Integrity Life Insurance Company, et al., 4312-4320 [E7-1408]

Download as PDF 4312 Federal Register / Vol. 72, No. 19 / Tuesday, January 30, 2007 / Notices ycherry on PROD1PC64 with NOTICES requestor seeks to have litigated at the proceeding. Each contention must consist of a specific statement of the issue of law or fact to be raised or controverted. In addition, the petitioner/requestor shall provide a brief explanation of the bases for the contention and a concise statement of the alleged facts or expert opinion which support the contention and on which the petitioner intends to rely in proving the contention at the hearing. The petitioner must also provide references to those specific sources and documents of which the petitioner is aware and on which the petitioner intends to rely to establish those facts or expert opinion. The petition must include sufficient information to show that a genuine dispute exists with the applicant on a material issue of law or fact.1 Contentions shall be limited to matters within the scope of the amendment under consideration. The contention must be one which, if proven, would entitle the petitioner to relief. A petitioner/requestor who fails to satisfy these requirements with respect to at least one contention will not be permitted to participate as a party. Each contention shall be given a separate numeric or alpha designation within one of the following groups: 1. Technical—primarily concerns/ issues relating to technical and/or health and safety matters discussed or referenced in the applications. 2. Environmental—primarily concerns/issues relating to matters discussed or referenced in the environmental analysis for the applications. 3. Miscellaneous—does not fall into one of the categories outlined above. As specified in 10 CFR 2.309, if two or more petitioners/requestors seek to co-sponsor a contention, the petitioners/ requestors shall jointly designate a representative who shall have the authority to act for the petitioners/ requestors with respect to that contention. If a petitioner/requestor seeks to adopt the contention of another sponsoring petitioner/requestor, the petitioner/requestor who seeks to adopt the contention must either agree that the sponsoring petitioner/requestor shall act as the representative with respect to that contention, or jointly designate with the sponsoring petitioner/requestor a representative who shall have the 1 To the extent that the applications contain attachments and supporting documents that are not publicly available because they are asserted to contain safeguards or proprietary information, petitioners desiring access to this information should contact the applicant or applicant’s counsel and discuss the need for a protective order. VerDate Aug<31>2005 15:36 Jan 29, 2007 Jkt 211001 authority to act for the petitioners/ requestors with respect to that contention. Those permitted to intervene become parties to the proceeding, subject to any limitations in the order granting leave to intervene, and have the opportunity to participate fully in the conduct of the hearing. Since the Commission has made a final determination that the amendment involves no significant hazards consideration, if a hearing is requested, it will not stay the effectiveness of the amendment. Any hearing held would take place while the amendment is in effect. A request for a hearing or a petition for leave to intervene must be filed by: (1) First-class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555– 0001, Attention: Rulemaking and Adjudications Staff; (2) courier, express mail, and expedited delivery services: Office of the Secretary, Sixteenth Floor, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852, Attention: Rulemaking and Adjudications Staff; (3) E-mail addressed to the Office of the Secretary, U.S. Nuclear Regulatory Commission, HearingDocket@nrc.gov; or (4) facsimile transmission addressed to the Office of the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC, Attention: Rulemakings and Adjudications Staff at (301) 415–1101, verification number is (301) 415–1966. A copy of the request for hearing and petition for leave to intervene should also be sent to the Office of the General Counsel, U.S. Nuclear Regulatory Commission, Washington, DC 20555– 0001, and it is requested that copies be transmitted either by means of facsimile transmission to (301) 415–3725 or by email to OGCMailCenter@nrc.gov. A copy of the request for hearing and petition for leave to intervene should also be sent to the attorney for the licensee. Nontimely requests and/or petitions and contentions will not be entertained absent a determination by the Commission or the presiding officer or the Atomic Safety and Licensing Board that the petition, request and/or the contentions should be granted based on a balancing of the factors specified in 10 CFR 2.309(a)(1)(i)–(viii). STP Nuclear Operating Company, Docket No. 50–498, South Texas Project, Unit 1, Matagorda County, Texas Date of amendment request: December 20, 2006, as supplemented by letter dated December 28, 2006. Description of amendment request: The amendment, for a one-time change, PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 revised Technical Specification (TS) 3.3.2 for the loss of power (LOP) instrumentation (Functional Unit 8, ‘‘loss of power’’) in TS Table 3.3–3, ‘‘Engineered Safety Features Actuation System Instrumentation.’’ A note is added to TS Table 3.3–3, Action 20, which is the TS-required action for inoperable LOP instrumentation, to allow a one-time provision for corrective maintenance on an inoperable Unit 1 LOP instrumentation channel when the number of operable channels are more than one less than the total number of channels. This provision for corrective maintenance expires 30 days after the amendment is approved. Date of issuance: January 11, 2007. Effective date: Effective as of its date of issuance and shall be implemented by January 15, 2007. Amendment No.: 176. Facility Operating License No. NPF– 76: The amendment revised the Technical Specifications and Facility Operating License. Public comments requested as to proposed no significant hazards consideration (NSHC): No. The Commission’s related evaluation of the amendment, finding of emergency circumstances, state consultation, and final NSHC determination are contained in a safety evaluation dated January 11, 2007. Attorney for licensee: A. H. Gutterman, Esq., Morgan, Lewis & Bockius, 1111 Pennsylvania Avenue, NW., Washington, DC 20004. NRC Branch Chief: David Terao. Dated at Rockville, Maryland, this 22nd day of January 2007. For the Nuclear Regulatory Commission. John W. Lubinski, Deputy Director, Division of Operating Reactor Licensing, Office of Nuclear Reactor Regulation. [FR Doc. E7–1259 Filed 1–29–07; 8:45 am] BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [Release Number IC–27677; File No. 812– 13321] Integrity Life Insurance Company, et al. January 24, 2007. Securities and Exchange Commission (the ‘‘Commission’’). ACTION: Notice of application for an order of approval pursuant to Section 26(c) of the Investment Company Act of 1940, as amended (the ‘‘Act’’). AGENCY: Integrity Life Insurance Company (‘‘Integrity’’), Separate APPLICANTS: E:\FR\FM\30JAN1.SGM 30JAN1 ycherry on PROD1PC64 with NOTICES Federal Register / Vol. 72, No. 19 / Tuesday, January 30, 2007 / Notices Account I of Integrity Life Insurance Company (‘‘Integrity Separate Account I’’), Separate Account II of Integrity Life Insurance Company (‘‘Integrity Separate Account II’’), National Integrity Life Insurance Company (‘‘National Integrity’’), Separate Account I of National Integrity Life Insurance Company (‘‘National Integrity Separate Account I’’), and Separate Account II of National Integrity Life Insurance Company (‘‘National Integrity Separate Account II,’’ together with Integrity Separate Account I, Integrity Separate Account II, and National Integrity Separate Account I, the ‘‘Separate Accounts’’). SUMMARY: Applicants seek an order approving the proposed substitution of shares of DWS Equity 500 Index VIP Fund: Class A with Fidelity VIP Index 500: Initial Class; DWS Equity 500 Index VIP Fund: Class B with Fidelity VIP Index 500: Service Class 2; JPMorgan Bond Portfolio with Fidelity VIP Investment Grade Bond: Initial Class; JPMorgan International Equity Portfolio with Fidelity VIP Overseas: Initial Class; MFS VIT Capital Opportunities Series: Service Class with Franklin VIP Growth and Income Securities Fund: Class 2; MFS VIT Emerging Growth Series: Service Class with Touchstone VST Eagle Capital Appreciation Fund; MFS VIT Investors Growth Stock Series: Service Class with Touchstone VST Eagle Capital Appreciation Fund; MFS VIT Mid Cap Growth Series: Service Class with Touchstone VST Mid Cap Growth Fund; MFS VIT New Discovery Series: Service Class with Fidelity VIP Disciplined Small Cap: Service Class 2; MFS VIT Total Return Series: Service Class with Franklin VIP Growth and Income Securities Fund: Class 2; Putnam VT Discovery Growth: Class IB with Fidelity VIP Mid Cap: Service Class 2; Putnam VT George Putnam Fund of Boston: Class IB with Fidelity VIP Balanced: Service Class 2; Putnam VT Growth and Income Fund: Class IB with Franklin VIP Growth and Income Securities Fund: Class 2; Putnam VT International Equity Fund: Class IB with Fidelity VIP Overseas: Service Class 2; Putnam VT Small Cap Value Fund: Class IB with Touchstone VST Third Avenue Value Fund; Putnam VT Voyager Fund: Class IB with Fidelity VIP Growth: Service Class 2. FILING DATE: The application was filed on August 4, 2006, and an amended and restated application was filed on January 23, 2007. HEARING OR NOTIFICATION OF HEARING: An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request VerDate Aug<31>2005 15:36 Jan 29, 2007 Jkt 211001 a hearing by writing to the Secretary of the Commission and serving Applicants with a copy of the request, personally or by mail. Hearing requests must be received by the Commission by 5:30 p.m. on February 16, 2007, and should be accompanied by proof of service on Applicants in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the requester’s interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Secretary of the Commission. ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549. Applicants, c/o Rhonda S. Malone, Esq., Associate Counsel—Securities, Western and Southern Financial Group, 400 Broadway, Cincinnati, Ohio 45202. FOR FURTHER INFORMATION CONTACT: Alison T. White, Senior Counsel, or Joyce M. Pickholz, Branch Chief, Office of Insurance Products, Division of Investment Management, at (202) 551– 6795. SUPPLEMENTARY INFORMATION: The following is a summary of the amended and restated application. The complete application is available for a fee from the Public Reference Branch of the Commission, 100 F Street, NE., Washington, DC 20549 (202–551–8090). Applicants’ Representations 1. Integrity is a stock life insurance company organized under the laws of Ohio. Integrity is a wholly owned subsidiary of The Western and Southern Life Insurance Company. The Western and Southern Life Insurance Company is wholly owned by Western and Southern Financial Group, Inc., which is wholly owned by Western and Southern Mutual Holding Company. 2. Integrity Separate Account I and Integrity Separate Account II are registered under the Act as unit investment trusts (File Nos. 811–04844 and 811–07134, respectively). They are used to fund variable annuity contracts of Integrity. 3. National Integrity is a stock life insurance company organized under the laws of New York. National Integrity is a direct subsidiary of Integrity and an indirect subsidiary of The Western and Southern Life Insurance Company. 4. National Integrity Separate Account I and National Integrity Separate Account II are registered under the Act as unit investment trusts (File Nos. 811– 04846 and 811–07132, respectively). They are used to fund variable annuity contracts of National Integrity. PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 4313 5. The fifteen variable annuity Contracts affected by this application are flexible premium deferred variable annuities and hereinafter are collectively referred to as the ‘‘Contracts.’’ 6. Each Contract permits allocations of value to certain fixed subaccounts and variable subaccounts that invest in specific investment portfolios of underlying mutual funds. The Contracts currently offer between 12 and 54 portfolios. All of the Contracts currently being sold offer the same portfolios and same series of the Putnam Variable Trust Funds (‘‘Putnam’’), MFS Variable Insurance Trust (‘‘MFS’’), DWS Investments VIP Funds (‘‘DWS’’), and J.P. Morgan Series Trust II (‘‘JP Morgan’’) that are the subject of this Substitution. One contract that is no longer sold currently offers 12 portfolios including only one of the replaced portfolios, and will continue to offer 12 portfolios after the substitution. 7. Each Contract permits transfers from one subaccount to another subaccount at any time prior to annuitization, subject to certain restrictions and charges described below. No sales charge applies to such a transfer of value among subaccounts. The Contracts permit up to twelve free transfers during any contract year. A fee of $20 is imposed on transfers in excess of twelve transfers in a contract year. 8. Each Contract reserves the right, upon notice to Contract owners and compliance with applicable law, to add, combine or remove subaccounts, or to withdraw assets from one subaccount and put them into another subaccount. 9. The Applicants propose the Substitution of 16 separate portfolios, representing all the currently available portfolios, except one, of four unaffiliated companies: Putnam, MFS, DWS, and JP Morgan (the ‘‘Replaced Portfolios’’). As replacements, the Applicants propose 12 portfolios: eight from Fidelity VIP Funds (‘‘Fidelity’’), one from Franklin Templeton Variable Insurance Product Trust (‘‘Franklin’’), and three from Touchstone VST Funds (the ‘‘Replacement Portfolios’’). Each of these fund companies currently offers portfolios in the Contracts, and 11 of the 12 proposed replacement portfolios are currently or were previously available in the Contracts. 10. The investment objective, strategies and risks of each Replacement Portfolio are the same as, or substantially similar to, the investment objective, strategies and risks of the corresponding Replaced Portfolio. For each Replaced Portfolio and each Replacement Portfolio, the investment objective, strategies, and risks, along E:\FR\FM\30JAN1.SGM 30JAN1 4314 Federal Register / Vol. 72, No. 19 / Tuesday, January 30, 2007 / Notices with the Morningstar Style Category, are shown in the tables that follow: Replacement Portfolio (Unless otherwise indicated, the Replacement Portfolios are not affiliated with the Integrity Companies.) Replaced Portfolio Replacements 1 and 2 Name .................................... Investment Objective .... Strategy ......................... Principal Risks .............. Morningstar Category ... DWS Equity 500 Index .................................................... Match the performance of the S&P 500 Index, which emphasizes stocks of large U.S. companies. Invests in stocks and other securities of a statistically selected sample of the companies included in the benchmark and derivative instruments that are representative of the S&P 500 Index as a whole, using a process called optimization. • Market Risk .................................................................. • Tracking Error Risk. • Issuer-Specific Changes. • Index Fund Risk. • Futures and Options Risk. • Pricing Risk. • Securities Lending Risk. Large Cap Blend ............................................................. Fidelity Index 500. Results that correspond to the total return of common stocks in the US, as represented by the S&P 500. Invests at least 80% of assets in common stocks included in the S&P 500 using statistical sampling techniques; lends securities to earn income for the fund. • Stock Market Volatility. Large Cap Blend. Replacement 3 Name .................................... Investment Objective .... Strategy ......................... Principal Risks .............. Morningstar Category ... JPMorgan Bond .............................................................. Provide a high total return consistent with moderate risk of capital and maintenance of liquidity. Invests at least 80% of its assets in debt investments, including U.S. government and agency securities, corporate bonds, private placements, asset backed and mortgage backed securities it believes have the potential to provide a high total return over time. • Interest Rate Risk ........................................................ • Junk Bond Risk ........................................................... • Foreign Exposure ........................................................ • Prepayment Risk ......................................................... • Issuer-Specific Change. • Short Sales Risk. • Futures and Options Risk. Intermediate Term Bond ................................................. Fidelity Investment Grade Bond. Provide a high level of current income consistent with the preservation of capital. Invests at least 80% of assets in investment-grade debt securities of all types and repurchase agreements for those securities; allocates assets across different market sectors and maturities, and analyzes a security’s structural features and current pricing, trading opportunities, and the credit quality of the issuer; may invest up to 10% in lower-quality debt securities. • Interest Rate Risk. • Foreign Exposure. • Prepayment Risk. • Issuer-Specific Changes. Intermediate Term Bond. Replacement 4 Name .................................... Investment Objective .... Strategy ......................... Principal Risks .............. ycherry on PROD1PC64 with NOTICES Morningstar Category ... JPMorgan International Equity ........................................ Provide a high total return of capital growth and current income. Invests at least 80% of its assets in equity investments of primarily foreign companies of various sizes, including foreign subsidiaries of U.S. companies. • Market Risk .................................................................. • Foreign Exposure ........................................................ • Futures and Options Risk ............................................ • Emerging Market Risk. • Small Company Risk. • Prepayment Risk. • Interest Rate Risk. Foreign Large Cap Blend ................................................ Fidelity Overseas. Provide long-term growth of capital. Invests at least 80% of assets in non-U.S. common stocks; allocates investments across countries and regions considering the size of the market in each country and region relative to the size of the international market as a whole, using fundamental analysis of each issuer, its industry position, and market and economic conditions. • Market Risk. • Foreign Exposure. • Issuer-Specific Changes. Foreign Large Cap Blend. Replacement 5 Name .................................... Investment Objective .... VerDate Aug<31>2005 15:36 Jan 29, 2007 MFS Capital Opportunities .............................................. Capital appreciation ........................................................ Jkt 211001 PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 Franklin Growth and Income Securities. Capital appreciation with current income as a secondary goal. E:\FR\FM\30JAN1.SGM 30JAN1 Federal Register / Vol. 72, No. 19 / Tuesday, January 30, 2007 / Notices Replacement Portfolio (Unless otherwise indicated, the Replacement Portfolios are not affiliated with the Integrity Companies.) Replaced Portfolio Strategy ......................... Principal Risks .............. Morningstar Category ... 4315 Invests at least 65% of its net assets in common stocks and related securities; focuses on companies it believes have favorable growth prospects and attractive valuations based on current and expected earnings or cash flow, using fundamental research and a ‘‘bottom-up’’ investment style. • Market Risk .................................................................. • Company Risk ............................................................. • Over-the-Counter Risk ................................................. • Foreign Securities Risk ............................................... • Emerging Market Risk ................................................. Large Cap Blend ............................................................. Invests predominantly in a broadly diversified portfolio of equity securities that the advisor considers to be financially strong but undervalued by the market. • Market Risk. • Undervalued Securities Risk. • Interest Rate Risk. • Sector Risk. • Foreign Securities Risk. • Emerging Market Risk. Large Cap Value. Replacement 6 Name .................................... MFS Emerging Growth ................................................... Investment Objective .... Strategy ......................... Long-term growth of capital ............................................ Invests at least 65% of its net assets in common stocks and related securities of emerging growth companies it believes are either (1) early in their life cycle but which have the potential to become major enterprises, or (2) major enterprises whose rates of earnings growth are expected to accelerate because of special factors, such as rejuvenated management, new products, changes in consumer demand, or basic changes in the economic environment; emerging growth companies may be of any size. Principal Risks .............. • Market Risk .................................................................. • Over-the-Counter Risk ................................................. • Foreign Securities Risk ............................................... • Emerging Markets Risk ............................................... • Emerging Growth Risk ................................................ • Frequent Trading Risk ................................................. Large Cap Growth ........................................................... Morningstar Category ... Touchstone Eagle Capital Appreciation (affiliated with the Integrity Companies). Long-term capital appreciation. Invests in a diversified portfolio of common stocks in large cap companies, selected from the largest 500 stocks by market cap size, screened using fundamental research to develop five-year earnings estimates for each company based on historical data, current comparables and a thorough understanding of each company and the relevant industry drivers; assigned either a premium or discount multiple; then ranked using a proprietary valuation model which ranks each stock based on the five year expected rates of return. • Market Risk. • Large-cap Company Risk. • Analysis Risk. • Sector Risk. • Growth Company Risk. • Management Risk. Large Cap Growth. Replacement 7 Name .................................... MFS Investors Growth Stock .......................................... Investment Objective .... Provide long-term growth of capital and future income rather than current income. Invests at least 80% of its net assets in common stocks and related securities of companies it believes offer better than average prospects for long-term growth. Strategy ......................... Principal Risks .............. • • • • Morningstar Category ... Large Cap Growth ........................................................... Market Risk .................................................................. Growth Company Risk ................................................ Foreign Securities Risk ............................................... Frequent Trading Risk ................................................. Touchstone Eagle Capital Appreciation (affiliated with the Integrity Companies). Long-term capital appreciation. Invests in a diversified portfolio of common stocks in large cap companies, selected from the largest 500 stocks by market cap size, screened using fundamental research to develop five-year earnings estimates for each company based on historical data, current comparables and a thorough understanding of each company and the relevant industry drivers; assigned either a premium or discount multiple; then ranked using a proprietary valuation model which ranks each stock based on the five year expected rates of return. • Market Risk. • Growth Company Risk. • Large-cap Company Risk. • Sector Risk. • Management Risk. Large Cap Growth. ycherry on PROD1PC64 with NOTICES Replacement 8 Name .................................... MFS Mid Cap Growth ..................................................... Investment Objective .... Long-term growth of capital ............................................ VerDate Aug<31>2005 15:36 Jan 29, 2007 Jkt 211001 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 Touchstone Mid Cap Growth (affiliated with the Integrity Companies). Increase the value of fund shares as a primary goal and earn income as a secondary goal. E:\FR\FM\30JAN1.SGM 30JAN1 4316 Federal Register / Vol. 72, No. 19 / Tuesday, January 30, 2007 / Notices Replacement Portfolio (Unless otherwise indicated, the Replacement Portfolios are not affiliated with the Integrity Companies.) Replaced Portfolio Strategy ......................... Invests at least 80% of its net total assets in common stocks and related securities of companies with medium market capitalization that it believes have above-average growth potential. Principal Risks .............. • Mid Cap Growth Company Risk .................................. • Over-the-Counter Risk ................................................. • Foreign Securities Risk ............................................... • Emerging Markets Risk ............................................... • Short Sales Risk. Mid Cap Growth .............................................................. Morningstar Category ... Invests at least 80% of assets in common stocks of mid cap companies including companies that have earnings that the portfolio manager believes may grow faster than the U.S. economy in general or companies that are believed to be undervalued, including those with unrecognized asset values, undervalued growth or those undergoing turnaround. • Market Risk. • Mid Cap Company Risk. • Sector Risk. • Management Risk. Mid Cap Growth. Replacement 9 Name .................................... Investment Objective .... Strategy ......................... Principal Risks .............. Morningstar Category ... MFS New Discovery ....................................................... Capital appreciation ........................................................ Invests at least 65% of assets in common stocks and related securities of emerging growth companies it believes offer superior prospects for growth and are either (1) early in their life cycle but which have the potential to become major enterprises, or (2) enterprises whose rates of earnings growth are expected to accelerate because of special factors; the Portfolio will generally focus on smaller cap companies within the range of market capitalizations in the Russell 2000 Growth Index. • Market Risk .................................................................. • Company Risk ............................................................. • Over-the-Counter Risk ................................................. • Foreign Securities Risk ............................................... • Short Sales Risk .......................................................... • Emerging Growth Companies. • Small Cap Companies Risk. Small Cap Growth ........................................................... Fidelity Disciplined Small Cap. Capital appreciation. Invests at least 80% of assets in securities of Companies with small market capitalizations similar to companies in the Russell 2000 Index; invest in domestic and foreign issuers, in either growth or value stocks; uses computer aided quantitative analysis of historical valuation, growth, profitability and other factors. • • • • • Stock Market Volatility. Foreign Exposure. Issuer-Specific Changes. Quantitative Investing. Small Cap Investing. Small Cap Growth. Replacement 10 Name .................................... Investment Objective .... Strategy ......................... Principal Risks .............. Morningstar Category ... MFS Total Return ............................................................ Provide above-average income (compared to a portfolio invested entirely in equity securities) consistent with the prudent employment of capital, and secondarily to provide a reasonable opportunity for growth of capital and income. Invests in a combination of equity and fixed income securities (1) at least 40%, but not more than 75%, of its net assets in common stocks and related securities and (2) at least 25% of its net assets in non-convertible fixed income securities. • Allocation Risk ............................................................. • Undervalued Securities Risk ....................................... • Market Risk .................................................................. • Foreign Securities Risk ............................................... • Interest Rate Risk ........................................................ • Convertible Securities Risk ......................................... • Maturity Risk. • Credit Risk. • Junk Bond Risk. • Liquidity Risk. • Prepayment Risk. Moderate Allocation ........................................................ Franklin Growth and Income Securities. Capital appreciation with current income as a secondary goal. Invests predominantly in a broadly diversified portfolio of equity securities that the advisor considers to be financially strong but undervalued by the market. • • • • • • Market Risk. Undervalued Securities Risk. Interest Rate Risk. Sector Risk. Foreign Securities Risk. Emerging Market Risk. Large Cap Value. ycherry on PROD1PC64 with NOTICES Replacement 11 Name .................................... Investment Objective .... Strategy ......................... Principal Risks .............. VerDate Aug<31>2005 15:36 Jan 29, 2007 Putnam Discovery Growth .............................................. Long-term growth of capital ............................................ Invests mainly in common stocks of U.S. companies with a focus on growth stocks. • Market Risk .................................................................. • Small Cap Company Risk ........................................... • Mid Cap Company Risk .............................................. Jkt 211001 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 Fidelity Mid Cap. Long-term growth of capital. Invests at least 80% of assets in securities of U.S. and foreign companies with medium market caps. • Stock Market Volatility Risk. • Foreign Exposure. • Mid Cap Company Risk. E:\FR\FM\30JAN1.SGM 30JAN1 Federal Register / Vol. 72, No. 19 / Tuesday, January 30, 2007 / Notices Replacement Portfolio (Unless otherwise indicated, the Replacement Portfolios are not affiliated with the Integrity Companies.) Replaced Portfolio Morningstar Category ... 4317 Mid Cap Growth .............................................................. Mid Cap Growth. Replacement 12 Name .................................... Investment Objective .... Strategy ......................... Principal Risks .............. Morningstar Category ... Putnam The George Putnam Fund of Boston ................ Provide a balanced investment composed of a well-diversified portfolio of stocks and bonds that produce both capital growth and current income. Invests in a combination of bonds and U.S. value stocks, with a greater focus on value stocks; at least 25% of the Fund’s total assets in fixed-income securities, including debt securities, preferred stocks and that portion of the value of convertible securities attributable to the fixed-income characteristics of those securities. • Stock Market Volatility Risk ......................................... • Interest Rate Risk ........................................................ • Credit Risk ................................................................... • Junk Bond Risk ........................................................... • Allocation Risk ............................................................. • Futures and Options Risk. Moderate Allocation ........................................................ Fidelity Balanced. Income and capital growth consistent with reasonable risk. Invests approximately 60% of assets in common stocks of domestic and foreign issuers and at least 25% of assets in fixed income senior securities. • • • • • Stock Market Volatility Risk. Interest Rate Risk. Foreign Exposure. Prepayment Risk. Issuer-Specific Changes. Moderate Allocation. Replacement 13 Name .................................... Investment Objective .... Putnam Growth and Income ........................................... Seeks capital growth and current income ...................... Strategy ......................... Invests mainly in common stocks of U.S. companies, with a focus on value stocks that offer potential for capital growth, current income, or both. • Market Risk .................................................................. • Company Risk ............................................................. Principal Risks .............. Morningstar Category ... Large Cap Value ............................................................. Franklin Growth and Income Securities. Capital appreciation with current income as a secondary goal. Invests predominantly in a broadly diversified portfolio of equity securities that the advisor considers to be financially strong but undervalued by the market. • Market Risk. • Undervalued Securities Risk. • Interest Rate Risk. • Sector Risk. • Foreign Securities Risk. • Emerging Market Risk. Large Cap Value. Replacement 14 Name .................................... Investment Objective .... Strategy ......................... Putnam International Equity ............................................ Capital appreciation ........................................................ Invests in common stocks of companies outside the United States that it believes have favorable investment potential; at least 80% of assets in equity investments. Principal Risks .............. • Foreign Exposure ........................................................ • Market Risk .................................................................. • Company Risk ............................................................. Foreign Large Cap Blend ................................................ Morningstar Category ... Fidelity Overseas. Provide long-term growth of capital. Invests at least 80% of its assets in non-U.S. common stocks; allocates investments across countries and regions considering the size of the market in each country and region relative to the size of the international market as a whole, using fundamental analysis of each issuer, its industry position, and market and economic conditions. • Market Risk. • Foreign Exposure. • Issuer-Specific Changes. Foreign Large Cap Blend. Replacement 15 Name .................................... Putnam Small Cap Value ................................................ Investment Objective .... Strategy ......................... Capital appreciation ........................................................ Invests in common stocks of U.S. companies, with a focus on stocks it believes are currently undervalued by the market; at least 80% of its net assets in small companies of a size similar to those in the Russell 2000 Value Index. • Market Risk .................................................................. • Company Risk ............................................................. • Small Cap Companies Risk ycherry on PROD1PC64 with NOTICES Principal Risks .............. VerDate Aug<31>2005 15:36 Jan 29, 2007 Jkt 211001 PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 Touchstone Third Avenue Value (affiliated with the Integrity Companies). Long-term capital appreciation. Non-diversified Fund that seeks to achieve its objective mainly by investing in common stocks of well-financed companies (companies without significant debt in comparison to their cash resources) at a discount to what it believes is their liquid value. • Market Risk. • Company Risk. • Small Cap Companies Risk. • Foreign Exposure. • Valuation Risk. • Sector Risk. • Diversification Risk. E:\FR\FM\30JAN1.SGM 30JAN1 4318 Federal Register / Vol. 72, No. 19 / Tuesday, January 30, 2007 / Notices Replacement Portfolio (Unless otherwise indicated, the Replacement Portfolios are not affiliated with the Integrity Companies.) Replaced Portfolio Morningstar Category ... Small Cap Value ............................................................. Small Cap Blend. Replacement 16 Name .................................... Investment Objective .... Strategy ......................... Putnam Voyager ............................................................. Capital appreciation ........................................................ Invests mainly in common stocks of U.S. companies, with a focus on growth stocks. Principal Risks .............. • Market Risk .................................................................. • Company Risk ............................................................. Morningstar Category ... Large Cap Growth ........................................................... 11. Applicants assert that the proposed Substitutions will streamline the Contracts, creating efficiencies and reducing costs. The current portfolio structure requires the Integrity Companies to interface with eight fund companies. Reducing the number of its fund partners from eight to five will reduce the burden on the Integrity Companies’ administrative, accounting, auditing, compliance, and marketing areas and systems. In addition, Applicants maintaining the legal and administrative relationships with eight fund companies has become increasingly burdensome in light of recently enhanced compliance requirements. Focusing compliance and administrative efforts on a smaller Fidelity Growth. Capital appreciation. Invests in domestic and foreign common stock it believes have above average growth potential, using fundamental analysis. • Stock Market Volatility. • Foreign Exposure. • Issuer-specific Changes. • Growth Investing. Large Cap Growth. number of fund partners is intended to reduce risk and improve controls and oversight. 12. Applicants state that the proposed Substitutions are expected to provide significant benefits to the Contract owners, including improved selection of superior portfolios and simplification of fund offerings through the elimination of overlapping and duplicative portfolios in certain asset classes, particularly large cap growth. At the same time, Contract owners will continue to be able to select among 41 funds with a full range of investment objectives, investment strategies and risks. 13. Applicants represent that every Replacement Portfolio has an equal or lower expense ratio than the corresponding Replaced Portfolio, taking into account current fund expenses and fee waivers. Service fees charged by the Replacement Portfolios pursuant to a 12b–1 plan are equal to or less than those charged by the Replaced Portfolio, and the management fees are substantially similar between the Replaced and Replacement Portfolios. Detailed expense information is set forth in the chart below. By maintaining expenses at an equal or lower level, the Integrity Companies are offering their Contract owners and prospective investors a selection of better-managed funds at the same or reduced cost. EXPENSES Management fee (percent) ycherry on PROD1PC64 with NOTICES Name Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... VerDate Aug<31>2005 12b-1 fee (percent) Total expense (percent) 0.19 0.10 0.19 0.10 0.30 0.36 0.60 0.72 0.75 0.48 0.75 0.48 0.75 0.75 0.75 0.75 0.75 22 0.80 0.90 0.72 0.70 0.57 0.62 0.42 0.49 0.48 0.75 0.00 0.00 0.25 0.25 0.00 0.00 0.00 0.00 0.25 0.25 0.25 0.25 0.25 0.00 0.25 0.00 0.25 0.00 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.34 0.10 0.72 0.35 0.75 0.49 1.20 0.89 1.09 0.76 1.23 0.76 1.13 1.22 1.15 1.22 1.17 1.33 1.31 1.51 1.42 0.94 0.97 0.83 0.79 0.76 1.18 DWS Equity 500 Index, Class A ............................ Fidelity VIP Index 500, Initial Class ....................... DWS Equity 500 Index, Class B ............................ Fidelity VIP Index 500, Service Class 2 ................ JPMorgan Bond ..................................................... Fidelity VIP Invstmt Grade Bond, Initial Cl ............ JPMorgan International Equity ............................... Fidelity VIP Overseas, Initial Class ........................ MFS Total Return, Service Class .......................... Franklin Growth and Income Securities, Cl 2 ........ MFS Capital Opportunity, Service Class ............... Franklin Growth and Income Securities, Cl 2 ........ MFS Emerging Growth, Service Class .................. Touchstone Eagle Cap Appreciation ..................... MFS Investors Growth Stock, Serv Class ............. Touchstone Eagle Cap Appreciation ..................... MFS Mid Cap Growth, Service Class .................... Touchstone Mid Cap Growth ................................. MFS New Discovery, Service Class ...................... Fidelity Disciplined Small Cap, Serv Cl 2 .............. Putnam Discovery Growth, Class IB ..................... Fidelity VIP Mid Cap, Service Class 2 ................... Putnam Geo Putnam Boston, Class IB ................. Fidelity VIP Balanced, Service Class 2 ................. Putnam Growth & Income, Class IB ...................... Franklin Growth and Income Securities, Cl 2 ........ Putnam International Equity, Class IB ................... 15:36 Jan 29, 2007 Jkt 211001 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 E:\FR\FM\30JAN1.SGM 30JAN1 Waivers and reimbursements (percent) 0.06 ........................ 0.19 ........................ ........................ ........................ ........................ ........................ ........................ ........................ 0.08 ........................ ........................ 0.17 ........................ 0.17 ........................ 0.17 ........................ 0.26 0.29 0.05 ........................ 0.03 ........................ ........................ ........................ Net expense (percent) 0.28 0.10 0.53 0.35 0.75 0.49 1.20 0.89 1.09 0.76 1.15 0.76 1.13 1.05 1.15 1.05 1.17 1.15 1.31 1.25 1.13 0.89 0.97 0.80 0.79 0.76 1.18 4319 Federal Register / Vol. 72, No. 19 / Tuesday, January 30, 2007 / Notices EXPENSES—Continued Management fee (percent) Name Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Replaced Portfolio ........... Replacement Portfolio ..... Applicants Legal Analysis and Conditions ycherry on PROD1PC64 with NOTICES Total expense (percent) 0.72 0.76 0.80 0.57 0.57 0.25 0.25 0.00 0.25 0.25 1.14 1.09 1.16 0.88 0.92 Fidelity VIP Overseas, Service Class 2 ................. Putnam Small Cap Value, Class IB ....................... Touchstone Third Avenue Value ........................... Putnam Voyager, Class IB ..................................... Fidelity Growth, Service Class 2 ............................ 14. Applicants submit that each of the Replacement Portfolios has demonstrated better performance than the Replaced Portfolios during the overwhelming majority of the periods measured. Detailed performance information is set forth in the Application. 1. The Substitution will take place at the portfolios’ relative net asset values determined on the date of the Substitution in accordance with Section 22 of the Act and Rule 22c–1 thereunder with no change in the amount of any Contract owner’s cash value or death benefit or in the dollar value of his or her investment in any of the subaccounts. Accordingly, there will be no financial impact on any Contract owner. The Substitution will be effected by having each of the subaccounts that invests in the Replaced Portfolios redeem its shares at the net asset value calculated on the date of the Substitution and purchase shares of the respective Replacement Portfolios at the net asset value calculated on the same date. 2. The Substitution will be described in a supplement to the prospectuses for the Contracts (‘‘Sticker’’) filed with the Commission and mailed to Contract owners. The Sticker will give Contract owners notice of the Substitution and will describe the reasons for engaging in the Substitution. The Sticker will also inform contract owners with assets allocated to a subaccount investing in the Replaced Portfolios that no additional amount may be allocated to those subaccounts on or after the date of the Substitution. In addition, the Stickers will inform affected Contract owners that at anytime after receipt of the notification of the Substitution and for 30 days after the Substitution, they will have the opportunity to reallocate assets from the subaccounts investing in the Replacement Portfolios to subaccounts investing in other portfolios available under the respective Contracts, without the imposition of any VerDate Aug<31>2005 12b-1 fee (percent) 15:36 Jan 29, 2007 Jkt 211001 transfer charge or limitation and without diminishing the number of free transfers that may be made in a given contract year. 3. The prospectuses for the Contracts, as supplemented by the Sticker, will reflect the Substitution. Each Contract owner will be provided with a prospectus for the Replacement Portfolios applicable to them. Within five days after the Substitution, the Integrity Companies will each send affected Contract owners written confirmation that the Substitution has occurred. 4. The Integrity Companies will pay all expenses and transaction costs of the Substitution, including all legal, accounting and brokerage expenses relating to the Substitution. No costs will be borne by Contract owners. Affected Contract owners will not incur any fees or charges as a result of the Substitution, nor will their rights or the obligations of the Integrity Companies under the Contracts be altered in any way. The Substitution will not cause the fees and charges under the Contracts currently being paid by Contract owners to be greater after the Substitution than before the Substitution. The Substitution will have no adverse tax consequences to Contract owners and will in no way alter the tax benefits to contract owners. 5. Each Contract and its prospectus expressly discloses the reservation of the Applicants’ right, subject to applicable law, to substitute shares of another portfolio for shares of the portfolio in which a subaccount is invested. 6. In all cases the investment objectives and policies of the Replacement Portfolios are sufficiently similar to those of the corresponding Replaced Portfolios that contract owners will have reasonable continuity in investment expectations. 7. The Substitution will not result in the type of costly forced redemption that Section 26(c) was intended to guard against because the Contract owner will continue to have the same type of investment choices, with better potential returns and the same or lower PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 Waivers and reimbursements (percent) 0.07 ........................ 0.11 ........................ 0.04 Net expense (percent) 1.07 1.09 1.05 0.88 0.88 expenses and will not otherwise have any incentive to redeem their shares or terminate their Contracts. 8. The purposes, terms and conditions of the proposed Substitution are consistent with the protection of investors, and the principles and purposes of Section 26(c), and do not entail any of the abuses that Section 26(c) is designed to prevent. 9. Current net annual expenses in the Replacement Portfolios are lower or equal to those of the Replaced Portfolios. 10. Each of the Replacement Portfolios is an appropriate portfolio to which to move Contract owners with values allocated to the Replaced Portfolios because the portfolios have substantially similar investment objectives, strategies and risks. 11. The costs of the Substitution, including any brokerage costs, will be borne by the Integrity Companies and will not be borne by Contract owners. No charges will be assessed to effect the Substitution. 12. The Substitution will be at the net asset values of the respective shares without the imposition of any transfer or similar charge and with no change in the amount of any Contract owner’s accumulation value. 13. The Substitution will not cause the fees and charges under the Contracts currently being paid by contract owners to be greater after the Substitution than before the Substitution and will result in Contract owners’ contract values being moved to Portfolios with the same or lower current total net annual expenses. 14. In connection with assets held under Contracts affected by the Substitutions, the Integrity Companies will not receive, for three years from the date of the Substitutions, any direct or indirect benefits from the Replacement Portfolios, their advisors or underwriters (or their affiliates) at a rate higher than that which they had received from the Replaced Portfolios, their advisors or underwriters (or their affiliates), including without limitation 12b–1, shareholder service, administration or other service fees, E:\FR\FM\30JAN1.SGM 30JAN1 ycherry on PROD1PC64 with NOTICES 4320 Federal Register / Vol. 72, No. 19 / Tuesday, January 30, 2007 / Notices revenue sharing or other arrangements in connection with such assets. Applicants represent that the Substitutions and the selection of the Replacement Portfolios were not motivated by any financial consideration paid or to be paid by the Replacement Portfolios, their advisors or underwriters, or their respective affiliates. 15. For the two year period following the date of the Substitutions, the Applicants agree that if, on the last day of each fiscal quarter during the 2 year period, the total operating expenses of an unaffiliated Replacement Fund (taking into account any expense waiver or reimbursement) exceed on an annualized basis the net expense level of the corresponding Replaced Fund for the 2005 fiscal year, it will, for each Contract outstanding on the date of the Substitutions, make a corresponding reimbursement of expenses to the Contract Owners as of the last day of such fiscal quarter period, such that the amount of the Replacement Fund’s net expenses, together with those of the corresponding Separate Account, on an annualized basis, will be no greater than the sum of the net expenses of the corresponding Replaced Fund and the expenses of the Separate Account for the 2005 fiscal year. 16. For a two year period following the date of the Substitution, the Applicants agree that the total operating expenses of each affiliated Replacement Portfolio (taking into account any expense waiver or reimbursement) will not exceed on an annualized basis the net expense level of the corresponding Replaced Fund for the 2005 fiscal year. 17. Applicants further agree that Separate Account charges on the Contracts affected by this Substitution will not be increased at any time during the 2 year period following the date of the Substitution, while the caps discussed in paragraphs 15 and 16 are in effect on the Replacement Portfolios. 18. Notice of the proposed substitution was mailed to all Contract owners on October 30, 2006. In addition, all Contract owners will be given another notice of the Substitution after it is approved by the Commission. This notice will be sent at least 30 days prior to the Substitution. All Contract owners will have an opportunity at any time after receipt of this notification of the Substitution and for 30 days after the Substitution to reallocate accumulation value among other available subaccounts without the imposition of any transfer charge or limitation and without being counted as one of the Contract owner’s free transfers in a contract year. VerDate Aug<31>2005 15:36 Jan 29, 2007 Jkt 211001 19. Within five days after the Substitution, the Integrity Companies will send to affected Contract owners written confirmation that the Substitution has occurred. 20. The Substitution will in no way alter the insurance benefits to Contract owners or the contractual obligations of the Integrity Companies. 21. The Substitution will have no adverse tax consequences to contract owners and will in no way alter the tax benefits to Contract owners. Conclusion For the reasons and upon the facts set forth above, Applicants submit that the requested order meets the standards set forth in Section 26(c). Applicants request an order of the Commission, pursuant to Section 26(c) of the Act, approving the Substitutions. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Florence E. Harmon, Deputy Secretary. [FR Doc. E7–1408 Filed 1–29–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55157; File No. SR–NSCC– 2006–12] Self-Regulatory Organizations; National Securities Clearing Corporation; Order Granting Approval to Proposed Rule Change Relating to Buy-Ins of Municipal Securities January 23, 2007. I. Introduction On October 16, 2006, the National Securities Clearing Corporation (‘‘NSCC’’) submitted to the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to modify NSCC’s rules concerning buy-ins of municipal securities. The proposed rule change was published for comment in the Federal Register on December 14, 2006.3 No comment letters were received on the proposal. This order approves the proposal. II. Description of the Proposal The purpose of this filing is to amend NSCC’s rules to streamline the 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Securities Exchange Act Release No. 54900 (Dec. 8, 2006), 71 FR 75286. 2 17 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 processing of continuous net settlement (‘‘CNS’’) buy-ins of municipal securities. At the request of members and after consultation with the Buy-In Subcommittee of the Securities Industry Association, NSCC is modifying Rule 11 (CNS System), Procedure VII (CNS Accounting Operation), and Procedure X (Execution of CNS Buy-Ins) with respect to CNS buy-ins of municipal securities as set forth below. Executions of buy-ins of municipal securities are governed by the rules of the Municipal Securities Rulemaking Board (‘‘MSRB’’) and have a ten-day cycle from notification of intent to buyin to buy-in execution. In contrast, buyins for equity and corporate bond securities have a two-day cycle. Under NSCC’s rules (except with respect to securities subject to voluntary corporate reorganizations), an NSCC member that has a long CNS position at the end of any day (‘‘originator’’) may submit to NSCC a Notice of Intention to Buy-In (‘‘Buy-In Notice’’) specifying a quantity of securities not exceeding such long CNS position that it intends to buy-in (‘‘Buy-In Position’’). The day the Buy-In Notice is submitted is referred to as N and the succeeding days are referred to as N+1 and N+2. The Buy-In Position is given high priority for CNS allocations until expiration of the buy-in. While increased priority is provided to facilitate the allocation of the Buy-In Position in CNS, municipal securities are usually thinly traded and the increased allocation priority has not been generally effective in accelerating the delivery process. Accordingly, when a municipal security Buy-In Position is not satisfied by a CNS allocation, the long member must have its Buy-In Position exited from CNS in order to be able to proceed under MSRB rules, which entails issuing a new buy-in notice and then waiting an additional ten days before executing the buy-in. As a result, a member typically will request that NSCC exit the municipal security Buy-In Position from CNS, and NSCC will exit the municipal security from CNS, which results in receive and deliver obligations for the affected parties two days later. To assist members in their timely processing of buy-ins of municipal securities, NSCC is modifying its rules and procedures to automatically exit from CNS unsatisfied municipal security Buy-In Positions. Under the new procedures, CNS will automatically exit such positions prior to the night cycle on N+1. This will create a brokerto-broker close-out receive and deliver obligation between the member with the long CNS position and the member(s) E:\FR\FM\30JAN1.SGM 30JAN1

Agencies

[Federal Register Volume 72, Number 19 (Tuesday, January 30, 2007)]
[Notices]
[Pages 4312-4320]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-1408]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release Number IC-27677; File No. 812-13321]


Integrity Life Insurance Company, et al.

January 24, 2007.
AGENCY: Securities and Exchange Commission (the ``Commission'').

ACTION: Notice of application for an order of approval pursuant to 
Section 26(c) of the Investment Company Act of 1940, as amended (the 
``Act'').

-----------------------------------------------------------------------

Applicants: Integrity Life Insurance Company (``Integrity''), Separate

[[Page 4313]]

Account I of Integrity Life Insurance Company (``Integrity Separate 
Account I''), Separate Account II of Integrity Life Insurance Company 
(``Integrity Separate Account II''), National Integrity Life Insurance 
Company (``National Integrity''), Separate Account I of National 
Integrity Life Insurance Company (``National Integrity Separate Account 
I''), and Separate Account II of National Integrity Life Insurance 
Company (``National Integrity Separate Account II,'' together with 
Integrity Separate Account I, Integrity Separate Account II, and 
National Integrity Separate Account I, the ``Separate Accounts'').

SUMMARY: Applicants seek an order approving the proposed substitution 
of shares of DWS Equity 500 Index VIP Fund: Class A with Fidelity VIP 
Index 500: Initial Class; DWS Equity 500 Index VIP Fund: Class B with 
Fidelity VIP Index 500: Service Class 2; JPMorgan Bond Portfolio with 
Fidelity VIP Investment Grade Bond: Initial Class; JPMorgan 
International Equity Portfolio with Fidelity VIP Overseas: Initial 
Class; MFS VIT Capital Opportunities Series: Service Class with 
Franklin VIP Growth and Income Securities Fund: Class 2; MFS VIT 
Emerging Growth Series: Service Class with Touchstone VST Eagle Capital 
Appreciation Fund; MFS VIT Investors Growth Stock Series: Service Class 
with Touchstone VST Eagle Capital Appreciation Fund; MFS VIT Mid Cap 
Growth Series: Service Class with Touchstone VST Mid Cap Growth Fund; 
MFS VIT New Discovery Series: Service Class with Fidelity VIP 
Disciplined Small Cap: Service Class 2; MFS VIT Total Return Series: 
Service Class with Franklin VIP Growth and Income Securities Fund: 
Class 2; Putnam VT Discovery Growth: Class IB with Fidelity VIP Mid 
Cap: Service Class 2; Putnam VT George Putnam Fund of Boston: Class IB 
with Fidelity VIP Balanced: Service Class 2; Putnam VT Growth and 
Income Fund: Class IB with Franklin VIP Growth and Income Securities 
Fund: Class 2; Putnam VT International Equity Fund: Class IB with 
Fidelity VIP Overseas: Service Class 2; Putnam VT Small Cap Value Fund: 
Class IB with Touchstone VST Third Avenue Value Fund; Putnam VT Voyager 
Fund: Class IB with Fidelity VIP Growth: Service Class 2.

Filing Date: The application was filed on August 4, 2006, and an 
amended and restated application was filed on January 23, 2007.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Secretary of the 
Commission and serving Applicants with a copy of the request, 
personally or by mail. Hearing requests must be received by the 
Commission by 5:30 p.m. on February 16, 2007, and should be accompanied 
by proof of service on Applicants in the form of an affidavit or, for 
lawyers, a certificate of service. Hearing requests should state the 
nature of the requester's interest, the reason for the request, and the 
issues contested. Persons who wish to be notified of a hearing may 
request notification by writing to the Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549. Applicants, c/o Rhonda S. Malone, Esq., 
Associate Counsel--Securities, Western and Southern Financial Group, 
400 Broadway, Cincinnati, Ohio 45202.

FOR FURTHER INFORMATION CONTACT: Alison T. White, Senior Counsel, or 
Joyce M. Pickholz, Branch Chief, Office of Insurance Products, Division 
of Investment Management, at (202) 551-6795.

SUPPLEMENTARY INFORMATION: The following is a summary of the amended 
and restated application. The complete application is available for a 
fee from the Public Reference Branch of the Commission, 100 F Street, 
NE., Washington, DC 20549 (202-551-8090).

Applicants' Representations

    1. Integrity is a stock life insurance company organized under the 
laws of Ohio. Integrity is a wholly owned subsidiary of The Western and 
Southern Life Insurance Company. The Western and Southern Life 
Insurance Company is wholly owned by Western and Southern Financial 
Group, Inc., which is wholly owned by Western and Southern Mutual 
Holding Company.
    2. Integrity Separate Account I and Integrity Separate Account II 
are registered under the Act as unit investment trusts (File Nos. 811-
04844 and 811-07134, respectively). They are used to fund variable 
annuity contracts of Integrity.
    3. National Integrity is a stock life insurance company organized 
under the laws of New York. National Integrity is a direct subsidiary 
of Integrity and an indirect subsidiary of The Western and Southern 
Life Insurance Company.
    4. National Integrity Separate Account I and National Integrity 
Separate Account II are registered under the Act as unit investment 
trusts (File Nos. 811-04846 and 811-07132, respectively). They are used 
to fund variable annuity contracts of National Integrity.
    5. The fifteen variable annuity Contracts affected by this 
application are flexible premium deferred variable annuities and 
hereinafter are collectively referred to as the ``Contracts.''
    6. Each Contract permits allocations of value to certain fixed 
subaccounts and variable subaccounts that invest in specific investment 
portfolios of underlying mutual funds. The Contracts currently offer 
between 12 and 54 portfolios. All of the Contracts currently being sold 
offer the same portfolios and same series of the Putnam Variable Trust 
Funds (``Putnam''), MFS Variable Insurance Trust (``MFS''), DWS 
Investments VIP Funds (``DWS''), and J.P. Morgan Series Trust II (``JP 
Morgan'') that are the subject of this Substitution. One contract that 
is no longer sold currently offers 12 portfolios including only one of 
the replaced portfolios, and will continue to offer 12 portfolios after 
the substitution.
    7. Each Contract permits transfers from one subaccount to another 
subaccount at any time prior to annuitization, subject to certain 
restrictions and charges described below. No sales charge applies to 
such a transfer of value among subaccounts. The Contracts permit up to 
twelve free transfers during any contract year. A fee of $20 is imposed 
on transfers in excess of twelve transfers in a contract year.
    8. Each Contract reserves the right, upon notice to Contract owners 
and compliance with applicable law, to add, combine or remove 
subaccounts, or to withdraw assets from one subaccount and put them 
into another subaccount.
    9. The Applicants propose the Substitution of 16 separate 
portfolios, representing all the currently available portfolios, except 
one, of four unaffiliated companies: Putnam, MFS, DWS, and JP Morgan 
(the ``Replaced Portfolios''). As replacements, the Applicants propose 
12 portfolios: eight from Fidelity VIP Funds (``Fidelity''), one from 
Franklin Templeton Variable Insurance Product Trust (``Franklin''), and 
three from Touchstone VST Funds (the ``Replacement Portfolios''). Each 
of these fund companies currently offers portfolios in the Contracts, 
and 11 of the 12 proposed replacement portfolios are currently or were 
previously available in the Contracts.
    10. The investment objective, strategies and risks of each 
Replacement Portfolio are the same as, or substantially similar to, the 
investment objective, strategies and risks of the corresponding 
Replaced Portfolio. For each Replaced Portfolio and each Replacement 
Portfolio, the investment objective, strategies, and risks, along

[[Page 4314]]

with the Morningstar Style Category, are shown in the tables that 
follow:

----------------------------------------------------------------------------------------------------------------
                                                                                  Replacement Portfolio (Unless
                                                                                     otherwise indicated, the
                                                      Replaced Portfolio          Replacement Portfolios are not
                                                                                  affiliated with the Integrity
                                                                                           Companies.)
----------------------------------------------------------------------------------------------------------------
                                              Replacements 1 and 2
----------------------------------------------------------------------------------------------------------------
Name.........................................  DWS Equity 500 Index............  Fidelity Index 500.
    Investment Objective.....................  Match the performance of the S&P  Results that correspond to the
                                                500 Index, which emphasizes       total return of common stocks
                                                stocks of large U.S. companies.   in the US, as represented by
                                                                                  the S&P 500.
    Strategy.................................  Invests in stocks and other       Invests at least 80% of assets
                                                securities of a statistically     in common stocks included in
                                                selected sample of the            the S&P 500 using statistical
                                                companies included in the         sampling techniques; lends
                                                benchmark and derivative          securities to earn income for
                                                instruments that are              the fund.
                                                representative of the S&P 500
                                                Index as a whole, using a
                                                process called optimization.
    Principal Risks..........................   Market Risk............   Stock Market
                                                                                  Volatility.
                                                Tracking Error Risk....
                                                Issuer-Specific Changes
                                                Index Fund Risk........
                                                Futures and Options
                                                Risk.
                                                Pricing Risk...........
                                                Securities Lending Risk
    Morningstar Category.....................  Large Cap Blend.................  Large Cap Blend.
----------------------------------------------------------------------------------------------------------------
                                                  Replacement 3
----------------------------------------------------------------------------------------------------------------
Name.........................................  JPMorgan Bond...................  Fidelity Investment Grade Bond.
    Investment Objective.....................  Provide a high total return       Provide a high level of current
                                                consistent with moderate risk     income consistent with the
                                                of capital and maintenance of     preservation of capital.
                                                liquidity.
    Strategy.................................  Invests at least 80% of its       Invests at least 80% of assets
                                                assets in debt investments,       in investment-grade debt
                                                including U.S. government and     securities of all types and
                                                agency securities, corporate      repurchase agreements for
                                                bonds, private placements,        those securities; allocates
                                                asset backed and mortgage         assets across different market
                                                backed securities it believes     sectors and maturities, and
                                                have the potential to provide a   analyzes a security's
                                                high total return over time.      structural features and
                                                                                  current pricing, trading
                                                                                  opportunities, and the credit
                                                                                  quality of the issuer; may
                                                                                  invest up to 10% in lower-
                                                                                  quality debt securities.
    Principal Risks..........................   Interest Rate Risk.....   Interest Rate Risk.
                                                Junk Bond Risk.........   Foreign Exposure.
                                                Foreign Exposure.......   Prepayment Risk.
                                                Prepayment Risk........   Issuer-Specific
                                                                                  Changes.
                                                Issuer-Specific Change.
                                                Short Sales Risk.......
                                                Futures and Options
                                                Risk.
    Morningstar Category.....................  Intermediate Term Bond..........  Intermediate Term Bond.
----------------------------------------------------------------------------------------------------------------
                                                  Replacement 4
----------------------------------------------------------------------------------------------------------------
Name.........................................  JPMorgan International Equity...  Fidelity Overseas.
    Investment Objective.....................  Provide a high total return of    Provide long-term growth of
                                                capital growth and current        capital.
                                                income.
    Strategy.................................  Invests at least 80% of its       Invests at least 80% of assets
                                                assets in equity investments of   in non-U.S. common stocks;
                                                primarily foreign companies of    allocates investments across
                                                various sizes, including          countries and regions
                                                foreign subsidiaries of U.S.      considering the size of the
                                                companies.                        market in each country and
                                                                                  region relative to the size of
                                                                                  the international market as a
                                                                                  whole, using fundamental
                                                                                  analysis of each issuer, its
                                                                                  industry position, and market
                                                                                  and economic conditions.
    Principal Risks..........................   Market Risk............   Market Risk.
                                                Foreign Exposure.......   Foreign Exposure.
                                                Futures and Options       Issuer-Specific
                                                Risk.                             Changes.
                                                Emerging Market Risk...
                                                Small Company Risk.....
                                                Prepayment Risk........
                                                Interest Rate Risk.....
    Morningstar Category.....................  Foreign Large Cap Blend.........  Foreign Large Cap Blend.
----------------------------------------------------------------------------------------------------------------
                                                  Replacement 5
----------------------------------------------------------------------------------------------------------------
Name.........................................  MFS Capital Opportunities.......  Franklin Growth and Income
                                                                                  Securities.
    Investment Objective.....................  Capital appreciation............  Capital appreciation with
                                                                                  current income as a secondary
                                                                                  goal.

[[Page 4315]]

 
    Strategy.................................  Invests at least 65% of its net   Invests predominantly in a
                                                assets in common stocks and       broadly diversified portfolio
                                                related securities; focuses on    of equity securities that the
                                                companies it believes have        advisor considers to be
                                                favorable growth prospects and    financially strong but
                                                attractive valuations based on    undervalued by the market.
                                                current and expected earnings
                                                or cash flow, using fundamental
                                                research and a ``bottom-up''
                                                investment style.
    Principal Risks..........................   Market Risk............   Market Risk.
                                                Company Risk...........   Undervalued Securities
                                                                                  Risk.
                                                Over-the-Counter Risk..   Interest Rate Risk.
                                                Foreign Securities Risk   Sector Risk.
                                                Emerging Market Risk...   Foreign Securities
                                                                                  Risk.
                                                                                  Emerging Market Risk.
    Morningstar Category.....................  Large Cap Blend.................  Large Cap Value.
----------------------------------------------------------------------------------------------------------------
                                                  Replacement 6
----------------------------------------------------------------------------------------------------------------
Name.........................................  MFS Emerging Growth.............  Touchstone Eagle Capital
                                                                                  Appreciation (affiliated with
                                                                                  the Integrity Companies).
    Investment Objective.....................  Long-term growth of capital.....  Long-term capital appreciation.
    Strategy.................................  Invests at least 65% of its net   Invests in a diversified
                                                assets in common stocks and       portfolio of common stocks in
                                                related securities of emerging    large cap companies, selected
                                                growth companies it believes      from the largest 500 stocks by
                                                are either (1) early in their     market cap size, screened
                                                life cycle but which have the     using fundamental research to
                                                potential to become major         develop five-year earnings
                                                enterprises, or (2) major         estimates for each company
                                                enterprises whose rates of        based on historical data,
                                                earnings growth are expected to   current comparables and a
                                                accelerate because of special     thorough understanding of each
                                                factors, such as rejuvenated      company and the relevant
                                                management, new products,         industry drivers; assigned
                                                changes in consumer demand, or    either a premium or discount
                                                basic changes in the economic     multiple; then ranked using a
                                                environment; emerging growth      proprietary valuation model
                                                companies may be of any size.     which ranks each stock based
                                                                                  on the five year expected
                                                                                  rates of return.
    Principal Risks..........................   Market Risk............   Market Risk.
                                                Over-the-Counter Risk..   Large-cap Company
                                                                                  Risk.
                                                Foreign Securities Risk   Analysis Risk.
                                                Emerging Markets Risk..   Sector Risk.
                                                Emerging Growth Risk...   Growth Company Risk.
                                                Frequent Trading Risk..   Management Risk.
    Morningstar Category.....................  Large Cap Growth................  Large Cap Growth.
----------------------------------------------------------------------------------------------------------------
                                                  Replacement 7
----------------------------------------------------------------------------------------------------------------
Name.........................................  MFS Investors Growth Stock......  Touchstone Eagle Capital
                                                                                  Appreciation (affiliated with
                                                                                  the Integrity Companies).
    Investment Objective.....................  Provide long-term growth of       Long-term capital appreciation.
                                                capital and future income
                                                rather than current income.
    Strategy.................................  Invests at least 80% of its net   Invests in a diversified
                                                assets in common stocks and       portfolio of common stocks in
                                                related securities of companies   large cap companies, selected
                                                it believes offer better than     from the largest 500 stocks by
                                                average prospects for long-term   market cap size, screened
                                                growth.                           using fundamental research to
                                                                                  develop five-year earnings
                                                                                  estimates for each company
                                                                                  based on historical data,
                                                                                  current comparables and a
                                                                                  thorough understanding of each
                                                                                  company and the relevant
                                                                                  industry drivers; assigned
                                                                                  either a premium or discount
                                                                                  multiple; then ranked using a
                                                                                  proprietary valuation model
                                                                                  which ranks each stock based
                                                                                  on the five year expected
                                                                                  rates of return.
    Principal Risks..........................   Market Risk............   Market Risk.
                                                Growth Company Risk....   Growth Company Risk.
                                                Foreign Securities Risk   Large-cap Company
                                                                                  Risk.
                                                Frequent Trading Risk..   Sector Risk.
                                                                                  Management Risk.
    Morningstar Category.....................  Large Cap Growth................  Large Cap Growth.
----------------------------------------------------------------------------------------------------------------
                                                  Replacement 8
----------------------------------------------------------------------------------------------------------------
Name.........................................  MFS Mid Cap Growth..............  Touchstone Mid Cap Growth
                                                                                  (affiliated with the Integrity
                                                                                  Companies).
    Investment Objective.....................  Long-term growth of capital.....  Increase the value of fund
                                                                                  shares as a primary goal and
                                                                                  earn income as a secondary
                                                                                  goal.

[[Page 4316]]

 
    Strategy.................................  Invests at least 80% of its net   Invests at least 80% of assets
                                                total assets in common stocks     in common stocks of mid cap
                                                and related securities of         companies including companies
                                                companies with medium market      that have earnings that the
                                                capitalization that it believes   portfolio manager believes may
                                                have above-average growth         grow faster than the U.S.
                                                potential.                        economy in general or
                                                                                  companies that are believed to
                                                                                  be undervalued, including
                                                                                  those with unrecognized asset
                                                                                  values, undervalued growth or
                                                                                  those undergoing turnaround.
    Principal Risks..........................   Mid Cap Growth Company    Market Risk.
                                                Risk.
                                                Over-the-Counter Risk..   Mid Cap Company Risk.
                                                Foreign Securities Risk   Sector Risk.
                                                Emerging Markets Risk..   Management Risk.
                                                Short Sales Risk.......
    Morningstar Category.....................  Mid Cap Growth..................  Mid Cap Growth.
----------------------------------------------------------------------------------------------------------------
                                                  Replacement 9
----------------------------------------------------------------------------------------------------------------
Name.........................................  MFS New Discovery...............  Fidelity Disciplined Small Cap.
    Investment Objective.....................  Capital appreciation............  Capital appreciation.
    Strategy.................................  Invests at least 65% of assets    Invests at least 80% of assets
                                                in common stocks and related      in securities of Companies
                                                securities of emerging growth     with small market
                                                companies it believes offer       capitalizations similar to
                                                superior prospects for growth     companies in the Russell 2000
                                                and are either (1) early in       Index; invest in domestic and
                                                their life cycle but which have   foreign issuers, in either
                                                the potential to become major     growth or value stocks; uses
                                                enterprises, or (2) enterprises   computer aided quantitative
                                                whose rates of earnings growth    analysis of historical
                                                are expected to accelerate        valuation, growth,
                                                because of special factors; the   profitability and other
                                                Portfolio will generally focus    factors.
                                                on smaller cap companies within
                                                the range of market
                                                capitalizations in the Russell
                                                2000 Growth Index.
    Principal Risks..........................   Market Risk............   Stock Market
                                                                                  Volatility.
                                                Company Risk...........   Foreign Exposure.
                                                Over-the-Counter Risk..   Issuer-Specific
                                                                                  Changes.
                                                Foreign Securities Risk   Quantitative
                                                                                  Investing.
                                                Short Sales Risk.......   Small Cap Investing.
                                                Emerging Growth
                                                Companies.
                                                Small Cap Companies
                                                Risk.
    Morningstar Category.....................  Small Cap Growth................  Small Cap Growth.
----------------------------------------------------------------------------------------------------------------
                                                 Replacement 10
----------------------------------------------------------------------------------------------------------------
Name.........................................  MFS Total Return................  Franklin Growth and Income
                                                                                  Securities.
    Investment Objective.....................  Provide above-average income      Capital appreciation with
                                                (compared to a portfolio          current income as a secondary
                                                invested entirely in equity       goal.
                                                securities) consistent with the
                                                prudent employment of capital,
                                                and secondarily to provide a
                                                reasonable opportunity for
                                                growth of capital and income.
    Strategy.................................  Invests in a combination of       Invests predominantly in a
                                                equity and fixed income           broadly diversified portfolio
                                                securities (1) at least 40%,      of equity securities that the
                                                but not more than 75%, of its     advisor considers to be
                                                net assets in common stocks and   financially strong but
                                                related securities and (2) at     undervalued by the market.
                                                least 25% of its net assets in
                                                non-convertible fixed income
                                                securities.
    Principal Risks..........................   Allocation Risk........   Market Risk.
                                                Undervalued Securities    Undervalued Securities
                                                Risk.                             Risk.
                                                Market Risk............   Interest Rate Risk.
                                                Foreign Securities Risk   Sector Risk.
                                                Interest Rate Risk.....   Foreign Securities
                                                                                  Risk.
                                                Convertible Securities    Emerging Market Risk.
                                                Risk.
                                                Maturity Risk..........
                                                Credit Risk............
                                                Junk Bond Risk.........
                                                Liquidity Risk.........
                                                Prepayment Risk........
    Morningstar Category.....................  Moderate Allocation.............  Large Cap Value.
----------------------------------------------------------------------------------------------------------------
                                                 Replacement 11
----------------------------------------------------------------------------------------------------------------
Name.........................................  Putnam Discovery Growth.........  Fidelity Mid Cap.
    Investment Objective.....................  Long-term growth of capital.....  Long-term growth of capital.
    Strategy.................................  Invests mainly in common stocks   Invests at least 80% of assets
                                                of U.S. companies with a focus    in securities of U.S. and
                                                on growth stocks.                 foreign companies with medium
                                                                                  market caps.
    Principal Risks..........................   Market Risk............   Stock Market
                                                                                  Volatility Risk.
                                                Small Cap Company Risk.   Foreign Exposure.
                                                Mid Cap Company Risk...   Mid Cap Company Risk.

[[Page 4317]]

 
    Morningstar Category.....................  Mid Cap Growth..................  Mid Cap Growth.
----------------------------------------------------------------------------------------------------------------
                                                 Replacement 12
----------------------------------------------------------------------------------------------------------------
Name.........................................  Putnam The George Putnam Fund of  Fidelity Balanced.
                                                Boston.
    Investment Objective.....................  Provide a balanced investment     Income and capital growth
                                                composed of a well-diversified    consistent with reasonable
                                                portfolio of stocks and bonds     risk.
                                                that produce both capital
                                                growth and current income.
    Strategy.................................  Invests in a combination of       Invests approximately 60% of
                                                bonds and U.S. value stocks,      assets in common stocks of
                                                with a greater focus on value     domestic and foreign issuers
                                                stocks; at least 25% of the       and at least 25% of assets in
                                                Fund's total assets in fixed-     fixed income senior
                                                income securities, including      securities.
                                                debt securities, preferred
                                                stocks and that portion of the
                                                value of convertible securities
                                                attributable to the fixed-
                                                income characteristics of those
                                                securities.
    Principal Risks..........................   Stock Market Volatility   Stock Market
                                                Risk.                             Volatility Risk.
                                                Interest Rate Risk.....   Interest Rate Risk.
                                                Credit Risk............   Foreign Exposure.
                                                Junk Bond Risk.........   Prepayment Risk.
                                                Allocation Risk........   Issuer-Specific
                                                                                  Changes.
                                                Futures and Options
                                                Risk.
    Morningstar Category.....................  Moderate Allocation.............  Moderate Allocation.
----------------------------------------------------------------------------------------------------------------
                                                 Replacement 13
----------------------------------------------------------------------------------------------------------------
Name.........................................  Putnam Growth and Income........  Franklin Growth and Income
                                                                                  Securities.
    Investment Objective.....................  Seeks capital growth and current  Capital appreciation with
                                                income.                           current income as a secondary
                                                                                  goal.
    Strategy.................................  Invests mainly in common stocks   Invests predominantly in a
                                                of U.S. companies, with a focus   broadly diversified portfolio
                                                on value stocks that offer        of equity securities that the
                                                potential for capital growth,     advisor considers to be
                                                current income, or both.          financially strong but
                                                                                  undervalued by the market.
    Principal Risks..........................   Market Risk............   Market Risk.
                                                Company Risk...........   Undervalued Securities
                                                                                  Risk.
                                                                                  Interest Rate Risk.
                                                                                  Sector Risk.
                                                                                  Foreign Securities
                                                                                  Risk.
                                                                                  Emerging Market Risk.
    Morningstar Category.....................  Large Cap Value.................  Large Cap Value.
----------------------------------------------------------------------------------------------------------------
                                                 Replacement 14
----------------------------------------------------------------------------------------------------------------
Name.........................................  Putnam International Equity.....  Fidelity Overseas.
    Investment Objective.....................  Capital appreciation............  Provide long-term growth of
                                                                                  capital.
    Strategy.................................  Invests in common stocks of       Invests at least 80% of its
                                                companies outside the United      assets in non-U.S. common
                                                States that it believes have      stocks; allocates investments
                                                favorable investment potential;   across countries and regions
                                                at least 80% of assets in         considering the size of the
                                                equity investments.               market in each country and
                                                                                  region relative to the size of
                                                                                  the international market as a
                                                                                  whole, using fundamental
                                                                                  analysis of each issuer, its
                                                                                  industry position, and market
                                                                                  and economic conditions.
    Principal Risks..........................   Foreign Exposure.......   Market Risk.
                                                Market Risk............   Foreign Exposure.
                                                Company Risk...........   Issuer-Specific
                                                                                  Changes.
    Morningstar Category.....................  Foreign Large Cap Blend.........  Foreign Large Cap Blend.
----------------------------------------------------------------------------------------------------------------
                                                 Replacement 15
----------------------------------------------------------------------------------------------------------------
Name.........................................  Putnam Small Cap Value..........  Touchstone Third Avenue Value
                                                                                  (affiliated with the Integrity
                                                                                  Companies).
    Investment Objective.....................  Capital appreciation............  Long-term capital appreciation.
    Strategy.................................  Invests in common stocks of U.S.  Non-diversified Fund that seeks
                                                companies, with a focus on        to achieve its objective
                                                stocks it believes are            mainly by investing in common
                                                currently undervalued by the      stocks of well-financed
                                                market; at least 80% of its net   companies (companies without
                                                assets in small companies of a    significant debt in comparison
                                                size similar to those in the      to their cash resources) at a
                                                Russell 2000 Value Index.         discount to what it believes
                                                                                  is their liquid value.
    Principal Risks..........................   Market Risk............   Market Risk.
                                                Company Risk...........   Company Risk.
                                                Small Cap Companies       Small Cap Companies
                                                Risk                              Risk.
                                                                                  Foreign Exposure.
                                                                                  Valuation Risk.
                                                                                  Sector Risk.
                                                                                  Diversification Risk.

[[Page 4318]]

 
    Morningstar Category.....................  Small Cap Value.................  Small Cap Blend.
----------------------------------------------------------------------------------------------------------------
                                                 Replacement 16
----------------------------------------------------------------------------------------------------------------
Name.........................................  Putnam Voyager..................  Fidelity Growth.
    Investment Objective.....................  Capital appreciation............  Capital appreciation.
    Strategy.................................  Invests mainly in common stocks   Invests in domestic and foreign
                                                of U.S. companies, with a focus   common stock it believes have
                                                on growth stocks.                 above average growth
                                                                                  potential, using fundamental
                                                                                  analysis.
    Principal Risks..........................   Market Risk............   Stock Market
                                                                                  Volatility.
                                                Company Risk...........   Foreign Exposure.
                                                                                  Issuer-specific
                                                                                  Changes.
                                                                                  Growth Investing.
    Morningstar Category.....................  Large Cap Growth................  Large Cap Growth.
----------------------------------------------------------------------------------------------------------------

    11. Applicants assert that the proposed Substitutions will 
streamline the Contracts, creating efficiencies and reducing costs. The 
current portfolio structure requires the Integrity Companies to 
interface with eight fund companies. Reducing the number of its fund 
partners from eight to five will reduce the burden on the Integrity 
Companies' administrative, accounting, auditing, compliance, and 
marketing areas and systems. In addition, Applicants maintaining the 
legal and administrative relationships with eight fund companies has 
become increasingly burdensome in light of recently enhanced compliance 
requirements. Focusing compliance and administrative efforts on a 
smaller number of fund partners is intended to reduce risk and improve 
controls and oversight.
    12. Applicants state that the proposed Substitutions are expected 
to provide significant benefits to the Contract owners, including 
improved selection of superior portfolios and simplification of fund 
offerings through the elimination of overlapping and duplicative 
portfolios in certain asset classes, particularly large cap growth. At 
the same time, Contract owners will continue to be able to select among 
41 funds with a full range of investment objectives, investment 
strategies and risks.
    13. Applicants represent that every Replacement Portfolio has an 
equal or lower expense ratio than the corresponding Replaced Portfolio, 
taking into account current fund expenses and fee waivers. Service fees 
charged by the Replacement Portfolios pursuant to a 12b-1 plan are 
equal to or less than those charged by the Replaced Portfolio, and the 
management fees are substantially similar between the Replaced and 
Replacement Portfolios. Detailed expense information is set forth in 
the chart below. By maintaining expenses at an equal or lower level, 
the Integrity Companies are offering their Contract owners and 
prospective investors a selection of better-managed funds at the same 
or reduced cost.

                                                    Expenses
----------------------------------------------------------------------------------------------------------------
                                                     Management  12b-1 fee    Total      Waivers and      Net
                                       Name              fee                 expense   reimbursements   expense
                                                      (percent)  (percent)  (percent)     (percent)    (percent)
----------------------------------------------------------------------------------------------------------------
Replaced Portfolio...........  DWS Equity 500              0.19       0.00       0.34            0.06       0.28
                                Index, Class A.
Replacement Portfolio........  Fidelity VIP Index          0.10       0.00       0.10  ..............       0.10
                                500, Initial Class.
Replaced Portfolio...........  DWS Equity 500              0.19       0.25       0.72            0.19       0.53
                                Index, Class B.
Replacement Portfolio........  Fidelity VIP Index          0.10       0.25       0.35  ..............       0.35
                                500, Service Class
                                2.
Replaced Portfolio...........  JPMorgan Bond.......        0.30       0.00       0.75  ..............       0.75
Replacement Portfolio........  Fidelity VIP Invstmt        0.36       0.00       0.49  ..............       0.49
                                Grade Bond, Initial
                                Cl.
Replaced Portfolio...........  JPMorgan                    0.60       0.00       1.20  ..............       1.20
                                International
                                Equity.
Replacement Portfolio........  Fidelity VIP                0.72       0.00       0.89  ..............       0.89
                                Overseas, Initial
                                Class.
Replaced Portfolio...........  MFS Total Return,           0.75       0.25       1.09  ..............       1.09
                                Service Class.
Replacement Portfolio........  Franklin Growth and         0.48       0.25       0.76  ..............       0.76
                                Income Securities,
                                Cl 2.
Replaced Portfolio...........  MFS Capital                 0.75       0.25       1.23            0.08       1.15
                                Opportunity,
                                Service Class.
Replacement Portfolio........  Franklin Growth and         0.48       0.25       0.76  ..............       0.76
                                Income Securities,
                                Cl 2.
Replaced Portfolio...........  MFS Emerging Growth,        0.75       0.25       1.13  ..............       1.13
                                Service Class.
Replacement Portfolio........  Touchstone Eagle Cap        0.75       0.00       1.22            0.17       1.05
                                Appreciation.
Replaced Portfolio...........  MFS Investors Growth        0.75       0.25       1.15  ..............       1.15
                                Stock, Serv Class.
Replacement Portfolio........  Touchstone Eagle Cap        0.75       0.00       1.22            0.17       1.05
                                Appreciation.
Replaced Portfolio...........  MFS Mid Cap Growth,         0.75       0.25       1.17  ..............       1.17
                                Service Class.
Replacement Portfolio........  Touchstone Mid Cap     \22\ 0.80       0.00       1.33            0.17       1.15
                                Growth.
Replaced Portfolio...........  MFS New Discovery,          0.90       0.25       1.31  ..............       1.31
                                Service Class.
Replacement Portfolio........  Fidelity Disciplined        0.72       0.25       1.51            0.26       1.25
                                Small Cap, Serv Cl
                                2.
Replaced Portfolio...........  Putnam Discovery            0.70       0.25       1.42            0.29       1.13
                                Growth, Class IB.
Replacement Portfolio........  Fidelity VIP Mid            0.57       0.25       0.94            0.05       0.89
                                Cap, Service Class
                                2.
Replaced Portfolio...........  Putnam Geo Putnam           0.62       0.25       0.97  ..............       0.97
                                Boston, Class IB.
Replacement Portfolio........  Fidelity VIP                0.42       0.25       0.83            0.03       0.80
                                Balanced, Service
                                Class 2.
Replaced Portfolio...........  Putnam Growth &             0.49       0.25       0.79  ..............       0.79
                                Income, Class IB.
Replacement Portfolio........  Franklin Growth and         0.48       0.25       0.76  ..............       0.76
                                Income Securities,
                                Cl 2.
Replaced Portfolio...........  Putnam International        0.75       0.25       1.18  ..............       1.18
                                Equity, Class IB.

[[Page 4319]]

 
Replacement Portfolio........  Fidelity VIP                0.72       0.25       1.14            0.07       1.07
                                Overseas, Service
                                Class 2.
Replaced Portfolio...........  Putnam Small Cap            0.76       0.25       1.09  ..............       1.09
                                Value, Class IB.
Replacement Portfolio........  Touchstone Third            0.80       0.00       1.16            0.11       1.05
                                Avenue Value.
Replaced Portfolio...........  Putnam Voyager,             0.57       0.25       0.88  ..............       0.88
                                Class IB.
Replacement Portfolio........  Fidelity Growth,            0.57       0.25       0.92            0.04       0.88
                                Service Class 2.
----------------------------------------------------------------------------------------------------------------

    14. Applicants submit that each of the Replacement Portfolios has 
demonstrated better performance than the Replaced Portfolios during the 
overwhelming majority of the periods measured. Detailed performance 
information is set forth in the Application.

Applicants Legal Analysis and Conditions

    1. The Substitution will take place at the portfolios' relative net 
asset values determined on the date of the Substitution in accordance 
with Section 22 of the Act and Rule 22c-1 thereunder with no change in 
the amount of any Contract owner's cash value or death benefit or in 
the dollar value of his or her investment in any of the subaccounts. 
Accordingly, there will be no financial impact on any Contract owner. 
The Substitution will be effected by having each of the subaccounts 
that invests in the Replaced Portfolios redeem its shares at the net 
asset value calculated on the date of the Substitution and purchase 
shares of the respective Replacement Portfolios at the net asset value 
calculated on the same date.
    2. The Substitution will be described in a supplement to the 
prospectuses for the Contracts (``Sticker'') filed with the Commission 
and mailed to Contract owners. The Sticker will give Contract owners 
notice of the Substitution and will describe the reasons for engaging 
in the Substitution. The Sticker will also inform contract owners with 
assets allocated to a subaccount investing in the Replaced Portfolios 
that no additional amount may be allocated to those subaccounts on or 
after the date of the Substitution. In addition, the Stickers will 
inform affected Contract owners that at anytime after receipt of the 
notification of the Substitution and for 30 days after the 
Substitution, they will have the opportunity to reallocate assets from 
the subaccounts investing in the Replacement Portfolios to subaccounts 
investing in other portfolios available under the respective Contracts, 
without the imposition of any transfer charge or limitation and without 
diminishing the number of free transfers that may be made in a given 
contract year.
    3. The prospectuses for the Contracts, as supplemented by the 
Sticker, will reflect the Substitution. Each Contract owner will be 
provided with a prospectus for the Replacement Portfolios applicable to 
them. Within five days after the Substitution, the Integrity Companies 
will each send affected Contract owners written confirmation that the 
Substitution has occurred.
    4. The Integrity Companies will pay all expenses and transaction 
costs of the Substitution, including all legal, accounting and 
brokerage expenses relating to the Substitution. No costs will be borne 
by Contract owners. Affected Contract owners will not incur any fees or 
charges as a result of the Substitution, nor will their rights or the 
obligations of the Integrity Companies under the Contracts be altered 
in any way. The Substitution will not cause the fees and charges under 
the Contracts currently being paid by Contract owners to be greater 
after the Substitution than before the Substitution. The Substitution 
will have no adverse tax consequences to Contract owners and will in no 
way alter the tax benefits to contract owners.
    5. Each Contract and its prospectus expressly discloses the 
reservation of the Applicants' right, subject to applicable law, to 
substitute shares of another portfolio for shares of the portfolio in 
which a subaccount is invested.
    6. In all cases the investment objectives and policies of the 
Replacement Portfolios are sufficiently similar to those of the 
corresponding Replaced Portfolios that contract owners will have 
reasonable continuity in investment expectations.
    7. The Substitution will not result in the type of costly forced 
redemption that Section 26(c) was intended to guard against because the 
Contract owner will continue to have the same type of investment 
choices, with better potential returns and the same or lower expenses 
and will not otherwise have any incentive to redeem their shares or 
terminate their Contracts.
    8. The purposes, terms and conditions of the proposed Substitution 
are consistent with the protection of investors, and the principles and 
purposes of Section 26(c), and do not entail any of the abuses that 
Section 26(c) is designed to prevent.
    9. Current net annual expenses in the Replacement Portfolios are 
lower or equal to those of the Replaced Portfolios.
    10. Each of the Replacement Portfolios is an appropriate portfolio 
to which to move Contract owners with values allocated to the Replaced 
Portfolios because the portfolios have substantially similar investment 
objectives, strategies and risks.
    11. The costs of the Substitution, including any brokerage costs, 
will be borne by the Integrity Companies and will not be borne by 
Contract owners. No charges will be assessed to effect the 
Substitution.
    12. The Substitution will be at the net asset values of the 
respective shares without the imposition of any transfer or similar 
charge and with no change in the amount of any Contract owner's 
accumulation value.
    13. The Substitution will not cause the fees and charges under the 
Contracts currently being paid by contract owners to be greater after 
the Substitution than before the Substitution and will result in 
Contract owners' contract values being moved to Portfolios with the 
same or lower current total net annual expenses.
    14. In connection with assets held under Contracts affected by the 
Substitutions, the Integrity Companies will not receive, for three 
years from the date of the Substitutions, any direct or indirect 
benefits from the Replacement Portfolios, their advisors or 
underwriters (or their affiliates) at a rate higher than that which 
they had received from the Replac