Jefferson National Life Insurance Company, et al., 18284-18290 [E7-6867]
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18284
Federal Register / Vol. 72, No. 69 / Wednesday, April 11, 2007 / Notices
collections, the Railroad Retirement
Board (RRB) will publish periodic
summaries of proposed data collections.
Comments are invited on: (a) Whether
the proposed information collection is
necessary for the proper performance of
the functions of the agency, including
whether the information has practical
utility; (b) the accuracy of the RRB’s
estimate of the burden of the collection
of the information; (c) ways to enhance
the quality, utility, and clarity of the
information to be collected; and (d)
ways to minimize the burden related to
the collection of information on
respondents, including the use of
automated collection techniques or
other forms of information technology.
Title and purpose of information
collection: Placement Service; OMB
3220–0057 Section 12(i) of the Railroad
Unemployment Insurance Act (RUIA),
authorizes the Railroad Retirement
Board (RRB) to establish maintain, and
operate free employment offices to
provide claimants for unemployment
benefits with job placement
opportunities. Section 704(d) of the
Regional Railroad Reorganization Act of
1973, as amended, and as extended by
the consolidated Omnibus Budget
Reconciliation Act of 1985, required the
RRB to maintain and distribute a list of
railroad job vacancies, by class and
craft, based on information furnished by
rail carriers to the RRB. Although the
requirement under the law expired
effective August 13, 1987, the RRB has
continued to obtain this information in
keeping with its employment service
responsibilities under Section 12(k) of
the RUIA. Application procedures for
the job placement program are
prescribed in 20 CFR 325. The
procedures pertaining to the RRB’s
obtaining and distributing job vacancy
reports furnished by rail carriers are
described in 20 CFR 346.1.
The RRB currently utilizes four forms
to obtain information needed to carry
out its job placement responsibilities.
Form ES–2, Supplemental Information
for Central Register, is used by the RRB
to obtain information needed to update
a computerized central register of
separated and furloughed railroad
employees available for employment in
the railroad industry. Form ES–21,
Referral to State Employment Service,
and ES–21c, Report of State
Employment Service Office, are used by
the RRB to provide placement assistance
for unemployed railroad employees
through arrangements with State
Employment Service offices. Form UI–
35, Field Office Record of Claimant
Interview, is used primarily by RRB
field office staff to conduct in-person
interviews of claimants for
unemployment benefits. Completion of
these forms is required to obtain or
maintain a benefit. In addition, the RRB
also collects Railroad Job Vacancies
information received voluntarily from
railroad employers.
The RRB proposes minor, non-burden
impacting editorial changes to Form ES–
2, minor non-burden impacting editorial
and reformatting changes to Form ES–
21, and a minor non-burden impacting
change to Form UI–35. No changes are
being proposed to Form ES–21c or to
the Railroad Job Vacancies Report.
The estimated annual respondent
burden for this collection is as follows:
ESTIMATE OF ANNUAL RESPONDENT BURDEN
Form Nos.
Annual responses
Completion time
(min)
Burden
(hrs)
ES–2 ..........................................................................................................................
ES–21 ........................................................................................................................
ES–21c ......................................................................................................................
UI–35 (in person) .......................................................................................................
UI–35 (by mail) ..........................................................................................................
Railroad Job Vacancies Report .................................................................................
7,500
3,500
1,250
9,000
1,000
750
0.25
0.68
1.50
7.00
10.50
10.00
31
40
31
1,050
175
125
Total ....................................................................................................................
23,000
..............................
1,452
cprice-sewell on PRODPC61 with NOTICES
Additional Information or Comments:
To request more information or to
obtain a copy of the information
collection justification, forms, and/or
supporting material, please call the RRB
Clearance Officer at (312) 751–3363 or
send an e-mail request to
Charles.Mierzwa@RRB.GOV. Comments
regarding the information collection
should be addressed to Ronald J.
Hodapp, Railroad Retirement Board, 844
North Rush Street, Chicago, Illinois
60611–2092 or send an e-mail to
Ronald.Hodapp@RRB.GOV. Written
comments should be received within 60
days of this notice.
Charles Mierzwa,
Clearance Officer.
[FR Doc. E7–6785 Filed 4–10–07; 8:45 am]
BILLING CODE 7905–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–27779; File No. 812–13342]
Jefferson National Life Insurance
Company, et al.
April 6, 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’’) approving
certain substitutions of securities and an
order of exemption pursuant to Section
17(b) of the Act from Section 17(a) of
the Act.
AGENCY:
Jefferson National Life
Insurance Company (‘‘JNL’’), Jefferson
National Life Annuity Account C
(‘‘Separate Account C’’), Jefferson
National Life Annuity Account E
(‘‘Separate Account E’’), Jefferson
APPLICANTS:
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National Life Annuity Account F
(‘‘Separate Account F’’), Jefferson
National Life Annuity Account G
(‘‘Separate Account G’’), Jefferson
National Life Annuity Account H
(‘‘Separate Account H’’), Jefferson
National Life Annuity Account I
(‘‘Separate Account I’’), Jefferson
National Life Annuity Account J
(‘‘Separate Account J’’), Jefferson
National Life Annuity Account K
(‘‘Separate Account K’’), Conseco
Variable Insurance—Separate Account L
(‘‘Separate Account L’’, and together
with Separate Account C, Separate
Account E, Separate Account F,
Separate Account G, Separate Account
H, Separate Account I, Separate
Account J, and Separate Account K, the
‘‘Separate Accounts’’ and, collectively
with JNL, the ‘‘Applicants’’), Northern
Lights Variable Trust (‘‘NLVT’’ and
collectively with Applicants, the
‘‘Section 17 Applicants’’).
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Applicants
seek an order approving the proposed
substitution of shares of the 40|86 Series
Trust Equity Portfolio and 40|86 Series
Trust Balanced Portfolio (the ‘‘Replaced
Funds’’) with shares of the JNF Equity
Portfolio and JNF Balanced Portfolio
(the ‘‘Replacement Funds’’), (the
‘‘Substitutions’’). Section 17 Applicants
seek an order exempting them from the
provisions of Section 17(a) of the Act to
the extent necessary to permit JNL to
carry out each of the Substitutions
(‘‘Application’’).
FILING DATE: The application was
originally filed on November 9, 2006,
and was amended and restated on
January 17, 2007, and April 2, 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 April 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.
SUMMARY OF APPLICATION:
Secretary, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–1090.
Applicants, 9920 Corporate Campus
Drive, Suite 1000, Louisville, Kentucky
40223.
FOR FURTHER INFORMATION CONTACT:
Patrick Scott, Senior Counsel, Office of
Insurance Products, Division of
Investment Management, at (202) 551–
6763, or Harry Eisenstein, Branch Chief,
at (202) 661–6795.
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,
100 F Street, NE., Washington, D.C.
20549 (202–942–8090).
ADDRESSES:
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Applicants’ and Section 17 Applicants’
Representations
1. JNL is a stock life insurance
company originally organized in 1937
under the laws of Texas. JNL was
formerly a subsidiary of Conseco
Variable Insurance Company. JNL is
currently an affiliate of Inviva, Inc.,
which purchased JNL in 2002.
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2. Separate Account C was established
in 1980. Separate Account C is
registered under the Act as a unit
investment trust (File No. 811–04819)
and is used to fund variable annuity
contracts issued by JNL. Two variable
annuity contracts funded by Separate
Account C are affected by the
Substitutions.
Separate Account E was established
in 1993. Separate Account E is
registered under the Act as a unit
investment trust (File No. 811–08288)
and is used to fund variable annuity
contracts issued by JNL. One variable
annuity contract funded by Separate
Account E is affected by the
Substitutions.
Separate Account F was established
in 1997. Separate Account F is
registered under the Act as a unit
investment trust (File No. 811–08483)
and is used to fund variable annuity
contracts issued by JNL. One variable
annuity contract funded by Separate
Account F is affected by the
Substitutions.
Separate Account G was established
in 1996. Separate Account G is
registered under the Act as a unit
investment trust (File No. 811–07501)
and is used to fund variable annuity
contracts issued by JNL. Three variable
annuity contracts funded by Separate
Account G are affected by the
Substitutions.
Separate Account H was established
in 1999. Separate Account H is
registered under the Act as a unit
investment trust (File No. 811–09693)
and is used to fund variable annuity
contracts issued by JNL. One variable
annuity contract funded by Separate
Account H is affected by the
Substitutions.
Separate Account I was established in
2000. Separate Account I is registered
under the Act as a unit investment trust
(File No. 811–10213) and is used to
fund variable annuity contracts issued
by JNL. One variable annuity contract
funded by Separate Account I is affected
by the Substitutions.
Separate Account J was established in
2003. Separate Account J is registered
under the Act as a unit investment trust
(File No. 811–21498) and is used to
fund variable annuity contracts issued
by JNL. One variable annuity contract
funded by Separate Account J is affected
by the Substitutions.
Separate Account K was established
in 2003. Separate Account K is
registered under the Act as a unit
investment trust (File No. 811–21500)
and is used to fund variable annuity
contracts issued by JNL. One variable
annuity contract funded by Separate
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18285
Account K is affected by the
Substitutions.
Separate Account L was established
in 2000. Separate Account L is
registered under the Act as a unit
investment trust (File No. 811–10271)
and is used to fund variable universal
life contracts issued by JNL. One
variable universal life contract funded
by Separate Account L is affected by the
Substitutions (all eleven variable
annuity contracts and the one variable
universal life contract affected by the
Substitutions are collectively referred to
as the ‘‘Contracts’’).
3. NLVT was organized in Delaware
as a statutory trust on November 2, 2005
and is registered under the Act as an
open-end management investment
company.
4. 40/86 Advisors, Inc. (‘‘Advisors’’) is
the investment adviser to the Replaced
Funds, and is a subsidiary of Conseco
Inc., JNL’s former parent. The two
Replaced Funds are portfolios of the 40/
86 Series Trust, formerly known as the
Conseco Series Trust (‘‘CST’’). JNF
Advisors, Inc. (‘‘JNF Advisor’’) is a
newly formed investment adviser under
common control with JNL. JNF Advisor
will serve as investment adviser to the
Replacement Funds, which will be
portfolios of NLVT. Chicago Equity
Partners (‘‘CEP’’) is a registered
investment adviser and is currently 40/
86 Series Trust Equity Portfolio’s subadviser. CEP is also currently the 40/86
Series Trust Balanced Portfolio’s subadviser for the equity portion of the
fund. After the Substitutions, CEP will
be sub-adviser for both Replacement
Funds, including the fixed income
portion of the JNF Balanced Portfolio.
There are no corporate affiliations
between any of these three investment
advisers.
5. Purchase payments under the
Contracts may be allocated to one or
more sub-accounts of the Separate
Accounts (the ‘‘Sub-Accounts’’).
Income, gains and losses, whether or not
realized, from assets allocated to the
Separate Accounts are, as provided in
the Contracts, credited to or charged
against the Separate Accounts without
regard to other income, gains or losses
of JNL. The assets maintained in the
Separate Accounts will not be charged
with any liabilities arising out of any
other business conducted by JNL.
Nevertheless, all obligations arising
under the Contracts, including the
commitment to make annuity payments
or death benefit payments, are general
corporate obligations of JNL.
Accordingly, all of the assets of JNL are
available to meet its obligations under
the Contracts.
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Federal Register / Vol. 72, No. 69 / Wednesday, April 11, 2007 / Notices
6. The Contracts permit allocations of
account value to available Sub-Accounts
that invest in specific investment
portfolios of underlying registered
investment companies (each a ‘‘Fund’’
and, collectively, the ‘‘Mutual Funds’’).
The Mutual Funds are registered under
the Act as open-end management
investment companies.
7. The Contracts permit transfers of
accumulation value from one SubAccount to another Sub-Account at any
time subject to certain restrictions. No
sales charge applies to such a transfer of
accumulation value among SubAccounts.
8. The Contracts reserve the right,
upon notice to contract owners (the
‘‘Contract Owners’’), to substitute shares
of another mutual fund for shares of a
Fund held by a Sub-Account.
9. Account C was established in 1980
as a management investment company.
Effective May 1, 1993, Account C was
restructured into a unit investment
trust, pursuant to Commission
exemptive relief. As a condition of this
exemptive relief, certain Contract
Owners’ contracts were endorsed to
limit the advisory fees the Contract
Owner paid on investments in the 40/
86 Series Trust Equity Portfolio.
Investments by those Contract Owners
in the corresponding Replacement Fund
will continue to benefit from the
advisory fee limitations which were a
condition of the prior exemptive relief.
10. The Replaced Funds involved in
the Substitutions include 2 separate
4086 Series Trust portfolios. After the
Substitutions, the investment objective
and policies of each Replacement Fund
will be the same as or substantially
similar to the investment objective and
policies of the corresponding Replaced
Fund. The Substitutions are being
proposed for several reasons. First, the
accumulated assets in the Replaced
Funds were derived from an earlier
time, prior to 2002, when Conseco Inc.,
JNL’s former parent, formed a large
commissioned broker-dealer network
that was familiar with, and loyal to, the
CST funds. That broker-dealer network
dissolved after Conseco experienced
financial difficulties in the summer of
2002. Today JNL, as an affiliate of
Inviva, Inc. (which purchased JNL
(f/k/a Conseco Variable Insurance
Company)), has almost no access to the
broker-dealer network that was
responsible for the growth in assets in
the CST funds. In addition, JNL has
developed its own, very different target
audience: the fee-based and fee-only
adviser, as opposed to the traditional
commission-based representative.
Second, as part of the discussions
related to the Substitutions of the
Replaced Funds, Advisors has indicated
to JNL that sponsoring an insurancededicated mutual fund complex did not
have a place in its parent corporation’s
long-term business plan. Advisors
intends to continue to serve in its
current capacity with respect to the
Replaced Funds to facilitate a smooth
transition. The Board of Trustees of 40/
86 Series Trust voted to liquidate, on or
about March 23, 2007, the Trust’s three
other portfolios, the Fixed Income,
Government Securities and Money
Market Portfolios, and these portfolios
have been liquidated.
Currently all of the Mutual Funds are
unaffiliated investment companies and
changes due to investment performance,
style drift, or management practice
issues require substantial systems,
filing, and printing resources, which
slows the process to make changes, if
necessary. Because it is anticipated the
Replacement Funds and JNF Advisors
will have ‘‘manager of managers’’
exemptive relief, JNF Advisor, as
investment adviser, will be able to act
more quickly and efficiently to protect
Contract Owners’ interests if the
investment strategy, management team
or performance of a sub-adviser does not
meet expectations. JNF Advisor plans to
file an application for ‘‘manager of
managers’’ exemptive relief within 6
months from the date that the
Substitutions are effected. The
‘‘manager of managers’’ exemptive relief
would permit JNF Advisor, as the
investment adviser for the existing
series, to replace any sub-adviser or to
employ a new sub-adviser without
submitting such actions for the approval
of shareholders of the affected series.
Before a Replacement Fund relies on
any Commission order or rule that
would permit the Replacement Fund to
enter into contracts with subadvisers
without obtaining shareholder approval,
the Replacement Fund’s reliance on the
order or rule will be approved,
following the Substitutions, by a
majority of the Replacement Fund’s
outstanding voting securities.
11. JNF Advisor will serve as the
investment adviser for each
Replacement Fund. However, the
management of each Replacement Fund
will be sub-advised as described below.
Additional information, including the
investment objective, fee structure and
expenses for the fiscal year ending in
2006 for each of the Replaced and each
Replacement Fund, is shown in the
tables that follow:
12. Substitution 1
Replaced fund
Fund Name ..........................
Investment Objective ...........
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Principal Risks .....................
Adviser/Subadviser ..............
Fund Asset Level as of 9/30/
06.
Mgmt. Fee ............................
12b–1 Fee ............................
Other Expenses ...................
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Replacement fund
40/86 Series Trust Equity Portfolio .................................
Seeks to provide a high total return consistent with
preservation of capital and a prudent level of risk.
Normally invests at least 80% of its assets in U.S.
common stocks. May also invest in other U.S. and
foreign securities, including convertible securities and
warrants. Is normally widely diversified by industry
and company, with a focus on small and mediumsize companies. Uses a proprietary multi-factor
model to select securities. The model includes momentum, value and quality factors. The process focuses on security selection while remaining industry,
sector, style and capitalization neutral.
• Market Risk ..................................................................
• Small-Company Risk ...................................................
• Price Volatility ..............................................................
40/86 Advisors Partners/CEP .........................................
$169,387,929 ..................................................................
JNF Equity; subadvised by CEP
Seeks to provide a high total return consistent with
preservation of capital and a prudent level of risk.
Normally invests at least 80% of its assets in U.S.
common stocks. May also invest in other U.S. and
foreign securities, including convertible securities and
warrants. Is normally widely diversified by industry
and company, with a focus on small and mediumsize companies. Uses a proprietary multi-factor
model to select securities. The model includes momentum, value and quality factors. The process focuses on security selection while remaining industry,
sector, style and capitalization neutral.
• Market Risk.
• Small-Company Risk.
• Price Volatility.
JNF Advisor/CEP.
$0
0.79%* .............................................................................
0.25% ..............................................................................
0.12% ..............................................................................
0.79%*
0.25%
0.20%
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Replaced fund
18287
Replacement fund
Total Annual Operating
Expns..
1.16% ..............................................................................
1.24%
Fee Reduction ..............
¥0.06% ...........................................................................
¥0.14%
Net Total Annual Expenses.
1.10% ..............................................................................
1.10%
* The
advisory fee schedule does not contain breakpoints.
The Applicants believe that the
Replacement Fund is an appropriate
substitute for the Replaced Fund
because the investment objective and
policies of the Replacement Fund are
nearly identical to those of the Replaced
Fund. Additionally, the Replacement
Fund will be managed by the same subadviser as the Replaced Fund, and will
continue using the same style and
strategy as is used in managing the
Replaced Fund.
13. Substitution 2
Replaced fund
Replacement fund
40/86 Series Trust Balanced Portfolio ............................
Seeks a high total investment return consistent with the
preservation of capital and prudent investment risk.
Normally, invests approximately 50–65% of assets in
equities, and the remainder in a combination of fixed
income securities, or cash equivalents. The equity
portion of the Portfolio is invested primarily in U.S.
common stocks but may also invest in other U.S. and
foreign securities, including convertible securities and
warrants. Normally, the equity portion will be widely
diversified by industry and company. It will focus on
large and medium-size companies.
The fixed income portion of the Portfolio will normally
maintain at least 25% of the value of the Portfolio’s
assets in a wide range of domestic and foreign fixedincome securities, including non-U.S. dollar denominated securities. The majority of foreign investments
will be in Yankee Bonds. These fixed-income securities will have primarily intermediate and/or long-term
maturities. The Portfolio may also invest in below investment grade fixed-income securities that are not
believed to involve undue risk to income or principal.
The lowest rating categories in which the Portfolio
will invest are rated Caa/CCC by Moody’s/S&P.
• Market Risk ..................................................................
• Midsize Company Risk ................................................
• Price Volatility ..............................................................
• Principal Loss ..............................................................
• Credit Risk ...................................................................
• Interest Rate Risk ........................................................
• Foreign Risk ................................................................
• Leverage Risk ..............................................................
40/86/CEP—Equity .........................................................
40/86 Advisors—Fixed Income
$42,161,064 ....................................................................
JNF Balanced; subadvised by CEP.
Seeks a high total investment return consistent with the
preservation of capital and prudent investment risk.
Normally, invests approximately 50–65% of assets in
equities, and the remainder in a combination of fixed
income securities, or cash equivalents. The equity
portion of the Portfolio is invested primarily in U.S.
common stocks but may also invest in other U.S. and
foreign securities, including convertible securities and
warrants. Normally, the equity portion will be widely
diversified by industry and company. It will focus on
large and medium-size companies.
The fixed income portion of the portfolio will normally
maintain at least 25% of the value of the Portfolio’s
assets in a wide range of domestic and foreign fixedincome securities, including non-U.S. dollar denominated securities. The majority of foreign investments
will be in Yankee Bonds. These fixed-income securities will have primarily intermediate and/or long-term
maturities. The Portfolio may also invest in below investment grade fixed-income securities that are not
believed to involve undue risk to income or principal.
The lowest rating categories in which the Portfolio
will invest are rated Caa/CCC by Moody’s/S&P.
• Market Risk.
• Midsize Company Risk.
• Price Volatility.
• Principal Loss.
• Credit Risk.
• Interest Rate Risk.
• Foreign Risk.
• Leverage Risk.
JNF Advisor/CEP.
0.79%* .............................................................................
0.25% ..............................................................................
0.16% ..............................................................................
0.79%*
0.25%
0.23%
Total Annual Operating
Expenses.
1.20% ..............................................................................
1.27%
Fee Reduction ..............
¥0.10% ...........................................................................
¥0.17%
Net Total Annual Expenses.
1.10% ..............................................................................
1.10%
Fund Name ..........................
Investment Objective ...........
Principal Risks .....................
Adviser/Subadviser ..............
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Fund Asset Level as of 9/30/
06.
Mgmt. Fee ............................
12b–1 Fee ............................
Other Expenses ...................
* The
$0
advisory fee schedule does not contain breakpoints.
The Applicants believe that the
Replacement Fund is an appropriate
substitute for the Replaced Fund
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because the investment objective and
policies of the Replacement Fund are
substantially similar to those of the
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Replaced Fund. Additionally, the
Replacement Fund will be managed by
the same sub-adviser as the Replaced
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Federal Register / Vol. 72, No. 69 / Wednesday, April 11, 2007 / Notices
Fund, and will continue using the same
style and strategy as is used in managing
the Replaced Fund.
14. The Substitutions will take place
at the Funds’ relative net asset values
determined on the date of the
Substitutions in accordance with
Section 22 of the Act and Rule 22c–1
thereunder with no change in the
amount of any Contract Owner’s
account value or death benefit or in the
dollar value of his or her investment in
any of the Sub-Accounts. Accordingly,
there will be no financial impact on any
Contract Owner. The Substitutions will
generally be effected by having each of
the Sub-Accounts that invests in the
Replaced Funds redeem its shares at the
net asset value calculated on the date of
the Substitutions and purchase shares of
the respective Replacement Funds at the
net asset value calculated on the same
date.
15. In the alternative, should a
Replaced Fund determine that a cash
redemption would adversely affect its
shareholders, it may redeem the interest
‘‘in-kind.’’ In that case, the Substitutions
will be effected by the Sub-Account
contributing all the securities it receives
from the Replaced Fund for an amount
of Replacement Fund shares equal to the
fair market value of the securities
contributed. All in-kind redemptions
from a Replaced Fund of which any of
the Applicants is an affiliated person
will be effected in accordance with the
conditions set forth in the Commission’s
no-action letter issued to Signature
Financial Group, Inc. (available
December 28, 1999).
16. The Substitutions will be
described in a supplement to the
prospectuses for the Contracts
(‘‘Supplements’’) filed with the
Commission and mailed to Contract
Owners. The Supplements will provide
Contract Owners with notice of the
Substitutions and describe the reasons
for engaging in the Substitutions. The
Supplements also will inform Contract
Owners with assets allocated to a SubAccount investing in the Replaced
Funds that the Replaced Funds will not
be an available investment option after
the date of the Substitutions and that
Contract Owners will have the
opportunity to reallocate account value
once:
• Prior to the Substitutions, from the
Sub-Accounts investing in the Replaced
Funds, and
• For 30 days after the Substitutions,
from the Sub-Accounts investing in the
Replacement Funds to Sub-Accounts
investing in other Funds available under
the respective Contracts, without
diminishing the number of free transfers
that may be made in a given contract
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year and without the imposition of any
transfer charge or limitation, other than
any applicable limitations in place to
deter potentially harmful excessive
trading. To the extent a Contract Owner
has account value allocated to both SubAccounts investing in a Replaced Fund,
the Contract Owner will be permitted
one reallocation from each SubAccount. If a Contract Owner reallocates
from both Sub-Accounts on the same
day, they will have exhausted the
number of permitted reallocations.
17. The prospectuses for the Contracts
will contain the substance of the
information contained in the
Supplements concerning the
Substitutions. Each Contract Owner will
be provided with a prospectus for the
Replacement Funds before the
Substitutions, except that with respect
to Replacement Funds that become
effective contemporaneously with the
Substitutions, a prospectus will be sent
to affected Contract Owners with the
written confirmation. Within five days
after the Substitutions, JNL will send
affected Contract Owners written
confirmation that the Substitutions have
occurred and notice that Contract
Owners will have the opportunity to
reallocate account value, for 30 days
after the Substitutions, from the SubAccounts investing in the Replacement
Funds to Sub-Accounts investing in
other Funds available under the
respective Contracts, without
diminishing the number of free transfers
that may be made in a given contract
year and without the imposition of any
transfer charge or limitation, other than
any applicable limitations in place to
deter potentially harmful excessive
trading.
18. JNL will pay all direct and
indirect expenses and transaction costs
of the Substitutions, including all legal,
accounting and brokerage expenses
relating to the Substitutions. No costs
will be borne by Contract Owners.
Affected Contract Owners will not incur
any fees or charges as a result of the
Substitutions, nor will their rights or the
obligations of the Applicants under the
Contracts be altered in any way. The
Substitutions will not cause the fees and
charges under the Contracts currently
being paid by Contract Owners to be
greater after the Substitutions than
before the Substitutions. The
Substitutions will have no adverse tax
consequences to Contract Owners and
will in no way alter the tax benefits to
Contract Owners.
19. Applicants believe that their
request satisfies the standards for relief
pursuant to Section 26(c) of the Act, as
set forth below, because the affected
Contract Owners will have:
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(1) Account values allocated to a SubAccount invested in a Replacement
Fund with an investment objective and
policies substantially similar to the
investment objective and policies of the
Replaced Fund; and
(2) Replacement Funds whose current
total annual expenses will be no higher
than those of the Replaced Funds for
their 2006 fiscal year, because as
described below, JNL has agreed to, for
a period of 24 months following the
Substitutions, limit the total net
expenses of a Replacement Fund to
those of the Replaced Fund for the 2006
fiscal year. At the end of the 24-month
period it is possible that the expenses of
the Replacement Funds may be higher.
Applicants’ and Section 17 Applicants’
Legal Analysis
1. Section 26(c) of the Act makes it
unlawful for any depositor or trustee of
a registered unit investment trust
holding the security of a single issuer to
substitute another security for such
security unless the Commission
approves the substitution. The
Commission will approve such a
substitution if the evidence establishes
that it is consistent with the protection
of investors and the purposes fairly
intended by the policy and provisions of
the Act.
2. The purpose of Section 26(c) is to
protect the expectation of investors in a
unit investment trust that the unit
investment trust will accumulate shares
of a particular issuer by preventing
unscrutinized substitutions that might,
in effect, force shareholders dissatisfied
with the substituted security to redeem
their shares, thereby possibly incurring
either a loss of the sales load deducted
from initial premium payments, an
additional sales load upon reinvestment
of the redemption proceeds, or both.
Moreover, in the insurance product
context, a Contract Owner forced to
redeem may suffer adverse tax
consequences. Section 26(c) affords this
protection to investors by preventing a
depositor or trustee of a unit investment
trust that holds shares of one issuer
from substituting for those shares the
shares of another issuer, unless the
Commission approves that substitution.
3. Applicants assert that the purposes,
terms and conditions of the
Substitutions are consistent with the
principles and purposes of Section 26(c)
and do not entail any of the abuses that
Section 26(c) is designed to prevent.
Applicants have reserved the right to
make such a substitution under the
Contracts and this reserved right is
disclosed in the prospectus for the
Contracts.
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4. In both Substitutions, Applicants
maintain, the investment objectives and
policies of the Replacement Funds are
sufficiently similar to those of the
corresponding Replaced Funds that
Contract Owners will have reasonable
continuity in investment expectations.
Accordingly, the Replacement Funds
are appropriate investment vehicles for
those Contract Owners who have
account values allocated to the Replaced
Funds.
5. Applicants state that, for the 24month period following the date of the
Substitutions, JNL agrees to limit the
total operating expenses of a
Replacement Fund (taking into account
any expense waiver or reimbursement)
on an annualized basis to the net
expense level of the corresponding
Replaced Fund for the 2006 fiscal year.
In addition, for 24 months following the
Substitutions, JNL will not increase
asset-based fees or charges for Contracts
outstanding on the day of the
Substitutions. JNL represents that the
Substitutions and the selection of the
Replacement Funds were not motivated
by any financial consideration paid or to
be paid by the Replacement Funds, their
advisers or underwriters, or their
respective affiliates.
6. Applicants submit that, the
Substitutions will not result in the type
of costly forced redemption that Section
26(c) was intended to guard against and,
for the following reasons, is consistent
with the protection of investors and the
purposes fairly intended by the Act:
(1) Each of the Replacement Funds is
an appropriate fund to which to move
Contract Owners with account values
allocated to the Replaced Funds because
the new funds have substantially similar
investment objectives and policies.
(2) The costs of the Substitutions,
including any brokerage costs, will be
borne by JNL and will not be borne by
Contract Owners. No charges will be
assessed to effect the Substitutions.
(3) The Substitutions 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
account value.
(4) The Substitutions will not cause
the fees and charges under the Contracts
currently being paid by Contract
Owners to be greater after the
Substitutions than before the
Substitutions and will result in Contract
Owners’ account values being moved to
a Fund with the same or lower current
total annual expenses.
(5) All Contract Owners will be given
notice of the Substitutions prior to the
Substitutions and will have an
opportunity before, and for 30 days
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after, the Substitutions to reallocate
account value among other available
Sub-Accounts without diminishing the
number of free transfers that may be
made in a given contract year and
without the imposition of any transfer
charge or limitation, other than any
applicable limitations in place to deter
potentially harmful excessive trading or
disintermediation involving the fixed
accounts available with the variable
annuity contracts.
(6) Within five days after a
Substitution, JNL will send to its
affected Contract Owners written
confirmation that a Substitution has
occurred.
(7) The Substitutions will in no way
alter the insurance benefits to Contract
Owners or the contractual obligations of
JNL.
(8) The Substitutions will have no
adverse tax consequences to Contract
Owners and will in no way alter the tax
benefits to Contract Owners.
(9) Before a Replacement Fund relies
on any Commission order or rule that
would permit the Replacement Fund to
enter into contracts with sub-advisers
without obtaining shareholder approval,
the Replacement Fund’s reliance on the
order or rule will be approved,
following the Substitutions, by a
majority of the Replacement Fund’s
outstanding voting securities.
7. The Section 17 Applicants request
an order under Section 17(b) exempting
them from the provisions of Section
17(a) to the extent necessary to permit
JNL to carry out each of the proposed
Substitutions. Section 17(a)(1) of the
Act, in relevant part, prohibits any
affiliated person of a registered
investment company, or any affiliated
person of such person, acting as
principal, from knowingly selling any
security or other property to that
company. Section 17(a)(2) of the Act
generally prohibits the persons
described above, acting as principal,
from knowingly purchasing any security
or other property from the registered
company.
8. Applicants state that, JNL, as
depositor of the Separate Accounts, is
an affiliate of the Separate Accounts and
also JNF Advisor, which serves as
investment adviser for the affected
NLVT series. As such, JNF Advisor
could be deemed to control the affected
NLVT series and be an affiliate of the
affected NLVT series. Assuming, for this
or other reasons, that an affected NLVT
series is an affiliate of an affiliate of JNL,
to the extent the Separate Accounts each
use assets received in-kind to purchase
Replacement Fund Shares, the
Substitutions would involve one or
more purchases or sales of securities or
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18289
property between persons who are
affiliates of affiliates. Accordingly, the
Section 17 Applicants are seeking relief,
to the extent necessary, from Section
17(a) for the in-kind purchases and sales
of Replacement Fund Shares.
9. Section 17(b) of the Act provides
that the Commission may, upon
application, grant an order exempting
any transaction from the prohibitions of
Section 17(a) if the evidence establishes
that:
(1) The terms of the proposed
transaction, including the consideration
to be paid or received, are reasonable
and fair and do not involve
overreaching on the part of any person
concerned;
(2) the proposed transaction is
consistent with the policy of each
registered investment company
concerned, as recited in its registration
statement and records filed under the
Act; and
(3) the proposed transaction is
consistent with the general purposes of
the Act.
10. The Section 17 Applicants submit
that, for all the reasons set forth in
paragraphs 3–9 above, the terms of the
proposed in-kind purchases of shares of
the Replacement Funds by the Separate
Accounts, including the consideration
to be paid and received, are reasonable
and fair and do not involve
overreaching on the part of any person
concerned. The Section 17 Applicants
also submit that the proposed in-kind
purchases by the Separate Accounts are
consistent with the policies of JNL and
the affected NLVT series. Finally, the
Section 17 Applicants submit that the
proposed substitutions are consistent
with the general purposes of the Act.
11. To the extent the Separate
Account’s in-kind purchases of
Replacement Fund shares are deemed to
involve principal transactions between
entities which are affiliates of affiliates,
the procedures described below,
Applicants and Section 17 Applicants
contend, should be sufficient to assure
that the terms of the proposed
transactions are reasonable and fair to
all participants. The Section 17
Applicants maintain that the terms of
the proposed in-kind purchase
transactions, including the
consideration to be paid and received by
each Fund involved, are reasonable, fair
and do not involve overreaching. In
addition, although not applicable, the
in-kind transactions will conform with
all except one of the conditions
enumerated in Rule 17a–7. The
proposed transactions will take place at
relative net asset value in conformity
with the requirements of Section 22(c)
of the Act and Rule 22c–1 thereunder
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with no change in the amount of any
Contract Owner’s account value or
death benefit or in the dollar value of
his or her investment in any SubAccount. Contract Owners will not
suffer any adverse tax consequences as
a result of the substitutions. The fees
and charges under the Contracts will not
increase because of the substitutions.
Even though they may not rely on Rule
17a–7, the Section 17 Applicants
believe that the Rule’s conditions
outline the type of safeguards that result
in transactions that are fair and
reasonable to registered investment
company participants and preclude
overreaching.
12. The Section 17 Applicants state
that they will carry out the proposed inkind purchases in conformity with all of
the conditions of Rule 17a–7 and each
Fund’s procedures thereunder, except
that the consideration paid for the
securities being purchased or sold may
not be entirely cash. Nevertheless, they
contend, the circumstances surrounding
the proposed Substitutions will be such
as to offer the same degree of protection
to each Replacement Fund from
overreaching that Rule 17a–7 provides
to them generally in connection with
their purchase and sale of securities
under that Rule in the ordinary course
of their business. In particular, JNL (or
any of its affiliates) cannot effect the
proposed transactions at a price that is
disadvantageous to any of the
Replacement Funds. Although the
transactions may not be entirely for
cash, each will be effected based upon
(1) the independent market price of the
portfolio securities valued as specified
in paragraph (b) of Rule 17a–7, and (2)
the net asset value per share of each
Fund involved valued in accordance
with the procedures disclosed in its
registration statement and as required
by Rule 22c–1 under the Act. No
brokerage commission, fee (except for
customary transfer fees), or other
remuneration will be paid to any party
in connection with the proposed in-kind
transactions.
13. Applicants state that the sale of
shares of Replacement Funds for
investment securities, as contemplated
by the proposed in-kind transactions, is
consistent with the investment policy
and restrictions of the Replacement
Funds because (1) the shares are sold at
their net asset value, and (2) the
portfolio securities are of the type and
quality that the Replacement Funds
would each have acquired with the
proceeds from share sales had the shares
been sold for cash. To assure that the
second of these conditions is met, each
Replacement Funds’ sub-adviser will
examine the portfolio securities being
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15:09 Apr 10, 2007
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offered to each Replacement Fund and
accept only those securities as
consideration for shares that it would
have acquired for each such fund in a
cash transaction.
14. The proposed in-kind
transactions, Applicants state, are
consistent with the general purposes of
the Act as stated in the Findings and
Declaration of Policy in Section 1 of the
Act. The proposed transactions do not
present any of the conditions or abuses
that the Act was designed to prevent. In
particular, Sections 1(b)(2) and (3) of the
Act state, among other things, that the
national public interest and the interest
of investors are adversely affected
‘‘when investment companies are
organized, operated, managed, or their
portfolio securities are selected in the
interest of directors, officers, investment
advisers, depositors, or other affiliated
persons thereof, or in the interests of
other investment companies or persons
engaged in other lines of business,
rather than in the interest of all classes
of such companies’ security holders;
* * * when investment companies
issue securities containing inequitable
or discriminatory provisions, or fail to
protect the preferences and privileges of
the holders of their outstanding
securities * * *’’. For all the reasons
stated in the Application, the Section 17
Applicants state that, the abuses
described in Sections l(b)(2) and (3) of
the Act will not occur in connection
with the proposed in-kind purchases.
15. The Commission has previously
granted exemptions from Section 17(a)
in circumstances substantially similar in
all material respects to those presented
in this Application to applicants
affiliated with an open-end management
investment company that proposed to
purchase shares issued by the company
with investment securities of the type
that the company might otherwise have
purchased for its portfolio. In these
cases, the Commission issued an order
pursuant to Section 17(b) of the Act
where the expense of liquidating such
investment securities and using the
cash-proceeds to purchase shares of the
investment company would have
reduced the value of investors’ ultimate
investment in such shares.
Conclusions
1. Applicants request an order of the
Commission pursuant to Section 26(c)
of the 1940 Act approving the
Substitutions. Section 26(c), in pertinent
part, provides that the Commission shall
issue an order approving a substitution
of securities if the evidence establishes
that it is consistent with the protection
of investors and the purposes fairly
intended by the policy and provisions of
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the 1940 Act. For the reasons and upon
the facts set forth in the Application, the
Applicants state that the requested order
meets the standards set forth in Section
26(c) and should, therefore, be granted.
2. Section 17 Applicants request that
the Commission issue an order pursuant
to Section 17(b) of the Act exempting
the Separate Accounts, JNL and the
affected NLVT series from the
provisions of Section 17(a) of the Act to
the extent necessary to permit, as part
of the Substitutions, the in-kind
purchase of shares of the Replacement
Funds which may be deemed to be
prohibited by Section 17(a) of the Act.
The Section 17 Applicants represent
that the proposed in-kind transactions
meet all of the requirements of Section
17(b) of the Act and that an exemption
should be granted, to the extent
necessary, from the provisions of
Section 17(a).
For the Commission, by the Division of
Investment Management, under delegated
authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–6867 Filed 4–10–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–27778; File No. 812–13347]
MetLife Insurance Company of
Connecticut, et al.
April 6, 2007.
Securities and Exchange
Commission (‘‘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’’), and an
order of exemption pursuant to Section
17(b) of the Act from Section 17(a) of
the Act.
AGENCY:
MetLife Insurance
Company of Connecticut (‘‘MetLife of
CT’’), MetLife of CT Separate Account
Five for Variable Annuities (‘‘Separate
Account Five’’), MetLife of CT Separate
Account Seven for Variable Annuities
(‘‘Separate Account Seven’’), MetLife of
CT Separate Account Nine for Variable
Annuities (‘‘Separate Account Nine’’),
MetLife of CT Separate Account Eleven
for Variable Annuities (‘‘Separate
Account Eleven’’), MetLife of CT
Separate Account Thirteen for Variable
Annuities (‘‘Separate Account
Thirteen’’), MetLife of CT Fund U for
Variable Annuities (‘‘Fund U’’), MetLife
of CT Separate Account PF for Variable
Annuities (‘‘Separate Account PF’’),
APPLICANTS:
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[Federal Register Volume 72, Number 69 (Wednesday, April 11, 2007)]
[Notices]
[Pages 18284-18290]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-6867]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-27779; File No. 812-13342]
Jefferson National Life Insurance Company, et al.
April 6, 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'') approving certain substitutions of securities and an order of
exemption pursuant to Section 17(b) of the Act from Section 17(a) of
the Act.
-----------------------------------------------------------------------
Applicants: Jefferson National Life Insurance Company (``JNL''),
Jefferson National Life Annuity Account C (``Separate Account C''),
Jefferson National Life Annuity Account E (``Separate Account E''),
Jefferson National Life Annuity Account F (``Separate Account F''),
Jefferson National Life Annuity Account G (``Separate Account G''),
Jefferson National Life Annuity Account H (``Separate Account H''),
Jefferson National Life Annuity Account I (``Separate Account I''),
Jefferson National Life Annuity Account J (``Separate Account J''),
Jefferson National Life Annuity Account K (``Separate Account K''),
Conseco Variable Insurance--Separate Account L (``Separate Account L'',
and together with Separate Account C, Separate Account E, Separate
Account F, Separate Account G, Separate Account H, Separate Account I,
Separate Account J, and Separate Account K, the ``Separate Accounts''
and, collectively with JNL, the ``Applicants''), Northern Lights
Variable Trust (``NLVT'' and collectively with Applicants, the
``Section 17 Applicants'').
[[Page 18285]]
Summary of Application: Applicants seek an order approving the proposed
substitution of shares of the 40[verbar]86 Series Trust Equity
Portfolio and 40[verbar]86 Series Trust Balanced Portfolio (the
``Replaced Funds'') with shares of the JNF Equity Portfolio and JNF
Balanced Portfolio (the ``Replacement Funds''), (the
``Substitutions''). Section 17 Applicants seek an order exempting them
from the provisions of Section 17(a) of the Act to the extent necessary
to permit JNL to carry out each of the Substitutions (``Application'').
Filing Date: The application was originally filed on November 9, 2006,
and was amended and restated on January 17, 2007, and April 2, 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 April 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, 9920 Corporate Campus
Drive, Suite 1000, Louisville, Kentucky 40223.
FOR FURTHER INFORMATION CONTACT: Patrick Scott, Senior Counsel, Office
of Insurance Products, Division of Investment Management, at (202) 551-
6763, or Harry Eisenstein, Branch Chief, at (202) 661-6795.
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, 100 F Street, NE.,
Washington, D.C. 20549 (202-942-8090).
Applicants' and Section 17 Applicants' Representations
1. JNL is a stock life insurance company originally organized in
1937 under the laws of Texas. JNL was formerly a subsidiary of Conseco
Variable Insurance Company. JNL is currently an affiliate of Inviva,
Inc., which purchased JNL in 2002.
2. Separate Account C was established in 1980. Separate Account C
is registered under the Act as a unit investment trust (File No. 811-
04819) and is used to fund variable annuity contracts issued by JNL.
Two variable annuity contracts funded by Separate Account C are
affected by the Substitutions.
Separate Account E was established in 1993. Separate Account E is
registered under the Act as a unit investment trust (File No. 811-
08288) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account E is affected
by the Substitutions.
Separate Account F was established in 1997. Separate Account F is
registered under the Act as a unit investment trust (File No. 811-
08483) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account F is affected
by the Substitutions.
Separate Account G was established in 1996. Separate Account G is
registered under the Act as a unit investment trust (File No. 811-
07501) and is used to fund variable annuity contracts issued by JNL.
Three variable annuity contracts funded by Separate Account G are
affected by the Substitutions.
Separate Account H was established in 1999. Separate Account H is
registered under the Act as a unit investment trust (File No. 811-
09693) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account H is affected
by the Substitutions.
Separate Account I was established in 2000. Separate Account I is
registered under the Act as a unit investment trust (File No. 811-
10213) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account I is affected
by the Substitutions.
Separate Account J was established in 2003. Separate Account J is
registered under the Act as a unit investment trust (File No. 811-
21498) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account J is affected
by the Substitutions.
Separate Account K was established in 2003. Separate Account K is
registered under the Act as a unit investment trust (File No. 811-
21500) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account K is affected
by the Substitutions.
Separate Account L was established in 2000. Separate Account L is
registered under the Act as a unit investment trust (File No. 811-
10271) and is used to fund variable universal life contracts issued by
JNL. One variable universal life contract funded by Separate Account L
is affected by the Substitutions (all eleven variable annuity contracts
and the one variable universal life contract affected by the
Substitutions are collectively referred to as the ``Contracts'').
3. NLVT was organized in Delaware as a statutory trust on November
2, 2005 and is registered under the Act as an open-end management
investment company.
4. 40/86 Advisors, Inc. (``Advisors'') is the investment adviser to
the Replaced Funds, and is a subsidiary of Conseco Inc., JNL's former
parent. The two Replaced Funds are portfolios of the 40/86 Series
Trust, formerly known as the Conseco Series Trust (``CST''). JNF
Advisors, Inc. (``JNF Advisor'') is a newly formed investment adviser
under common control with JNL. JNF Advisor will serve as investment
adviser to the Replacement Funds, which will be portfolios of NLVT.
Chicago Equity Partners (``CEP'') is a registered investment adviser
and is currently 40/86 Series Trust Equity Portfolio's sub-adviser. CEP
is also currently the 40/86 Series Trust Balanced Portfolio's sub-
adviser for the equity portion of the fund. After the Substitutions,
CEP will be sub-adviser for both Replacement Funds, including the fixed
income portion of the JNF Balanced Portfolio. There are no corporate
affiliations between any of these three investment advisers.
5. Purchase payments under the Contracts may be allocated to one or
more sub-accounts of the Separate Accounts (the ``Sub-Accounts'').
Income, gains and losses, whether or not realized, from assets
allocated to the Separate Accounts are, as provided in the Contracts,
credited to or charged against the Separate Accounts without regard to
other income, gains or losses of JNL. The assets maintained in the
Separate Accounts will not be charged with any liabilities arising out
of any other business conducted by JNL. Nevertheless, all obligations
arising under the Contracts, including the commitment to make annuity
payments or death benefit payments, are general corporate obligations
of JNL. Accordingly, all of the assets of JNL are available to meet its
obligations under the Contracts.
[[Page 18286]]
6. The Contracts permit allocations of account value to available
Sub-Accounts that invest in specific investment portfolios of
underlying registered investment companies (each a ``Fund'' and,
collectively, the ``Mutual Funds''). The Mutual Funds are registered
under the Act as open-end management investment companies.
7. The Contracts permit transfers of accumulation value from one
Sub-Account to another Sub-Account at any time subject to certain
restrictions. No sales charge applies to such a transfer of
accumulation value among Sub-Accounts.
8. The Contracts reserve the right, upon notice to contract owners
(the ``Contract Owners''), to substitute shares of another mutual fund
for shares of a Fund held by a Sub-Account.
9. Account C was established in 1980 as a management investment
company. Effective May 1, 1993, Account C was restructured into a unit
investment trust, pursuant to Commission exemptive relief. As a
condition of this exemptive relief, certain Contract Owners' contracts
were endorsed to limit the advisory fees the Contract Owner paid on
investments in the 40/86 Series Trust Equity Portfolio. Investments by
those Contract Owners in the corresponding Replacement Fund will
continue to benefit from the advisory fee limitations which were a
condition of the prior exemptive relief.
10. The Replaced Funds involved in the Substitutions include 2
separate 4086 Series Trust portfolios. After the Substitutions, the
investment objective and policies of each Replacement Fund will be the
same as or substantially similar to the investment objective and
policies of the corresponding Replaced Fund. The Substitutions are
being proposed for several reasons. First, the accumulated assets in
the Replaced Funds were derived from an earlier time, prior to 2002,
when Conseco Inc., JNL's former parent, formed a large commissioned
broker-dealer network that was familiar with, and loyal to, the CST
funds. That broker-dealer network dissolved after Conseco experienced
financial difficulties in the summer of 2002. Today JNL, as an
affiliate of Inviva, Inc. (which purchased JNL (f/k/a Conseco Variable
Insurance Company)), has almost no access to the broker-dealer network
that was responsible for the growth in assets in the CST funds. In
addition, JNL has developed its own, very different target audience:
the fee-based and fee-only adviser, as opposed to the traditional
commission-based representative. Second, as part of the discussions
related to the Substitutions of the Replaced Funds, Advisors has
indicated to JNL that sponsoring an insurance-dedicated mutual fund
complex did not have a place in its parent corporation's long-term
business plan. Advisors intends to continue to serve in its current
capacity with respect to the Replaced Funds to facilitate a smooth
transition. The Board of Trustees of 40/86 Series Trust voted to
liquidate, on or about March 23, 2007, the Trust's three other
portfolios, the Fixed Income, Government Securities and Money Market
Portfolios, and these portfolios have been liquidated.
Currently all of the Mutual Funds are unaffiliated investment
companies and changes due to investment performance, style drift, or
management practice issues require substantial systems, filing, and
printing resources, which slows the process to make changes, if
necessary. Because it is anticipated the Replacement Funds and JNF
Advisors will have ``manager of managers'' exemptive relief, JNF
Advisor, as investment adviser, will be able to act more quickly and
efficiently to protect Contract Owners' interests if the investment
strategy, management team or performance of a sub-adviser does not meet
expectations. JNF Advisor plans to file an application for ``manager of
managers'' exemptive relief within 6 months from the date that the
Substitutions are effected. The ``manager of managers'' exemptive
relief would permit JNF Advisor, as the investment adviser for the
existing series, to replace any sub-adviser or to employ a new sub-
adviser without submitting such actions for the approval of
shareholders of the affected series. Before a Replacement Fund relies
on any Commission order or rule that would permit the Replacement Fund
to enter into contracts with subadvisers without obtaining shareholder
approval, the Replacement Fund's reliance on the order or rule will be
approved, following the Substitutions, by a majority of the Replacement
Fund's outstanding voting securities.
11. JNF Advisor will serve as the investment adviser for each
Replacement Fund. However, the management of each Replacement Fund will
be sub-advised as described below. Additional information, including
the investment objective, fee structure and expenses for the fiscal
year ending in 2006 for each of the Replaced and each Replacement Fund,
is shown in the tables that follow:
12. Substitution 1
------------------------------------------------------------------------
Replaced fund Replacement fund
------------------------------------------------------------------------
Fund Name................... 40/86 Series Trust JNF Equity;
Equity Portfolio. subadvised by CEP
Investment Objective........ Seeks to provide a Seeks to provide a
high total return high total return
consistent with consistent with
preservation of preservation of
capital and a capital and a
prudent level of prudent level of
risk. Normally risk. Normally
invests at least invests at least
80% of its assets 80% of its assets
in U.S. common in U.S. common
stocks. May also stocks. May also
invest in other invest in other
U.S. and foreign U.S. and foreign
securities, securities,
including including
convertible convertible
securities and securities and
warrants. Is warrants. Is
normally widely normally widely
diversified by diversified by
industry and industry and
company, with a company, with a
focus on small and focus on small and
medium-size medium-size
companies. Uses a companies. Uses a
proprietary multi- proprietary multi-
factor model to factor model to
select securities. select securities.
The model includes The model includes
momentum, value and momentum, value and
quality factors. quality factors.
The process focuses The process focuses
on security on security
selection while selection while
remaining industry, remaining industry,
sector, style and sector, style and
capitalization capitalization
neutral. neutral.
Principal Risks............. Market Risk Market
Risk.
Small- Small-
Company Risk. Company Risk.
Price Price
Volatility. Volatility.
Adviser/Subadviser.......... 40/86 Advisors JNF Advisor/CEP.
Partners/CEP.
Fund Asset Level as of 9/30/ $169,387,929........ $0
06.
Mgmt. Fee................... 0.79%\*\............ 0.79%\*\
12b-1 Fee................... 0.25%............... 0.25%
Other Expenses.............. 0.12%............... 0.20%
-------------------------------------------
[[Page 18287]]
Total Annual Operating 1.16%............... 1.24%
Expns..
-------------------------------------------
Fee Reduction........... -0.06%.............. -0.14%
===========================================
Net Total Annual 1.10%............... 1.10%
Expenses.
------------------------------------------------------------------------
\*\ The advisory fee schedule does not contain breakpoints.
The Applicants believe that the Replacement Fund is an appropriate
substitute for the Replaced Fund because the investment objective and
policies of the Replacement Fund are nearly identical to those of the
Replaced Fund. Additionally, the Replacement Fund will be managed by
the same sub-adviser as the Replaced Fund, and will continue using the
same style and strategy as is used in managing the Replaced Fund.
13. Substitution 2
------------------------------------------------------------------------
Replaced fund Replacement fund
------------------------------------------------------------------------
Fund Name................... 40/86 Series Trust JNF Balanced;
Balanced Portfolio. subadvised by CEP.
Investment Objective........ Seeks a high total Seeks a high total
investment return investment return
consistent with the consistent with the
preservation of preservation of
capital and prudent capital and prudent
investment risk. investment risk.
Normally, invests Normally, invests
approximately 50- approximately 50-
65% of assets in 65% of assets in
equities, and the equities, and the
remainder in a remainder in a
combination of combination of
fixed income fixed income
securities, or cash securities, or cash
equivalents. The equivalents. The
equity portion of equity portion of
the Portfolio is the Portfolio is
invested primarily invested primarily
in U.S. common in U.S. common
stocks but may also stocks but may also
invest in other invest in other
U.S. and foreign U.S. and foreign
securities, securities,
including including
convertible convertible
securities and securities and
warrants. Normally, warrants. Normally,
the equity portion the equity portion
will be widely will be widely
diversified by diversified by
industry and industry and
company. It will company. It will
focus on large and focus on large and
medium-size medium-size
companies. companies.
The fixed income The fixed income
portion of the portion of the
Portfolio will portfolio will
normally maintain normally maintain
at least 25% of the at least 25% of the
value of the value of the
Portfolio's assets Portfolio's assets
in a wide range of in a wide range of
domestic and domestic and
foreign fixed- foreign fixed-
income securities, income securities,
including non-U.S. including non-U.S.
dollar denominated dollar denominated
securities. The securities. The
majority of foreign majority of foreign
investments will be investments will be
in Yankee Bonds. in Yankee Bonds.
These fixed-income These fixed-income
securities will securities will
have primarily have primarily
intermediate and/or intermediate and/or
long-term long-term
maturities. The maturities. The
Portfolio may also Portfolio may also
invest in below invest in below
investment grade investment grade
fixed-income fixed-income
securities that are securities that are
not believed to not believed to
involve undue risk involve undue risk
to income or to income or
principal. The principal. The
lowest rating lowest rating
categories in which categories in which
the Portfolio will the Portfolio will
invest are rated invest are rated
Caa/CCC by Moody's/ Caa/CCC by Moody's/
S&P. S&P.
Principal Risks............. Market Risk Market
Risk.
Midsize Midsize
Company Risk. Company Risk.
Price Price
Volatility. Volatility.
Principal Principal
Loss. Loss.
Credit Risk Credit
Risk.
Interest Interest
Rate Risk. Rate Risk.
Foreign Foreign
Risk. Risk.
Leverage Leverage
Risk. Risk.
Adviser/Subadviser.......... 40/86/CEP--Equity... JNF Advisor/CEP.
40/86 Advisors--
Fixed Income
Fund Asset Level as of 9/30/ $42,161,064......... $0
06.
Mgmt. Fee................... 0.79%*.............. 0.79%*
12b-1 Fee................... 0.25%............... 0.25%
Other Expenses.............. 0.16%............... 0.23%
-------------------------------------------
Total Annual Operating 1.20%............... 1.27%
Expenses.
-------------------------------------------
Fee Reduction........... -0.10%.............. -0.17%
===========================================
Net Total Annual 1.10%............... 1.10%
Expenses.
------------------------------------------------------------------------
\*\ The advisory fee schedule does not contain breakpoints.
The Applicants believe that the Replacement Fund is an appropriate
substitute for the Replaced Fund because the investment objective and
policies of the Replacement Fund are substantially similar to those of
the Replaced Fund. Additionally, the Replacement Fund will be managed
by the same sub-adviser as the Replaced
[[Page 18288]]
Fund, and will continue using the same style and strategy as is used in
managing the Replaced Fund.
14. The Substitutions will take place at the Funds' relative net
asset values determined on the date of the Substitutions in accordance
with Section 22 of the Act and Rule 22c-1 thereunder with no change in
the amount of any Contract Owner's account value or death benefit or in
the dollar value of his or her investment in any of the Sub-Accounts.
Accordingly, there will be no financial impact on any Contract Owner.
The Substitutions will generally be effected by having each of the Sub-
Accounts that invests in the Replaced Funds redeem its shares at the
net asset value calculated on the date of the Substitutions and
purchase shares of the respective Replacement Funds at the net asset
value calculated on the same date.
15. In the alternative, should a Replaced Fund determine that a
cash redemption would adversely affect its shareholders, it may redeem
the interest ``in-kind.'' In that case, the Substitutions will be
effected by the Sub-Account contributing all the securities it receives
from the Replaced Fund for an amount of Replacement Fund shares equal
to the fair market value of the securities contributed. All in-kind
redemptions from a Replaced Fund of which any of the Applicants is an
affiliated person will be effected in accordance with the conditions
set forth in the Commission's no-action letter issued to Signature
Financial Group, Inc. (available December 28, 1999).
16. The Substitutions will be described in a supplement to the
prospectuses for the Contracts (``Supplements'') filed with the
Commission and mailed to Contract Owners. The Supplements will provide
Contract Owners with notice of the Substitutions and describe the
reasons for engaging in the Substitutions. The Supplements also will
inform Contract Owners with assets allocated to a Sub-Account investing
in the Replaced Funds that the Replaced Funds will not be an available
investment option after the date of the Substitutions and that Contract
Owners will have the opportunity to reallocate account value once:
Prior to the Substitutions, from the Sub-Accounts
investing in the Replaced Funds, and
For 30 days after the Substitutions, from the Sub-Accounts
investing in the Replacement Funds to Sub-Accounts investing in other
Funds available under the respective Contracts, without diminishing the
number of free transfers that may be made in a given contract year and
without the imposition of any transfer charge or limitation, other than
any applicable limitations in place to deter potentially harmful
excessive trading. To the extent a Contract Owner has account value
allocated to both Sub-Accounts investing in a Replaced Fund, the
Contract Owner will be permitted one reallocation from each Sub-
Account. If a Contract Owner reallocates from both Sub-Accounts on the
same day, they will have exhausted the number of permitted
reallocations.
17. The prospectuses for the Contracts will contain the substance
of the information contained in the Supplements concerning the
Substitutions. Each Contract Owner will be provided with a prospectus
for the Replacement Funds before the Substitutions, except that with
respect to Replacement Funds that become effective contemporaneously
with the Substitutions, a prospectus will be sent to affected Contract
Owners with the written confirmation. Within five days after the
Substitutions, JNL will send affected Contract Owners written
confirmation that the Substitutions have occurred and notice that
Contract Owners will have the opportunity to reallocate account value,
for 30 days after the Substitutions, from the Sub-Accounts investing in
the Replacement Funds to Sub-Accounts investing in other Funds
available under the respective Contracts, without diminishing the
number of free transfers that may be made in a given contract year and
without the imposition of any transfer charge or limitation, other than
any applicable limitations in place to deter potentially harmful
excessive trading.
18. JNL will pay all direct and indirect expenses and transaction
costs of the Substitutions, including all legal, accounting and
brokerage expenses relating to the Substitutions. No costs will be
borne by Contract Owners. Affected Contract Owners will not incur any
fees or charges as a result of the Substitutions, nor will their rights
or the obligations of the Applicants under the Contracts be altered in
any way. The Substitutions will not cause the fees and charges under
the Contracts currently being paid by Contract Owners to be greater
after the Substitutions than before the Substitutions. The
Substitutions will have no adverse tax consequences to Contract Owners
and will in no way alter the tax benefits to Contract Owners.
19. Applicants believe that their request satisfies the standards
for relief pursuant to Section 26(c) of the Act, as set forth below,
because the affected Contract Owners will have:
(1) Account values allocated to a Sub-Account invested in a
Replacement Fund with an investment objective and policies
substantially similar to the investment objective and policies of the
Replaced Fund; and
(2) Replacement Funds whose current total annual expenses will be
no higher than those of the Replaced Funds for their 2006 fiscal year,
because as described below, JNL has agreed to, for a period of 24
months following the Substitutions, limit the total net expenses of a
Replacement Fund to those of the Replaced Fund for the 2006 fiscal
year. At the end of the 24-month period it is possible that the
expenses of the Replacement Funds may be higher.
Applicants' and Section 17 Applicants' Legal Analysis
1. Section 26(c) of the Act makes it unlawful for any depositor or
trustee of a registered unit investment trust holding the security of a
single issuer to substitute another security for such security unless
the Commission approves the substitution. The Commission will approve
such a substitution if the evidence establishes that it is consistent
with the protection of investors and the purposes fairly intended by
the policy and provisions of the Act.
2. The purpose of Section 26(c) is to protect the expectation of
investors in a unit investment trust that the unit investment trust
will accumulate shares of a particular issuer by preventing
unscrutinized substitutions that might, in effect, force shareholders
dissatisfied with the substituted security to redeem their shares,
thereby possibly incurring either a loss of the sales load deducted
from initial premium payments, an additional sales load upon
reinvestment of the redemption proceeds, or both. Moreover, in the
insurance product context, a Contract Owner forced to redeem may suffer
adverse tax consequences. Section 26(c) affords this protection to
investors by preventing a depositor or trustee of a unit investment
trust that holds shares of one issuer from substituting for those
shares the shares of another issuer, unless the Commission approves
that substitution.
3. Applicants assert that the purposes, terms and conditions of the
Substitutions are consistent with the principles and purposes of
Section 26(c) and do not entail any of the abuses that Section 26(c) is
designed to prevent. Applicants have reserved the right to make such a
substitution under the Contracts and this reserved right is disclosed
in the prospectus for the Contracts.
[[Page 18289]]
4. In both Substitutions, Applicants maintain, the investment
objectives and policies of the Replacement Funds are sufficiently
similar to those of the corresponding Replaced Funds that Contract
Owners will have reasonable continuity in investment expectations.
Accordingly, the Replacement Funds are appropriate investment vehicles
for those Contract Owners who have account values allocated to the
Replaced Funds.
5. Applicants state that, for the 24-month period following the
date of the Substitutions, JNL agrees to limit the total operating
expenses of a Replacement Fund (taking into account any expense waiver
or reimbursement) on an annualized basis to the net expense level of
the corresponding Replaced Fund for the 2006 fiscal year. In addition,
for 24 months following the Substitutions, JNL will not increase asset-
based fees or charges for Contracts outstanding on the day of the
Substitutions. JNL represents that the Substitutions and the selection
of the Replacement Funds were not motivated by any financial
consideration paid or to be paid by the Replacement Funds, their
advisers or underwriters, or their respective affiliates.
6. Applicants submit that, the Substitutions will not result in the
type of costly forced redemption that Section 26(c) was intended to
guard against and, for the following reasons, is consistent with the
protection of investors and the purposes fairly intended by the Act:
(1) Each of the Replacement Funds is an appropriate fund to which
to move Contract Owners with account values allocated to the Replaced
Funds because the new funds have substantially similar investment
objectives and policies.
(2) The costs of the Substitutions, including any brokerage costs,
will be borne by JNL and will not be borne by Contract Owners. No
charges will be assessed to effect the Substitutions.
(3) The Substitutions 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 account
value.
(4) The Substitutions will not cause the fees and charges under the
Contracts currently being paid by Contract Owners to be greater after
the Substitutions than before the Substitutions and will result in
Contract Owners' account values being moved to a Fund with the same or
lower current total annual expenses.
(5) All Contract Owners will be given notice of the Substitutions
prior to the Substitutions and will have an opportunity before, and for
30 days after, the Substitutions to reallocate account value among
other available Sub-Accounts without diminishing the number of free
transfers that may be made in a given contract year and without the
imposition of any transfer charge or limitation, other than any
applicable limitations in place to deter potentially harmful excessive
trading or disintermediation involving the fixed accounts available
with the variable annuity contracts.
(6) Within five days after a Substitution, JNL will send to its
affected Contract Owners written confirmation that a Substitution has
occurred.
(7) The Substitutions will in no way alter the insurance benefits
to Contract Owners or the contractual obligations of JNL.
(8) The Substitutions will have no adverse tax consequences to
Contract Owners and will in no way alter the tax benefits to Contract
Owners.
(9) Before a Replacement Fund relies on any Commission order or
rule that would permit the Replacement Fund to enter into contracts
with sub-advisers without obtaining shareholder approval, the
Replacement Fund's reliance on the order or rule will be approved,
following the Substitutions, by a majority of the Replacement Fund's
outstanding voting securities.
7. The Section 17 Applicants request an order under Section 17(b)
exempting them from the provisions of Section 17(a) to the extent
necessary to permit JNL to carry out each of the proposed
Substitutions. Section 17(a)(1) of the Act, in relevant part, prohibits
any affiliated person of a registered investment company, or any
affiliated person of such person, acting as principal, from knowingly
selling any security or other property to that company. Section
17(a)(2) of the Act generally prohibits the persons described above,
acting as principal, from knowingly purchasing any security or other
property from the registered company.
8. Applicants state that, JNL, as depositor of the Separate
Accounts, is an affiliate of the Separate Accounts and also JNF
Advisor, which serves as investment adviser for the affected NLVT
series. As such, JNF Advisor could be deemed to control the affected
NLVT series and be an affiliate of the affected NLVT series. Assuming,
for this or other reasons, that an affected NLVT series is an affiliate
of an affiliate of JNL, to the extent the Separate Accounts each use
assets received in-kind to purchase Replacement Fund Shares, the
Substitutions would involve one or more purchases or sales of
securities or property between persons who are affiliates of
affiliates. Accordingly, the Section 17 Applicants are seeking relief,
to the extent necessary, from Section 17(a) for the in-kind purchases
and sales of Replacement Fund Shares.
9. Section 17(b) of the Act provides that the Commission may, upon
application, grant an order exempting any transaction from the
prohibitions of Section 17(a) if the evidence establishes that:
(1) The terms of the proposed transaction, including the
consideration to be paid or received, are reasonable and fair and do
not involve overreaching on the part of any person concerned;
(2) the proposed transaction is consistent with the policy of each
registered investment company concerned, as recited in its registration
statement and records filed under the Act; and
(3) the proposed transaction is consistent with the general
purposes of the Act.
10. The Section 17 Applicants submit that, for all the reasons set
forth in paragraphs 3-9 above, the terms of the proposed in-kind
purchases of shares of the Replacement Funds by the Separate Accounts,
including the consideration to be paid and received, are reasonable and
fair and do not involve overreaching on the part of any person
concerned. The Section 17 Applicants also submit that the proposed in-
kind purchases by the Separate Accounts are consistent with the
policies of JNL and the affected NLVT series. Finally, the Section 17
Applicants submit that the proposed substitutions are consistent with
the general purposes of the Act.
11. To the extent the Separate Account's in-kind purchases of
Replacement Fund shares are deemed to involve principal transactions
between entities which are affiliates of affiliates, the procedures
described below, Applicants and Section 17 Applicants contend, should
be sufficient to assure that the terms of the proposed transactions are
reasonable and fair to all participants. The Section 17 Applicants
maintain that the terms of the proposed in-kind purchase transactions,
including the consideration to be paid and received by each Fund
involved, are reasonable, fair and do not involve overreaching. In
addition, although not applicable, the in-kind transactions will
conform with all except one of the conditions enumerated in Rule 17a-7.
The proposed transactions will take place at relative net asset value
in conformity with the requirements of Section 22(c) of the Act and
Rule 22c-1 thereunder
[[Page 18290]]
with no change in the amount of any Contract Owner's account value or
death benefit or in the dollar value of his or her investment in any
Sub-Account. Contract Owners will not suffer any adverse tax
consequences as a result of the substitutions. The fees and charges
under the Contracts will not increase because of the substitutions.
Even though they may not rely on Rule 17a-7, the Section 17 Applicants
believe that the Rule's conditions outline the type of safeguards that
result in transactions that are fair and reasonable to registered
investment company participants and preclude overreaching.
12. The Section 17 Applicants state that they will carry out the
proposed in-kind purchases in conformity with all of the conditions of
Rule 17a-7 and each Fund's procedures thereunder, except that the
consideration paid for the securities being purchased or sold may not
be entirely cash. Nevertheless, they contend, the circumstances
surrounding the proposed Substitutions will be such as to offer the
same degree of protection to each Replacement Fund from overreaching
that Rule 17a-7 provides to them generally in connection with their
purchase and sale of securities under that Rule in the ordinary course
of their business. In particular, JNL (or any of its affiliates) cannot
effect the proposed transactions at a price that is disadvantageous to
any of the Replacement Funds. Although the transactions may not be
entirely for cash, each will be effected based upon (1) the independent
market price of the portfolio securities valued as specified in
paragraph (b) of Rule 17a-7, and (2) the net asset value per share of
each Fund involved valued in accordance with the procedures disclosed
in its registration statement and as required by Rule 22c-1 under the
Act. No brokerage commission, fee (except for customary transfer fees),
or other remuneration will be paid to any party in connection with the
proposed in-kind transactions.
13. Applicants state that the sale of shares of Replacement Funds
for investment securities, as contemplated by the proposed in-kind
transactions, is consistent with the investment policy and restrictions
of the Replacement Funds because (1) the shares are sold at their net
asset value, and (2) the portfolio securities are of the type and
quality that the Replacement Funds would each have acquired with the
proceeds from share sales had the shares been sold for cash. To assure
that the second of these conditions is met, each Replacement Funds'
sub-adviser will examine the portfolio securities being offered to each
Replacement Fund and accept only those securities as consideration for
shares that it would have acquired for each such fund in a cash
transaction.
14. The proposed in-kind transactions, Applicants state, are
consistent with the general purposes of the Act as stated in the
Findings and Declaration of Policy in Section 1 of the Act. The
proposed transactions do not present any of the conditions or abuses
that the Act was designed to prevent. In particular, Sections 1(b)(2)
and (3) of the Act state, among other things, that the national public
interest and the interest of investors are adversely affected ``when
investment companies are organized, operated, managed, or their
portfolio securities are selected in the interest of directors,
officers, investment advisers, depositors, or other affiliated persons
thereof, or in the interests of other investment companies or persons
engaged in other lines of business, rather than in the interest of all
classes of such companies' security holders; * * * when investment
companies issue securities containing inequitable or discriminatory
provisions, or fail to protect the preferences and privileges of the
holders of their outstanding securities * * *''. For all the reasons
stated in the Application, the Section 17 Applicants state that, the
abuses described in Sections l(b)(2) and (3) of the Act will not occur
in connection with the proposed in-kind purchases.
15. The Commission has previously granted exemptions from Section
17(a) in circumstances substantially similar in all material respects
to those presented in this Application to applicants affiliated with an
open-end management investment company that proposed to purchase shares
issued by the company with investment securities of the type that the
company might otherwise have purchased for its portfolio. In these
cases, the Commission issued an order pursuant to Section 17(b) of the
Act where the expense of liquidating such investment securities and
using the cash-proceeds to purchase shares of the investment company
would have reduced the value of investors' ultimate investment in such
shares.
Conclusions
1. Applicants request an order of the Commission pursuant to
Section 26(c) of the 1940 Act approving the Substitutions. Section
26(c), in pertinent part, provides that the Commission shall issue an
order approving a substitution of securities if the evidence
establishes that it is consistent with the protection of investors and
the purposes fairly intended by the policy and provisions of the 1940
Act. For the reasons and upon the facts set forth in the Application,
the Applicants state that the requested order meets the standards set
forth in Section 26(c) and should, therefore, be granted.
2. Section 17 Applicants request that the Commission issue an order
pursuant to Section 17(b) of the Act exempting the Separate Accounts,
JNL and the affected NLVT series from the provisions of Section 17(a)
of the Act to the extent necessary to permit, as part of the
Substitutions, the in-kind purchase of shares of the Replacement Funds
which may be deemed to be prohibited by Section 17(a) of the Act. The
Section 17 Applicants represent that the proposed in-kind transactions
meet all of the requirements of Section 17(b) of the Act and that an
exemption should be granted, to the extent necessary, from the
provisions of Section 17(a).
For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-6867 Filed 4-10-07; 8:45 am]
BILLING CODE 8010-01-P
