[Federal Register Volume 67, Number 149 (Friday, August 2, 2002)]
[Notices]
[Pages 50489-50497]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19533]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-25687; File No. 812-12516]


The Phoenix Edge Series Fund, et al.

July 26, 2002.
AGENCY: The Securities and Exchange Commission (``SEC'' or 
``Commission'').

ACTION: Notice of application for an order of exemption under Section 
6(c) of the Investment Company Act of 1940, as amended (the ``1940 
Act'') from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of 
the 1940 Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder.

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    Summary of Application: Applicants seek an order to permit shares 
of the Phoenix Edge Series Fund (``Phoenix Fund'') or any other 
existing or future investment company that is designed to fund 
insurance products and for which the Advisors (as defined below) or any 
of their affiliates may serve as investment manager, investment 
advisor, sub-advisor, administrator, manager, principal underwriter or 
sponsor (the Phoenix Fund and such other investment companies being 
herein referred to, collectively, as the ``Fund''), or any current or 
future series of any Fund (a ``Portfolio'') to be sold to and held by: 
(1) Separate accounts funding variable annuity and variable life 
insurance contracts issued by both affiliated and unaffiliated life 
insurance companies (``Separate Accounts''); and (2) qualified pension 
and retirement plans outside of the separate account context 
(``Qualified Plans'' or ``Plans'').
    Applicants: The Phoenix Fund, Phoenix Investment Counsel, Inc. 
(``PIC''), Phoenix-Aberdeen International Advisors, LLC (``PAIA''), 
Duff & Phelps Investment Management Co. (``DPIM'') and Phoenix Variable 
Advisors, Inc. (``PVA'') (collectively, ``Applicants'').
    Filing Date: The application was filed on May 17, 2001 and amended 
and restated on April 17, 2002.
    Hearing Or Notification Of Hearing: An order granting the 
application will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing on the 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 August 19, 2002 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 writer's interest, the reason for the 
request, and the issues contested. Persons may request notification of 
the date of the hearing by writing to the Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549-0690. Applicants, c/o Ruth S. 
Epstein, Esq., Dechert, 1775 Eye Street, NW., Washington, DC 20006-
2401.

FOR FURTHER INFORMATION CONTACT: Harry Eisenstein, Senior Counsel, or 
Zandra Y. Bailes, Branch Chief, 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 
SEC's Public Reference Branch, 450 Fifth Street, NW., Washington, DC 
20549-0102 (tel. 202-942-8090).

Applicants' Representations

    1. The Phoenix Fund is a no-load, open-end, management investment 
company registered under the 1940 Act. The Phoenix Fund is organized as 
a Massachusetts business trust established pursuant to an Agreement and 
Declaration of Trust dated February 18, 1986. The Phoenix Fund is 
comprised of twenty-seven separate Portfolios, each of which has its 
own investment objectives and policies. Additional Portfolios may be 
added in the future.
    2. Shares of the Phoenix Fund are currently offered to the Separate 
Accounts of Phoenix Home Life Mutual Insurance Company (``Phoenix''), 
PHL Variable Insurance Company (``PHL Variable''), and Phoenix Life and

[[Page 50490]]

Annuity Company (``PLAC''), which fund benefits under variable annuity 
and variable life insurance contracts issued by those companies. Shares 
of the Phoenix Fund are not sold directly to the public.
    3. Phoenix Equity Planning Corporation (``PEPCO'') is registered as 
a broker-dealer under the Securities Exchange Act of 1934, as amended, 
and is a member of the National Association of Securities Dealers, Inc. 
PEPCO performs bookkeeping, pricing and administrative services for the 
Phoenix Fund. PEPCO also serves as principal underwriter for certain 
variable annuity and life insurance contracts. PEPCO is a subsidiary of 
Phoenix Investment Partners, Ltd. (``PXP''). PXP and PEPCO are each a 
subsidiary of the Phoenix Companies, Inc.
    4. PIC, PAIA, DPIM and PVA (each an ``Advisor'' and collectively, 
``Advisors'') serve as the Phoenix Fund's investment advisors. Each is 
registered as an investment advisor under the Investment Advisers Act 
of 1940, as amended. PVA is a subsidiary of Phoenix. All of the 
outstanding stock of PIC is owned by PEPCO. PAIA is a joint venture 
jointly owned and managed by PM Holdings, Inc., a subsidiary of 
Phoenix, and Aberdeen Fund Managers, Inc., a subsidiary of Aberdeen 
Asset Management PLC. DPIM is a subsidiary of Phoenix.
    5. The Fund intends to offer shares of the Portfolios to Separate 
Accounts of both affiliated and unaffiliated life insurance companies 
(``Participating Insurance Companies'') to serve as investment vehicles 
for various types of insurance products. These products may include, 
but are not limited to, variable annuity contracts, single premium 
variable life insurance contracts, scheduled premium variable life 
insurance contracts, modified single premium variable life insurance 
policies, and flexible premium variable life insurance contracts 
(collectively referred to herein as ``variable contracts'' or 
``contracts'').\1\ Participating Insurance Companies will be those 
insurance companies that purchase shares of the Fund for such purposes.
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    \1\ Some Separate Accounts to which the Fund may offer its 
Portfolio shares may be exempt from registration under the 1940 Act 
pursuant to Sections 3(c)(1) or 3(c)(7) thereof.
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    6. The Participating Insurance Companies will establish their own 
Separate Accounts and design their own variable contracts. Each 
Participating Insurance Company will have the legal obligation of 
satisfying all requirements applicable to such insurance company under 
both federal and state law. It is anticipated that Participating 
Insurance Companies, including Phoenix, PHL Variable, and PLAC, will 
rely on Rule 6e-2 or Rule 6e-3(T) under the 1940 Act, in connection 
with variable life insurance contracts, although some Participating 
Insurance Companies may rely on individual exemptive orders as well. 
The role of the Fund, so far as the federal securities laws are 
applicable, will be limited to that of offering its shares, as 
described below, to Separate Accounts of various insurance companies 
and to Qualified Plans, and fulfilling any conditions the Commission 
may impose upon granting the order requested in the application.
    7. Each Participating Insurance Company will enter into a 
participation agreement with the applicable Fund on behalf of the 
Portfolios in which the Participating Insurance Company invests. The 
Separate Accounts of the Participating Insurance Companies will invest 
in shares of the Fund in accordance with allocation instructions 
received from contract owners.
    8. The Fund intends to offer shares of the Portfolios directly to 
Qualified Plans outside of the separate account context. Qualified 
Plans may choose a Portfolio as the sole investment under the Qualified 
Plan or as one of several investments. Qualified Plan participants may 
or may not be given an investment choice depending on the Qualified 
Plan itself. Fund shares sold to such Qualified Plans would be held by 
the trustee(s) of said Qualified Plans as mandated by Section 403(a) of 
the Employee Retirement Income Security Act (``ERISA''). Certain 
Qualified Plans, including those described in Sections 403(b)(7) and 
408(a) of the Internal Revenue Code of 1986, as amended (``Code''), may 
vest voting rights in Plan participants instead of Plan trustees. \2\ 
Exercise of voting rights by participants in any such Qualified Plans, 
as opposed to the trustees of such Plans, cannot be mandated by 
Applicants. Each Plan must be administered in accordance with the terms 
of the Plan and as determined by its trustee or trustees.
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    \2\ Qualified Plans described in Sections 403(b)(7) and 408(a) 
of the Code may invest in mutual funds through custodial 
arrangements. Such custodial arrangements typically provide that 
shares held of record by the custodian are held for the benefit of 
the participant that beneficially owns such shares. Because of the 
limited role of custodians of those Plans, Applicants intend to 
treat each participant in those Plans as a separate Qualified Plan 
for purposes of the Application.
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Applicants' Legal Analysis

    1. In connection with the funding of scheduled premium variable 
life insurance contracts issued through a separate account registered 
under the 1940 Act as a unit investment trust, Rule 6e-2(b)(15) 
provides partial exemptions from Sections 9(a), 13(a), 15(a), and 
15(b).\3\ Section 9(a) provides that it is unlawful for any company to 
serve as an investment advisor or principal underwriter of any 
registered open-end investment company if an affiliated person of that 
company is subject to a disqualification enumerated in Sections 9(a)(1) 
or (2). Rule 6e-2(b)(15)(i) and (ii) provides a partial exemption from 
Section 9(a) to the extent that such section would render a company 
ineligible to serve as investment advisor or principal underwriter of 
any registered open end management investment company, where an 
officer, director, employee or affiliated person of such company is 
subject to a disqualification enumerated in Section 9(a), but the 
individual subject to such disqualification does not participate 
directly in the management or administration of the underlying 
registered management investment company. Rule 6e-2(b)(15)(iii) 
provides a partial exemption from Sections 13(a), 15(a), and 15(b) to 
the extent those sections have been deemed by the Commission to require 
``pass-through'' voting with respect to an underlying fund's shares. 
The exemptions granted to a separate account by Rule 6e-2(b)(15) are 
available only where all of the assets of the separate account consist 
of the shares of one or more registered management investment companies 
which offer their shares ``exclusively to variable life insurance 
separate accounts of the life insurer or of any affiliated life 
insurance company.'' Therefore, the relief granted by Rule 6e-2(b)(15) 
is not available with respect to a variable life insurance separate 
account that owns shares of a management company that also offers its 
shares to a variable annuity separate account of the same insurance 
company or any other insurance company. The use of a common underlying 
fund as the underlying investment medium for both variable annuity and 
variable life insurance separate accounts of the same life insurance 
company or of any affiliated life insurance company is referred to 
herein as ``mixed funding.''
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    \3\ The exemptions provided by Rule 6e-2 also are available to a 
separate account's investment advisor, principal underwriter, and 
sponsor or depositor.
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    2. In addition, the relief granted by Rule 6e-2(b)(15) is not 
available with respect to a scheduled premium variable life insurance 
separate account that owns shares of an underlying management company 
that also offers

[[Page 50491]]

its shares to separate accounts funding variable contracts of one or 
more unaffiliated life insurance companies. The use of a common 
underlying fund as the underlying investment medium for variable life 
insurance separate accounts of one insurance company and separate 
accounts funding variable contracts of one or more unaffiliated life 
insurance companies is referred to herein as ``shared funding.''
    3. Moreover, because the relief under Rule 6e-2(b)(15) is available 
only where shares are offered exclusively to variable life insurance 
separate accounts, additional exemptive relief may be necessary if the 
shares of the Fund are also to be sold to Qualified Plans.
    4. Accordingly, Applicants are requesting an order of the 
Commission granting exemptions from Sections 9(a), 13(a), 15(a), and 
15(b) of the 1940 Act, and Rule 6e-2(b)(15) thereunder, to the extent 
necessary to permit shares of each Fund to be offered and sold to, and 
held by: (a) Separate Accounts funding variable annuity contracts and 
scheduled premium and flexible premium variable life insurance 
contracts issued by both affiliated and unaffiliated life insurance 
companies; and (b) Qualified Plans.
    5. In connection with the funding of flexible premium variable life 
insurance contracts issued through a separate account registered under 
the 1940 Act as a unit investment trust, Rule 6e-3(T)(b)(15) provides 
partial exemptions from Sections 9(a), 13(a), 15(a), and 15(b). The 
exemptions granted to a separate account by Rule 6e-3(T)(b)(15) are 
available only where all of the assets of the separate account consist 
of the shares of one or more registered management investment companies 
which offer their shares ``exclusively to separate accounts of the life 
insurer, or of any affiliated life insurance company offering either 
scheduled contracts or flexible contracts, or both; or which also offer 
their shares to variable annuity separate accounts of the life insurer 
or of an affiliated life insurance company.'' Therefore, Rule 6e-3(T) 
permits mixed funding with respect to a flexible premium variable life 
insurance separate account, subject to certain conditions.\4\ However, 
Rule 6e-3(T) does not permit shared funding because the relief granted 
by Rule 6e-3(T)(b)(15) is not available with respect to a flexible 
premium variable life insurance separate account that owns shares of an 
underlying fund that also offers its shares to separate accounts 
(including variable annuity and flexible premium and scheduled premium 
variable life insurance separate accounts) of unaffiliated life 
insurance companies.
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    \4\ The exemptions provided by Rule 6e-3(T) also are available 
to a separate account's investment advisor, principal underwriter, 
and sponsor or depositor.
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    6. Applicants state that the relief provided by Rule 6e-3(T) is not 
relevant to the purchase of shares of the Fund by Qualified Plans. 
However, because the relief granted by Rule 6e-3(T)(b)(15) is available 
only where shares of the underlying fund are offered exclusively to 
separate accounts, or to life insurers in connection with the operation 
of a separate account, additional exemptive relief may be necessary if 
the shares of the Fund are also to be sold to Qualified Plans.
    7. Accordingly, Applicants are requesting an order of the 
Commission granting exemptions from Sections 9(a), 13(a), 15(a), and 
15(b) of the 1940 Act, and Rule 6e-3(T)(b)(15) (and any comparable 
permanent rule) thereunder, to the extent necessary to permit shares of 
each Portfolio to be offered and sold to, and held by: (a) Separate 
Accounts funding variable annuity contracts and scheduled premium and 
flexible premium variable life insurance contracts issued by 
unaffiliated life insurance companies; and (b) Qualified Plans.
    8. In its most recent release adopting amendments to Rule 6e-3(T), 
the Commission stated that shared funding arrangements presented ``a 
very new and somewhat complicated area from a regulatory perspective'' 
(Investment Company Act Release No. 15651 (March 30, 1987)). In the 
context of mixed funding, the Commission noted in this same Release 
that ``it would prefer to see any evolvement in this area * * * take 
place in the context of the application process.''
    9. Applicants state they believe that the reason the Commission did 
not grant greater relief in the area of mixed and shared funding when 
it adopted Rule 6e-3(T) is because of the Commission's uncertainty in 
this area with respect to such issues as conflicts of interest. 
Applicants believe that any Commission concern in this area is not 
warranted in the context of the application. If and when a material 
irreconcilable conflict between the Separate Accounts arises in this 
context or between Separate Accounts on the one hand and Qualified 
Plans on the other hand, the Participating Insurance Companies and 
Qualified Plans must take whatever steps are necessary to remedy or 
eliminate the conflict, including eliminating the Portfolios as 
eligible investment options. Applicants state they have concluded that 
the inclusion of Qualified Plans as eligible shareholders should not 
increase the risk of material irreconcilable conflicts among 
shareholders. However, Applicants further assert that even if a 
material irreconcilable conflict involving the Qualified Plans arose, 
the Qualified Plans, unlike the Separate Accounts (which are subject to 
Section 26(c) of the 1940 Act with respect to substitutions), can 
simply redeem their shares and make alternative investments. Applicants 
argue that allowing Qualified Plans to invest directly in the Fund 
should not increase the opportunity for conflicts of interest.
    10. Applicants state that the Commission has previously granted 
exemptive orders permitting open-end management investment companies to 
offer their shares directly to Qualified Plans as well as to separate 
accounts of affiliated or unaffiliated insurance companies that issue 
variable annuity contracts and variable life insurance contracts.
    11. Applicants request relief under Section 6(c) of the 1940 Act 
for the class consisting of the Fund and the Portfolios; life insurance 
companies (i.e., Participating Insurance Companies) and their Separate 
Accounts that invest or in the future will invest in the Fund and the 
Portfolios; and, to the extent necessary, investment managers, 
investment advisors, sub-advisors, administrators, managers, principal 
underwriters or sponsors of Separate Accounts that currently invest or 
in the future will invest in the Fund and the Portfolios. Applicants 
assert that there is ample precedent, in a variety of contexts, for 
granting exemptive relief not only to Applicants in a given case, but 
also to members of the class not currently identified that may be 
similarly situated in the future. In the context of mixed and shared 
funding, Applicants note that the Commission has previously granted 
exemptions covering a class composed of registered investment companies 
designed to fund variable contracts for which a named party to the 
exemptive application or, in some instances, an affiliate thereof, 
would serve in one or more of the following capacities: investment 
manager, investment advisor, sub-advisor, administrator, manager, 
principal underwriter or sponsor.
    12. 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 any provision or provisions 
of the 1940 Act and/or of any rule thereunder if and to the extent that 
such exemption is necessary or appropriate in the public interest and 
consistent with the

[[Page 50492]]

protection of investors and the purposes fairly intended by the policy 
and provisions of the 1940 Act. For the reasons stated below, 
Applicants believe that the requested exemptions 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.
    13. Section 9(a) of the 1940 Act provides that it is unlawful for 
any company to serve as investment advisor or principal underwriter of 
any registered open-end investment company if an affiliated person of 
that company is subject to a disqualification enumerated in Sections 
9(a)(1) or (2). Rules 6e-2(b)(15)(i) and (ii) and Rules 6e-
3(T)(b)(15)(i) and (ii) provide exemptions from Section 9(a) under 
certain circumstances, subject to the limitations discussed above on 
mixed and shared funding imposed by the 1940 Act and the rules 
thereunder. These exemptions limit the application of the eligibility 
restrictions to affiliated individuals or companies that directly 
participate in the management of the underlying management company.
    14. Applicants state that Rules 6e-2(b)(15)(i) and 6e-
3(T)(b)(15)(i) provide, in effect, that the fact that an individual 
disqualified under Section 9(a)(1) or Section 9(a)(2) is an officer, 
director, or employee of an insurance company, or any of its 
affiliates, would not, by virtue of Section 9(a)(3), disqualify the 
insurance company or any of its affiliates from serving in any capacity 
with respect to an underlying investment company, provided that the 
disqualified individual did not participate directly in the management 
or administration of the underlying investment company.
    15. Applicants state that Rules 6e-2(b)(15)(ii) and 6e-
3(T)(b)(15)(ii) provide, in effect, that the fact that any company 
disqualified under Section 9(a)(1) or Section 9(a)(2) is affiliated 
with the insurance company would not, by virtue of Section 9(a)(3), 
disqualify the insurance company from serving in any capacity with 
respect to an underlying investment company, provided that the 
disqualified company did not participate directly in the management or 
administration of the investment company.
    16. Applicants state that the partial relief granted in Rules 6e-
2(b)(15) and 6e-3(T)(b)(15) from the requirements of Section 9, in 
effect, limits the amount of monitoring necessary to ensure compliance 
with Section 9 to that which is appropriate in light of the policy and 
purposes of Section 9. These Rules recognize that it is not necessary 
to apply the provisions of Section 9(a) to individuals in a large 
insurance company complex, most of whom will have no involvement in 
matters pertaining to investment companies in that organization. These 
Rules further recognize that it is also unnecessary to apply Section 
9(a) to individuals in various unaffiliated insurance companies (or 
affiliated companies of Participating Insurance Companies) that may 
utilize the Fund as a funding medium for variable contracts.
    17. Applicants believe that there is no regulatory purpose in 
extending the Section 9(a) monitoring requirements because of mixed or 
shared funding. The Participating Insurance Companies are not expected 
to play any role in the management or administration of the Fund. Those 
individuals who participate in the management or administration of the 
Fund will remain the same regardless of which Separate Accounts or 
insurance companies use the Fund. Applicants maintain that, therefore, 
applying the monitoring requirements of Section 9(a) because of 
investment by Separate Accounts of other insurers would be unjustified 
and would not serve any regulatory purpose. Applicants also state that, 
furthermore, the increased monitoring costs would reduce the net rates 
of return realized by contract owners and Plan participants.
    18. Applicants submit that the relief requested herein from Section 
9(a) in no way will be affected by the proposed additional use of the 
shares of the Fund in connection with Qualified Plans. The insulation 
of the Fund from those individuals who are disqualified under the 1940 
Act remains in place. Since the Qualified Plans are not investment 
companies and will not be deemed to be affiliated solely by virtue of 
their shareholdings, no additional relief from Section 9(a), with 
respect to Qualified Plans, is necessary.
    19. Rules 6e-2(b)(15)(iii) and 6e-3(T)(b)(15)(iii) provide 
exemptions from the pass-through voting requirement with respect to 
several significant matters, assuming the limitations discussed above 
on mixed and shared funding are observed. Rules 6e-2(b)(15)(iii)(A) and 
6e-3(T)(b)(15)(iii)(A) provide that the insurance company may disregard 
the voting instructions of its contract owners with respect to the 
investments of an underlying fund, or any contract between a fund and 
its investment advisor, when required to do so by an insurance 
regulatory authority (subject to the provisions of paragraphs (b)(5)(i) 
and (b)(7)(ii)(A) of Rules 6e-2 and 6e-3(T)). Rules 6e-2(b)(15)(iii)(B) 
and 6e-3(T)(b)(15)(iii)(A) provide that, with respect to registered 
management investment companies whose shares are held by a separate 
account of an insurance company, the insurance company may disregard 
voting instructions of contract owners if the contract owners initiate 
any change in such investment company's investment policies, principal 
underwriter, or any investment advisor (provided that disregarding such 
voting instructions is reasonable and subject to the other provisions 
of paragraphs (b)(5)(ii), (b)(7)(ii)(B), and (b)(7)(ii)(C) of Rules 6e-
2 and 6e-3(T)).
    20. Applicants state that Rule 6e-2 recognizes that a variable life 
insurance contract, as an insurance contract, has important elements 
unique to insurance contracts and is subject to extensive state 
regulation of insurance. Applicants believe that, in adopting Rule 6e-
2(b)(15)(iii), the Commission expressly recognized that state insurance 
regulators have authority, pursuant to state insurance laws or 
regulations, to disapprove or require changes in investment policies, 
investment advisors, or principal underwriters. The Commission also 
expressly has recognized that state insurance regulators have authority 
to require an insurer to draw from its general account to cover costs 
imposed upon the insurer by a change approved by contract owners over 
the insurer's objection. The Commission, therefore, deemed such 
exemptions necessary ``to assure the solvency of the life insurer and 
performance of its contractual obligations by enabling an insurance 
regulatory authority or the life insurer to act when certain proposals 
reasonably could be expected to increase the risks undertaken by the 
life insurer.'' \5\ Applicants conclude that, in this respect, flexible 
premium variable life insurance contracts are identical to scheduled 
premium variable life insurance contracts. Therefore, the corresponding 
provisions of Rule 6e-3(T) (which apply to flexible premium insurance 
contracts and which permit mixed funding) undoubtedly were adopted in 
recognition of the same considerations as the Commission applied in 
adopting Rule 6e-2.
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    \5\ Investment Company Act Release No. 9104 (Dec. 30, 1975) 
(proposing Rule 6e-2).
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    21. Applicants state that these considerations are no less 
important or necessary when an insurance company funds its separate 
accounts in connection with mixed and shared funding. Such mixed and 
shared funding does not compromise the goals of the insurance 
regulatory authorities or of the Commission. Applicants assert that, 
while the Commission may have

[[Page 50493]]

wished to reserve wide latitude with respect to the once unfamiliar 
variable annuity product, that product is now familiar and there 
appears to be no reason for the maintenance of prohibitions against 
mixed and shared funding arrangements. Applicants note that, by 
permitting such arrangements, the Commission eliminates needless 
duplication of start-up and administrative expenses and potentially 
increases an investment company's assets, thereby making effective 
portfolio management strategies that are easier to implement and 
promoting other economies of scale.
    22. Applicants state that the Fund's sale of shares to Qualified 
Plans will not have any impact on the relief requested herein in this 
regard. Shares of the Fund sold to Qualified Plans would be held by the 
trustees of such Plans. With respect to the Qualified Plans, which are 
not registered as investment companies under the 1940 Act, Applicants 
state that there is no requirement to pass through voting rights to 
Plan participants. Indeed, to the contrary, applicable law expressly 
reserves voting rights associated with certain types of Plan assets to 
certain specified persons. For example, under Section 403(a) of ERISA, 
shares of a fund sold to a Qualified Plan must be held by the 
trustee(s) of the Plan. Section 403(a) also provides that the 
trustee(s) must have exclusive authority and discretion to manage and 
control the Plan with two exceptions: (a) When the Plan expressly 
provides that the trustee(s) are subject to the direction of a named 
fiduciary who is not a trustee, in which case the trustee(s) are 
subject to proper directions made in accordance with the terms of the 
Plan and not contrary to ERISA; and (b) when the authority to manage, 
acquire or dispose of assets of the Plan is delegated to one or more 
investment managers pursuant to Section 402(c)(3) of ERISA. Unless one 
of the above two exceptions stated in Section 403(a) applies, Plan 
trustee(s) have the exclusive authority and responsibility for voting 
proxies.
    23. Applicants note that, if a named fiduciary to a Qualified Plan 
appoints an investment manager, the investment manager has the 
responsibility to vote the shares held unless the right to vote such 
shares is reserved to the trustees or the named fiduciary. Applicants 
further note that the Qualified Plans may have their trustee(s) or 
other fiduciaries exercise voting rights attributable to investment 
securities held by the Qualified Plans in their discretion. Certain 
Qualified Plans, however, may provide for the trustees(s) or another 
named fiduciary to exercise voting rights in accordance with 
instructions from participants.
    24. If a Qualified Plan does not provide participants with the 
right to give voting instructions, Applicants do not see any potential 
for material irreconcilable conflicts of interest between or among 
variable contract owners and Plan participants with respect to voting 
of the respective Portfolio's shares. Accordingly, unlike the case with 
insurance company separate accounts, the issue of the resolution of 
material irreconcilable conflicts with respect to voting is not present 
with respect to such Qualified Plans because the Qualified Plans are 
not entitled to pass-through voting privileges.
    25. Applicants further note that there is no reason to believe that 
participants in Qualified Plans that provide participants with the 
right to give voting instructions generally, or those in a particular 
Plan, either as a single group or in combination with participants in 
other Qualified Plans, would vote in a manner that would disadvantage 
variable contract owners. Applicants, therefore, assert that the 
purchase of shares of the Portfolios by Qualified Plans that provide 
voting rights does not present any complications not otherwise 
occasioned by mixed or shared funding.
    26. Applicants submit that the prohibitions on mixed and shared 
funding might reflect concern regarding possible different investment 
motivations among investors. Applicants note that when Rule 6e-2 was 
adopted, variable annuity separate accounts could invest in mutual 
funds whose shares also were offered to the general public. At the time 
of the adoption of Rule 6e-2, therefore, the Commission staff 
contemplated underlying funds with public shareholders, as well as with 
variable life insurance separate account shareholders. Applicants state 
that the Commission staff may have been concerned with the potentially 
different investment motivations of public shareholders and variable 
life insurance contract owners. There also may have been some concern 
with respect to the problems of permitting a state insurance regulatory 
authority to affect the operations of a publicly available mutual fund 
and to affect the investment decisions of public shareholders.
    27. Applicants state that, for reasons unrelated to the 1940 Act, 
however, Internal Revenue Service Revenue Ruling 81-225 (Sept. 25, 
1981) effectively deprived variable annuities funded by publicly 
available mutual funds of their tax-benefited status. The Tax Reform 
Act of 1984 codified the prohibition against the use of publicly 
available mutual funds as an investment medium for variable contracts 
(including variable life contracts). Section 817(h) of the Code, in 
effect, requires that the investments made by variable annuity and 
variable life insurance separate accounts be ``adequately 
diversified.'' If a separate account is organized as a unit investment 
trust that invests in a single fund or series, then the separate 
account will not be diversified. Applicants note that in this 
situation, however, Section 817(h) of the Code and the regulations 
promulgated thereunder, in effect, provide that the diversification 
test will be applied at the underlying fund level, rather than at the 
separate account level, but only if ``all of the beneficial interests'' 
in the underlying fund ``are held by one or more insurance companies 
(or affiliated companies) in their general account or in segregated 
asset accounts * * *'' \6\ Applicants state that, accordingly, a unit 
investment trust separate account that invests solely in a publicly 
available mutual fund will not be adequately diversified. In addition, 
Applicants state that any underlying mutual fund, including any fund 
that sells shares to separate accounts, in effect, would be precluded 
from selling its shares to the public. Applicants conclude that, 
consequently, there will be no public shareholders of the Fund.
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    \6\ U.S. Department of the Treasury Regulation 1.817-5, which 
established diversification requirements for such funds, 
specifically permits, among other things, investment company 
managers, insurance company general and separate accounts and 
``qualified pension or retirement plans'' to share the same 
underlying management investment company.
---------------------------------------------------------------------------

    28. Applicants state that shared funding by unaffiliated insurance 
companies does not present any issues that do not already exist where a 
single insurance company is licensed to do business in several or all 
states. Applicants state that a particular state insurance regulatory 
body could require action that is inconsistent with the requirements of 
other states in which the insurance company offers its policies. 
Applicants maintain that the fact that different insurers may be 
domiciled in different states does not create a significantly different 
or enlarged problem.
    29. Applicants submit that shared funding by unaffiliated insurers, 
in this respect, is no different than the use of the same investment 
company as the funding vehicle for affiliated insurers, which Rules 6e-
2(b)(15) and 6e-3(T)(b)(15) permit. Affiliated insurers

[[Page 50494]]

may be domiciled in different states and be subject to differing state 
law requirements. Affiliation does not reduce the potential, if any 
exists, for differences in state regulatory requirements. Applicants 
assert that, in any event, the conditions discussed below are designed 
to safeguard against, and provide procedures for resolving, any adverse 
effects that differences among state regulatory requirements may 
produce.
    30. Rules 6e-2(b)(15) and 6e-3(T)(b)(15) give the insurance company 
the right to disregard the voting instructions of the contract owners. 
Applicants state that this right does not raise any issues different 
from those raised by the authority of state insurance administrators 
over separate accounts. Under Rules 6e-2(b)(15) and 6e-3(T)(b)(15), an 
insurer can disregard contract owner voting instructions only with 
respect to certain specified items. Affiliation does not eliminate the 
potential, if any exists, for divergent judgments as to the 
advisability or legality of a change in investment policies, principal 
underwriter, or investment advisor initiated by contract owners. The 
potential for disagreement is limited by the requirements in Rules 6e-2 
and 6e-3(T) that the insurance company's disregard of voting 
instructions be reasonable and based on specific good-faith 
determinations.
    31. Applicants note, however, that a particular insurer's disregard 
of voting instructions, nevertheless, could conflict with the majority 
of contract owner voting instructions. The insurer's action possibly 
could be different than the determination of all or some of the other 
insurers (including affiliated insurers) that the voting instructions 
of contract owners should prevail, and either could preclude a majority 
vote approving the change or could represent a minority view. If the 
insurer's judgment represents a minority position or would preclude a 
majority vote, then the insurer may be required, at the affected Fund's 
election, to withdraw its Separate Account's investment in the Fund and 
no charge or penalty will be imposed as a result of such withdrawal.
    32. Applicants state that there is no reason that the investment 
policies of the Fund would or should be materially different from what 
these policies would or should be if the Fund funded only variable 
annuity contracts or variable life insurance policies, whether flexible 
premium or scheduled premium policies. Each type of insurance product 
is designed as a long-term investment program. Similarly, the 
investment strategy of Qualified Plans (i.e., long-term investment) 
coincides with that of variable contracts and should not increase the 
potential for conflicts.
    33. Applicants do not believe that the sale of shares of the Fund 
to Qualified Plans will increase the potential for material 
irreconcilable conflicts of interest between or among different types 
of investors. In particular, Applicants see very little potential for 
such conflicts beyond that which would otherwise exist between variable 
annuity and variable life insurance contract owners. Applicants submit 
that either there are no additional conflicts of interest or there 
exists the ability by the affected parties to resolve any such 
conflicts without harm to the contract owners in the Separate Accounts 
or to the participants under the Qualified Plans.
    34. Applicants note that Section 817 of the Code is the only 
section where separate accounts are discussed. Section 817(h) imposes 
certain diversification standards on the underlying assets of variable 
annuity contracts and variable life insurance contracts held in the 
portfolios of management investment companies. The Code provides that a 
variable contract shall not be treated as an annuity contract or life 
insurance for any period (and any subsequent period) for which the 
investments, in accordance with regulations prescribed by the Treasury 
Department, are not adequately diversified. On March 2, 1989, the 
Treasury Department issued regulations (Treas. Reg. 1.817-5) (the 
``Treasury Regulations'') that established diversification requirements 
for the investment portfolios underlying variable contracts. The 
Treasury Regulations provide that, in order to rely on certain look-
through provisions of the diversification requirements, all of the 
beneficial interests in the underlying investment company must be held 
by the segregated asset accounts of one or more insurance companies. 
The Treasury Regulations, however, also contain certain exceptions to 
this requirement, one of which allows shares in the investment company 
to be held by the trustee of a qualified pension or retirement plan 
without adversely affecting the ability of shares in the same 
investment company also to be held by insurance company separate 
accounts (Treas. Reg. 1.817-5(f)(3)(iii)). Applicants assert, 
therefore, that neither the Code nor the Treasury Regulations or 
revenue rulings thereunder present any inherent conflicts of interest 
if Qualified Plans, variable annuity Separate Accounts, and variable 
life insurance Separate Accounts all invest in the same management 
investment company.
    35. Applicants state that the promulgation of Rules 6e-2(b)(15) and 
6e-3(T)(b)(15) under the 1940 Act preceded the issuance of the Treasury 
Regulations that made it possible for shares of an investment company 
to be held by the trustee of a Qualified Plan without adversely 
affecting the ability of shares in the same investment company also to 
be held by the separate accounts of insurance companies in connection 
with their variable contracts. Applicants submit that the sale of 
shares of the same investment company to Separate Accounts and to 
Qualified Plans could not have been envisioned at the time of the 
adoption of Rules 6e-2(b)(15) and 6e-3(T)(b)(15), given the then-
current tax law.
    36. Applicants state that while there are differences in the manner 
in which distributions are taxed for variable annuity contracts, 
variable life insurance contracts, and Qualified Plans, these 
differences will have no impact on the Fund and, therefore, the tax 
consequences of distributions from variable contracts and Qualified 
Plans do not raise any conflicts of interest with respect to the use of 
the Fund. When distributions are to be made, and the Separate Account 
or the Qualified Plan cannot net purchase payments to make the 
distributions, the Separate Account or the Qualified Plan will redeem 
shares of the affected Fund at its net asset value. The Qualified Plan 
then will make distributions in accordance with the terms of the 
Qualified Plan. The life insurance company will surrender values from 
the Separate Account into the general account to make distributions in 
accordance with the terms of the variable contract. Distributions and 
dividends will be declared and paid by the Fund without regard to the 
character of the shareholder.
    37. Applicants state that with respect to voting rights, it is 
possible to provide an equitable means of giving such voting rights to 
separate account contract owners and to Qualified Plans. The transfer 
agent for each Fund will inform each Participating Insurance Company of 
its share ownership in each Separate Account, as well as inform the 
trustees of Qualified Plans of their holdings. The Participating 
Insurance Company will then solicit voting instructions in accordance 
with Rules 6e-2 and 6e-3(T).
    38. Applicants maintain that the ability of the Fund to sell its 
shares directly to Qualified Plans does not create a ``senior 
security'' with respect to any variable annuity or variable life 
contract owner as opposed to a participant under a Qualified Plan. The

[[Page 50495]]

term ``senior security'' is defined under Section 18(g) of the 1940 Act 
to include ``any stock of a class having priority over any other class 
as to distribution of assets or payment of dividends.'' As noted above, 
regardless of the rights and benefits of participants under the 
Qualified Plans, or contract owners under variable contracts, the 
Qualified Plans and the Separate Accounts, respectively, have rights 
only with respect to their respective shares of the Fund. The Qualified 
Plans and the Separate Accounts can redeem such shares of the Fund only 
at the net asset value of the shares. No shareholder of a Fund will 
have any preference over any other shareholder of such Fund with 
respect to distribution of assets or payment of dividends.
    39. Applicants maintain that various factors have kept more 
insurance companies from offering variable annuity and variable life 
insurance contracts than currently offer such contracts. These factors 
include the costs of organizing and operating a funding medium, the 
lack of expertise with respect to investment management (principally 
with respect to stock and money market investments), and the lack of 
name recognition by the public of certain insurers as investment 
experts with whom the public feels comfortable entrusting their 
investment dollars. For example, some smaller life insurance companies 
may not find it economically feasible, or within their investment or 
administrative expertise, to enter the variable contract business on 
their own. Use of the Fund as a common investment medium for variable 
contracts, as well as for Qualified Plans, would reduce or eliminate 
these concerns. Mixed and shared funding also should provide several 
benefits to variable contract owners by eliminating a significant 
portion of the costs of establishing and administering separate funds. 
Applicants assert that Participating Insurance Companies and Qualified 
Plans will benefit not only from the investment and administrative 
expertise of the responsible advisors and their affiliates, but also 
from the cost efficiencies and investment flexibility afforded by a 
large pool of funds. According to Applicants, mixed and shared funding, 
including the sale of shares of a Fund to Qualified Plans, also would 
permit a greater amount of assets available for investment by such 
Fund, thereby promoting economies of scale, by permitting increased 
safety through greater diversification, and by making the addition of 
new Portfolios to a Fund more feasible. Applicants maintain that making 
the Fund available for mixed and shared funding will therefore 
encourage more insurance companies to offer variable contracts, and 
this should result in increased competition with respect to both 
variable contract design and pricing, which can be expected to result 
in more product variation and lower charges.
    40. Applicants submit that, regardless of the type of shareholder 
in a Fund, the responsible Advisor will continue to manage a 
Portfolio's investments solely and exclusively in accordance with each 
such Portfolio's investment objectives and restrictions as well as with 
any guidelines established by the board of trustees or directors, as 
applicable, of the Fund. Applicants state that individual Portfolio 
managers work with a pool of money and do not take into account the 
identity of the shareholders and that, thus, the Fund is managed in the 
same manner as any other mutual fund. According to Applicants, if 
shareholders are not pleased with a mutual fund's investment results, 
or the manner in which the mutual fund is being operated, these 
shareholders may redeem their shares. Applicants state that it is the 
duty of the management of a mutual fund to keep shareholders informed 
through updated prospectuses and annual and semi-annual reports. 
Applicants believe that these periodic communications to shareholders 
function as these communications are intended. Qualified Plans, as well 
as contract owners, thus, will be given up-to-date information 
necessary for them to make informed investment decisions.

Applicants' Conditions

    Applicants consent to the following conditions:
    1. A majority of the Board of Trustees or Board of Directors 
(``Board'') of each Fund shall consist of persons who are not 
``interested persons'' of the Fund, as defined by Section 2(a)(19) of 
the 1940 Act and the rules thereunder and as modified by any applicable 
orders of the Commission, except that if this condition is not met by 
reason of the death, disqualification, or bona fide resignation of any 
trustee or director, then the operation of this condition shall be 
suspended: (a) For a period of 90 days if the vacancy or vacancies may 
be filled by the Board; (b) for a period of 150 days if a vote of 
shareholders is required to fill the vacancy or vacancies; or (c) for 
such longer period as the Commission may prescribe by order upon 
application.
    2. Each Board will monitor the respective Fund for the existence of 
any material irreconcilable conflict among and between the interests of 
the contract owners of all Separate Accounts, Plan participants, and 
Qualified Plans investing in that Fund, and determine what action, if 
any, should be taken in response to such conflicts. A material 
irreconcilable conflict may arise for a variety of reasons, including: 
(a) An action by any state insurance regulatory authority; (b) a change 
in applicable federal or state insurance, tax, or securities laws or 
regulations, or a public ruling, private letter ruling, no-action or 
interpretative letter, or any similar action by insurance, tax, or 
securities regulatory authorities; (c) an administrative or judicial 
decision in any relevant proceeding; (d) the manner in which the 
investments of any Portfolio are being managed; (e) a difference in 
voting instructions given by variable annuity contract owners, variable 
life insurance contract owners, Plan trustees, or Plan participants; 
(f) a decision by a Participating Insurance Company to disregard the 
voting instructions of contract owners; or (g) if applicable a decision 
by a Qualified Plan to disregard the voting instructions of Plan 
participants.
    3. Any Qualified Plan that executes a fund participation agreement 
upon becoming an owner of 10% or more of the assets of a Fund, any 
Participating Insurance Company (collectively, ``Participating 
Entities'') and the relevant Advisor or its affiliate will report any 
potential or existing conflicts to the Board. The relevant Advisor and 
each of the Participating Entities will be responsible for assisting 
the Board in carrying out the Board's responsibilities under these 
conditions by providing the Board with all information reasonably 
necessary for the Board to consider any issues raised. This includes, 
but is not limited to, an obligation by each Participating Insurance 
Company to inform the Board whenever it has determined to disregard 
contract owner voting instructions and, if pass-through voting is 
applicable, an obligation by each Qualified Plan that is a 
Participating Entity to inform the Board whenever it has determined to 
disregard Plan participant voting instructions. The responsibility to 
report such information and conflicts and to assist the Board will be a 
contractual obligation of all Participating Entities investing in a 
Fund under their agreements governing participation in the Fund, and 
such agreements shall provide that such responsibilities will be 
carried out with a view only to the interests of the contract owners 
or, if applicable, Plan participants.
    4. If it is determined by a majority of the Board of a Fund, or a 
majority of its disinterested trustees or directors, that a

[[Page 50496]]

material irreconcilable conflict exists, the relevant Participating 
Entities shall, at their expense and to the extent reasonably 
practicable (as determined by a majority of the disinterested trustees 
or directors), take whatever steps are necessary to remedy or eliminate 
the material irreconcilable conflict, up to and including: (a) 
Withdrawing the assets allocable to some or all of the Separate 
Accounts from the affected Fund or any Portfolio and reinvesting such 
assets in a different investment medium, including another Portfolio; 
(b) in the case of Participating Insurance Companies, submitting the 
question of whether such segregation should be implemented to a vote of 
all affected contract owners and, as appropriate, segregating the 
assets of any appropriate group (i.e., variable annuity contract owners 
or variable life insurance contract owners of one or more Participating 
Insurance Companies) that votes in favor of such segregation, or 
offering to the affected contract owners the option of making such a 
change; (c) withdrawing the assets allocable to some or all of 
Qualified Plans that are Participating Entities from the affected Fund 
or any Portfolio and reinvesting such assets in a different investment 
medium, including another Portfolio; and (d) establishing a new 
registered management investment company or managed separate account. 
If a material irreconcilable conflict arises because of a Participating 
Insurance Company's decision to disregard contract owner voting 
instructions and that decision represents a minority position or would 
preclude a majority vote, the Participating Insurance Company may be 
required, at the Fund's election, to withdraw its Separate Account's 
investment in the Fund, and no charge or penalty will be imposed as a 
result of such withdrawal. If a material irreconcilable conflict arises 
because of the decision of a Qualified Plan that is a Participating 
Entity to disregard Plan participant voting instructions, if 
applicable, and that decision represents a minority position or would 
preclude a majority vote, the Qualified Plan may be required, at the 
election of the Fund, to withdraw its investment in the Fund, and no 
charge or penalty will be imposed as a result of such withdrawal. The 
responsibility to take remedial action in the event of a Board 
determination of a material irreconcilable conflict and to bear the 
cost of such remedial action shall be a contractual obligation of all 
Participating Entities under their agreements governing participation 
in the Fund, and these responsibilities will be carried out with a view 
only to the interests of the contract owners or, as applicable, Plan 
participants.
    For the purposes of this Condition 4, a majority of the 
disinterested members of the Board shall determine whether or not any 
proposed action adequately remedies any material irreconcilable 
conflict, but in no event will the Fund or the Advisors or their 
affiliates, as relevant, be required to establish a new funding medium 
for any variable contract. No Participating Insurance Company shall be 
required by this Condition 4 to establish a new funding medium for any 
variable contract if an offer to do so has been declined by vote of a 
majority of contract owners materially adversely affected by the 
material irreconcilable conflict. No Qualified Plan that is a 
Participating Entity shall be required by this Condition (4) to 
establish a new funding medium for such Qualified Plan if (a) a 
majority of Plan participants materially and adversely affected by the 
material irreconcilable conflict vote to decline such offer or (b) 
pursuant to governing Plan documents and applicable law, the Plan makes 
such decision without a Plan participant vote.
    5. The Board's determination of the existence of a material 
irreconcilable conflict and its implications shall be made known 
promptly in writing to all Participating Entities and the relevant 
Advisor or its affiliate.
    6. Participating Insurance Companies will provide pass-through 
voting privileges to all variable contract owners for so long as the 
Commission continues to interpret the 1940 Act as requiring pass-
through voting privileges for variable contract owners. Accordingly, 
such Participating Insurance Companies will vote shares of each 
Portfolio held in their registered separate accounts in a manner 
consistent with voting instructions timely received from such contract 
owners. Each Participating Insurance Company will vote shares of each 
Portfolio held in its registered Separate Accounts for which no timely 
voting instructions are received, as well as shares attributable to the 
Participating Insurance Company, in the same proportion as those shares 
for which voting instructions are received. Participating Insurance 
Companies shall be responsible for assuring that each of their 
registered Separate Accounts investing in a Fund calculates voting 
privileges in a manner consistent with all other Participating 
Insurance Companies. The obligation to vote a Fund's shares and to 
calculate voting privileges in a manner consistent with all other 
registered Separate Accounts investing in a Fund shall be a contractual 
obligation of all Participating Insurance Companies under their 
agreements governing participation in the Fund. Each Plan will vote as 
required by applicable law and governing Plan documents.
    7. A Fund will notify all Participating Insurance Companies and 
Qualified Plans that disclosure regarding potential risks of mixed and 
shared funding may be appropriate in prospectuses for any of the 
Separate Accounts and in Plan documents. Each Fund will disclose in its 
prospectus that: (a) Shares of the Fund are offered to insurance 
company Separate Accounts that fund both variable annuity and variable 
life insurance contracts, and to Qualified Plans; (b) due to 
differences of tax treatment or other considerations, the interests of 
various contract owners participating in the Fund and the interests of 
Qualified Plans investing in the Fund might at some time be in 
conflict; and (c) the Board will monitor the Fund for any material 
conflicts and determine what action, if any, should be taken.
    8. All reports received by the Board of potential or existing 
conflicts, and all Board action with regard to determining the 
existence of a conflict, notifying Participating Entities and any 
Advisor and its affiliates of a conflict, and determining whether any 
proposed action adequately remedies a conflict, will be properly 
recorded in the minutes of the Board or other appropriate records, and 
such minutes or other records shall be made available to the Commission 
upon request.
    9. If and to the extent Rule 6e-2 and Rule 6e-3(T) under the 1940 
Act are amended, or Rule 6e-3 is adopted, to provide exemptive relief 
from any provision of the 1940 Act or the rules thereunder with respect 
to mixed or shared funding on terms and conditions materially different 
from any exemptions granted in the order requested in the application, 
then each Fund and/or the Participating Insurance Companies, as 
appropriate, shall take such steps as may be necessary to comply with 
Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to 
the extent such rules are applicable.
    10. Each Fund will comply with all provisions of the 1940 Act 
requiring voting by shareholders (which, for these purposes, shall be 
the persons having a voting interest in the shares of that Fund), and 
in particular each Fund will either provide for annual meetings (except 
insofar as the Commission may interpret Section 16 of the 1940 Act not 
to require such meetings) or comply

[[Page 50497]]

with Section 16(c) of the 1940 Act (although the Fund is not one of the 
trusts described in Section 16(c) of the 1940 Act) as well as with 
Section 16(a) of the 1940 Act and, if and when applicable, Section 
16(b) of the 1940 Act. Further, each Fund will act in accordance with 
the Commission's interpretation of the requirements of Section 16(a) of 
the 1940 Act with respect to periodic elections of directors (or 
trustees) and with whatever rules the Commission may promulgate with 
respect thereto.
    11. The Participating Entities and the relevant Advisor or its 
affiliate shall at least annually submit to the Board of a Fund such 
reports, materials or data as the Board may reasonably request so that 
it may fully carry out the obligations imposed upon it by the 
conditions contained in the application and said reports, materials and 
data shall be submitted more frequently, if deemed appropriate, by the 
Board. The obligations of Participating Entities to provide these 
reports, materials and data to the Board of the Fund when it so 
reasonably requests, shall be a contractual obligation of all 
Participating Entities under their agreements governing participation 
in each Fund.
    12. If a Qualified Plan should become an owner of 10% or more of 
the assets of a Fund, the Fund shall require such Plan to execute a 
participation agreement with such Fund which includes the conditions 
set forth herein to the extent applicable. A Qualified Plan will 
execute an application containing an acknowledgment of this condition 
upon such Plan's initial purchase of the shares of any Fund.

Conclusion

    Applicants submit, based on the grounds summarized above, that the 
exemptions requested are 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.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-19533 Filed 8-1-02; 8:45 am]
BILLING CODE 8010-01-P