[Federal Register Volume 78, Number 167 (Wednesday, August 28, 2013)]
[Notices]
[Pages 53175-53179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20955]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30671; File No. 812-14128]


The Northwestern Mutual Life Insurance Company, et al.; Notice of 
Application Agency: Securities and Exchange Commission (``SEC'' or 
``Commission'')

August 22, 2013.

ACTION: Notice of application for an order approving the substitution 
of certain securities pursuant to Section 26(c) of the Investment 
Company Act of 1940, as amended (the ``1940 Act'' or ``Act'') and an 
order of exemption pursuant to Section 17(b) of the Act from Section 
17(a) of the Act.

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Applicants: The Northwestern Mutual Life Insurance Company (the 
``Company''), NML Variable Annuity Account A (``VA Account A''), NML 
Variable Annuity Account B (``VA Account B'') and NML Variable Annuity 
Account C (``VA Account C,'' and together with VA Account A and VA 
Account B, the ``Annuity Accounts'') and Northwestern Mutual Variable 
Life Account (``VL Account'') and Northwestern Mutual Variable Life 
Account II (``VL Account II,'' together with VL Account, the ``Life 
Accounts,'' and together with the Annuity Accounts, the ``Separate 
Accounts''). The Company and the Separate Accounts are collectively 
referred to herein as the ``Substitution Applicants.'' The Substitution 
Applicants and Credit Suisse Trust are also collectively referred to as 
the ``Section 17 Applicants.''

Summary of the Application: The Substitution Applicants seek an order 
pursuant to Section 26(c) of the 1940 Act, approving the substitution 
of shares of the Commodity Return Strategy Portfolio (the ``Replacement 
Fund''), a series of Credit Suisse Trust, for shares of the Commodities 
Return Strategy Portfolio (the ``Replaced Fund''), a series of the 
Northwestern Mutual Series Fund, Inc. (the ``Series Fund''), under each 
of the variable annuity contracts and variable life insurance policies 
issued by the Separate Accounts (collectively, the ``Contracts''). The 
Section 17 Applicants seek an order pursuant to Section 17(b) of the 
1940 Act exempting them from 17(a) of the Act to the extent necessary 
to permit them to engage in certain in-kind transactions in connection 
with the substitution (``In-Kind Transactions'').

DATES: Filing Date: The application was filed on March 6, 2013, and the 
amended and restated application was filed on July 12, 2013.

Hearing or Notification of a Hearing: An order granting the application 
will be issued unless the Commission orders hearing. Interested persons 
may request a hearing by writing to the Secretary of the Commission and 
serving the applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on September 17, 2013, and should be accompanied by proof of 
service on the 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

[[Page 53176]]

contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Secretary of the Commission.

ADDRESSES: Secretary, SEC, 100 F Street NE., Washington, DC 20549-1090. 
Applicants: Chad E. Fickett, Assistant General Counsel, The 
Northwestern Mutual Life Insurance Company, 720 East Wisconsin Avenue, 
Milwaukee, Wisconsin 53202; Thomas E. Bisset, Esq., Sutherland Asbill & 
Brennan LLP, 700 Sixth Street NW., Suite 700, Washington, DC 20001-
3980; Joanne Doldo, Credit Suisee Asset Management, LLC, One Madison 
Avenue, New York, New York 10010.

FOR FURTHER INFORMATION CONTACT: Mark Cowan, Senior Counsel, or Michael 
L. Kosoff, Branch Chief, Insured Investments Office, 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' Representations

    1. The Company, on its own behalf and on behalf of their respective 
separate accounts, proposes to substitute shares of the Replacement 
Fund for shares of the Replaced Fund held by the Separate Accounts to 
fund the Contracts.
    2. The Company is the depositor and sponsor of the Separate 
Accounts.
    3. Each of VA Account A, VA Account B, VA Account C, VL Account and 
VL Account II is a ``separate account'' as defined by Rule 0-1(e) under 
the Act and each is registered under the Act as a unit investment trust 
for the purpose of funding the Contracts. Security interests under the 
Contracts have been registered under the Securities Act of 1933. The 
application sets forth the registration statement file numbers for the 
Contracts and the Separate Accounts.
    4. The variable annuity Contracts are either flexible premium 
variable annuity contracts or unallocated group combination variable 
annuity contracts. The variable life insurance Contracts are either 
variable whole life forms of insurance contracts or variable universal 
life insurance contracts. Under each of the Contracts (the proper form 
of which is provided to every Contract owner) as well as the prospectus 
for each Contract, the Company has the right to substitute shares of 
one fund for shares of another fund managed by either the same 
investment adviser or by a different investment adviser.
    5. The Replaced Fund is registered as an open-end management 
investment company and is a series of the Series Fund (File Number 811-
03990). It offers its shares only to the Company and the Accounts for 
purposes of funding the Contracts.
    6. The Replaced Fund has entered into an investment advisory 
agreement with Mason Street Advisors, LLC (``MSA''), a wholly-owned 
subsidiary of the Company.
    7. The Series Fund has received an exemptive order from the 
Commission (``Multi-Manager Order'') that permits the Manager, or any 
entity controlling, controlled by, or under common control (within the 
meaning of Section 2(a)(9) of the 1940 Act) with the Manager, subject 
to certain conditions, to hire and replace unaffiliated subadvisors and 
to enter into and amend sub-advisory agreements without shareholder 
approval.
    8. MSA has entered into a sub-advisory agreement with Credit Suisse 
Asset Management, LLC (``CSAM''). CSAM is part of the asset management 
business of Credit Suisse Group AG, a worldwide bank and financial 
services provider.
    9. The Replacement Fund is registered as an open-end management 
investment company and is a series of the Series Fund (File Number 811-
07261). It offers its shares only to variable annuity and variable life 
insurance contracts offered by the separate accounts of certain 
insurance companies, to certain tax-qualified pension and retirement 
plans and other investment companies.
    10. The Replacement Fund has entered into an investment advisory 
agreement with CSAM under which CSAM acts as investment adviser for the 
Replaced Fund's portfolio of investments. CSAM does not have the 
authority to retain sub-advisers to manage all or a portion of the 
Replacement Fund's assets without obtaining shareholder approval. CSAM 
voluntarily waives fees and reimburse expenses so that the Replacement 
Fund's annual operating expenses will not exceed 1.05% of average daily 
net assets.
    11. The Replacement Fund is neither an affiliate nor a second-tier 
affiliate of the Company or the Accounts. However, for purposes of 
Section 2(a)(3) of the 1940 Act, after the substitution the Replacement 
Fund may be deemed an affiliate of the Company and the Accounts, if the 
Accounts own 5% or more of the shares of the Replacement Fund. CSAM is 
currently a second-tier affiliate of the Accounts by virtue of its role 
as investment sub-adviser to the Replaced Fund.
    12. The Substitution Applicants state that the Funds' investment 
objectives, principal investment strategies and risks are substantially 
the same. A comparison of the investing objectives, strategies and 
risks of the Replaced Fund and the Replacement Fund is included in the 
application.
    13. The following table compares the fees and expenses of the 
Replaced Fund and the Replacement Fund as of the year ended December 
31, 2012:
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    \1\ Restated to reflect current fees.
    \2\ Includes fees and expenses incurred indirectly by the 
Replaced Fund as a result of its investments in investment companies 
and other pooled investment vehicles as well as the expenses of 
investing in the NMSF Subsidiary (referred to as ``Acquired Fund 
Fees and Expenses'').

------------------------------------------------------------------------
                                                                The
                                      The replaced fund     replacement
                                          (percent)            fund
                                                             (percent)
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Management Fee....................  0.80................            0.50
Distribution and Service (12b-1)    None................            0.25
 Fee.
Other Expenses....................  0.16................            0.59
Acquired Fund Fees and Expenses...  0.07................             N/A
Total Annual Operating Expenses...  \1\ \2\ 1.03........    \1\ \3\ 1.34
Expense Reimbursement and Fee       (0.08)..............             N/A
 Waiver.
Total Annual Operating Expenses     \1\ \4\ 0.95........        \1\ 1.34
 After Expense Reimbursement and
 Waiver.
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[[Page 53177]]

    14. The Substitution Applicants state that the reason for the 
proposed substitution is in response to a recent rule amendment adopted 
by the CFTC that eliminated the Replaced Fund's ability to rely on the 
exclusion provided by CFTC Rule 4.5 to avoid regulation as a commodity 
pool unless it were to substantially curtail its use of futures, 
options, swaps and other financial instruments now regulated by the 
CFTC, which would prevent it from pursuing its principal investment 
strategies. MSA has informed the Replaced Fund's Board of Directors 
that in light of the consequences of these new regulatory requirements, 
it has determined to discontinue its services as investment adviser to 
the Replaced Fund and that the Replaced Fund be terminated. Given these 
circumstances, the Replaced Fund's Board of Directors, at a meeting of 
the Board held on February 21, 2013, decided to terminate the Replaced 
Fund and liquidate its assets as soon as is reasonably practicable.
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    \3\ ``Other Expenses'' include expenses of both the Replacement 
Fund and the Credit Suisse Subsidiary.
    \4\ MSA has entered into a written expense limitation agreement 
under which it has agreed to limit the total expenses of the 
Replaced Fund (excluding taxes, brokerage, other investment-related 
costs, interest and dividend expenses and charges and extraordinary 
expenses) to an annual rate 0.95 of the Replaced Fund's average net 
assets. This expense limitation agreement may be terminated by MSA 
at any time after April 30, 2014. MSA has entered into an agreement 
to waive its management fee in an amount equal to the management fee 
paid to it by the NMSF Subsidiary. This waiver will remain in effect 
for the life of the Replaced Fund, as long as the Replaced Fund 
remains invested in the NMSF Subsidiary.
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    15. The Substitution Applicants represent that replacing the 
Replaced Fund with the Replacement Fund will provide the best possible 
consistency in terms of investment objectives and strategies, risks, 
and management, and provides comparable performance. The Replacement 
Fund has an identical investment objective and nearly identical 
investment strategies to those of the Replaced Fund. The Replacement 
Fund also provides the greatest possible continuity of investment 
management services because the investment adviser to the Replacement 
Fund is the current sub-adviser to the Replaced Fund, and the same 
portfolio managers make the day-to-day investment decisions for both 
Funds. In addition, the Replacement Fund offers an immediate 
opportunity for increased economies of scale resulting from the 
infusion of assets currently held by the Replaced Fund, as well as 
future opportunity for asset growth due to its availability to other, 
unaffiliated separate accounts and pension plans, as well as other 
investment companies.
    16. The Replaced Fund's total net assets as of May 1, 2013 were 
$135,658,744, compared to total net assets of the Replacement Fund of 
$84,596,457. However, unlike the Replaced Fund, the availability of the 
Replacement Fund is not restricted to the Accounts, but instead is 
available to the variable separate accounts of multiple insurance 
companies, pension plans and other investment companies, offering 
greater potential for even further asset growth and economies of scale.
    17. The Company also believes that an important consideration for 
substituting the Replacement Fund for the Replaced Fund is Contract 
owner expectations regarding performance. For the one year period ended 
December 31, 2012 investment performance of the Replacement Fund was 
0.26% higher than the Replaced Fund's return for the comparable period 
(though long-term performance is less subject to comparison given the 
relatively recent inception date of the Replaced Fund). Both Funds, 
however, share the same Morningstar rankings and categories.
    18. The Substitution Applicants note that the overall expenses of 
the Replacement Fund are higher than the overall expenses of the 
Replaced Fund. In light of this, and consistent with prior substitution 
applications, for twenty-four months following the date of the 
substitution and for those Contracts with Contract value invested in 
the Replaced Fund on the date of the proposed substitution, on or 
around the last day of each fiscal period (not to exceed a fiscal 
quarter), the Company will reimburse Contract owners to the extent the 
sum of the operating expenses of the Replacement Fund (taking into 
account any fee waivers and expense reimbursements) and subaccount 
expenses for such period exceeds, on an annualized basis, the sum of 
the operating expenses of the Replaced Fund (taking into account any 
fee waivers and expense reimbursements) and subaccount expenses for the 
fiscal year preceding the date of the proposed substitution.\5\ In 
addition, for twenty-four months following the date of the proposed 
substitution, the Company will not increase total separate account 
charges for Contracts outstanding on the date of the proposed 
substitution.
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    \5\ For purposes of this limitation, Net Total Annual Operating 
Expenses of the Replaced Fund are 0.95%. See the fee table 
comparison in the ``Fees and Expenses'' section above.
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Legal Analysis and Conditions

    19. By supplements to the Contract prospectuses or by disclosures 
in the prospectuses for the Contracts for new Contract owners after May 
1, 2013, the Company notified existing Contract owners of its intention 
to take the necessary actions, including seeking the order requested by 
the Application, to carry out the proposed substitution as described 
herein. These disclosures advise Contract owners that the Company has 
filed or would file an application to seek approval of the 
substitution, and that if the substitution is approved, any Contract 
value allocated to the subaccount investing in the Replaced Fund on the 
date of substitution will be automatically transferred to the 
subaccount investing in the Replacement Fund.
    20. In addition, these disclosures inform Contract owners that any 
Contract owner not wanting his or her entire Contract value in the 
Replaced Fund to be automatically transferred to the Replacement Fund 
on the date of substitution should consider transferring the Contract 
value in the Replaced Fund to other investment options available under 
the Contract. The disclosures also inform Contract owners that the 
Company does not impose charges in connection with the transfer to any 
of the investment options available under the Contract, nor does the 
Company impose restrictions on transfers (other than short-term trading 
restrictions on frequent transfers to prevent market timing 
transactions and other restrictions noted in the applicable Contract 
prospectus). Finally, the disclosures explain that the Company bears 
all expenses related to the substitution, and that there would be no 
tax consequences for Contract owners as a result of the substitution. 
Additionally, within five days following the date of substitution, 
Contract owners affected by the substitution will be notified in 
writing that the substitution was carried out. This notice will largely 
restate the information set forth in the prospectus and prospectus 
supplements described above. The forms of the proposed supplements were 
attached as exhibits A-1 and A-2, respectively, to the initial 
Application.\6\
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    \6\ See File No. 812-14128, filed March 6, 2013 (SEC accession 
number 0001193125-13-093752).
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    21. The current summary or statutory prospectus for the Replacement 
Fund will have been provided to all Contract owners prior to the date 
of substitution. The Company currently intends the effective date of 
the substitution to be no later than the fourth quarter of 2013, 
depending on SEC approval as well as

[[Page 53178]]

operational or other factors that may affect the implementation of the 
substitution transaction. The effective date of the substitution may be 
earlier. All Contract owners will have been given sufficient advance 
notice of the date on which the substitution will take effect.
    22. The substitution will not cause the Contract fees and charges 
currently being paid by existing Contract owners to be greater after 
the substitution than before the substitution. The proposed 
substitution will also not be treated as a transfer of Contract value 
for purposes of determining the number of transfers permitted under the 
Contracts' short-term trading restrictions.
    23. The Company will not exercise any reserved right it may have 
under the Contracts to impose additional charges for transfers of 
accumulated Contract value for a period of at least 30 calendar days 
following the effective date of the substitution. Similarly, after 
giving proper notice in advance of the substitution, the Company will 
permit Contract owners to make their first transfer of accumulated 
Contract value out of the Replaced Fund to another investment option 
(or the fixed option in the case of certain Variable Annuity 
contracts), without such transfer being treated as a transfer for 
purposes of the Contracts' short-term trading restrictions. As 
previously noted, the Contracts do not currently impose (although they 
reserve the right to impose) any charges or fees for executing 
transfers.

Section 26(c) Relief

    24. The Substitution Applicants request that the Commission issue 
an order pursuant to Section 26(c) of the 1940 Act approving the 
substitution by the Company of shares of the Replacement Fund for 
shares of the Replaced Fund. Section 26(c) of the 1940 Act requires the 
depositor of a registered unit investment trust holding securities of a 
single issuer to receive Commission approval before substituting the 
securities held by the trust.
    25. The Substitution Applicants assert that the proposed 
substitution is not the type of substitution that Section 26(c) was 
designed to prevent. Unlike traditional unit investment trusts where a 
depositor could only substitute an investment security in a manner 
which permanently affected all the investors in the trust, the 
Contracts provide each Contract owner with the right to exercise his or 
her own judgment and transfer Contract values into other subaccounts 
and a fixed option as applicable. Moreover, as is or will be described 
in appropriate supplements and elsewhere, the Contracts will offer 
Contract owners the opportunity to make a one-time transfer out of the 
affected subaccount into any of the remaining subaccounts without any 
cost or limitation other than those disclosed in the applicable 
prospectuses previously provided to Contract owners. Contract owners 
always have the right to change their allocations at any time without 
restrictions or charges of any sort beyond those already noted. The 
proposed substitution, therefore, will not result in the type of costly 
forced redemption that Section 26(c) was designed to prevent.
    26. The Substitution Applicants submit that the proposed 
substitution meets the standards set forth in Section 26(c) and that, 
if implemented, the substitution would not raise any of the 
aforementioned concerns that Congress intended to address when the 1940 
Act was amended to include this provision. In addition, the 
Substitution Applicants submit that the proposed substitution meets the 
standards that the Commission and its Staff have applied to 
substitutions that have been approved in the past.

Section 17(b) Relief

    27. The Section 17 Applicants also request an order of the 
Commission under Section 17(b) exempting them from the provisions of 
Section 17(a) to the extent necessary to permit the Company to carry 
out the In-Kind Transactions.
    28. Section 17(a)(1) of the 1940 Act, in relevant part, prohibits 
any affiliated person of a registered investment company, or any 
affiliated person of such person (``first tier affiliates'' and 
``second tier affiliates'', respectively), acting as principal, from 
knowingly selling any security or other property to that investment 
company. Section 17(a)(2) of the 1940 Act generally prohibits such 
persons acting as principals from knowingly purchasing any security or 
other property from the registered investment company.
    29. Pursuant to Section 17(a) of the 1940 Act, the Section 17 
Applicants may be considered affiliates of one or more of the Funds 
involved in the proposed substitution, based upon the definition of 
``affiliated person'' under Section 2(a)(3) of the 1940 Act. Section 
2(a)(3) defines an ``affiliated person'' of another person, in relevant 
part, as ``(A) any person directly or indirectly owning, controlling, 
or holding with power to vote, 5 per centum or more of the outstanding 
voting securities of such other person; (B) any person 5 per centum or 
more of whose outstanding voting securities are directly or indirectly 
owned, controlled, or held with power to vote, by such other person; . 
. . (E) if such other person is an investment company, any investment 
adviser thereof . . . .''
    30. Shares held by an insurance company separate account are 
legally owned by the insurance company. The Company does not currently 
own any part of the Replacement Fund. Therefore, the Replacement Fund 
is not currently an affiliate (or an affiliate of an affiliate) of the 
Company's Accounts or the Company despite the fact that the Replaced 
Fund and the Replacement Fund share an investment adviser, CSAM. It is 
anticipated, however, that after the substitution transaction one or 
more of the Company's Accounts would own more than 5% of the 
Replacement Fund. Under these circumstances, because the proposed 
substitution may be effected, in whole or in part, by means of in-kind 
redemptions and subsequent purchases of shares, the proposed 
substitution may be deemed to involve one or more purchases or sales of 
securities or property between affiliated persons.
    31. Accordingly, as the Company and the Replacement Fund could be 
viewed as affiliated persons of one another, it is conceivable that 
this aspect of the proposed substitution could be viewed as being 
prohibited by Section 17(a). Therefore, the Section 17 Applicants have 
determined that, out of an abundance of caution, it is prudent to seek 
relief from Section 17(a) in the context of this Amended Application 
for the in-kind purchases and sales of the Replacement Fund's shares.
    32. The Section 17 Applicants submit that the terms of the proposed 
in-kind purchases of shares of the Replacement Fund, including the 
consideration to be paid and received, as described in this Amended 
Application, are reasonable and fair and do not involve overreaching on 
the part of any persons concerned. The Section 17 Applicants also 
submit that the proposed in-kind purchases will be consistent with the 
investment policies of the Replaced Fund and the Replacement Fund, as 
recited in the current registration statements and reports filed by 
them under the 1940 Act. Finally, the Section 17 Applicants submit that 
the proposed substitution is consistent with the general purposes of 
the 1940 Act.
    33. The Section 17 Applicants assert that, to the extent that the 
in-kind purchases are deemed to involve principal transactions among 
affiliated persons, the procedures described below should be sufficient 
to assure that the terms of the proposed transactions

[[Page 53179]]

are reasonable and fair to all Contract owners. The Section 17 
Applicants maintain that the terms of the proposed in-kind purchase 
transactions, including the consideration to be paid and received by 
each Fund, are reasonable, fair and do not involve overreaching on the 
part of any person principally because the transactions will conform 
with all but one of the conditions enumerated in Rule 17a-7. The 
proposed transactions will take place at relative net asset values as 
of the date of substitution in conformity with the requirements of 
Section 22(c) of the 1940 Act and Rule 22c-1 thereunder with no change 
in the amount of any Contract owner's Contract value or death benefit 
or in the dollar value of his or her investment in any of the Accounts. 
Contract owners will not suffer any adverse tax consequences as a 
result of the substitution. The fees and charges under the Contracts 
will not increase because of the substitution.
    34. Even though the Section 17 Applicants may not rely on Rule 17a-
7, the Section 17 Applicants believe that the Rule's conditions outline 
the type of safeguards that result in transactions that are fair and 
reasonable to registered investment company participants and preclude 
overreaching in connection with an investment company by its affiliated 
persons. The board of the Replacement Fund has adopted procedures, as 
required by paragraph (e)(1) of Rule 17a-7, pursuant to which a series 
may purchase and sell securities to and from their affiliates. The 
Section 17 Applicants will carry out the proposed in-kind purchases in 
conformity with all of the conditions of Rule 17a-7 and the Replacement 
Fund's procedures adopted thereunder, except that the consideration 
paid for the securities being purchased or sold may not be entirely 
cash. The investment adviser for the Replacement Fund will examine any 
securities received from an in-kind redemption, and accept any 
securities that they would otherwise have purchased for cash for the 
Replacement Fund to hold. The circumstances surrounding the proposed 
substitution will be such as to offer the Replacement Fund the same 
degree of protection from overreaching that Rule 17a-7 provides the 
Replacement Fund generally in connection with the purchase and sale of 
securities under that Rule in the ordinary course of its business. In 
particular, the proposed transactions will not be effected at a price 
that is disadvantageous to the Replacement Fund.
    35. Although the transactions may not be entirely for cash, each 
will be effected based upon (1) the independent market price of the 
portfolio securities valued as specified in paragraph (b) of Rule 17a-
7, and (2) the net asset value per share of each Fund involved valued 
in accordance with the procedures disclosed in its registration 
statement and as required by Rule 22c-1 under the 1940 Act. Moreover, 
consistent with Rule 17a-7(d), no brokerage commissions, fees, or other 
costs or remuneration will be paid in connection with the proposed 
transactions, except for any brokerage commissions paid in connection 
with the liquidation of the securities that are not distributed as part 
of the in-kind redemption, which brokerage costs will be borne by the 
Company or its affiliates and not by Contract owners.
    36. Consistent with Section 17(b) and Rule 17a-7(c), any in-kind 
redemptions and purchases for purposes of the proposed substitution 
will be transacted in a manner consistent with the investment 
objectives and policies of the Funds, as recited in their registration 
statements. Any in-kind redemption will be effected on a pro-rata 
basis, where the Replacement Fund will receive an approximate 
proportionate share of every security position in the Replaced Fund's 
portfolio in accordance with the Signature Letter, as supplemented by 
the SEC in subsequent no-action letters. CSAM, the adviser to the 
Replacement Fund, will examine the securities being transferred to the 
Replacement Fund to ensure they are consistent with the Replacement 
Fund's investment objective and policies and will retain only those 
securities that it would have acquired for the Replacement Fund in a 
cash transaction. In addition, the redeeming and purchasing values of 
such securities will be the same.
    37. The Section 17 Applicants submit that the in-kind redemptions 
and purchases described above are consistent with the general purposes 
of the 1940 Act as stated in the Findings and Declaration of Policy in 
Section 1 of the 1940 Act and that the proposed transactions do not 
present any of the conditions or abuses that the 1940 Act was designed 
to prevent. The Commission has previously granted relief to others 
based on similar facts. The Section 17 Applicants represent that the 
proposed in-kind purchases meet all the requirements of Section 17(b) 
of the 1940 Act and 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) to the extent necessary to permit the Company, on behalf 
of the Accounts, to carry out in-kind the proposed substitution by 
redeeming shares of the Replaced Fund in-kind and using securities 
distributed as redemption proceeds to purchase shares of the 
Replacement Fund.

Conclusion

    For the reasons and upon the facts set forth above and in the 
application, the Substitution Applicants and the Section 17 Applicants 
believe that the requested orders meet the standards set forth in 
Section 26(c) of the Act and Section 17(b) of the Act, respectively, 
and should therefore, be granted.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20955 Filed 8-27-13; 8:45 am]
BILLING CODE 8011-01-P