[Federal Register Volume 65, Number 105 (Wednesday, May 31, 2000)]
[Notices]
[Pages 34758-34759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-13529]



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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 24464; 812-11938]


CIGNA Funds Group, et al.; Notice of Application

May 23, 2000.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of an application under section 17(b) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 17(a) of 
the Act.

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SUMMARY OF THE APPLICATION: Applicants request an order to permit Life 
Insurance Company of North America (``LINA'') to transfer some or all 
of its portfolio of ``equity securities'' of companies which comprise 
the ``Standard & Poor's 500 Composite Stock Price Index'' (``S&P 500 
Securities'' and ``S&P 500,'' respectively) to a series of CIGNA Funds 
Group (``CFG'') in exchange for shares of the series.
    Applicants: CFG and LINA.
    Filing Dates: The application was filed on January 12, 2000, and 
amended on May 22, 2000.
    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 15, 
2000, and should be accompanied by proof of service on applicants in 
the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons may request 
notification by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549-0609. Applicants, Cigna Corporation, 900 Cottage Grove Road, 
Hartford, CT 06152-2215.

FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Staff Attorney, 
(202) 942-0634, or Nadya B. Roytblat, Assistant Director, (202) 942-
0564 (Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTAL 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, 450 Fifth Street, N.W., Washington, 
D.C. 20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. CFG is an open-end management investment company registered 
under the Act. One of CFG's series is the Charter Large Company Stock 
Index Fund (``Fund''). The Fund is an index fund that replicates the 
composition of the S&P 500.
    2. Times Square Capital Management, Inc. (the ``Adviser'') is an 
investment adviser registered under the Investment Adviser Act of 1940 
and serves as the investment adviser to the Fund. The Adviser is an 
indirect wholly owned subsidiary of Cigna Corporaiton (``CIGNA'').
    3. LINA is a life insurance company and an indirect wholly owned 
subsidiary of CIGNA. LINA is a provider of group life insurance and 
investment products and services. LINA has invested a portion of its 
portfolio of assets in S&P 500 Securities.
    4. Applicants state that four shareholders own approximately 98% of 
the outstanding shares of the Fund. Applicants seek relief to enable 
LINA to invest in-kind in the Fund in the event one or more of these 
four shareholders redeems some or all of their shares and the 
redemption results in the Fund's assets being reduced below a level 
required for the Fund to be economically viable.
    5. Applicants propose that LINA would sell some or all of its S&P 
500 Securities to the Fund in exchange for shares of the Fund (the 
``Transfer''). The Transfer will not affect the proportionate 
composition of the Fund's portfolio since the S&P 500 Securities 
transferred by LINA will replicate the composition of the S&P 500. The 
Transfer would take place as soon as practicable following a large 
redemption of Fund shares and a determination by the Adviser that the 
Transfer was necessary for the Fund to maintain critical mass.
    6. The S&P 500 Securities would be valued at the last quoted sale 
price on the business day immediately prior to the Transfer, the same 
method that is used to calculate the Fund's new asset value. The number 
of shares to be issued by the Fund to LINA would be determined by 
dividing the value of the S&P 500 Securities by the current net asset 
value of the Fund's shares.

Applicants' Legal Analysis

    1. Section 17(a) of the Act, in relevant part, prohibits an 
affiliated person of a registered investment company, or any affiliated 
person of such person, acting as principal, from selling to or 
purchasing from such investment company any security or other property.
    2. Section 2(a)(3) of the Act defines an ``affiliated person'' of 
another person to include (a) any person directly or indirectly 
controlling, controlled by, or under common control with the other 
person and (b) if the other person is an investment company, any 
investment adviser of that company. Applicants state that both CFG and 
LINA may be deemed to be an affiliated person of the other under 
section 2(a)(3) because they may be deemed to be under the common 
control of CIGNA. LINA thus is an affiliated person of an affiliated 
person of the Fund, and the Transfer may be prohibited by section 
17(a).
    3. Section 17(b) of the Act provides that the SEC may exempt a 
transaction from the provisions of section 17(a) if the evidence 
establishes that the terms of the proposed transaction, including the 
consideration to be paid, are reasonable and fair and do not involve 
overreaching on the part of any person concerned, and that the proposed 
transaction is consistent with the policy of each registered investment 
company concerned and with the general purposes of the Act.
    4. Applicants submit that the terms of the Transfer satisfy the 
standards set forth in section 17(b). Applicants state the Fund's board 
of trustees (``Board''), including a majority of the trustees who are 
not interested persons as defined in section 2(a)(19) of the Act 
(``Disinterested Trustees''), found that participation in the Transfer 
is in the best interests of the Fund and that the interests of the 
existing shareholders of the Fund will not be diluted as a result of 
the Transfer. Applicants state that all the S&P 500 Securities to be 
transferred to the Fund fit into the categories of securities described 
in rule 17a-7(b) (1) through (3) under the Act. Applicants further 
state that no brokerage commission, fee (except for customary transfer 
fees) or other remuneration will be paid in connection with the 
Transfer.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. The securities to be transferred to the Fund will be limited to 
the S&P 500 Securities.
    2. The S&P 500 Securities transferred by LINA will be valued in the 
same manner as they would be valued for purposes of computing the 
Fund's net asset value, which, in the case of securities traded on a 
public securities market for which quotations are available, is their 
last reported sales price on the exchange on which the

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securities are primarily traded or at the last sales price on the 
national securities market.
    3. At the next regular meeting following the Transfer, the Board, 
including a majority of the Disinterested Trustees will determine: (a) 
whether the S&P 500 Securities were valued in accordance with condition 
(2); and (b) whether the acquisition of the S&P 500 Securities was 
consistent with the policies of the Fund as reflected in the 
registration statement and reports filed under the Act.
    4. The Fund will maintain and preserve for a period of not less 
than six years from the end of the fiscal year in which the Transfer 
occurs, the first two years in an easily accessible place, a written 
record of the Transfer setting forth a description of each security 
transferred, the terms of the transfer, and the information or 
materials upon which the determinations required by condition (3) were 
made.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-13529 Filed 5-30-00; 8:45 am]
BILLING CODE 8010-01-M