procedures for the 

proposed In-Kind Transactions will be 

maintained and preserved in accordance 

with Rule 17a–7(g). 

Conclusions 

Section 26 Applicants submit that for 

the reasons summarized above the 

proposed Substitutions meet the 

standards of Section 26(c) of the 1940 

Act and request that the Commission 

issue an order of approval pursuant to 

Section 26(c) of the 1940 Act. Section 17 

Applicants submit that the proposed InKind Transactions meet the standards of 

Section 17(b) of the 1940 Act and 

request that the Commission issue an 

order of exemption pursuant to Section 

17(b) of the 1940 Act. 

For the Commission, by the Division of 

Investment Management pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–27367 Filed 10–28–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold an Open Meeting 

on November 3, 2010 at 10 a.m., in the 

Auditorium, Room L–002. 

The subject matter of the Open 

Meeting will be: 

1. The Commission will consider 

whether to adopt new Rule 15c3–5, Risk 

Management Controls for Brokers or 

Dealers with Market Access, under the 

Securities Exchange Act of 1934. The 

new rule would require brokers or 

dealers with access to trading directly 

on an exchange or alternative trading 

system (‘‘ATS’’), including those 

providing sponsored or direct market 

access to customers or other persons, to 

implement risk management controls 

and supervisory procedures reasonably 

designed to manage the financial, 

regulatory, and other risks of this 

business activity. Among other things, 

new Rule 15c3–5 would effectively 

prohibit broker-dealers from providing 

‘‘unfiltered’’ or ‘‘naked’’ sponsored access 

to any exchange or ATS. 

2. The Commission will consider 

whether to propose a new rule under 

Section 763(g) of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act, Public Law 111–203, to prohibit 

fraud, manipulation, and deception in 

connection with security-based swaps. 

3. The Commission will consider 

whether to propose rules and forms to 

implement Section 21F of the Securities 

Exchange Act of 1934 (‘‘Exchange Act’’) 

entitled ‘‘Securities Whistleblower 

Incentives and Protection.’’ Section 21F, 

as added by Section 922 of the DoddFrank Wall Street Reform and Consumer 

Protection Act, provides that the 

Commission shall pay awards, under 

regulations prescribed by the 

Commission and subject to certain 

limitations, to eligible whistleblowers 

who voluntarily provide the 

Commission with original information 

about a violation of the Federal 

securities laws that leads to the 

successful enforcement of a covered 

judicial or administrative action, or a 

related action. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: October 27, 2010. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–27493 Filed 10–27–10; 4:15 pm] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63151; File No. SR– 

NASDAQ–2010–132] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of a Proposed Rule Change by The 

NASDAQ Stock Market LLC To Clarify 

the Implementation Date of the 

NASDAQ Options Market Professional 

Filing 

October 21, 2010. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1, and Rule 19b–4 thereunder,2

notice is hereby given that on October 

14, 2010, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III, below, which Items have been 

prepared by NASDAQ. The Commission 

is publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

NASDAQ is filing with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) a proposal that clarifies 

when the NASDAQ Options Market 

(‘‘NOM’’ or ‘‘Exchange’’) intends to 

implement a recent filing that adopted 

a definition of ‘‘Professional’’ on the 

Exchange and required that all 

Professional orders be appropriately 

marked (the ‘‘NOM Professional filing’’). 

The text of the proposed rule change 

is available from NASDAQ’s Web site at 

http://nasdaq.cchwallstreet.com/ 

Filings/, at NASDAQ’s principal office, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NASDAQ included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES