Integrity Life Insurance Company, et al.;, 13147-13151 [2010-5921]
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Federal Register / Vol. 75, No. 52 / Thursday, March 18, 2010 / Notices
17Ad–2(c), (d), and (h) is not less than
two years following the date the notice
is submitted. The recordkeeping
requirement under this rule is
mandatory to assist the Commission in
monitoring transfer agents who fail to
meet the minimum performance
standards set by the Commission rule.
This rule does not involve the collection
of confidential information. Please note
that a transfer agent is not required to
file under the rule unless it does not
meet the minimum performance
standards for turnaround, processing or
forwarding items received for transfer
during a month. Persons should note
that an agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Comments should be directed to: (i)
Desk Officer for the Securities and
Exchange Commission, Office of
Information and Regulatory Affairs,
Office of Management and Budget,
Room 10102, New Executive Office
Building, Washington, DC 20503, or by
sending an e-mail to:
Shagufta_Ahmed@omb.eop.gov; and (ii)
Charles Boucher Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Shirley
Martinson, 6432 General Green Way,
Alexandria, VA 22312 or send an e-mail
to: PRA_Mailbox@sec.gov. Comments
must be submitted to OMB within 30
days of this notice.
Dated: March 11, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–5919 Filed 3–17–10; 8:45 am]
BILLING CODE 8011–01–P
[Release No. IC–29171; File No. 812–13690]
Integrity Life Insurance Company, et
al.; Notice of Application
March 10, 2010.
sroberts on DSKD5P82C1PROD with NOTICES
AGENCY: Securities and Exchange
Commission (the ‘‘Commission’’).
ACTION: Notice of application for an
order of approval pursuant to Section
26(c) of the Investment Company Act of
1940, as amended (the ‘‘Act’’).
Applicants: Integrity Life Insurance
Company (‘‘Integrity’’), Separate
Account I of Integrity Life Insurance
Company (‘‘Integrity Separate Account
I’’), Separate Account II of Integrity Life
Insurance Company (‘‘Integrity Separate
Account II’’), National Integrity Life
Insurance Company (‘‘National
17:08 Mar 17, 2010
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Summary of Application: Applicants
seek an order approving the proposed
substitution of shares of certain
portfolios of the Variable Insurance
Products Fund III held by the Separate
Accounts for shares of portfolios of
Variable Insurance Products Fund III
and in the case of the Fidelity
Contrafund, shares of Variable
Insurance Products Fund II as follows:
Fidelity VIP Dynamic Capital
Appreciation: Service Class 2 with
Fidelity VIP Contrafund: Service Class
2; Fidelity VIP Growth & Income:
Service Class 2 with Fidelity VIP
Balanced: Service Class 2; Fidelity VIP
Growth & Income: Service Class with
Fidelity VIP Balanced: Service Class;
Fidelity VIP Growth & Income: Initial
Class with Fidelity VIP Balanced: Initial
Class; Fidelity VIP Growth
Opportunities: Service Class 2 with
Fidelity VIP Contrafund: Service Class
2; Fidelity VIP Growth Opportunities:
Service Class with Fidelity VIP
Contrafund: Service Class; Fidelity VIP
Growth Opportunities: Initial Class with
Fidelity VIP Contrafund: Initial Class;
and Fidelity VIP Value Strategies:
Service Class 2 with Fidelity VIP Mid
Cap: Service Class 2 (the ‘‘Substitution’’).
Filing Date: The application was
originally filed on September 3, 2009
and amended on January 19, 2010, and
March 10, 2010.
SECURITIES AND EXCHANGE
COMMISSION
VerDate Nov<24>2008
Integrity’’ and together with Integrity,
the ‘‘Integrity Companies’’), Separate
Account I of National Integrity Life
Insurance Company (‘‘National Integrity
Separate Account I’’), and Separate
Account II of National Integrity Life
Insurance Company (‘‘National Integrity
Separate Account II,’’ together with
Integrity Separate Account I, Integrity
Separate Account II, and National
Integrity Separate Account I, the
‘‘Separate Accounts’’).
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 6, 2010, 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.
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13147
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–1090.
Applicants, c/o Rhonda S. Malone, Esq.,
Associate Counsel—Securities, Western
and Southern Financial Group, Inc., 400
Broadway, Cincinnati, Ohio 45202.
FOR FURTHER INFORMATION CONTACT:
Michelle Roberts, Senior Counsel, or
Joyce M. Pickholz, Branch Chief, Office
of Insurance Products, Division of
Investment Management, at (202) 551–
6795.
The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
SUPPLEMENTARY INFORMATION:
Applicants’ Representations
1. Integrity is a stock life insurance
company organized under the laws of
Ohio. Integrity is a wholly owned
subsidiary of The Western and Southern
Life Insurance Company, a stock life
insurance company organized under the
laws of Ohio. The Western and
Southern Life Insurance Company is
wholly owned by an Ohio-domiciled
intermediate holding company, Western
& Southern Financial Group, Inc., which
is wholly owned by an Ohio-domiciled
mutual insurance holding company,
Western & Southern Mutual Holding
Company.
2. Integrity Separate Account I and
Integrity Separate Account II are
registered under the Act as unit
investment trusts (File Nos. 811–04844
and 811–07134, respectively). They are
used to fund variable annuity contracts
issued by Integrity. (‘‘Integrity
Contracts’’)
3. National Integrity is a stock life
insurance company organized under the
laws of New York. National Integrity is
a wholly owned direct subsidiary of
Integrity and an indirect subsidiary of
The Western and Southern Life
Insurance Company.
4. National Integrity Separate Account
I and National Integrity Separate
Account II are registered under the Act
as unit investment trusts (File Nos. 811–
04846 and 811–07132, respectively).
They are used to fund variable annuity
contracts issued by National Integrity
(‘‘National Integrity Contracts’’).
5. Integrity Contracts and the National
Integrity Contracts cited in the
application and affected by the
Substitution are flexible premium
deferred variable annuities (the
‘‘Contracts’’).
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6. Each Contract permits allocations
of value to available fixed and variable
subaccounts; each variable subaccount
invests in a specific investment
portfolio of an underlying mutual fund.
Of the 24 Contracts affected by this
application, 18 Contracts offer the same
56 portfolios (‘‘Subset 1’’), four Contracts
offer the same 54 portfolios (‘‘Subset 2’’)
and two Contracts offer the same 43
portfolios (‘‘Subset 3’’).
7. Each Contract permits transfers
from one subaccount to another
subaccount at any time prior to
annuitization, subject to certain
restrictions and charges described
below. No sales charge applies to such
a transfer of value among subaccounts.
The Contracts permit up to twelve free
transfers during any contract year. A fee
of $20 is imposed on transfers in excess
of twelve transfers in a contract year.
8. Each Contract reserves the right,
upon notice to Contract owners and
compliance with applicable law, to add,
combine or remove subaccounts, or to
withdraw assets from one subaccount
and put them into another subaccount.
Each Contract’s prospectus provides
that Applicants may add, remove or
combine subaccounts or withdraw
assets relating to a Contract from one
subaccount and put them into another.
9. The Integrity Companies propose
the substitution of four portfolios (two
of which include three classes each) of
Variable Insurance Products Fund III
(the ‘‘Existing Portfolios’’). As
replacements, the Integrity Companies
propose three portfolios (two of which
include three classes) of Variable
Insurance Products Fund III and, in the
case of Fidelity VIP Contrafund,
Variable Insurance Products II (the
‘‘Replacement Portfolios’’). All of the
Replacement Portfolios are currently
available in the Contracts. Neither
Variable Insurance Products Fund III,
Variable Insurance Products Fund II,
nor Fidelity Management and Research
Company (collectively referred to as
‘‘Fidelity’’) are affiliated with
Applicants.
10. The investment objective,
strategies and risks of each Replacement
Portfolio are the same as, or similar to,
the investment objective, strategies and
risks of the corresponding Existing
Portfolio. For each Existing Portfolio
and each Replacement Portfolio, the
investment objective, principal
investment strategies and principal risks
are shown in the table that follows.
Replacement 1
Existing portfolio
Replacement portfolio
Name
Fidelity VIP dynamic capital appreciation
Fidelity VIP Contrafund
Investment Objective ...........
Principal Investment Strategies.
Capital appreciation ........................................................
Invests primarily in common stocks—either growth
stocks, value stocks or both—of domestic and foreign
issuers using fundamental analysis to select investments.
Principal Risks .....................
• Stock market volatility ..................................................
• Issuer-specific changes ...............................................
• Foreign exposure .........................................................
Long-term capital appreciation.
Invests primarily in common stocks—either growth
stocks, value stocks or both—of domestic and foreign
issuers using fundamental analysis to select investments in companies believed to be undervalued by
the public; allocates assets across different market
sectors using different managers.
• Stock market volatility.
• Issuer-specific changes.
• Foreign exposure.
Replacements 2, 3 and 4
Existing portfolio
Replacement portfolio
Name
Fidelity VIP growth & income
Fidelity VIP balanced
Investment Objective ...........
High total return through a combination of current income and capital appreciation.
Invests a majority of assets in common stock with current dividends and potential for capital appreciation;
potentially invests in bonds, including lower quality
debt securities and stocks not currently paying dividends but offering prospects for future income and
capital appreciation; invests primarily in common
stocks—either growth stocks, value stocks or both—
of domestic and foreign issuers using fundamental
analysis to select investments.
Income and capital growth consistent with reasonable
risk.
Invests approximately 60% of assets in stocks or other
equity securities—either growth stocks, value stocks
or both—of domestic and foreign issuers, and remainder in bonds or other debt securities including
lower quality debt securities when the outlook is neutral; investing at least 25% of assets in fixed income
senior securities; using fundamental analysis to select investments; engaging in transactions that have
a leveraging effect on the fund; investing in Fidelity’s
central funds.
• Stock market volatility.
• Issuer-specific changes.
• Foreign exposure.
• Interest rate changes.
• Leverage risk.
• Prepayment.
Principal Investment Strategies.
Principal Risks .....................
•
•
•
•
Stock market volatility ..................................................
Issuer-specific changes ...............................................
Foreign exposure .........................................................
Interest rate changes ...................................................
Existing portfolio
Replacement portfolio
Name
sroberts on DSKD5P82C1PROD with NOTICES
Replacements 5, 6 and 7
Fidelity VIP growth opportunities
Fidelity VIP contrafund
Investment Objective ...........
Principal Investment Strategies.
Capital growth .................................................................
Invests primarily in common stocks of domestic and foreign issuers using fundamental analysis to select investments in companies believed to have above average growth potential.
Principal Risks .....................
• Stock Market Volatility .................................................
• Issuer-Specific Changes ..............................................
• Foreign exposure .........................................................
Long-term capital appreciation.
Invests primarily in common stocks—either growth
stocks, value stocks or both—of domestic and foreign
issuers using fundamental analysis to select investments in companies believed to be undervalued by
the public; allocates assets across different market
sectors using different managers.
• Stock Market Volatility.
• Issuer-Specific Changes.
• Foreign exposure.
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Federal Register / Vol. 75, No. 52 / Thursday, March 18, 2010 / Notices
Replacements 5, 6 and 7
Existing portfolio
Replacement portfolio
Name
Fidelity VIP growth opportunities
Fidelity VIP contrafund
• Growth investing.
Replacement 8
Existing portfolio
Replacement portfolio
Name
Fidelity VIP value strategies
Fidelity VIP mid cap
Investment Objective ...........
Principal Investment Strategies.
Capital appreciation ........................................................
Invests primarily in common stocks of domestic and foreign issuers using fundamental analysis to select investments in companies believed to be undervalued
in the marketplace in relation to factors such as assets, sales, earnings or growth potential; focusing investment in medium sized companies but may invest
in larger or smaller companies.
Principal Risks .....................
•
•
•
•
Long-term capital growth.
Invests primarily in common stocks—either growth
stocks, value stocks or both—of domestic and foreign
issuers using fundamental analysis to select investments; normally invests at least 80% of assets in
companies with medium market capitalizations similar
to companies in the Russell Midcap Index 1 or Standard & Poor’s MidCap 400 Index; 2 potentially investing in companies with smaller or larger market capitalizations.
• Stock market volatility.
• Foreign exposure.
• Issuer-specific changes.
• Mid cap investing.
1 The
2 The
Stock market volatility ..................................................
Foreign exposure .........................................................
Issuer-specific changes ...............................................
Value investing ............................................................
capitalization range for the Russell Midcap Index is $829 million to $12.2 billion as of May 31, 2009.
capitalization range for the Standard & Poor’s MidCap 400 Index is $750 million to $3.3 billion as of June 30, 2009.
11. Applicants state that the proposed
substitutions are expected to provide
benefits to the Contract owners,
including better performing funds and
simplification of fund offerings through
the elimination of overlapping and
duplicative portfolios in certain asset
categories, particularly the large growth
category. After the Substitution,
Contract owners will continue to be able
to select among funds with a full range
of investment objectives, investment
strategies and risks. Of the 24 Contracts
affected by the Substitution, Contract
owners in Subset 1 (18 Contracts) will
be able to select among 52 portfolios,
Contract owners in Subset 2 (four
Contracts) will be able to select among
50 portfolios, and Contract owners in
Subset 3 (two Contracts) will be able to
select among 40 portfolios.
12. Applicants represent that each
Replacement Portfolio has lower total
gross and net expense ratios and equal
or lower management fees than the
corresponding Existing Portfolio.
Service fees charged by each
Replacement Portfolio pursuant to a
12b–1 plan are equal to those charged
by the Existing Portfolio. The
management fees the Replacement
Portfolios and Existing Portfolios (the
‘‘Portfolios’’) pay to Fidelity
Management and Research Company
(‘‘FMR’’) have two components: A group
fee rate and an individual fund fee rate.
The group fee rate is based on the
monthly average net assets of all the
registered investment companies with
which FMR has management contracts.
The second component is the individual
fund fee rate, which for each Existing
Portfolio (except one) is the same as the
rate for the Replacement Portfolio,
0.30%. In the one instance, the rate paid
on the Fidelity VIP Balanced Portfolio
(Replacement Portfolio) is 0.15%, which
is lower than is paid on the Fidelity VIP
Growth and Income Portfolio (Existing
Portfolio) of 0.20%. Detailed expense
information is set forth in the Chart
below. By reducing expenses, the
Applicants represent that the Integrity
Companies are offering their Contract
owners and prospective investors a
selection of better-managed funds at a
reduced cost.
EXPENSES
Management fee
(percent)
Name
Existing .............
Replacement .....
Existing .............
Replacement .....
sroberts on DSKD5P82C1PROD with NOTICES
Existing .............
Replacement .....
Existing .............
Replacement .....
Existing .............
Replacement .....
VerDate Nov<24>2008
Fidelity VIP Dynamic Capital Appreciation: Service Class 2.
Fidelity VIP Contrafund: Service
Class 2.
Fidelity VIP Growth & Income: Service Class 2.
Fidelity VIP Balanced: Service Class
2.
Fidelity VIP Growth & Income: Service Class.
Fidelity VIP Balanced: Service Class
Fidelity VIP Growth & Income: Initial
Class.
Fidelity VIP Balanced: Initial Class ..
Fidelity VIP Growth Opportunities:
Service Class 2.
Fidelity VIP Contrafund: Service
Class 2.
17:08 Mar 17, 2010
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Frm 00078
12b–1 fee
(percent)
Other expense
(percent)
Total expense
(percent)
Waivers and
reimbursements
(percent)
Net expense
(percent)
0.56
0.25
0.31
1.12
0.03
1.09
0.56
0.25
0.10
0.91
0.01
0.90
0.46
0.25
0.13
0.84
0.00
0.84
0.41
0.25
0.15
0.81
0.01
0.80
0.46
0.10
0.13
0.69
0.00
0.69
0.41
0.46
0.10
0.00
0.17
0.13
0.68
0.59
0.00
0.00
0.68
0.59
0.41
0.56
0.00
0.25
0.14
0.16
0.55
0.97
0.00
0.00
0.55
0.97
0.56
0.25
0.10
0.91
0.01
0.90
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Federal Register / Vol. 75, No. 52 / Thursday, March 18, 2010 / Notices
EXPENSES—Continued
Management fee
(percent)
Name
Existing .............
Replacement .....
Existing .............
Replacement .....
Existing .............
Replacement .....
Fidelity VIP Growth Opportunities:
Service Class.
Fidelity VIP Contrafund: Service
Class.
Fidelity VIP Growth Opportunities:
Initial Class.
Fidelity VIP Contrafund: Initial Class
Fidelity VIP Value Strategies: Service Class 2.
Fidelity VIP Mid Cap: Service Class
2.
sroberts on DSKD5P82C1PROD with NOTICES
13. Applicants submit that each of the
Replacement Portfolios has
demonstrated better performance than
the corresponding Existing Portfolios
during each of the periods measured.
Detailed performance information is set
forth in the Application.
Applicants Legal Analysis and
Conditions
1. The Substitution will take place at
the portfolios’ relative net asset values
determined on the date of the
Substitution in accordance with Section
22 of the Act and Rule 22c–1 thereunder
with no change in the amount of any
Contract owner’s cash value, death
benefit, living benefit or in the dollar
value of his or her investment in any of
the subaccounts. Accordingly, there will
be no financial impact on any Contract
owner. The Substitution will be effected
by having each of the subaccounts that
invests in the Existing Portfolios redeem
its shares at the net asset value
calculated on the date of the
Substitution and purchase shares of the
respective Replacement Portfolios at the
net asset value calculated on the same
date.
2. The Substitution will be described
in detail in a written notice mailed to
Contract owners. The notice will inform
Contract owners of the Integrity
Companies’ intent to implement the
Substitution and describe the
Substitution, the reasons for engaging in
the Substitution and how the
Substitution will be implemented.
Details regarding the effect on any
investment in a GLWB will also be
provided. The notice will be mailed to
all Contract owners at least 30 days
prior to the Substitution and will inform
affected Contract owners that they may
transfer assets from the subaccounts
investing in the Existing Portfolios at
anytime after receipt of the notice, and
from the subaccounts investing in the
Replacement Portfolios for 30 days after
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17:08 Mar 17, 2010
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12b–1 fee
(percent)
Other expense
(percent)
Frm 00079
Waivers and
reimbursements
(percent)
Net expense
(percent)
0.56
0.10
0.15
0.81
0.00
0.81
0.56
0.10
0.10
0.76
0.01
0.75
0.56
0.00
0.15
0.71
0.00
0.71
0.56
0.56
0.00
0.25
0.10
0.18
0.66
0.99
0.01
0.01
0.65
0.98
0.56
0.25
0.12
0.93
0.01
0.92
the Substitution, to subaccounts
investing in other portfolios available
under the respective Contracts, without
the imposition of any transfer charge or
limitation and without diminishing the
number of free transfers that may be
made in a given contract year. A
supplement will be filed with the
Commission for all current prospectuses
containing the information to be
included in the notice.
3. Each Contract owner will be
provided with a prospectus for the
Replacement Portfolios applicable to
them. Within five days after the
Substitution, the Integrity Companies
will send each affected Contract owner
written confirmation that the
Substitution has occurred.
4. The Integrity Companies will pay
all expenses and transaction costs of the
Substitution, including all legal,
accounting and allocated brokerage
expenses relating to the Substitution. No
costs will be borne by Contract owners.
Affected Contract owners will not incur
any fees or charges as a result of the
Substitution, nor will their rights or the
obligations of the Integrity Companies
under the Contracts be altered in any
way. The Substitution will not cause the
fees and charges under the Contracts
currently being paid by Contract owners
to be greater after the Substitution than
before the Substitution. The
Substitution will have no adverse tax
consequences to Contract owners and
will in no way alter the tax benefits to
Contract owners.
5. Each Contract and its prospectus
expressly discloses the reservation of
the Applicants’ right, subject to
applicable law, to substitute shares of
another portfolio for shares of the
portfolio in which a subaccount is
invested.
6. The investment objectives and
policies of the Replacement Portfolios
are similar to those of the corresponding
Existing Portfolios such that Contract
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(percent)
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owners will have reasonable continuity
in investment expectations.
7. The Substitution will not result in
the type of costly forced redemption
that Section 26(c) was intended to guard
against because the Contract owner will
continue to have the same type of
investment choices, with better
potential returns and the same or lower
expenses and will not otherwise have
any incentive to redeem their shares or
terminate their Contracts.
8. The purposes, terms and conditions
of the proposed Substitution are
consistent with the protection of
investors, and the principles and
purposes of Section 26(c), and do not
entail any of the abuses that Section
26(c) is designed to prevent.
9. Current gross and net annual
expenses in each Replacement Portfolio
are lower than those of the
corresponding Existing Portfolios.
10. Each Replacement Portfolio is an
appropriate portfolio to move Contract
owners’ values currently allocated to the
Existing Portfolios because the
portfolios have similar investment
objectives, strategies and risks.
11. The Substitution will be at the net
asset values of the respective portfolio
shares without the imposition of any
transfer or similar charge and with no
change in the amount of any Contract
owners’ values.
12. The Substitution will not cause
the fees and charges under the Contracts
currently being paid by Contract owners
to be greater after the Substitution than
before the Substitution and will result
in Contract owners’ Contract values
being moved to portfolios with the
lower current total net annual expenses.
13. In connection with assets held
under Contracts affected by the
Substitution, the Integrity Companies
will not receive, for three years from the
date of the Substitution, any direct or
indirect benefits from the Replacement
Portfolios, their advisors or
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Federal Register / Vol. 75, No. 52 / Thursday, March 18, 2010 / Notices
underwriters (or their affiliates) at a rate
higher than that which they had
received from the Existing Portfolios,
their advisors or underwriters (or their
affiliates), including without limitation
12b–1 Fees, shareholder service,
administration or other service fees,
revenue sharing or other arrangements
in connection with such assets.
Applicants represent that the
Substitution and the selection of the
Replacement Portfolios were not
motivated by any financial
consideration paid or to be paid by the
Replacement Portfolios, their advisors
or underwriters, or their respective
affiliates.
14. Notice of the proposed
Substitution will be mailed to all
Contract owners at least 30 days prior to
the Substitution. All Contract owners
will have an opportunity at anytime
after receipt of the notice of the
Substitution and for 30 days after the
Substitution to transfer Contract account
value affected by the Substitution to
other available subaccounts without the
imposition of any transfer charge or
limitation and without being counted as
one of the Contract owner’s free
transfers in a contract year.
15. Within five days after the
Substitution, the Integrity Companies
will send to its affected Contract owners
a written confirmation that the
Substitution has occurred.
16. The Substitution will in no way
alter the insurance benefits to Contract
owners or the contractual obligations of
the Integrity Companies.
17. The Substitution will have no
adverse tax consequences to Contract
owners and will in no way alter the tax
benefits to Contract owners.
Conclusion
For the reasons and upon the facts set
forth above, the Applicants believe that
the requested order meets the standards
set forth in Section 26(c) and should,
therefore, be granted.
sroberts on DSKD5P82C1PROD with NOTICES
For the Commission, by the Division of
Investment Management, under delegated
authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–5921 Filed 3–17–10; 8:45 am]
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61698; File Nos. 10–194
and 10–196 1]
In the Matter of the Applications of
EDGX Exchange, Inc., and EDGA
Exchange, Inc. for Registration as
National Securities Exchanges;
Findings, Opinion, and Order of the
Commission
March 12, 2010.
I. Introduction
On May 7, 2009, EDGX Exchange, Inc.
(‘‘EDGX’’) and EDGA Exchange, Inc.
(‘‘EDGA’’) (each, an ‘‘Exchange,’’ and,
together, the ‘‘Exchanges’’) each
submitted to the Securities and
Exchange Commission (‘‘Commission’’) a
Form 1 application (each, a ‘‘Form 1
Application,’’ and, together, the ‘‘Form 1
Applications’’) under the Securities
Exchange Act of 1934 (‘‘Act’’) seeking
registration as a national securities
exchange pursuant to Section 6 of the
Act.2 On July 30, 2009, each Exchange
submitted Amendment No. 1 to its Form
1 Application. Notice of the Form 1
Applications, each as modified by
Amendment No. 1, was published for
comment in the Federal Register on
September 17, 2009.3 The Commission
received two comment letters regarding
the Form 1 Applications, as modified by
Amendment No. 1.4 On February 11,
2010, each Exchange submitted
Amendment No. 2 to its Form 1
Application.5
1 In the Notice (as defined below), EDGA
Exchange, Inc. was assigned File No. 10–194 and
EDGX Exchange, Inc. was assigned File No. 10–193.
The EDGX Exchange, Inc. file number was
subsequently redesignated as File No. 10–196. The
EDGA Exchange, Inc. file number remains
unchanged.
2 15 U.S.C. 78f. On September 11, 2009, the
Commission issued an order granting EDGX and
EDGA exemptive relief, subject to certain
conditions, in connection with filing of their Form
1 applications. See Securities Exchange Act Release
No. 60650 (September 11, 2009), 74 FR 47828.
3 See Securities Exchange Act Release No. 60651
(September 11, 2009), 74 FR 47827 (‘‘Notice’’).
4 See letters to Elizabeth M. Murphy, Secretary,
Commission, from Joan C. Conley, Senior Vice
President and Corporate Secretary, Nasdaq OMX
Group, Inc., dated November 11, 2009 (‘‘Nasdaq
Letter’’) and from Daniel Mathisson, Managing
Director, and Vaishali Javeri, Director and Counsel,
Credit Suisse Securities (USA) LLC, dated
December 4, 2009 (‘‘Credit Suisse Letter’’). Direct
Edge Holdings LLC responded to the Nasdaq Letter.
See letter from William O’Brien, Chief Executive
Officer, Direct Edge Holdings LLC, to Elizabeth M.
Murphy, Secretary, Commission, dated November
13, 2009 (‘‘DE Holdings Response’’).
5 In Amendment No. 2, each Exchange modified
several Exhibits in its Form 1 Application.
Specifically, each Exchange’s Amendment No. 2:
(a) Modifies Exhibit B to: (A) Specify the dates
when the non-U.S. Upstream Owners adopted the
Supplemental Resolutions (as defined below); and
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13151
II. Statutory Standards
Under sections 6(b) and 19(a) of the
Act,6 the Commission shall by order
grant a registration as a national
securities exchange if it finds, among
(B) revise the proposed rules of each Exchange to:
(i) Indicate in Rules 1.5(p), 11.9(a), 14.2(g), 14.3(d)
that the Post-Closing Session ends at 8 p.m.; (ii) add
Rule 2.3(b)–(f) (Member Eligibility & Registration) to
require registration of Authorized Traders and
Principals in the appropriate category of registration
as determined by the Exchange, and make
conforming amendments to the interpretations and
policies for Rule 2.5; (iii) reflect Direct Edge ECN
LLC’s assumed name of DE Route in Rules 2.11 and
2.12, regarding its roles as an inbound and
outbound router; (iv) add Rule 3.21 (Customer
Disclosures) to require Exchange members that
execute trades on behalf of customers during either
Pre-Opening or Post-Closing Sessions offered by the
Exchange to provide customers with notice
regarding the risks of trading during extended
hours, consistent with the rules of other selfregulatory organizations; (v) amend Rule 11.5(a) to
clarify that market orders are not eligible for the
Pre-Opening and Post-Closing Sessions; (vi) add
new Interpretation and Policy .01 to Rule 14.1 to
explain the circumstances under which the
Exchange will halt trading during the Pre-Opening
and Post-Closing Sessions; (vii) amend Rule 11.11
to enable DTC/NSCC authorized clearing brokers to
clear trades on the Exchange, even though they are
not Exchange members; (viii) add section (d) to
Rule 11.12 (Limitation of Liability) to establish a
procedure to compensate Exchange members in
relation to Exchange systems failures or a negligent
act or omission of an Exchange employee,
consistent with industry practice; (ix) revise the
Exchange’s Clearly Erroneous Trading rules (Rule
11.13) to comport with those filed by other
registered national securities exchanges; and (x) add
Rule 12.13 (Trading Ahead of Research Reports).
(b) Revises Exhibit C to clarify, in the description
of Direct Edge ECN LLC, the cessation of its
capacity as an electronic communications network
following the Exchanges’ commencement of
operations as national securities exchanges.
(c) Modifies Exhibit E to: (A) Provide a
clarification with respect to the Exchange’s
membership in various order and trade reporting
organizations; (B) refer to the planned phase-in of
securities to be traded on the Exchange; and (C)
update a reference to the provision of technical
systems specifications and the addition of a copy
of the Direct Edge Next Gen FIX Specifications
(Version 1.0) (Users Manual).
(d) Revises Exhibit F to amend the Clearing Letter
of Guarantee, User Agreement, Routing Agreement,
and Exchange Data Vendor Agreement to reflect
comments by potential Exchange members and
industry practice.
(e) Modifies Exhibit I to state that, prior to the
launch of the Exchange, DE Holdings will make a
capital contribution into the Exchange’s capital
account, and to represent that DE Holdings will
enter into an explicit agreement with the Exchange
to provide adequate funding for its operations.
(f) Amends Exhibit J to state that all Directors,
including Owner Directors and the Chief Executive
Officer, will serve staggered three-year terms,
subject to the Exchange’s Bylaws.
(g) Revises to Exhibit L to describe the Exchange’s
execution of a regulatory services agreement with
the ISE LLC and the Financial Industry Regulatory
Authority (‘‘FINRA’’) to conduct various regulatory
services on behalf of the Exchange.
The changes proposed in Amendment No. 2 are
either not material, consistent with the existing
rules of other registered national securities
exchanges, or responsive to the concerns of the
Commission.
6 15 U.S.C. 78f(b) and 78s(a).
E:\FR\FM\18MRN1.SGM
18MRN1
]]>Agencies
[Federal Register Volume 75, Number 52 (Thursday, March 18, 2010)]
[Notices]
[Pages 13147-13151]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-5921]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-29171; File No. 812-13690]
Integrity Life Insurance Company, et al.; Notice of Application
March 10, 2010.
AGENCY: Securities and Exchange Commission (the ``Commission'').
ACTION: Notice of application for an order of approval pursuant to
Section 26(c) of the Investment Company Act of 1940, as amended (the
``Act'').
-----------------------------------------------------------------------
Applicants: Integrity Life Insurance Company (``Integrity''), Separate
Account I of Integrity Life Insurance Company (``Integrity Separate
Account I''), Separate Account II of Integrity Life Insurance Company
(``Integrity Separate Account II''), National Integrity Life Insurance
Company (``National Integrity'' and together with Integrity, the
``Integrity Companies''), Separate Account I of National Integrity Life
Insurance Company (``National Integrity Separate Account I''), and
Separate Account II of National Integrity Life Insurance Company
(``National Integrity Separate Account II,'' together with Integrity
Separate Account I, Integrity Separate Account II, and National
Integrity Separate Account I, the ``Separate Accounts'').
Summary of Application: Applicants seek an order approving the
proposed substitution of shares of certain portfolios of the Variable
Insurance Products Fund III held by the Separate Accounts for shares of
portfolios of Variable Insurance Products Fund III and in the case of
the Fidelity Contrafund, shares of Variable Insurance Products Fund II
as follows: Fidelity VIP Dynamic Capital Appreciation: Service Class 2
with Fidelity VIP Contrafund: Service Class 2; Fidelity VIP Growth &
Income: Service Class 2 with Fidelity VIP Balanced: Service Class 2;
Fidelity VIP Growth & Income: Service Class with Fidelity VIP Balanced:
Service Class; Fidelity VIP Growth & Income: Initial Class with
Fidelity VIP Balanced: Initial Class; Fidelity VIP Growth
Opportunities: Service Class 2 with Fidelity VIP Contrafund: Service
Class 2; Fidelity VIP Growth Opportunities: Service Class with Fidelity
VIP Contrafund: Service Class; Fidelity VIP Growth Opportunities:
Initial Class with Fidelity VIP Contrafund: Initial Class; and Fidelity
VIP Value Strategies: Service Class 2 with Fidelity VIP Mid Cap:
Service Class 2 (the ``Substitution'').
Filing Date: The application was originally filed on September 3, 2009
and amended on January 19, 2010, and March 10, 2010.
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 6, 2010, 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 Rhonda S. Malone, Esq.,
Associate Counsel--Securities, Western and Southern Financial Group,
Inc., 400 Broadway, Cincinnati, Ohio 45202.
FOR FURTHER INFORMATION CONTACT: Michelle Roberts, 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 may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. Integrity is a stock life insurance company organized under the
laws of Ohio. Integrity is a wholly owned subsidiary of The Western and
Southern Life Insurance Company, a stock life insurance company
organized under the laws of Ohio. The Western and Southern Life
Insurance Company is wholly owned by an Ohio-domiciled intermediate
holding company, Western & Southern Financial Group, Inc., which is
wholly owned by an Ohio-domiciled mutual insurance holding company,
Western & Southern Mutual Holding Company.
2. Integrity Separate Account I and Integrity Separate Account II
are registered under the Act as unit investment trusts (File Nos. 811-
04844 and 811-07134, respectively). They are used to fund variable
annuity contracts issued by Integrity. (``Integrity Contracts'')
3. National Integrity is a stock life insurance company organized
under the laws of New York. National Integrity is a wholly owned direct
subsidiary of Integrity and an indirect subsidiary of The Western and
Southern Life Insurance Company.
4. National Integrity Separate Account I and National Integrity
Separate Account II are registered under the Act as unit investment
trusts (File Nos. 811-04846 and 811-07132, respectively). They are used
to fund variable annuity contracts issued by National Integrity
(``National Integrity Contracts'').
5. Integrity Contracts and the National Integrity Contracts cited
in the application and affected by the Substitution are flexible
premium deferred variable annuities (the ``Contracts'').
[[Page 13148]]
6. Each Contract permits allocations of value to available fixed
and variable subaccounts; each variable subaccount invests in a
specific investment portfolio of an underlying mutual fund. Of the 24
Contracts affected by this application, 18 Contracts offer the same 56
portfolios (``Subset 1''), four Contracts offer the same 54 portfolios
(``Subset 2'') and two Contracts offer the same 43 portfolios (``Subset
3'').
7. Each Contract permits transfers from one subaccount to another
subaccount at any time prior to annuitization, subject to certain
restrictions and charges described below. No sales charge applies to
such a transfer of value among subaccounts. The Contracts permit up to
twelve free transfers during any contract year. A fee of $20 is imposed
on transfers in excess of twelve transfers in a contract year.
8. Each Contract reserves the right, upon notice to Contract owners
and compliance with applicable law, to add, combine or remove
subaccounts, or to withdraw assets from one subaccount and put them
into another subaccount. Each Contract's prospectus provides that
Applicants may add, remove or combine subaccounts or withdraw assets
relating to a Contract from one subaccount and put them into another.
9. The Integrity Companies propose the substitution of four
portfolios (two of which include three classes each) of Variable
Insurance Products Fund III (the ``Existing Portfolios''). As
replacements, the Integrity Companies propose three portfolios (two of
which include three classes) of Variable Insurance Products Fund III
and, in the case of Fidelity VIP Contrafund, Variable Insurance
Products II (the ``Replacement Portfolios''). All of the Replacement
Portfolios are currently available in the Contracts. Neither Variable
Insurance Products Fund III, Variable Insurance Products Fund II, nor
Fidelity Management and Research Company (collectively referred to as
``Fidelity'') are affiliated with Applicants.
10. The investment objective, strategies and risks of each
Replacement Portfolio are the same as, or similar to, the investment
objective, strategies and risks of the corresponding Existing
Portfolio. For each Existing Portfolio and each Replacement Portfolio,
the investment objective, principal investment strategies and principal
risks are shown in the table that follows.
------------------------------------------------------------------------
Replacement
Replacement 1 Existing portfolio portfolio
------------------------------------------------------------------------
Name Fidelity VIP dynamic Fidelity VIP
capital Contrafund
appreciation.
------------------------------------------------------------------------
Investment Objective........ Capital appreciation Long-term capital
appreciation.
Principal Investment Invests primarily in Invests primarily in
Strategies. common stocks-- common stocks--
either growth either growth
stocks, value stocks, value
stocks or both--of stocks or both--of
domestic and domestic and
foreign issuers foreign issuers
using fundamental using fundamental
analysis to select analysis to select
investments. investments in
companies believed
to be undervalued
by the public;
allocates assets
across different
market sectors
using different
managers.
Principal Risks............. Stock Stock
market volatility. market volatility.
Issuer- Issuer-
specific changes. specific changes.
Foreign Foreign
exposure. exposure.
------------------------------------------------------------------------
Replacement
Replacements 2, 3 and 4 Existing portfolio portfolio
------------------------------------------------------------------------
Name Fidelity VIP growth Fidelity VIP
& income. balanced
------------------------------------------------------------------------
Investment Objective........ High total return Income and capital
through a growth consistent
combination of with reasonable
current income and risk.
capital
appreciation.
Principal Investment Invests a majority Invests
Strategies. of assets in common approximately 60%
stock with current of assets in stocks
dividends and or other equity
potential for securities--either
capital growth stocks,
appreciation; value stocks or
potentially invests both--of domestic
in bonds, including and foreign
lower quality debt issuers, and
securities and remainder in bonds
stocks not or other debt
currently paying securities
dividends but including lower
offering prospects quality debt
for future income securities when the
and capital outlook is neutral;
appreciation; investing at least
invests primarily 25% of assets in
in common stocks-- fixed income senior
either growth securities; using
stocks, value fundamental
stocks or both--of analysis to select
domestic and investments;
foreign issuers engaging in
using fundamental transactions that
analysis to select have a leveraging
investments. effect on the fund;
investing in
Fidelity's central
funds.
Principal Risks............. Stock Stock
market volatility. market volatility.
Issuer- Issuer-
specific changes. specific changes.
Foreign Foreign
exposure. exposure.
Interest Interest
rate changes. rate changes.
Leverage
risk.
Prepayment.
------------------------------------------------------------------------
Replacement
Replacements 5, 6 and 7 Existing portfolio portfolio
------------------------------------------------------------------------
Name Fidelity VIP growth Fidelity VIP
opportunities. contrafund
------------------------------------------------------------------------
Investment Objective........ Capital growth...... Long-term capital
appreciation.
Principal Investment Invests primarily in Invests primarily in
Strategies. common stocks of common stocks--
domestic and either growth
foreign issuers stocks, value
using fundamental stocks or both--of
analysis to select domestic and
investments in foreign issuers
companies believed using fundamental
to have above analysis to select
average growth investments in
potential. companies believed
to be undervalued
by the public;
allocates assets
across different
market sectors
using different
managers.
Principal Risks............. Stock Stock
Market Volatility. Market Volatility.
Issuer- Issuer-
Specific Changes. Specific Changes.
Foreign Foreign
exposure. exposure.
[[Page 13149]]
Growth ....................
investing.
------------------------------------------------------------------------
Replacement
Replacement 8 Existing portfolio portfolio
------------------------------------------------------------------------
Name Fidelity VIP value Fidelity VIP mid cap
strategies.
------------------------------------------------------------------------
Investment Objective........ Capital appreciation Long-term capital
growth.
Principal Investment Invests primarily in Invests primarily in
Strategies. common stocks of common stocks--
domestic and either growth
foreign issuers stocks, value
using fundamental stocks or both--of
analysis to select domestic and
investments in foreign issuers
companies believed using fundamental
to be undervalued analysis to select
in the marketplace investments;
in relation to normally invests at
factors such as least 80% of assets
assets, sales, in companies with
earnings or growth medium market
potential; focusing capitalizations
investment in similar to
medium sized companies in the
companies but may Russell Midcap
invest in larger or Index \1\ or
smaller companies. Standard & Poor's
MidCap 400 Index;
\2\ potentially
investing in
companies with
smaller or larger
market
capitalizations.
Principal Risks............. Stock Stock
market volatility. market volatility.
Foreign Foreign
exposure. exposure.
Issuer- Issuer-
specific changes. specific changes.
Value Mid cap
investing. investing.
------------------------------------------------------------------------
\1\ The capitalization range for the Russell Midcap Index is $829
million to $12.2 billion as of May 31, 2009.
\2\ The capitalization range for the Standard & Poor's MidCap 400 Index
is $750 million to $3.3 billion as of June 30, 2009.
11. Applicants state that the proposed substitutions are expected
to provide benefits to the Contract owners, including better performing
funds and simplification of fund offerings through the elimination of
overlapping and duplicative portfolios in certain asset categories,
particularly the large growth category. After the Substitution,
Contract owners will continue to be able to select among funds with a
full range of investment objectives, investment strategies and risks.
Of the 24 Contracts affected by the Substitution, Contract owners in
Subset 1 (18 Contracts) will be able to select among 52 portfolios,
Contract owners in Subset 2 (four Contracts) will be able to select
among 50 portfolios, and Contract owners in Subset 3 (two Contracts)
will be able to select among 40 portfolios.
12. Applicants represent that each Replacement Portfolio has lower
total gross and net expense ratios and equal or lower management fees
than the corresponding Existing Portfolio. Service fees charged by each
Replacement Portfolio pursuant to a 12b-1 plan are equal to those
charged by the Existing Portfolio. The management fees the Replacement
Portfolios and Existing Portfolios (the ``Portfolios'') pay to Fidelity
Management and Research Company (``FMR'') have two components: A group
fee rate and an individual fund fee rate. The group fee rate is based
on the monthly average net assets of all the registered investment
companies with which FMR has management contracts. The second component
is the individual fund fee rate, which for each Existing Portfolio
(except one) is the same as the rate for the Replacement Portfolio,
0.30%. In the one instance, the rate paid on the Fidelity VIP Balanced
Portfolio (Replacement Portfolio) is 0.15%, which is lower than is paid
on the Fidelity VIP Growth and Income Portfolio (Existing Portfolio) of
0.20%. Detailed expense information is set forth in the Chart below. By
reducing expenses, the Applicants represent that the Integrity
Companies are offering their Contract owners and prospective investors
a selection of better-managed funds at a reduced cost.
Expenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Management Other Total Waivers and
Name fee 12b-1 fee expense expense reimbursements Net expense
(percent) (percent) (percent) (percent) (percent) (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Existing............................. Fidelity VIP Dynamic Capital 0.56 0.25 0.31 1.12 0.03 1.09
Appreciation: Service Class 2.
Replacement.......................... Fidelity VIP Contrafund: Service 0.56 0.25 0.10 0.91 0.01 0.90
Class 2.
Existing............................. Fidelity VIP Growth & Income: 0.46 0.25 0.13 0.84 0.00 0.84
Service Class 2.
Replacement.......................... Fidelity VIP Balanced: Service 0.41 0.25 0.15 0.81 0.01 0.80
Class 2.
Existing............................. Fidelity VIP Growth & Income: 0.46 0.10 0.13 0.69 0.00 0.69
Service Class.
Replacement.......................... Fidelity VIP Balanced: Service 0.41 0.10 0.17 0.68 0.00 0.68
Class.
Existing............................. Fidelity VIP Growth & Income: 0.46 0.00 0.13 0.59 0.00 0.59
Initial Class.
Replacement.......................... Fidelity VIP Balanced: Initial 0.41 0.00 0.14 0.55 0.00 0.55
Class.
Existing............................. Fidelity VIP Growth 0.56 0.25 0.16 0.97 0.00 0.97
Opportunities: Service Class 2.
Replacement.......................... Fidelity VIP Contrafund: Service 0.56 0.25 0.10 0.91 0.01 0.90
Class 2.
[[Page 13150]]
Existing............................. Fidelity VIP Growth 0.56 0.10 0.15 0.81 0.00 0.81
Opportunities: Service Class.
Replacement.......................... Fidelity VIP Contrafund: Service 0.56 0.10 0.10 0.76 0.01 0.75
Class.
Existing............................. Fidelity VIP Growth 0.56 0.00 0.15 0.71 0.00 0.71
Opportunities: Initial Class.
Replacement.......................... Fidelity VIP Contrafund: Initial 0.56 0.00 0.10 0.66 0.01 0.65
Class.
Existing............................. Fidelity VIP Value Strategies: 0.56 0.25 0.18 0.99 0.01 0.98
Service Class 2.
Replacement.......................... Fidelity VIP Mid Cap: Service 0.56 0.25 0.12 0.93 0.01 0.92
Class 2.
--------------------------------------------------------------------------------------------------------------------------------------------------------
13. Applicants submit that each of the Replacement Portfolios has
demonstrated better performance than the corresponding Existing
Portfolios during each of the periods measured. Detailed performance
information is set forth in the Application.
Applicants Legal Analysis and Conditions
1. The Substitution will take place at the portfolios' relative net
asset values determined on the date of the Substitution in accordance
with Section 22 of the Act and Rule 22c-1 thereunder with no change in
the amount of any Contract owner's cash value, death benefit, living
benefit or in the dollar value of his or her investment in any of the
subaccounts. Accordingly, there will be no financial impact on any
Contract owner. The Substitution will be effected by having each of the
subaccounts that invests in the Existing Portfolios redeem its shares
at the net asset value calculated on the date of the Substitution and
purchase shares of the respective Replacement Portfolios at the net
asset value calculated on the same date.
2. The Substitution will be described in detail in a written notice
mailed to Contract owners. The notice will inform Contract owners of
the Integrity Companies' intent to implement the Substitution and
describe the Substitution, the reasons for engaging in the Substitution
and how the Substitution will be implemented. Details regarding the
effect on any investment in a GLWB will also be provided. The notice
will be mailed to all Contract owners at least 30 days prior to the
Substitution and will inform affected Contract owners that they may
transfer assets from the subaccounts investing in the Existing
Portfolios at anytime after receipt of the notice, and from the
subaccounts investing in the Replacement Portfolios for 30 days after
the Substitution, to subaccounts investing in other portfolios
available under the respective Contracts, without the imposition of any
transfer charge or limitation and without diminishing the number of
free transfers that may be made in a given contract year. A supplement
will be filed with the Commission for all current prospectuses
containing the information to be included in the notice.
3. Each Contract owner will be provided with a prospectus for the
Replacement Portfolios applicable to them. Within five days after the
Substitution, the Integrity Companies will send each affected Contract
owner written confirmation that the Substitution has occurred.
4. The Integrity Companies will pay all expenses and transaction
costs of the Substitution, including all legal, accounting and
allocated brokerage expenses relating to the Substitution. No costs
will be borne by Contract owners. Affected Contract owners will not
incur any fees or charges as a result of the Substitution, nor will
their rights or the obligations of the Integrity Companies under the
Contracts be altered in any way. The Substitution will not cause the
fees and charges under the Contracts currently being paid by Contract
owners to be greater after the Substitution than before the
Substitution. The Substitution will have no adverse tax consequences to
Contract owners and will in no way alter the tax benefits to Contract
owners.
5. Each Contract and its prospectus expressly discloses the
reservation of the Applicants' right, subject to applicable law, to
substitute shares of another portfolio for shares of the portfolio in
which a subaccount is invested.
6. The investment objectives and policies of the Replacement
Portfolios are similar to those of the corresponding Existing
Portfolios such that Contract owners will have reasonable continuity in
investment expectations.
7. The Substitution will not result in the type of costly forced
redemption that Section 26(c) was intended to guard against because the
Contract owner will continue to have the same type of investment
choices, with better potential returns and the same or lower expenses
and will not otherwise have any incentive to redeem their shares or
terminate their Contracts.
8. The purposes, terms and conditions of the proposed Substitution
are consistent with the protection of investors, and the principles and
purposes of Section 26(c), and do not entail any of the abuses that
Section 26(c) is designed to prevent.
9. Current gross and net annual expenses in each Replacement
Portfolio are lower than those of the corresponding Existing
Portfolios.
10. Each Replacement Portfolio is an appropriate portfolio to move
Contract owners' values currently allocated to the Existing Portfolios
because the portfolios have similar investment objectives, strategies
and risks.
11. The Substitution will be at the net asset values of the
respective portfolio shares without the imposition of any transfer or
similar charge and with no change in the amount of any Contract owners'
values.
12. The Substitution will not cause the fees and charges under the
Contracts currently being paid by Contract owners to be greater after
the Substitution than before the Substitution and will result in
Contract owners' Contract values being moved to portfolios with the
lower current total net annual expenses.
13. In connection with assets held under Contracts affected by the
Substitution, the Integrity Companies will not receive, for three years
from the date of the Substitution, any direct or indirect benefits from
the Replacement Portfolios, their advisors or
[[Page 13151]]
underwriters (or their affiliates) at a rate higher than that which
they had received from the Existing Portfolios, their advisors or
underwriters (or their affiliates), including without limitation 12b-1
Fees, shareholder service, administration or other service fees,
revenue sharing or other arrangements in connection with such assets.
Applicants represent that the Substitution and the selection of the
Replacement Portfolios were not motivated by any financial
consideration paid or to be paid by the Replacement Portfolios, their
advisors or underwriters, or their respective affiliates.
14. Notice of the proposed Substitution will be mailed to all
Contract owners at least 30 days prior to the Substitution. All
Contract owners will have an opportunity at anytime after receipt of
the notice of the Substitution and for 30 days after the Substitution
to transfer Contract account value affected by the Substitution to
other available subaccounts without the imposition of any transfer
charge or limitation and without being counted as one of the Contract
owner's free transfers in a contract year.
15. Within five days after the Substitution, the Integrity
Companies will send to its affected Contract owners a written
confirmation that the Substitution has occurred.
16. The Substitution will in no way alter the insurance benefits to
Contract owners or the contractual obligations of the Integrity
Companies.
17. The Substitution will have no adverse tax consequences to
Contract owners and will in no way alter the tax benefits to Contract
owners.
Conclusion
For the reasons and upon the facts set forth above, the Applicants
believe that the requested order meets the standards set forth in
Section 26(c) and should, therefore, be granted.
For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5921 Filed 3-17-10; 8:45 am]
BILLING CODE 8011-01-P
