Country Investors Life Assurance Company, et al., 6013-6016 [07-554]
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Federal Register / Vol. 72, No. 26 / Thursday, February 8, 2007 / Notices
of the Code and section 302(d)(7) of
ERISA for plan years beginning on or
after January 1, 2007. As a result, in
accordance with section
4006(a)(3)(E)(iii)(II) of ERISA, the
required interest rate for plan years
beginning on or after January 1, 2007, is
100 percent of the annual rate of interest
determined by the Secretary of the
Treasury on amounts invested
conservatively in long-term investment
grade corporate bonds for the month
preceding the beginning of the plan year
for which premiums are being paid
(premium payment year).
On January 12, 2007 (at 72 FR 1564),
the Pension Benefit Guaranty
Corporation (PBGC) published a notice
informing the public of the interest rate
assumption to be used for determining
variable-rate premiums for premium
payment years beginning in January
2007. In light of IRS’s publication of the
updated mortality tables, that required
interest rate assumption has changed.
The required interest rate to be used
for determining variable-rate premiums
for premium payment years beginning
in January 2007 is 5.75 percent (i.e., 100
percent of the 5.75 percent composite
corporate bond rate for December 2006).
PBGC will post the revised required
interest rate on its Web site (https://
www.pbgc.gov).
Issued in Washington, DC, on this 5th day
of February 2007.
Vincent K. Snowbarger,
Interim Director, Pension Benefit Guaranty
Corporation.
[FR Doc. E7–2087 Filed 2–7–07; 8:45 am]
BILLING CODE 7709–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon written request, copies available
from: Securities and Exchange
Commission, Office of Filings and
Information Services, Washington, DC
20549.
jlentini on PROD1PC65 with NOTICES
Extension: Rule 10b–10, SEC File No. 270–
389, OMB Control No. 3235–0444.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
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• Rule 10b–10; Confirmation of
Transactions.
Rule 10b–10 (17 CFR 240.10b–10) of
the Securities Exchange Act of 1934 (17
U.S.C. 78a et seq.) requires brokerdealers to convey basic trade
information to customers regarding their
securities transactions. This information
includes: the date and time of the
transaction, the identity and number of
shares bought or sold, and the trading
capacity of the broker-dealer. Depending
on the trading capacity of the brokerdealer, the Rule requires the disclosure
of commissions as well as mark-up and
mark-down information. For
transactions in debt securities, the Rule
requires the disclosure of redemption
and yield information. The Rule
potentially applies to all of the
approximately 6,014 firms registered
with the Commission that affect
transactions on behalf of customers.
The confirmations required by Rule
10b–10 are generally processed through
automated systems. It takes
approximately 1 minute to generate and
send a confirmation. It is estimated that
broker-dealers spend 77.4 million hours
per year complying with Rule 10b–10.
The Commission staff estimates the
costs of producing and sending a paper
confirmation, including postage, to be
approximately 91 cents. The
Commission staff also estimates that the
cost of producing and sending a wholly
electronic confirmation is
approximately 52 cents. The amount of
confirmations sent and the cost of
sending each confirmation varies from
firm to firm. Smaller firms generally
send fewer confirmations than larger
firms because they affect fewer
transactions.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information shall have practical utility;
(b) the accuracy of the agency’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility and clarity
of the information to be collected; and
(d) ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
Direct your written comments to R.
Corey Booth, Director/Chief Information
Officer, Securities and Exchange
Commission, C/O Shirley Martinson,
6432 General Green Way, Alexandria,
PO 00000
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6013
VA 22312 or send an e-mail to:
PRA_Mailbox@sec.gov. Comments must
be submitted to OMB within 60 days of
this notice.
Dated: January 31, 2007.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–2086 Filed 2–7–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–27695; File No. 812–13325]
Country Investors Life Assurance
Company, et al.
February 2, 2007.
Securities and Exchange
Commission (the ‘‘Commission’’).
ACTION: Notice of application for an
order pursuant to Section 26(c) of the
Investment Company Act of 1940, as
amended (the ‘‘1940 Act’’ or ‘‘Act’’),
approving certain substitutions of
securities.
AGENCY:
COUNTRY Investors Life
Assurance Company (the ‘‘Company’’),
COUNTRY Investors Variable Life
Account (the ‘‘Life Account’’) and
COUNTRY Investors Variable Annuity
Account (the ‘‘Annuity Account’’)
(together, the ‘‘Applicants’’)
APPLICANTS:
SUMMARY: Applicants seek an order
pursuant to Section 26(c) of the 1940
Act approving the substitution of: (1)
Shares of the EquiTrust High Grade
Bond Portfolio (‘‘Replacement Portfolio
A’’) of the EquiTrust Variable Insurance
Series Fund (the ‘‘EquiTrust Fund’’) for
shares of the COUNTRY VP Short-Term
Bond Fund (‘‘Replaced Portfolio A’’) of
the COUNTRY Mutual Funds Trust (the
‘‘COUNTRY Fund’’); and (2) shares of
the T. Rowe Price Personal Strategy
Balanced Portfolio (‘‘Replacement
Portfolio B’’) of the T. Rowe Price Equity
Series, Inc. (the ‘‘T. Rowe Price Fund’’)
for shares of the COUNTRY VP
Balanced Fund (‘‘Replaced Portfolio B’’)
of the COUNTRY Fund. Shares of
Replacement Portfolio A, Replacement
Portfolio B, Replaced Portfolio A, and
Replaced Portfolio B currently are held
by the Life Account and the Annuity
Account (each an ‘‘Account,’’ together,
the ‘‘Accounts’’) to support variable life
insurance or variable annuity contracts,
respectively, issued by the Company
(collectively, the ‘‘Contracts’’).
FILING DATE: The Application was filed
on September 5, 2006 and amended and
restated on January 24, 2007.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
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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 27, 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 20549–1090.
Applicants, c/o Virginia L. Eves, Esq.,
General Attorney, Country Investors Life
Assurance Company, 1701 N. Towanda
Avenue, Bloomington, IL 61702–2901.
Copy to Thomas E. Bisset, Esq.,
Sutherland Asbill & Brennan LLP, 1275
Pennsylvania Avenue, NW.,
Washington, DC 20004–2415.
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
Application. The complete Application
is available for a fee from the Public
Reference Branch of the Commission.
Applicants’ Representations
1. The Company is a stock life
insurance company organized under
Illinois law in 1981. The Company is
principally engaged in the offering of
life insurance policies and annuity
contracts, and is admitted to do
business in 41 states. For purposes of
the Act, the Company is the depositor
and sponsor of each of the Accounts, as
those terms have been interpreted by the
Commission with respect to variable life
insurance and variable annuity separate
accounts.
2. Under the insurance law of Illinois,
the assets of each Account attributable
to the Contracts issued through that
Account are owned by the Company,
but are held separately from the other
assets of the Company for the benefit of
the owners of, and the persons entitled
to payment under, those Contracts. Each
Account is a ‘‘separate account’’ as
defined by Rule 0–1(e) under the Act.
Each Account is registered with the
Commission as a unit investment trust
(File No. 811–21394 (the Life Account);
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File No. 811–21330 (the Annuity
Account)). Each Account is comprised
of a number of subaccounts and each
subaccount invests exclusively in one of
the insurance dedicated mutual fund
portfolios made available as investment
options underlying the Contracts.
3. The Life Account is currently
divided into 36 subaccounts. The assets
of the Life Account support variable life
insurance contracts, and interests in the
Account offered through such contracts
have been registered under the
Securities Act of 1933, as amended (the
‘‘1933 Act’’) on Form N–6 (File No. 333–
106757).
4. The Annuity Account is currently
divided into 36 subaccounts. The assets
of the Annuity Account support variable
annuity contracts, and interests in the
Account offered through such contracts
have been registered under the 1933 Act
on Form N–4 (File No. 333–104424).
5. The Contracts are flexible premium
variable life insurance and variable
annuity contracts. The variable life
insurance Contracts provide for the
accumulation of values on a variable
basis, a fixed basis, or a combination of
both, throughout the insured’s life, and
for a death benefit upon the death of the
insured. The variable annuity Contracts
provide for the accumulation of values
on a variable basis, a fixed basis, or a
combination of both, during the
accumulation period, and provide
settlement or annuity payment options
on a variable basis, a fixed basis, or a
combination of both, during the income
period. Under each of the Contracts, the
Company reserves the right to substitute
shares of one underlying fund for shares
of another, or of another investment
portfolio, including a portfolio of a
different management investment
company.
6. For as long as a variable life
insurance Contract remains in force or
a variable annuity Contract remains in
force and has not yet been annuitized,
a Contract owner may transfer all or any
part of the Contract value from one
subaccount to any other subaccount
without limit, although certain
restrictions apply to transfers to and
from the fixed account interest
investment option under the Contract
funded by the Company’s general
account (the ‘‘Declared Interest
Option’’). The Company reserves the
right to revoke or modify the transfer
privilege to discourage excessive trading
by Contract owners or to prevent
transfers that may have a detrimental
effect upon Contract owners,
subaccount unit values, the insurance
dedicated mutual fund portfolios
underlying the subaccounts or the
Declared Interest Option. The Contracts
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reserve to the Company the right to
assess a charge of $25 for transfers in
excess of twelve per Contract year.
7. The COUNTRY Fund is organized
as a Delaware business trust and
registered as an open-end management
investment company under the Act (File
No. 811–10475). The COUNTRY Fund
currently offers 9 separate investment
portfolios (each, a ‘‘Portfolio’’), two of
which would be involved in the
proposed substitutions. The COUNTRY
Fund issues a separate series of shares
of beneficial interest in connection with
each Portfolio and has registered such
shares under the 1933 Act on Form N–
1A (File No. 33–68270). COUNTRY
Trust Bank (‘‘COUNTRY Advisor’’)
serves as the investment adviser to each
Portfolio, including both Replaced
Portfolio A and Replaced Portfolio B.
8. The EquiTrust Fund is an open-end
diversified management investment
company registered under the Act (File
No. 811–5069) consisting of six
portfolios, each with its own investment
objective(s), investment policies,
restrictions, and attendant risks. One of
those portfolios, the EquiTrust High
Grade Bond Portfolio, is involved in the
proposed substitution. The EquiTrust
Fund issues a separate series of shares
of beneficial interest in connection with
each of those portfolios, and has
registered such shares under the 1933
Act on Form N–1A (File No. 33–12791).
EquiTrust Investment Management
Services, Inc. is the investment adviser
and manager to the EquiTrust Fund
portfolios. Neither the EquiTrust Fund
nor any of its portfolios is affiliated with
the Applicants.
9. The T. Rowe Price Fund is a
Maryland corporation that is registered
as an open-end management investment
company under the Act (File No. 811–
07143) and currently offers seven
investment portfolios, one of which—
the T. Rowe Price Personal Strategy
Balanced Portfolio—is involved in the
proposed substitution. The T. Rowe
Price Fund issues a series of shares of
beneficial interest in connection with
each portfolio, and has registered such
shares under the 1933 Act on Form N–
1A (File No. 33–52161). T. Rowe Price
Associates, Inc., based in Baltimore,
Maryland, acts as investment adviser to
the T. Rowe Price Personal Strategy
Balanced Portfolio. Neither the T. Rowe
Price Fund nor any of its portfolios is
affiliated with the Applicants.
10. The investment objectives of each
Replaced Portfolio and Replacement
Portfolio are as follows:
a. Replaced Portfolio A and
Replacement Portfolio A: The Country
VP Short-Term Bond Fund seeks to
achieve a high level of current income
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consistent with preservation of capital
and maintenance of liquidity. The
EquiTrust High Grade Bond Portfolio
seeks to generate as high a level of
current income as is consistent with
investment in a diversified portfolio of
high-grade income-bearing debt
securities.
b. Replaced Portfolio B and
Replacement Portfolio B: The Country
VP Balanced Fund seeks growth of
capital and current income. The T.
Rowe Price Strategy Balanced Portfolio
seeks the highest total return over time
consistent with emphasis on both
capital appreciation and income.
11. The advisory fees, other expenses
and total operating expenses (before and
after any contractual waivers and
reimbursements) for the year ended
December 31, 2005, expressed as an
annual percentage of average daily net
assets, of the Replaced Portfolios and
the Replacement Portfolios are as
follows:
Replaced
Portfolio A
Country VP
Short-Term
Bond Fund
(Percent)
Advisory Fees ........................................................................................................................................................
Other Expenses .....................................................................................................................................................
Total Operating Expenses .....................................................................................................................................
Less Contractual Fee Waivers and Expense Reimbursements ...........................................................................
Net Operating Expenses .......................................................................................................................................
Replacement
Portfolio A
EquiTrust High
Grade Bond
Portfolio
(Percent)
.50
.75
1.25
(.55)
.70
.30
.15
.45
N/A
.45
Replaced
Portfolio B
Replacement
Portfolio B
Country VP Balanced Fund
(Percent)
T. Rowe Price
Personal Strategy Balanced
Portfolio
(Percent)
Advisory Fees ........................................................................................................................................................
Other Expenses .....................................................................................................................................................
Total Operating Expenses .....................................................................................................................................
Less Contractual Fee Waivers and Expense Reimbursements ...........................................................................
Net Operating Expenses .......................................................................................................................................
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1 Unified
.75
.79
1.54
(.64)
.90
1 .90
.00
.90
N/A
.90
fee.
12. The investment performance of
each Replacement Portfolio compares
favorably to the investment performance
of the corresponding Replaced Portfolio.
For each of the last three fiscal years,
the life of each Replaced Portfolio, the
investment performance of each
Replacement Portfolio has significantly
exceeded the investment performance of
the corresponding Replaced Portfolio. In
addition, each Replacement Portfolio
has a longer history of investment
performance than that of the
corresponding Replaced Portfolio.
13. Currently, under each Contract 36
different variable investment options are
available for investment. Following the
proposed substitution of shares of each
Replacement Portfolio for shares of the
corresponding Replaced Portfolio, 34
different variable investment options
will be available under each Contract.
14. For those Contracts that are in
force on the date of the proposed
substitutions, the Company will take the
following action during the twenty-four
months following the date of the
proposed substitutions. On the last day
of each fiscal period (not to exceed a
fiscal quarter), the Company will
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reimburse the Contract owners investing
in the Replacement Portfolios to the
extent that the sum of the operating
expenses of the Replacement Portfolio
(taking into account any fee waivers and
expense reimbursements) and
subaccount expenses for such period
exceed, on an annualized basis, the sum
of the operating expenses of the
corresponding Replaced Portfolio
(taking into account any fee waivers and
expense reimbursements) and
subaccount expenses for the fiscal year
preceding the date of the proposed
substitution. In addition, for twenty-four
months following the proposed
substitutions, the Company will not
increase asset-based fees or charges for
Contracts outstanding on the date of the
proposed substitutions.
15. The Board of Trustees of the
COUNTRY Fund voted to close the
Replaced Portfolios to new investment
as of July 31, 2006, and to liquidate both
Replaced Portfolios on or before August
31, 2007, the Liquidation Date. In turn,
Replaced Portfolio A and Replaced
Portfolio B are no longer available for
new investment under the Contracts
(allocation of Contract value) as of July
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31, 2006 (the ‘‘Closing Date’’) and will
be discontinued altogether under the
Contracts on a date no later than the
Liquidation Date.
16. Accumulated Contract value
invested in the COUNTRY VP ShortTerm Bond Fund and the COUNTRY VP
Balanced Fund will automatically be
transferred to the EquiTrust High Grade
Bond Fund and the T. Rowe Price
Personnel Strategy Balanced Fund,
respectively, as of a date determined by
the Company following receipt of a
Commission order granting substitution
relief (the ‘‘Substitution’’). Contract
owners will receive advance notice of
the date of the Substitution (the
‘‘Substitution Date’’).
17. By supplements dated July 6, 2006
(collectively, the ‘‘2006 Supplements’’)
to the prospectuses for the registration
statements of the Accounts, the
Company notified owners of the
Contracts of its intention to take the
necessary actions, including seeking an
order requested to carry out the
proposed substitutions.
18. The 2006 Supplements advised
Contract owners that accumulated
Contract value may continue to remain
in the Replaced Portfolios after the
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Closing Date until the Substitution Date.
After the Closing Date, Contract owners
will not be able to allocate Contract
value to the Replaced Portfolios from
the alternative investment options
available under the Contract.
19. From the date of the 2006
Supplements, Contract owners may
transfer accumulated Contract value
invested in the Replaced Portfolios to
the other investment options available
under the Contract free of charge and
without such transfers counting against
the number of free transfers allowed
each Contract Year. For 30 days
following the Substitution Date,
Contract owners whose accumulated
Contract value was invested in the
Replaced Portfolios as of the
Substitution Date and subsequently
invested in the Replacement Portfolios
as a result of the Substitution may
transfer that accumulated Contract value
from the Replacement Portfolios to the
alternative investment options available
under the Contract free of charge and
without such transfers counting against
the number of free transfers. Although
the Company has no present intention
to increase the charge for transfers
under the Contract, the Company will
not exercise any rights reserved by it
under the Contract to impose additional
charges for transfers until at least 30
days after the Substitution Date.
20. Further, all Contract owners
invested in a Replaced Portfolio will
have received the most recent
corresponding Replacement Portfolio
prospectus prior to the Substitution
Date.
21. Within five days after the
proposed substitutions, Contract owners
who are affected by the substitutions
will be sent a written notice informing
them that the substitutions were carried
out. The notice also will reiterate the
facts that: (a) For at least 30 days after
the Substitution Date, the Company will
not exercise any rights reserved by it
under the Contract to impose additional
charges for transfers; and (b) for 30 days
following the proposed substitutions,
Contract owners may transfer
accumulated Contract value invested in
the Replacement Portfolios as a result of
the Substitution out of the Replacement
Portfolios and into the alternative
investment options available under the
Contracts free of charge and without
such transfers counting against the
number of free transfers allowed each
Contract Year.
22. The Company will carry out the
proposed substitutions by redeeming
shares of each Replaced Portfolio held
by the Accounts for cash and applying
the proceeds to the purchase of shares
of the corresponding Replacement
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Portfolio. Redemption requests and
purchase orders will be placed
simultaneously so that Contract values
will remain fully invested at all times.
All redemptions of shares of the
Replaced Portfolios and purchases of
shares of the Replacement Portfolios
will be effected in accordance with Rule
22c–1 of the Act.
23. The proposed substitutions will
take place at relative net asset value and
will not result in a change in the
amount of any Contract owner’s
accumulated Contract value or death
benefit, or in the dollar value of his or
her investment in any of the Accounts.
Contract owners will not incur any fees
or charges as a result of the proposed
substitutions, nor will their rights or the
Company’s obligations under the
Contracts be altered in any way. All
applicable expenses incurred in
connection with the proposed
substitutions, including brokerage
commissions and legal, accounting, and
other fees and expenses, will be paid by
the Company. In addition, the proposed
substitutions will not result in adverse
tax consequences for, and will not alter,
the tax benefits to Contract owners. The
proposed substitutions will not cause
the Contract fees and charges currently
being paid by existing Contract owners
to be greater after the proposed
substitutions than before the proposed
substitutions.
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. 07–554 Filed 2–7–07; 8:45 am]
BILLING CODE 8010–01–P
PO 00000
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55207, File No. 4–518]
Joint Industry Plan; Order Approving
Amendment To Add the International
Securities Exchange, LLC as
Participant to National Market System
Plan Establishing Procedures Under
Rule 605 of Regulation NMS
January 31, 2007.
I. Introduction
On September 14, 2006, the
International Securities Exchange, LLC
(‘‘ISE’’) submitted to the Securities and
Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) in accordance with
Section 11A of the Securities Exchange
Act of 1934 (‘‘Act’’) 1 and Rule 608 of
Regulation NMS,2 a proposed
amendment to the national market
system plan establishing procedures
under Rule 605 of Regulation NMS
(‘‘Joint-SRO Plan’’ or ‘‘Plan’’).3 Under
the proposed amendment, ISE would be
added as a participant to the Joint-SRO
Plan. Notice of filing and an order
granting temporary effectiveness of the
proposal through January 30, 2007 was
published in the Federal Register on
October 2, 2006.4 The Commission did
not receive any comments on the
proposed amendment. This order
approves the amendment on a
permanent basis.
II. Discussion
The Joint-SRO Plan establishes
procedures for market centers to follow
in making their monthly reports
required pursuant to Rule 605 of
Regulation NMS, available to the public
in a uniform, readily accessible, and
usable electronic format. The current
participants to the Joint-SRO Plan are
the American Stock Exchange LLC,
Boston Stock Exchange, Inc., Chicago
Board Options Exchange, Incorporated,
Chicago Stock Exchange, Inc.,
Cincinnati Stock Exchange, Inc. (n/k/a
National Stock ExchangeSM), The
NASDAQ Stock Market LLC, National
Association of Securities Dealers, Inc.,
New York Stock Exchange, Inc. (n/k/a
New York Stock Exchange LLC), Pacific
1 15
U.S.C. 78k–1.
CFR 242.608.
3 17 CFR 242.605. On April 12, 2001, the
Commission approved a national market system
plan for the purpose of establishing procedures for
market centers to follow in making their monthly
reports available to the public under Rule 11Ac1–
5 under the Act (n/k/a Rule 605 of Regulation
NMS). See Securities Exchange Act Release No.
44177 (April 12, 2001), 66 FR 19814 (April 17,
2001).
4 See Securities Exchange Act Release No. 54510
(September 26, 2006), 71 FR 58018.
2 17
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]]>Agencies
[Federal Register Volume 72, Number 26 (Thursday, February 8, 2007)]
[Notices]
[Pages 6013-6016]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-554]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-27695; File No. 812-13325]
Country Investors Life Assurance Company, et al.
February 2, 2007.
AGENCY: Securities and Exchange Commission (the ``Commission'').
ACTION: Notice of application for an order pursuant to Section 26(c) of
the Investment Company Act of 1940, as amended (the ``1940 Act'' or
``Act''), approving certain substitutions of securities.
-----------------------------------------------------------------------
APPLICANTS: COUNTRY Investors Life Assurance Company (the ``Company''),
COUNTRY Investors Variable Life Account (the ``Life Account'') and
COUNTRY Investors Variable Annuity Account (the ``Annuity Account'')
(together, the ``Applicants'')
SUMMARY: Applicants seek an order pursuant to Section 26(c) of the 1940
Act approving the substitution of: (1) Shares of the EquiTrust High
Grade Bond Portfolio (``Replacement Portfolio A'') of the EquiTrust
Variable Insurance Series Fund (the ``EquiTrust Fund'') for shares of
the COUNTRY VP Short-Term Bond Fund (``Replaced Portfolio A'') of the
COUNTRY Mutual Funds Trust (the ``COUNTRY Fund''); and (2) shares of
the T. Rowe Price Personal Strategy Balanced Portfolio (``Replacement
Portfolio B'') of the T. Rowe Price Equity Series, Inc. (the ``T. Rowe
Price Fund'') for shares of the COUNTRY VP Balanced Fund (``Replaced
Portfolio B'') of the COUNTRY Fund. Shares of Replacement Portfolio A,
Replacement Portfolio B, Replaced Portfolio A, and Replaced Portfolio B
currently are held by the Life Account and the Annuity Account (each an
``Account,'' together, the ``Accounts'') to support variable life
insurance or variable annuity contracts, respectively, issued by the
Company (collectively, the ``Contracts'').
Filing Date: The Application was filed on September 5, 2006 and amended
and restated on January 24, 2007.
Hearing or Notification of Hearing: An order granting the application
will be
[[Page 6014]]
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 27, 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 20549-1090. Applicants, c/o Virginia L. Eves, Esq.,
General Attorney, Country Investors Life Assurance Company, 1701 N.
Towanda Avenue, Bloomington, IL 61702-2901. Copy to Thomas E. Bisset,
Esq., Sutherland Asbill & Brennan LLP, 1275 Pennsylvania Avenue, NW.,
Washington, DC 20004-2415.
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
Application. The complete Application is available for a fee from the
Public Reference Branch of the Commission.
Applicants' Representations
1. The Company is a stock life insurance company organized under
Illinois law in 1981. The Company is principally engaged in the
offering of life insurance policies and annuity contracts, and is
admitted to do business in 41 states. For purposes of the Act, the
Company is the depositor and sponsor of each of the Accounts, as those
terms have been interpreted by the Commission with respect to variable
life insurance and variable annuity separate accounts.
2. Under the insurance law of Illinois, the assets of each Account
attributable to the Contracts issued through that Account are owned by
the Company, but are held separately from the other assets of the
Company for the benefit of the owners of, and the persons entitled to
payment under, those Contracts. Each Account is a ``separate account''
as defined by Rule 0-1(e) under the Act. Each Account is registered
with the Commission as a unit investment trust (File No. 811-21394 (the
Life Account); File No. 811-21330 (the Annuity Account)). Each Account
is comprised of a number of subaccounts and each subaccount invests
exclusively in one of the insurance dedicated mutual fund portfolios
made available as investment options underlying the Contracts.
3. The Life Account is currently divided into 36 subaccounts. The
assets of the Life Account support variable life insurance contracts,
and interests in the Account offered through such contracts have been
registered under the Securities Act of 1933, as amended (the ``1933
Act'') on Form N-6 (File No. 333-106757).
4. The Annuity Account is currently divided into 36 subaccounts.
The assets of the Annuity Account support variable annuity contracts,
and interests in the Account offered through such contracts have been
registered under the 1933 Act on Form N-4 (File No. 333-104424).
5. The Contracts are flexible premium variable life insurance and
variable annuity contracts. The variable life insurance Contracts
provide for the accumulation of values on a variable basis, a fixed
basis, or a combination of both, throughout the insured's life, and for
a death benefit upon the death of the insured. The variable annuity
Contracts provide for the accumulation of values on a variable basis, a
fixed basis, or a combination of both, during the accumulation period,
and provide settlement or annuity payment options on a variable basis,
a fixed basis, or a combination of both, during the income period.
Under each of the Contracts, the Company reserves the right to
substitute shares of one underlying fund for shares of another, or of
another investment portfolio, including a portfolio of a different
management investment company.
6. For as long as a variable life insurance Contract remains in
force or a variable annuity Contract remains in force and has not yet
been annuitized, a Contract owner may transfer all or any part of the
Contract value from one subaccount to any other subaccount without
limit, although certain restrictions apply to transfers to and from the
fixed account interest investment option under the Contract funded by
the Company's general account (the ``Declared Interest Option''). The
Company reserves the right to revoke or modify the transfer privilege
to discourage excessive trading by Contract owners or to prevent
transfers that may have a detrimental effect upon Contract owners,
subaccount unit values, the insurance dedicated mutual fund portfolios
underlying the subaccounts or the Declared Interest Option. The
Contracts reserve to the Company the right to assess a charge of $25
for transfers in excess of twelve per Contract year.
7. The COUNTRY Fund is organized as a Delaware business trust and
registered as an open-end management investment company under the Act
(File No. 811-10475). The COUNTRY Fund currently offers 9 separate
investment portfolios (each, a ``Portfolio''), two of which would be
involved in the proposed substitutions. The COUNTRY Fund issues a
separate series of shares of beneficial interest in connection with
each Portfolio and has registered such shares under the 1933 Act on
Form N-1A (File No. 33-68270). COUNTRY Trust Bank (``COUNTRY Advisor'')
serves as the investment adviser to each Portfolio, including both
Replaced Portfolio A and Replaced Portfolio B.
8. The EquiTrust Fund is an open-end diversified management
investment company registered under the Act (File No. 811-5069)
consisting of six portfolios, each with its own investment
objective(s), investment policies, restrictions, and attendant risks.
One of those portfolios, the EquiTrust High Grade Bond Portfolio, is
involved in the proposed substitution. The EquiTrust Fund issues a
separate series of shares of beneficial interest in connection with
each of those portfolios, and has registered such shares under the 1933
Act on Form N-1A (File No. 33-12791). EquiTrust Investment Management
Services, Inc. is the investment adviser and manager to the EquiTrust
Fund portfolios. Neither the EquiTrust Fund nor any of its portfolios
is affiliated with the Applicants.
9. The T. Rowe Price Fund is a Maryland corporation that is
registered as an open-end management investment company under the Act
(File No. 811-07143) and currently offers seven investment portfolios,
one of which--the T. Rowe Price Personal Strategy Balanced Portfolio--
is involved in the proposed substitution. The T. Rowe Price Fund issues
a series of shares of beneficial interest in connection with each
portfolio, and has registered such shares under the 1933 Act on Form N-
1A (File No. 33-52161). T. Rowe Price Associates, Inc., based in
Baltimore, Maryland, acts as investment adviser to the T. Rowe Price
Personal Strategy Balanced Portfolio. Neither the T. Rowe Price Fund
nor any of its portfolios is affiliated with the Applicants.
10. The investment objectives of each Replaced Portfolio and
Replacement Portfolio are as follows:
a. Replaced Portfolio A and Replacement Portfolio A: The Country VP
Short-Term Bond Fund seeks to achieve a high level of current income
[[Page 6015]]
consistent with preservation of capital and maintenance of liquidity.
The EquiTrust High Grade Bond Portfolio seeks to generate as high a
level of current income as is consistent with investment in a
diversified portfolio of high-grade income-bearing debt securities.
b. Replaced Portfolio B and Replacement Portfolio B: The Country VP
Balanced Fund seeks growth of capital and current income. The T. Rowe
Price Strategy Balanced Portfolio seeks the highest total return over
time consistent with emphasis on both capital appreciation and income.
11. The advisory fees, other expenses and total operating expenses
(before and after any contractual waivers and reimbursements) for the
year ended December 31, 2005, expressed as an annual percentage of
average daily net assets, of the Replaced Portfolios and the
Replacement Portfolios are as follows:
------------------------------------------------------------------------
Replaced Replacement
Portfolio A Portfolio A
--------------------------------
EquiTrust High
Country VP Grade Bond
Short-Term Bond Portfolio
Fund (Percent) (Percent)
------------------------------------------------------------------------
Advisory Fees.......................... .50 .30
Other Expenses......................... .75 .15
Total Operating Expenses............... 1.25 .45
Less Contractual Fee Waivers and (.55) N/A
Expense Reimbursements................
Net Operating Expenses................. .70 .45
------------------------------------------------------------------------
------------------------------------------------------------------------
Replaced Replacement
Portfolio B Portfolio B
--------------------------------
T. Rowe Price
Personal
Country VP Strategy
Balanced Fund Balanced
(Percent) Portfolio
(Percent)
------------------------------------------------------------------------
Advisory Fees.......................... .75 \1\ .90
Other Expenses......................... .79 .00
Total Operating Expenses............... 1.54 .90
Less Contractual Fee Waivers and (.64) N/A
Expense Reimbursements................
Net Operating Expenses................. .90 .90
------------------------------------------------------------------------
\1\ Unified fee.
12. The investment performance of each Replacement Portfolio
compares favorably to the investment performance of the corresponding
Replaced Portfolio. For each of the last three fiscal years, the life
of each Replaced Portfolio, the investment performance of each
Replacement Portfolio has significantly exceeded the investment
performance of the corresponding Replaced Portfolio. In addition, each
Replacement Portfolio has a longer history of investment performance
than that of the corresponding Replaced Portfolio.
13. Currently, under each Contract 36 different variable investment
options are available for investment. Following the proposed
substitution of shares of each Replacement Portfolio for shares of the
corresponding Replaced Portfolio, 34 different variable investment
options will be available under each Contract.
14. For those Contracts that are in force on the date of the
proposed substitutions, the Company will take the following action
during the twenty-four months following the date of the proposed
substitutions. On the last day of each fiscal period (not to exceed a
fiscal quarter), the Company will reimburse the Contract owners
investing in the Replacement Portfolios to the extent that the sum of
the operating expenses of the Replacement Portfolio (taking into
account any fee waivers and expense reimbursements) and subaccount
expenses for such period exceed, on an annualized basis, the sum of the
operating expenses of the corresponding Replaced Portfolio (taking into
account any fee waivers and expense reimbursements) and subaccount
expenses for the fiscal year preceding the date of the proposed
substitution. In addition, for twenty-four months following the
proposed substitutions, the Company will not increase asset-based fees
or charges for Contracts outstanding on the date of the proposed
substitutions.
15. The Board of Trustees of the COUNTRY Fund voted to close the
Replaced Portfolios to new investment as of July 31, 2006, and to
liquidate both Replaced Portfolios on or before August 31, 2007, the
Liquidation Date. In turn, Replaced Portfolio A and Replaced Portfolio
B are no longer available for new investment under the Contracts
(allocation of Contract value) as of July 31, 2006 (the ``Closing
Date'') and will be discontinued altogether under the Contracts on a
date no later than the Liquidation Date.
16. Accumulated Contract value invested in the COUNTRY VP Short-
Term Bond Fund and the COUNTRY VP Balanced Fund will automatically be
transferred to the EquiTrust High Grade Bond Fund and the T. Rowe Price
Personnel Strategy Balanced Fund, respectively, as of a date determined
by the Company following receipt of a Commission order granting
substitution relief (the ``Substitution''). Contract owners will
receive advance notice of the date of the Substitution (the
``Substitution Date'').
17. By supplements dated July 6, 2006 (collectively, the ``2006
Supplements'') to the prospectuses for the registration statements of
the Accounts, the Company notified owners of the Contracts of its
intention to take the necessary actions, including seeking an order
requested to carry out the proposed substitutions.
18. The 2006 Supplements advised Contract owners that accumulated
Contract value may continue to remain in the Replaced Portfolios after
the
[[Page 6016]]
Closing Date until the Substitution Date. After the Closing Date,
Contract owners will not be able to allocate Contract value to the
Replaced Portfolios from the alternative investment options available
under the Contract.
19. From the date of the 2006 Supplements, Contract owners may
transfer accumulated Contract value invested in the Replaced Portfolios
to the other investment options available under the Contract free of
charge and without such transfers counting against the number of free
transfers allowed each Contract Year. For 30 days following the
Substitution Date, Contract owners whose accumulated Contract value was
invested in the Replaced Portfolios as of the Substitution Date and
subsequently invested in the Replacement Portfolios as a result of the
Substitution may transfer that accumulated Contract value from the
Replacement Portfolios to the alternative investment options available
under the Contract free of charge and without such transfers counting
against the number of free transfers. Although the Company has no
present intention to increase the charge for transfers under the
Contract, the Company will not exercise any rights reserved by it under
the Contract to impose additional charges for transfers until at least
30 days after the Substitution Date.
20. Further, all Contract owners invested in a Replaced Portfolio
will have received the most recent corresponding Replacement Portfolio
prospectus prior to the Substitution Date.
21. Within five days after the proposed substitutions, Contract
owners who are affected by the substitutions will be sent a written
notice informing them that the substitutions were carried out. The
notice also will reiterate the facts that: (a) For at least 30 days
after the Substitution Date, the Company will not exercise any rights
reserved by it under the Contract to impose additional charges for
transfers; and (b) for 30 days following the proposed substitutions,
Contract owners may transfer accumulated Contract value invested in the
Replacement Portfolios as a result of the Substitution out of the
Replacement Portfolios and into the alternative investment options
available under the Contracts free of charge and without such transfers
counting against the number of free transfers allowed each Contract
Year.
22. The Company will carry out the proposed substitutions by
redeeming shares of each Replaced Portfolio held by the Accounts for
cash and applying the proceeds to the purchase of shares of the
corresponding Replacement Portfolio. Redemption requests and purchase
orders will be placed simultaneously so that Contract values will
remain fully invested at all times. All redemptions of shares of the
Replaced Portfolios and purchases of shares of the Replacement
Portfolios will be effected in accordance with Rule 22c-1 of the Act.
23. The proposed substitutions will take place at relative net
asset value and will not result in a change in the amount of any
Contract owner's accumulated Contract value or death benefit, or in the
dollar value of his or her investment in any of the Accounts. Contract
owners will not incur any fees or charges as a result of the proposed
substitutions, nor will their rights or the Company's obligations under
the Contracts be altered in any way. All applicable expenses incurred
in connection with the proposed substitutions, including brokerage
commissions and legal, accounting, and other fees and expenses, will be
paid by the Company. In addition, the proposed substitutions will not
result in adverse tax consequences for, and will not alter, the tax
benefits to Contract owners. The proposed substitutions will not cause
the Contract fees and charges currently being paid by existing Contract
owners to be greater after the proposed substitutions than before the
proposed substitutions.
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. 07-554 Filed 2-7-07; 8:45 am]
BILLING CODE 8010-01-P
