Lincoln National Life Insurance Company, et al; Notice of Application, 24249-24257 [2013-09633]
Download as PDF
<![CDATA[
tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 79 / Wednesday, April 24, 2013 / Notices
underwriting syndicate’s members, the
terms of the purchase, and the
information or materials upon which
the Board’s determinations were made.
9. Before investing in a Single-Tier
Fund in excess of the limits in section
12(d)(1)(A), an Investing Fund will
execute a Participation Agreement with
the Single-Tier Fund stating, without
limitation, that their respective boards
of directors or trustees and their
investment advisers, or trustee and
Sponsor, as applicable, understand the
terms and conditions of the order, and
agree to fulfill their responsibilities
under the order. At the time of its
investment in Shares of a Single-Tier
Fund in excess of the limit in section
12(d)(1)(A)(i), an Investing Fund will
notify the Single-Tier Fund of the
investment. At such time, the Investing
Fund will also transmit to the SingleTier Fund a list of the names of each
Investing Fund Affiliate and
Underwriting Affiliate. The Investing
Fund will notify the Single-Tier Fund of
any changes to the list of the names as
soon as reasonably practicable after a
change occurs. The Single-Tier Fund
and the Investing Fund will maintain
and preserve a copy of the order, the
Participation Agreement, and the list
with any updated information for the
duration of the investment and for a
period of not less than six years
thereafter, the first two years in an
easily accessible place.
10. Before approving any advisory
contract under section 15 of the Act, the
board of directors or trustees of each
Investing Management Company
including a majority of the noninterested directors or trustees, will find
that the advisory fees charged under
such contract are based on services
provided that will be in addition to,
rather than duplicative of, the services
provided under the advisory contract(s)
of any Single-Tier Fund (or its
respective Master Fund) in which the
Investing Management Company may
invest. These findings and their basis
will be recorded fully in the minute
books of the appropriate Investing
Management Company.
11. Any sales charges and/or service
fees with respect to shares of an
Investing Fund will not exceed the
limits applicable to a fund of funds as
set forth in NASD Conduct Rule 2830.
12. No Single-Tier Fund (or its
respective Master Fund) will acquire
securities of an investment company or
company relying on section 3(c)(1) or
3(c)(7) of the Act in excess of the limits
contained in section 12(d)(1)(A) of the
Act, except to the extent (i) the SingleTier Fund (or its respective Master
Fund) acquires securities of another
VerDate Mar<15>2010
18:05 Apr 23, 2013
Jkt 229001
investment company pursuant to
exemptive relief from the Commission
permitting the Single-Tier Fund (or its
respective Master Fund) to acquire
securities of one or more investment
companies for short-term cash
management purposes, or (ii) the SingleTier Fund acquires securities of the
Master Fund pursuant to the MasterFeeder Relief.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–09634 Filed 4–23–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–30468; File No. 812–14063]
Lincoln National Life Insurance
Company, et al; Notice of Application
April 18, 2013
Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’).
ACTION: Notice of application for an
order approving the substitution of
certain securities pursuant to Section
26(c) of the Investment Company Act of
1940, as amended (the ‘‘1940 Act’’ or
‘‘Act’’) and an order of exemption
pursuant to Section 17(b) of the Act
from Section 17(a) of the Act.
AGENCY:
Lincoln National Life
Insurance Company (‘‘Lincoln Life’’),
Lincoln National Variable Annuity
Account C, Lincoln National Variable
Annuity Account L, Lincoln Life
Variable Annuity Account N, and
Lincoln Life Variable Annuity Account
Q, (the ‘‘Lincoln Life Separate
Accounts’’) and Lincoln Life & Annuity
Company of New York (‘‘LNY’’),
Lincoln Life & Annuity Variable
Annuity Account L, and Lincoln New
York Account N for Variable Annuities
(the ‘‘LNY Separate Accounts,’’ and
together with the Lincoln Life Separate
Accounts, the ‘‘Separate Accounts’’)
(collectively, the ‘‘Section 26
Applicants’’). The Section 26
Applicants and the Lincoln Variable
Insurance Products Trust (the ‘‘Trust’’)
(which is a registered investment
company that is an affiliate of the
Section 26 Applicants) are collectively
referred to in this notice as the ‘‘Section
17 Applicants.’’ Lincoln Life and LNY
are also referred to as the ‘‘Insurance
Companies.’’
SUMMARY OF APPLICATION: The Section
26 Applicants seek an order pursuant to
Section 26(c) of the 1940 Act, approving
APPLICANTS:
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
24249
the substitution of certain shares of the
Trust for shares of other registered
investment companies unaffiliated with
the Section 26 Applicants (the
‘‘Substitutions’’) each of which is
currently used as an underlying
investment option for certain variable
annuity contracts (collectively, the
‘‘Contracts’’). The Section 17 Applicants
seek an order pursuant to Section 17(b)
of the 1940 Act exempting them from
Section 17(a) of the Act to the extent
necessary to permit them to engage in
certain in-kind transactions (‘‘In-Kind
Transfers’’) in connection with the
Substitutions.
FILING DATE: The application was filed
on July 25, 2012, and amended and
restated applications were filed on
November 14, 2012, March 5, 2013, and
April 16, 2013.
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 the
Applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on May 13, 2013, and
should be accompanied by proof of
service on the Applicants in the form of
an affidavit or, for lawyers, a certificate
of service. Hearing requests should state
the nature of the requester’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the Secretary
of the Commission.
ADDRESSES: Secretary, SEC, 100 F Street
NE., Washington, DC 20549–1090.
Applicants: Lincoln National Life
Insurance Company, Lincoln National
Variable Annuity Account C, Lincoln
National Variable Annuity Account L,
Lincoln Life Variable Annuity Account
N, Lincoln Life Variable Annuity
Account Q, and Lincoln Variable
Insurance Products Trust, 1300 South
Clinton Street, Fort Wayne, IN 46802;
Lincoln Life & Annuity Company of
New York, Lincoln Life & Annuity
Variable Annuity Account L, and
Lincoln New York Account N for
Variable Annuities, 100 Madison Street,
Suite 1860, Syracuse, NY 13202.
FOR FURTHER INFORMATION CONTACT:
Alberto H. Zapata, Senior Counsel, or
Joyce M. Pickholz, Branch Chief,
Insured Investments Office, Division of
Investment Management, at (202) 551–
6795.
The
following is a summary of the
application. The complete application
SUPPLEMENTARY INFORMATION:
E:\FR\FM\24APN1.SGM
24APN1
24250
Federal Register / Vol. 78, No. 79 / Wednesday, April 24, 2013 / Notices
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm, or by
calling (202) 551–8090.
Applicants’ Representations
1. Lincoln Life is the depositor and
sponsor of the Lincoln Life Separate
Accounts. LNY is the depositor and
sponsor of the LNY Separate Accounts.
2. Each of the Separate Accounts is a
registered unit investment trust used to
issue one or more Contracts issued by
the Insurance Companies. Each Separate
Account is divided into sub-accounts,
each of which invests in the securities
of a single underlying mutual fund. The
application sets forth the registration
statement file numbers for the Contracts
and the Separate Accounts.
3. The Trust is organized as a
Delaware statutory trust. It is registered
as an open-end management investment
company under the 1940 Act and its
shares are registered under the
Securities Act of 1933, on Form N–1A
(see File Nos. 811–08090 and 033–
70742). The Trust is a series investment
company and currently offers sixty-four
separate series (each a ‘‘Trust Fund’’),
six of which are involved in the
proposed Substitutions (the
‘‘Replacement Funds’’).
4. Lincoln Investment Advisors
Corporation (‘‘LIAC’’), a Delaware
corporation and investment adviser
registered under the Investment
Advisers Act of 1940 currently serves as
investment adviser to each of the Trust
Funds.
5. The Trust received an exemptive
order from the Commission (In the
Matter of Lincoln Investment Advisors
Corporation, et al., Inv. Co. Rel. No.
29197 (Mar. 31, 2010) File No. 812–
13732) (the ‘‘Manager of Managers
Order’’) that permits LIAC, subject to
certain conditions, including approval
of the Trust’s Board of Trustees, and
without the approval of shareholders,
to: (i) Select a new Subadviser or
additional Subadviser for each Trust
Fund; (ii) terminate any existing
Subadviser and/or replace the
Subadviser; (iii) enter into new subadvisory agreements and/or materially
modify the terms of, or terminate, any
existing sub-advisory agreement; and
(iv) allocate and reallocate a Trust
Fund’s assets among one or more
Subadvisers.
6. Shares of the Trust are
continuously distributed and
underwritten by Lincoln Financial
Distributors, Inc., an affiliate of the
Trust and the Section 26 Applicants.
Lincoln Life, also an affiliate of the
Trust and the Section 26 Applicants,
serves as administrator to the Trust.
7. The Contracts can be issued as
individual or group contracts. Contract
owners and participants in group
contracts (each a ‘‘Contract Owner’’)
may allocate some or all of their
Contract value to one or more sub-
tkelley on DSK3SPTVN1PROD with NOTICES
Existing funds
Replacement funds
AllianceBernstein Variable Products Series Fund—AllianceBernstein
VPS Growth and Income Portfolio:
Class A ..............................................................................................
Class B ..............................................................................................
AllianceBernstein Variable Products Series Fund—AllianceBernstein
VPS International Value Portfolio:
Class B ..............................................................................................
Class B ..............................................................................................
American Century Investment Variable Products—American Century
VP Inflation Protection Fund:
Class I ................................................................................................
Class II ...............................................................................................
Dreyfus Stock Index Fund, Inc.—Dreyfus Stock Index Fund: ..................
Initial Class ........................................................................................
Dreyfus Variable Investment Fund—Dreyfus VIF Opportunistic Small
Cap Portfolio:
Initial Class ........................................................................................
DWS Investments VIT Funds—DWS Equity 500 Index VIP Portfolio: .....
Class A ..............................................................................................
Class B ..............................................................................................
DWS Investments VIT Funds—DWS Small Cap Index VIP Portfolio: .....
Class A ..............................................................................................
Class B ..............................................................................................
Fidelity Variable Insurance Products Trust—Fidelity VIP Equity-Income
Portfolio:
Initial Class ........................................................................................
Service Class 2 ..................................................................................
Fidelity Variable Insurance Products Trust—Fidelity VIP Overseas Portfolio:
Initial Class ........................................................................................
VerDate Mar<15>2010
18:05 Apr 23, 2013
Jkt 229001
accounts available as investment
options under the Contract.
Additionally, the Contract Owner may,
if provided for under the Contract,
allocate some or all of their Contract
value to a fixed account and/or
guaranteed term option, both of which
are supported by the assets of Lincoln
Life’s general account.
8. Each Contract’s prospectus contains
provisions reserving the Insurance
Company’s right to substitute shares of
one underlying mutual fund for shares
of another underlying mutual fund
already purchased or to be purchased in
the future if either of the following
occurs: ‘‘(i) shares of a current
underlying mutual fund are no longer
available for investment by the Separate
Account; or (ii) in the judgment of the
Insurance Company’s management,
further investment in such underlying
mutual fund is inappropriate in view of
the purposes of the Contract.’’ All of the
Replacement Funds that correspond to
the Existing Funds are currently
available as underlying investment
options in the Contracts.
9. The Section 26 Applicants request
an order from the Commission pursuant
to Section 26(c) of the 1940 Act
approving the proposed Substitutions of
shares of the following series of the
Trust, the Replacement Funds, for
shares of the corresponding third party,
unaffiliated underlying mutual funds,
the Existing Funds, as shown in the
following table:
PO 00000
Frm 00101
Fmt 4703
Lincoln Variable Products Trust—LVIP SSgA S&P 500 Index Fund:
Standard Class
Service Class
Lincoln Variable Insurance Products Trust—LVIP Mondrian International Value Fund:
Standard Class
Service Class
Lincoln Variable Products Trust—LVIP BlackRock Inflation Protected
Bond Fund:
Standard Class
Service Class
Lincoln Variable Products Trust—LVIP SSgA S&P 500 Index Fund:
Standard Class
Lincoln Variable Products Trust—LVIP SSgA Small-Cap Index Fund:
Standard Class
Lincoln Variable Products Trust—LVIP SSgA S&P 500 Index Fund:
Standard Class
Service Class
Lincoln Variable Products Trust—LVIP SSgA Small-Cap Index Fund:
Standard Class
Service Class
Lincoln Variable Products Trust—LVIP SSgA S&P 500 Index Fund:
Standard Class
Service Class
Lincoln Variable Products Trust—LVIP SSgA International Index Fund:
Service Class
Sfmt 4703
E:\FR\FM\24APN1.SGM
24APN1
Federal Register / Vol. 78, No. 79 / Wednesday, April 24, 2013 / Notices
Existing funds
24251
Replacement funds
Service Class 2 ..................................................................................
Franklin Templeton Variable Insurance Products Trust—FTVIPT Franklin Small-Mid Cap Growth Securities Fund:
Class 1 ...............................................................................................
Class 2 ...............................................................................................
MFS Variable Insurance Trust—MFS VIT Total Return Series: ..............
Service Class .....................................................................................
Neuberger Berman Advisers Management Trust—Neuberger Berman
AMT Mid-Cap Growth Portfolio:
I Class ................................................................................................
I Class ................................................................................................
The class into which a Contract
Owner will be transferred is set forth in
the relevant Contract, which lists the
class of the Replacement Fund available
Service Class
Lincoln Variable Products Trust—LVIP SSgA Small-Cap Index Fund:
Standard Class
Service Class
Lincoln Variable Products Trust—LVIP SSgA Moderate Structured Allocation Fund:
Service Class
Lincoln Variable Products Trust—LVIP SSgA S&P 500 Index Fund:
Standard Class
Service Class
within the Contract. Comparisons of the
investing strategies and risks of the
Existing Funds and the Replacement
Funds are included in the application.
10. The following tables compare the
fees and expenses of the Existing Fund
and the Replacement Fund as of
December 31, 2012:
Existing fund
AllianceBernstein Variable Products Series
Fund—AllianceBernstein VPS Growth and
Income Portfolio.
Management Fees .............................................
12b–1 Fees ........................................................
Other Expenses ..................................................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
Total Net Expenses ............................................
Replacement fund
Lincoln Variable Products Trust—LVIP SSgA
S&P 500 Index Fund.
0.55%
0.55%
0.00%
0.25%
0.05%
0.05%
0.60%
0.85%
0.00%
0.00%
0.60%
0.85%
0.19%
0.19%
0.00%
0.25%
0.06%
0.06%
0.25%
0.50%
0.00%
0.00%
0.25%
0.50%
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
A
B
A
B
A
B
A
B
A
B
A
B
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
AllianceBernstein Variable Products Series
Fund—AllianceBernstein VPS International
Value Portfolio.
Management Fees .............................................
12b–1 Fees ........................................................
Other Expenses ..................................................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
Total Net Expenses ............................................
Lincoln
Variable
Products
Trust—LVIP
Mondrian International Value Fund.
0.75%
0.75%
0.25%
0.25%
0.06%
0.06%
1.06%
1.06%
0.00%
0.00%
1.06%
1.06%
0.75%
0.75%
0.00%
0.25%
0.08%
0.08%
0.83%
1.08%
0.00%
0.00%
0.83%
1.08%
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
B
B
B
B
B
B
B
B
B
B
B
B
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
American Century Investments Variable Products—American Century VP Inflation Protection Fund.
Management Fees .............................................
12b–1 Fees ........................................................
tkelley on DSK3SPTVN1PROD with NOTICES
Other Expenses ..................................................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
Total Net Expenses ............................................
VerDate Mar<15>2010
18:05 Apr 23, 2013
Jkt 229001
Lincoln
Variable
Products
Trust—LVIP
BlackRock Inflation Protected Bond Fund.
0.47%
0.47%
0.00%
0.25%
0.01%
0.01%
0.48%
0.73%
0.00%
0.00%
0.48%
0.73%
0.44%
0.44%
0.00%
0.25%
0.07%
0.07%
0.54%
0.79%
0.00%
0.00%
0.54%
0.79%
PO 00000
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Frm 00102
I ...................................................
.....................................................
I ...................................................
II ..................................................
I ...................................................
II ..................................................
I ...................................................
II ..................................................
I ...................................................
II ..................................................
I ...................................................
II ..................................................
Fmt 4703
Sfmt 4703
E:\FR\FM\24APN1.SGM
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
24APN1
24252
Federal Register / Vol. 78, No. 79 / Wednesday, April 24, 2013 / Notices
Existing fund
Dreyfus Stock Index Fund, Inc.—Dreyfus
Stock Index Fund.
Management Fees .............................................
12b–1 Fees ........................................................
Other Expenses ..................................................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
Total Net Expenses ............................................
Replacement fund
Lincoln Variable Products Trust—LVIP SSgA
S&P 500 Index Fund.
0.25%
0.00%
0.03%
0.28%
0.00%
0.28%
0.19%
0.00%
0.06%
0.25%
0.00%
0.25%
Initial
Initial
Initial
Initial
Initial
Initial
Class
Class
Class
Class
Class
Class
...........................................
...........................................
...........................................
...........................................
...........................................
...........................................
Standard
Standard
Standard
Standard
Standard
Standard
Class
Class
Class
Class
Class
Class
Dreyfus Variable Investment Fund—Dreyfus
VIF Opportunistic Small Cap Portfolio.
Management Fees .............................................
12b–1 Fees ........................................................
Other Expenses ..................................................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
Total Net Expenses ............................................
Lincoln Variable Products Trust—LVIP SSgA
Small-Cap Index Fund.
0.75%
0.00%
0.13%
0.88%
0.00%
0.88%
0.32%
0.00%
0.09%
0.41%
0.00%
0.41%
Initial
Initial
Initial
Initial
Initial
Initial
Class
Class
Class
Class
Class
Class
...........................................
...........................................
...........................................
...........................................
...........................................
...........................................
Standard
Standard
Standard
Standard
Standard
Standard
Class
Class
Class
Class
Class
Class
DWS Investments VIT Funds—DWS Equity
500 Index VIP Portfolio.
Management Fees .............................................
12b–1 Fees ........................................................
Other Expenses ..................................................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
Total Net Expenses ............................................
Lincoln Variable Products Trust—LVIP SSgA
S&P 500 Index Fund.
0.20%
0.20%
0.00%
0.25%
0.15%
0.15%
0.35%
0.60%
0.00%
0.00%
0.35%
0.60%
0.19%
0.19%
0.00%
0.25%
0.06%
0.06%
0.25%
0.50%
0.00%
0.00%
0.25%
0.50%
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
A
B
A
B
A
B
A
B
A
B
A
B
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
DWS Investments VIT Funds—DWS Small
Cap Index VIP Portfolio.
Management Fees .............................................
12b–1 Fees ........................................................
Other Expenses ..................................................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
Total Net Expenses ............................................
Lincoln Variable Products Trust—LVIP SSgA
Small-Cap Index Fund.
0.35% Class A
0.35% Class B
0.00% Class A
0.25% Class B
0.20% Class A
0.20% Class B
0.55% Class A
0.80% Class B
¥0.06% Class
¥0.06% Class
0.49% Class A
0.74% Class B
0.32%
0.32%
0.00%
0.25%
0.09%
0.09%
0.41%
0.66%
0.00%
0.00%
0.41%
0.66%
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
A ..............................................
B ..............................................
.................................................
.................................................
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Fidelity® Variable Insurance Products Trust—
Fidelity® VIP Equity-Income Portfolio.
Management Fees .............................................
12b–1 Fees ........................................................
Other Expenses ..................................................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
tkelley on DSK3SPTVN1PROD with NOTICES
Total Net Expenses ............................................
Lincoln Variable Products Trust—LVIP SSgA
S&P 500 Index Fund.
0.46%
0.46%
0.00%
0.25%
0.10%
0.10%
0.56%
0.81%
0.00%
0.00%
0.56%
0.81%
0.19%
0.19%
0.00%
0.25%
0.06%
0.06%
0.25%
0.50%
0.00%
0.00%
0.25%
0.50%
Initial Class ...........................................
Service Class 2 ....................................
Initial Class ...........................................
Service Class 2 ....................................
Initial Class ...........................................
Service Class 2 ....................................
Initial Class ...........................................
Service Class 2 ....................................
Initial Class ...........................................
Service Class 2 ....................................
Initial Class ...........................................
Service Class 2 ....................................
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Fidelity® Variable Insurance Products Trust—
Fidelity® VIP Overseas Portfolio.
Management Fees .............................................
12b–1 Fees ........................................................
VerDate Mar<15>2010
18:05 Apr 23, 2013
Jkt 229001
Lincoln Variable Products Trust—LVIP SSgA
International Index Fund.
0.71%
0.71%
0.00%
0.25%
0.40%
0.40%
0.25%
0.25%
PO 00000
Initial Class ...........................................
Service Class 2 ....................................
Initial Class ...........................................
Service Class 2 ....................................
Frm 00103
Fmt 4703
Sfmt 4703
E:\FR\FM\24APN1.SGM
Service
Service
Service
Service
24APN1
Class
Class
Class
Class
Federal Register / Vol. 78, No. 79 / Wednesday, April 24, 2013 / Notices
Existing fund
Other Expenses ..................................................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
Total Net Expenses ............................................
0.14%
0.14%
0.85%
1.10%
0.00%
0.00%
0.85%
1.10%
24253
Replacement fund
Initial Class ...........................................
Service Class 2 ....................................
Initial Class ...........................................
Service Class 2 ....................................
Initial Class ...........................................
Service Class 2 ....................................
Initial Class ...........................................
Service Class 2 ....................................
0.14% Standard Class
0.14% Service Class
0.79% Service Class
0.79% Service Class
¥0.04% Service Class
¥0.04% Service Class
0.75% Service Class
0.75% Service Class
Franklin Templeton Variable Insurance Products Trust—FTVIPT Franklin Small-Mid Cap
Growth Securities Fund.
Management Fees .............................................
12b–1 Fees ........................................................
Other Expenses ..................................................
Acquired Fund Fees and Expenses ...................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
Total Net Expenses ............................................
Lincoln Variable Products Trust—LVIP SSgA
Small-Cap Index Fund.
0.51%
0.51%
0.00%
0.25%
0.29%
0.29%
0.00%
0.00%
0.80%
1.05%
0.00%
0.00%
0.80%
1.05%
0.32%
0.32%
0.00%
0.25%
0.09%
0.09%
0.00%
0.00%
0.41%
0.66%
0.00%
0.00%
0.41%
0.66%
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
1
2
1
2
1
2
1
2
1
2
1
2
1
2
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
MFS Variable Insurance Trust—MFS VIT
Total Return Series.
Management Fees .............................................
12b–1 Fees ........................................................
Other Expenses ..................................................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
tkelley on DSK3SPTVN1PROD with NOTICES
Total Net Expenses ............................................
11. The Section 26 Applicants
propose the Substitutions as part of a
continued and overall business plan by
each Insurance Company to make its
Contracts more attractive to both
existing and prospective Contract
Owners, and more efficient to
administer and oversee via enhanced
flexibility to deliver to the Contract
Owners changes that are designed to
promote their best interests.
12. The Section 26 Applicants believe
that eliminating investment option
redundancy via the proposed
VerDate Mar<15>2010
18:05 Apr 23, 2013
Jkt 229001
0.75% Service Class ........................................
0.25% Service Class ........................................
0.05% Service Class ........................................
0.00% Service Class ........................................
1.05% Service Class ........................................
¥0.03% Service Class ....................................
1.02% Service Class ........................................
0.25% Service Class
0.25% Service Class
0.04% Service Class
0.37% Service Class
0.91% Service Class
¥0.10% Service Class
0.81% Service Class
Neuberger Berman Advisers Management
Trust—Neuberger Berman AMT Mid-Cap
Growth Portfolio.
Management Fees .............................................
12b–1 Fees ........................................................
Other Expenses ..................................................
Acquired Fund Fees and Expenses ...................
Total Gross Expenses ........................................
Waivers/Reimbursements ...................................
Total Net Expenses ............................................
Lincoln Variable Products Trust—LVIP SSgA
Moderate Structured Allocation Fund.
Lincoln Variable Products Trust—LVIP SSgA
S&P 500 Index Fund
0.84%
0.84%
0.00%
0.00%
0.15%
0.15%
0.99%
0.99%
0.00%
0.00%
0.99%
0.99%
0.19%
0.19%
0.00%
0.25%
0.06%
0.06%
0.25%
0.50%
0.00%
0.00%
0.25%
0.50%
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
I
I
I
I
I
I
I
I
I
I
I
I
...................................................
...................................................
...................................................
...................................................
...................................................
...................................................
...................................................
...................................................
...................................................
...................................................
...................................................
...................................................
Substitutions would result in a more
consolidated and less confusing menu
of investment options for investors.
Since the proposed Substitutions
involve consolidating duplicative
investment options, the diversity of
investment options available under the
Contracts will not be adversely
impacted. Furthermore, this
consolidation of investment options
would result in greater efficiency in
administration of the Contracts because
there will be fewer investment options
to support, resulting in the availability
PO 00000
Frm 00104
Fmt 4703
Sfmt 4703
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
Standard Class
Service Class
of resources to apply elsewhere to the
Contracts. Finally reducing overlapping
investment options gives the Contracts
the capacity to add other types of
investment options.
13. The Section 26 Applicants submit
that the Substitutions will, after
implementation, simplify the
prospectuses and related materials with
respect to the Contracts and the
investment options available through
the Separate Accounts. By reducing the
number of underlying mutual funds and
mutual fund companies offered in the
E:\FR\FM\24APN1.SGM
24APN1
24254
Federal Register / Vol. 78, No. 79 / Wednesday, April 24, 2013 / Notices
Contracts, the offering Insurance
Company necessarily reduces the
number of underlying mutual fund
prospectuses and prospectus formats the
Contract Owner must navigate. By
consolidating overlapping investment
options into the Trust, the number of
mutual fund companies, and varying
prospectus formats, is reduced,
simplifying the investment decision
process for Contract Owners. The Trust
Funds employ a common share class
structure, a common set of valuation
procedures that is administered by a
single investment adviser, and the same
prospectus style, vocabulary, look and
feel. The Section 26 Applicants believe
that the proposed Substitutions will
continue to provide Contract Owners
with access to quality investment
managers and a large variety of
investment options, but will make the
investment decision process more
manageable for the investor by having
the underlying fund disclosure
presented in a consistent format using
consistent terminology, making it easier
for Contract Owners to analyze fund
information and make informed
investment decisions relating to
allocation of his or her Contract value.
14. Also, the proposed Substitutions
involve substituting a Replacement
Fund for an Existing Fund with very
similar, and in some cases substantially
identical, investment objective and
investment strategy.
15. Contract Owners with Contract
value allocated to the sub-accounts of
the Existing Funds will experience the
same or lower fund net annual operating
expenses after the Substitutions as prior
to the Substitutions, except for the
following:
Replacement funds
AllianceBernstein Variable Products Series Fund—AllianceBernstein
VPS International Value Portfolio:
Class B ..............................................................................................
American Century Investment Variable Products—American Century
VP Inflation Protection Fund:
Class I ................................................................................................
Class II ...............................................................................................
tkelley on DSK3SPTVN1PROD with NOTICES
Existing funds
Lincoln Variable Products Trust—LVIP Mondrian International Value
Fund:
Service Class
Lincoln Variable Products Trust—LVIP BlackRock Inflation Protected
Bond Fund:
Standard Class
Service Class
16. Each Replacement Fund has a
combined management fee and 12b–1
Fee that is less than or equal to that of
the Existing Fund, except for the DWS
Equity 500 Index VIP Portfolio/LVIP
SSgA S&P 500 Index Fund substitution
in which the combined management
and 12b–1 Fees of the Replacement fund
could be higher than those of the
Existing Fund at certain management
fee breakpoints.
17. The Substitutions are designed to
provide Contract Owners with the
ability to continue their investment in
similar investment options without
interruption and at no additional cost to
them. In this regard, the Insurance
Companies have agreed to bear all
expenses incurred in connection with
the Substitutions and related filings and
notices, including legal, accounting,
brokerage, and other fees and expenses.
Also, the Contract value of each
Contract Owner impacted by the
Substitutions will not change as a result
of the Substitutions.
18. Prospectus supplements (‘‘PreSubstitution Notices’’) were sent to
Contract Owners on April 1, 2013. The
Pre-Substitution Notices: (i) Notify all
Contract Owners of the Insurance
Company’s intent to implement the
Substitutions, that it has filed the
application in order to obtain the
necessary orders to do so, and indicate
the anticipated Substitution Date; (ii)
advise Contract Owners that from the
date of the Pre-Substitution Notice until
the Substitution Date, Contract Owners
are permitted to transfer Contract value
out of any Existing Fund sub-account to
any other sub-account(s) offered under
VerDate Mar<15>2010
18:05 Apr 23, 2013
Jkt 229001
the Contract without the transfer being
treated as a transfer for purposes of
transfer limitations and fees that would
otherwise be applicable under the terms
of the Contract; (iii) instruct Contract
Owners how to submit transfer requests
in light of the proposed Substitutions;
(iv) advise Contract Owners that any
Contract value remaining in an Existing
Fund sub-account on the Substitution
Date will be transferred to the
corresponding Replacement Fund subaccount, and that the Substitutions will
take place at relative net asset value; (v)
inform Contract Owners that for at least
thirty days following the Substitution
Date, the Insurance Companies will
permit Contract Owners to make
transfers of Contract value out of each
Replacement Fund sub-account to any
other sub-account(s) offered under the
Contract without the transfer being
treated as a transfer for purposes of
transfer limitations and fees that would
otherwise be applicable under the terms
of the Contract; and (vi) inform Contract
Owners that, except as described in the
market timing/short-term trading
provision of the relevant prospectus, the
respective Insurance Company will not
exercise any rights reserved by it under
the Contracts to impose additional
restrictions on transfers out of a
Replacement Fund for at least thirty
days after the Substitution Date.
Existing Contract Owners will receive
the Pre-Substitution Notice and the
prospectus for the Replacement Fund
before the Substitution Date, if they
have not already received such
information. The prospectus for the
Replacement Fund will disclose and
PO 00000
Frm 00105
Fmt 4703
Sfmt 4703
explain the substance and effect of the
Manager of Managers Order. New
purchasers of the Contracts will be
provided the Pre-Substitution Notice,
the Contract prospectus and the
prospectus for the Replacement Funds
in accordance with all applicable legal
requirements. Prospective purchasers of
the Contracts will be provided the PreSubstitution Notice and the Contract
prospectus.
19. In addition to the Pre-Substitution
Notice distributed to Contract Owners,
within five business days after the
Substitution Date, Contract Owners will
be sent a written confirmation of the
Substitutions in accordance with Rule
10b–10 under the Securities Exchange
Act of 1934. The confirmation statement
will restate the information set forth in
the Pre-Substitution Notice.
20. As of the Substitution Date, a
portion of the securities of the Existing
Funds will be redeemed in kind and
those securities received will be used to
purchase shares of the Replacement
Funds. The redemption of each Existing
Fund’s shares and repurchase of the
corresponding Replacement Fund’s
shares will be effected and take place at
relative net asset value determined on
the Substitution Date pursuant to
Section 22 of the 1940 Act and Rule
22c–1 thereunder with no change in the
amount of any Contract Owner’s
Contract value, cash value, death
benefit, or dollar value of his or her
investment in the Separate Accounts
and without such transactions counting
as a transfer for purposes of transfer
limitations and fees that would
otherwise be applicable under the terms
E:\FR\FM\24APN1.SGM
24APN1
tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 79 / Wednesday, April 24, 2013 / Notices
of the Contracts. Each Substitution will
be effected by redeeming shares of the
Existing Fund in cash and/or in-kind on
the Substitution Date at their net asset
value. In the event that either LIAC or
the relevant Subadviser of a
Replacement Fund declines to accept,
on behalf of the Replacement Fund,
securities redeemed in-kind by an
Existing Fund, such Existing Fund shall
instead provide cash equal to the value
of the declined securities so that
Contract Owners’ Contract values will
not be adversely impacted or diluted.
Each Substitution will be effected by
redeeming shares of Existing Funds in
cash and/or in kind on the Substitution
Date and using the proceeds of those
redemptions to purchase shares of the
Replacement Funds. Therefore,
simultaneous to the redemption of the
Existing Fund’s shares, all the proceeds
of such redemptions shall be used to
purchase shares of the Replacement
Fund at their net asset value so that
each Contract Owner’s Contract value
will remain fully invested at all times.
21. Contract Owners will not incur
any fees or charges as a result of the
proposed Substitutions, nor will their
rights or insurance benefits or the
Insurance Companies’ obligations under
the Contracts be altered in any way. All
expenses incurred in connection with
the proposed Substitutions, including
any brokerage, legal, accounting, and
other fees and expenses, will be paid by
the Insurance Companies. In addition,
the Substitutions will not result in
adverse tax consequences to Contract
Owners and will not alter any tax
benefits associated with the Contracts.
The proposed Substitutions will not
cause the Contract fees and charges
currently being paid by Contract
Owners to be greater after the proposed
Substitution than before the proposed
Substitution. Redemptions and
repurchases that occur in connection
with effecting the Substitution will not
count as a transfer for purposes of
transfer limitations and fees that would
otherwise be applicable under the terms
of the Contracts. Consequently, no fees
will be charged on transfers made to
effectuate the Substitutions.
22. The Section 26 Applicants
represent that, after the Substitution
Date, the Replacement Funds will not
change a Subadviser, add a new
Subadviser, or otherwise rely on the
Manager of Managers Order without
first obtaining shareholder approval of
the change in Subadviser, the new
Subadviser, or the Fund’s ability to add
or to replace a Subadviser in reliance on
the Manager of Managers Order.
Additionally, the Section 26 Applicants
represent that a prospectus for the
VerDate Mar<15>2010
18:05 Apr 23, 2013
Jkt 229001
relevant Replacement Fund(s)
containing disclosure describing the
existence, substance, and effect of the
Manager of Managers Order will have
been provided to each Contract Owner
prior to the Substitution Date.
Legal Analysis and Conditions
Section 26(c) Relief
1. The Section 26 Applicants request
that the Commission issue an order
pursuant to Section 26(c) of the 1940
Act approving the proposed
substitutions. Section 26(c) of the 1940
Act makes it unlawful for the depositor
of a registered unit investment trust that
invests in the securities of a single
issuer to substitute another security for
such security without Commission
approval.
2. The Section 26 Applicants have
reserved the right under the Contracts to
substitute shares of another underlying
mutual fund for one of the current
underlying mutual funds offered as an
investment option under the Contracts.
The Contract prospectuses disclose this
right.
3. Each Replacement Fund and its
corresponding Existing Fund have
similar, and in some cases substantially
similar or identical, investment
objectives and strategies. In addition,
each proposed Substitution retains for
Contract Owners the investment
flexibility and expertise in asset
management, which are core investment
features of the Contracts. Any impact on
the investment programs of affected
Contract Owners should be negligible.
4. In each Substitution, except the
DWS Equity 500 Index VIP Portfolio/
LVIP SSgA 500 Index Fund
substitutions, the Replacement Fund
has a combined management fee and
12b–1 Fee that is less than or equal to
that of the Existing Fund. Except with
respect to the AllianceBernstein VPS
International Value Portfolio/LVIP
Mondrian International Value Fund,
and American Century VP Inflation
Protection Fund/LVIP BlackRock
Inflation Protected Bond Fund, Contract
Owners with Contracts value allocated
to the sub-accounts of the Existing
Funds will experience the same or
lower fund net annual operating
expenses after the Substitutions as prior
to the Substitutions.
5. Section 26 Applicants agree that for
a period of two years following the
Substitution date and for those
Contracts with assets allocated to the
Existing Fund on the date of the
Substitution, the Insurance Companies
will reimburse, on the last business day
of each fiscal quarter, the contract
owners whose sub-accounts invest in
PO 00000
Frm 00106
Fmt 4703
Sfmt 4703
24255
the applicable Replacement Fund to the
extent that the Replacement Fund’s net
annual operating expenses for such
period exceeds, on an annualized basis,
the net annual operating expenses of the
Existing Fund for fiscal year 2012,
except with respect to the DWS Equity
500 Index VIP Portfolio/LVIP SSgA S&P
500 Index Fund substitution. With
respect to the DWS Equity 500 Index
VIP Portfolio/LVIP SSgA S&P 500 Index
Fund substitution, the reimbursement
agreement with respect to the
Replacement Fund’s net annual
operating expenses will extend for the
life of each Contract outstanding on the
date of the proposed Substitutions.
6. In addition, the Section 26
Applicants agree that, except with
respect to the DWS Equity 500 Index
VIP Portfolio/LVIP SSgA S&P 500 Index
Fund, the Insurance Companies will not
increase total separate account charges
(net of any reimbursements or waivers)
for any existing owner of the Contracts
on the date of the Substitutions for a
period of two (2) years from the date of
the Substitutions. With respect to the
DWS Equity 500 Index VIP Portfolio/
LVIP SSgA S&P 500 Index Fund
substitution, the agreement not to
increase the separate account charges
will extend for the life of each Contract
outstanding on the date of the proposed
Substitutions.
7. The Section 26 Applicants submit
that the proposed Substitutions are not
of the type that Section 26 was designed
to prevent: Overreaching on the part of
the depositor by permanently impacting
the investment allocations of the entire
trust. In the current situation, the
Contracts provide Contract Owners with
investment discretion to allocate and
reallocate their Contract value among
the available underlying mutual funds.
This flexibility provides Contract
Owners with the ability to reallocate
their assets at any time—either before
the Substitution Date, or after the
Substitution Date—if they do not wish
to invest in the Replacement Fund.
Thus, the likelihood of being invested in
an undesired underlying mutual fund is
minimized, with the discretion
remaining with the Contract Owners.
The Substitutions, therefore, will not
result in the type of costly forced
redemption that Section 26(c) was
designed to prevent. The Section 26
Applicants submit that, for all the
reasons stated above, the proposed
Substitutions are consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the 1940 Act.
E:\FR\FM\24APN1.SGM
24APN1
tkelley on DSK3SPTVN1PROD with NOTICES
24256
Federal Register / Vol. 78, No. 79 / Wednesday, April 24, 2013 / Notices
Section 17(b) Relief
1. The Section 17 Applicants request
that the Commission issue an order
pursuant to Section 17(b) of the 1940
Act exempting them from the provisions
of Section 17(a) of the 1940 Act to the
extent necessary to permit them to carry
out the In-Kind Transactions.
2. Section 17(a)(1) of the 1940 Act, in
relevant part, generally prohibits any
affiliated person of a registered
investment company (or any affiliated
person of such a person), acting as
principal, from knowingly selling any
security or other property to that
company. Section 17(a)(2) of the 1940
Act generally prohibits the same
persons, acting as principals, from
knowingly purchasing any security or
other property from the registered
investment company.
3. Shares held by an insurance
company separate account are legally
owned by the insurance company. Thus,
the Insurance Companies collectively
own substantially all of the shares of the
Trust. Accordingly, the Trust and its
respective Trust Funds are arguably
under the control of the Insurance
Companies, as per Section 2(a)(9) of the
1940 Act (notwithstanding the fact that
the Contract Owners are the beneficial
owners of those Separate Account
shares). If the Trust is under the
common control of the Insurance
Companies, then each Insurance
Company is an affiliated person of the
Trust and its respective Trust Funds. If
the Trust and its respective Trust Funds
are under the control of the Insurance
Companies, then the Trust and its
respective affiliates are affiliated
persons of the Insurance Companies.
Regardless of whether or not the
Insurance Companies can be considered
to actually control the Trust and its
Trust Funds, because the Insurance
Companies and their affiliates own of
record more than 5% of the shares of
each Trust Fund and are under common
control with LIAC, the Insurance
Companies are affiliated persons of the
Trust and its Trust Funds. Likewise, the
Trust and its respective Trust Funds are
each an affiliated person of the
Insurance Companies. The proposed InKind Transactions could be seen as the
indirect purchase of shares of certain
Replacement Funds with portfolio
securities of certain Existing Funds and
the indirect sale of portfolio securities of
certain Existing Funds for shares of
certain Replacement Funds. Pursuant to
this analysis, the proposed In-Kind
Transactions also could be categorized
as a purchase of shares of certain
Replacement Funds by certain Existing
Funds, acting as principal, and a sale of
VerDate Mar<15>2010
18:05 Apr 23, 2013
Jkt 229001
portfolio securities by certain Existing
Funds, acting as principal, to certain
Replacement Funds. In addition, the
proposed In-Kind Transactions could be
viewed as a purchase of securities from
certain Existing Portfolios, and a sale of
securities to certain Replacement Funds,
by the Insurance Companies (or their
Separate Accounts), acting as principal.
If categorized in this manner, the
proposed In-Kind Transactions may be
deemed to contravene Section 17(a) due
to the affiliated status of these
participants.
4. The Section 17 Applicants submit
that the In-Kind Transactions, as
described in the application, meet the
conditions set forth in Section 17(b) of
the 1940 Act.
5. Contract Owners’ Contract values
will not be adversely impacted or
diluted because the In-Kind
Transactions will be effected at the
respective net asset values of the
Existing Funds and the Replacement
Funds, as described in each fund’s
registration statement and as required
by Rule 22c–1 under the 1940 Act. The
In-Kind Transactions will not change
the dollar value of any Contract, the
accumulation unit value or annuity unit
value of any Contract, or the death
benefit payable under any Contract.
After the In-Kind Transactions, the
value of a Separate Account’s
investment in a Replacement Fund will
equal the value of its investments in the
corresponding Existing Fund (in
addition to any pre-existing investment
in the Replacement Fund) before the InKind Transactions.
6. Additionally, the Section 17
Applicants will cause the In-Kind
Transactions to be implemented in
compliance with the conditions set forth
in Rule 17a-7 under the 1940 Act,
except that the consideration paid for
the securities being purchased or sold
will not be in cash.
7. The proposed In-Kind Transactions
will be effected based upon the
independent current market price of the
portfolio securities as specified in Rule
17a–7(b). Because, per the terms of Rule
17a–7(a), Rule 17a–7 is available only
with respect to securities for which
market quotations are readily available,
the proposed In-Kind Transactions will
include only securities for which market
quotations are readily available on the
Substitution Date. Further, the proposed
In-Kind Transactions will be consistent
with the policy of each registered
investment company and separate series
thereof participating in the In-Kind
Transactions, as recited in the relevant
registered investment company’s
registration statement and reports in
accordance with Rule 17a–7(c). No
PO 00000
Frm 00107
Fmt 4703
Sfmt 4703
brokerage commission, fee (except for
any customary transfer fees), or other
remuneration will be paid in connection
with the proposed In-Kind Transactions
as specified in Rule 17a–7(d). The
Trust’s Board of Trustees has adopted
and implemented the fund governance
and oversight procedures as required by
Rule 17a–7(e) and (f). In addition,
pursuant to Rule 17a–7(e)(3), during the
calendar quarter following the quarter in
which any In-Kind Transactions occur,
the Trust’s Board of Trustees will
review reports submitted by LIAC in
respect of such In-Kind Transactions in
order to determine that all such In-Kind
Transactions made during the preceding
quarter were effected in accordance
with the representations stated herein.
Finally, a written record of the
procedures for the proposed In-Kind
Transactions will be maintained and
preserved in accordance with Rule 17a–
7(g).
Although the proposed In-Kind
Transactions will not comply with the
cash consideration requirement of Rule
17a–7(a), the terms of the proposed InKind Transactions will offer to each of
the relevant Existing Funds and each of
the relevant Replacement Funds the
same degree of protection from
overreaching that Rule 17a–7 generally
provides in connection with the
purchase and sale of securities under
that Rule in the ordinary course of
business. Specifically, the Insurance
Companies and their affiliates cannot
effect the proposed In-Kind
Transactions at a price that is
disadvantageous to any Replacement
Fund and the proposed In-Kind
Transactions will not occur absent an
exemptive order from the Commission.
8. For those Existing Funds that will
redeem their shares in-kind as part of
the In-Kind Transactions, such
transactions will be consistent with the
investment policies of the Existing Fund
because: (1) The redemption in-kind
policy is stated in the relevant Existing
Fund’s current registration statement;
and (2) the shares will be redeemed at
their net asset value in conformity with
Rule 22c–1 under the 1940 Act. In
addition, to the extent applicable to the
Section 17 Applicants as affiliated
persons redeeming in-kind from an
Existing Fund, the Section 17
Applicants will comply with the
Commission’s no-action letter issued to
Signature Financial Group, Inc. (pub.
avail. Dec. 28, 1999). Likewise, for the
Replacement Funds that will sell shares
in exchange for portfolio securities as
part of the In-Kind Transactions, such
transactions will be consistent with the
investment policies of the Replacement
Fund because: (1) The Trust’s policy of
E:\FR\FM\24APN1.SGM
24APN1
Federal Register / Vol. 78, No. 79 / Wednesday, April 24, 2013 / Notices
selling shares in exchange for
investment securities is stated in the
Trust’s current registration statement;
(2) the shares will be sold at their net
asset value in conformity with Rule
22c–1 under the Act; and (3) the
investment securities will be of the type
and quality that a Replacement Fund
could have acquired with the proceeds
from the sale of its shares had the shares
been sold for cash. For each of the
proposed In-Kind Transactions, LIAC
and the relevant Subadviser(s) will
analyze the portfolio securities being
offered to each relevant Replacement
Fund and will retain only those
securities that it would have acquired
for each such Fund in a cash
transaction.
9. The Section 17 Applicants submit
that, for all the reasons stated above: (1)
The terms of the proposed In-Kind
Transactions, including the
consideration to be paid and received,
are reasonable and fair to each of the
relevant Replacement Funds, each of the
relevant Existing Funds, and Contract
Owners, and that the proposed In-Kind
Transactions do not involve
overreaching on the part of any person
concerned; (2) the proposed In-Kind
Transactions are, or will be, consistent
with the policies of the relevant
Replacement Funds and the relevant
Existing Funds as stated in the relevant
investment company’s registration
statement and reports filed under the
1940 Act; and (3) the proposed In-Kind
Transactions are, or will be, consistent
with the general purposes of the 1940
Act. The Section 17 Applicants
maintain that the proposed In-Kind
Transactions, as described herein, are
consistent with the general purposes of
the 1940 Act set forth in Section 1 of the
1940 Act. In particular, the proposed InKind Transactions do not present any
conditions or abuses that the 1940 Act
was designed to prevent.
Conclusion
tkelley on DSK3SPTVN1PROD with NOTICES
For the reasons set forth in the
application, the Applicants submit that
the proposed Substitutions and related
transactions meet the standards of
Section 26(c) of the 1940 Act and are
consistent with the standards of Section
17(b) of the 1940 Act and that the
requested orders should be granted.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–09633 Filed 4–23–13; 8:45 am]
BILLING CODE 8011–01–P
VerDate Mar<15>2010
18:05 Apr 23, 2013
Jkt 229001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69403; File No. SR–OCC–
2013–02]
Self-Regulatory Organizations; The
Options Clearing Corporation; Order
Approving Proposed Rule Change To
Implement a Revised Method of
Calculating Clearing Members’
Respective Contributions to OCC’s
Clearing Fund
April 18, 2013.
I. Introduction
On February 19, 2013 The Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change SR–OCC–2013–02
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’)1 and Rule 19b-4 thereunder.2
The proposed rule change was
published for comment in the Federal
Register on March 8, 2013.3 The
Commission received no comment
letters. This order approves the
proposed rule change.
II. Description of the Proposed Rule
Change
The purpose of this proposed rule
change is to revise OCC’s By-Laws and
Rules to implement a revised method of
calculating Clearing Members’
contributions to OCC’s Clearing Fund.
Currently, Clearing Members contribute
to the Clearing Fund in proportion to
average daily open interest, i.e., the total
number of cleared contracts and open
positions plus units of stock underlying
open stock loan or borrow positions,
over the calendar month preceding the
date of calculation, subject to a $150,000
minimum contribution.
OCC has developed a new allocation
formula that it believes will equitably
allocate contributions among its
Clearing Members based on each
Clearing Member’s particular activities
and use of OCC’s facilities.4 The revised
formula will include the following
components and weights: (1) Open
interest (50% of total); (2) total risk
charge (35% of total); and (3) volume
(15% of total).5
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Securities Exchange Act Release No. 34–69026
(March 4, 2013), 78 FR 15088 (March 8, 2013).
4 OCC believes the new allocation formula
generally reflects similar practices that are in place
at the other clearing agencies registered with the
Commission. See supra note 3, Securities Exchange
Act Release No. 34–69026 (March 4, 2013), 78 FR
15088 (March 8, 2013).
5 Because Execution-Only Clearing Members do
not clear their own trades, the measure of volume
2 17
PO 00000
Frm 00108
Fmt 4703
Sfmt 4703
24257
The total risk charge is intended to
measure the economic significance of
the activities of a Clearing Member. The
total risk charge is equal to the margin
requirement, as determined by OCC, of
the accounts of the Clearing Member
exclusive of the net asset value of those
accounts. OCC notes that a range of
factors influence the relationship
between the open interest in a Clearing
Member’s account and its associated
risk charge. For example, for each
Clearing Member these factors include,
but are not limited to, the types of
positions, number of long positions
versus short positions, value of the
securities underlying the contracts,
volatility of the underlying,
diversification, number of accounts of
the Clearing Member, and the extent to
which the Clearing Member’s options
positions are in-the-money or out-of-themoney.
Volume, like open interest, is a
measure of a Clearing Member’s level of
usage of OCC’s facilities. However,
volume is distinct from open interest in
that it is a function of the average
turnover of the positions in the Clearing
Member’s account. Therefore, according
to OCC, market-making, high frequency
trading, and execution-only services are
all examples of activities that might
elevate volume relative to open interest.
By contrast, holding long term positions
in long term contracts is an example of
activity that might lower a Clearing
Member’s volume relative to its open
interest.
OCC believes that its proposed
allocation formula is preferable to its
current formula because, by
incorporating measurements of volume
and certain risk charges, it will
apportion contributions based on more
sophisticated measurements of Clearing
Members’ usage of OCC’s facilities and
recognize demands on OCC’s services
and facilities that are not captured by
open interest alone.
OCC believes it is appropriate for
open interest to continue to serve as the
most heavily weighted component
because open interest, generally
speaking, is a measure of a Clearing
Member’s overall usage of OCC’s
facilities. The definition of open interest
in proposed Rule 1001(d) is different
than the definition of open interest in
existing Rule 1001(b), which OCC is
deleting, in a non-material way as a
result of the use of the defined term
‘‘cleared contract’’ in proposed Rule
1001(d) instead of specifically naming
the individual types of contracts that
make up ‘‘cleared contracts.’’
applicable to them would be executed volume
rather than cleared volume.
E:\FR\FM\24APN1.SGM
24APN1
]]>Agencies
[Federal Register Volume 78, Number 79 (Wednesday, April 24, 2013)]
[Notices]
[Pages 24249-24257]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-09633]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-30468; File No. 812-14063]
Lincoln National Life Insurance Company, et al; Notice of
Application
April 18, 2013
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').
ACTION: Notice of application for an order approving the substitution
of certain securities pursuant to Section 26(c) of the Investment
Company Act of 1940, as amended (the ``1940 Act'' or ``Act'') and an
order of exemption pursuant to Section 17(b) of the Act from Section
17(a) of the Act.
-----------------------------------------------------------------------
APPLICANTS: Lincoln National Life Insurance Company (``Lincoln Life''),
Lincoln National Variable Annuity Account C, Lincoln National Variable
Annuity Account L, Lincoln Life Variable Annuity Account N, and Lincoln
Life Variable Annuity Account Q, (the ``Lincoln Life Separate
Accounts'') and Lincoln Life & Annuity Company of New York (``LNY''),
Lincoln Life & Annuity Variable Annuity Account L, and Lincoln New York
Account N for Variable Annuities (the ``LNY Separate Accounts,'' and
together with the Lincoln Life Separate Accounts, the ``Separate
Accounts'') (collectively, the ``Section 26 Applicants''). The Section
26 Applicants and the Lincoln Variable Insurance Products Trust (the
``Trust'') (which is a registered investment company that is an
affiliate of the Section 26 Applicants) are collectively referred to in
this notice as the ``Section 17 Applicants.'' Lincoln Life and LNY are
also referred to as the ``Insurance Companies.''
SUMMARY OF APPLICATION: The Section 26 Applicants seek an order
pursuant to Section 26(c) of the 1940 Act, approving the substitution
of certain shares of the Trust for shares of other registered
investment companies unaffiliated with the Section 26 Applicants (the
``Substitutions'') each of which is currently used as an underlying
investment option for certain variable annuity contracts (collectively,
the ``Contracts''). The Section 17 Applicants seek an order pursuant to
Section 17(b) of the 1940 Act exempting them from Section 17(a) of the
Act to the extent necessary to permit them to engage in certain in-kind
transactions (``In-Kind Transfers'') in connection with the
Substitutions.
FILING DATE: The application was filed on July 25, 2012, and amended
and restated applications were filed on November 14, 2012, March 5,
2013, and April 16, 2013.
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 the Applicants with a copy of the request,
personally or by mail. Hearing requests should be received by the
Commission by 5:30 p.m. on May 13, 2013, and should be accompanied by
proof of service on the Applicants in the form of an affidavit or, for
lawyers, a certificate of service. Hearing requests should state the
nature of the requester's interest, the reason for the request, and the
issues contested. Persons who wish to be notified of a hearing may
request notification by writing to the Secretary of the Commission.
ADDRESSES: Secretary, SEC, 100 F Street NE., Washington, DC 20549-1090.
Applicants: Lincoln National Life Insurance Company, Lincoln National
Variable Annuity Account C, Lincoln National Variable Annuity Account
L, Lincoln Life Variable Annuity Account N, Lincoln Life Variable
Annuity Account Q, and Lincoln Variable Insurance Products Trust, 1300
South Clinton Street, Fort Wayne, IN 46802; Lincoln Life & Annuity
Company of New York, Lincoln Life & Annuity Variable Annuity Account L,
and Lincoln New York Account N for Variable Annuities, 100 Madison
Street, Suite 1860, Syracuse, NY 13202.
FOR FURTHER INFORMATION CONTACT: Alberto H. Zapata, Senior Counsel, or
Joyce M. Pickholz, Branch Chief, Insured Investments Office, Division
of Investment Management, at (202) 551-6795.
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application
[[Page 24250]]
may be obtained via the Commission's Web site by searching for the file
number, or for an applicant using the Company name box, at https://www.sec.gov/search/search.htm, or by calling (202) 551-8090.
Applicants' Representations
1. Lincoln Life is the depositor and sponsor of the Lincoln Life
Separate Accounts. LNY is the depositor and sponsor of the LNY Separate
Accounts.
2. Each of the Separate Accounts is a registered unit investment
trust used to issue one or more Contracts issued by the Insurance
Companies. Each Separate Account is divided into sub-accounts, each of
which invests in the securities of a single underlying mutual fund. The
application sets forth the registration statement file numbers for the
Contracts and the Separate Accounts.
3. The Trust is organized as a Delaware statutory trust. It is
registered as an open-end management investment company under the 1940
Act and its shares are registered under the Securities Act of 1933, on
Form N-1A (see File Nos. 811-08090 and 033-70742). The Trust is a
series investment company and currently offers sixty-four separate
series (each a ``Trust Fund''), six of which are involved in the
proposed Substitutions (the ``Replacement Funds'').
4. Lincoln Investment Advisors Corporation (``LIAC''), a Delaware
corporation and investment adviser registered under the Investment
Advisers Act of 1940 currently serves as investment adviser to each of
the Trust Funds.
5. The Trust received an exemptive order from the Commission (In
the Matter of Lincoln Investment Advisors Corporation, et al., Inv. Co.
Rel. No. 29197 (Mar. 31, 2010) File No. 812-13732) (the ``Manager of
Managers Order'') that permits LIAC, subject to certain conditions,
including approval of the Trust's Board of Trustees, and without the
approval of shareholders, to: (i) Select a new Subadviser or additional
Subadviser for each Trust Fund; (ii) terminate any existing Subadviser
and/or replace the Subadviser; (iii) enter into new sub-advisory
agreements and/or materially modify the terms of, or terminate, any
existing sub-advisory agreement; and (iv) allocate and reallocate a
Trust Fund's assets among one or more Subadvisers.
6. Shares of the Trust are continuously distributed and
underwritten by Lincoln Financial Distributors, Inc., an affiliate of
the Trust and the Section 26 Applicants. Lincoln Life, also an
affiliate of the Trust and the Section 26 Applicants, serves as
administrator to the Trust.
7. The Contracts can be issued as individual or group contracts.
Contract owners and participants in group contracts (each a ``Contract
Owner'') may allocate some or all of their Contract value to one or
more sub-accounts available as investment options under the Contract.
Additionally, the Contract Owner may, if provided for under the
Contract, allocate some or all of their Contract value to a fixed
account and/or guaranteed term option, both of which are supported by
the assets of Lincoln Life's general account.
8. Each Contract's prospectus contains provisions reserving the
Insurance Company's right to substitute shares of one underlying mutual
fund for shares of another underlying mutual fund already purchased or
to be purchased in the future if either of the following occurs: ``(i)
shares of a current underlying mutual fund are no longer available for
investment by the Separate Account; or (ii) in the judgment of the
Insurance Company's management, further investment in such underlying
mutual fund is inappropriate in view of the purposes of the Contract.''
All of the Replacement Funds that correspond to the Existing Funds are
currently available as underlying investment options in the Contracts.
9. The Section 26 Applicants request an order from the Commission
pursuant to Section 26(c) of the 1940 Act approving the proposed
Substitutions of shares of the following series of the Trust, the
Replacement Funds, for shares of the corresponding third party,
unaffiliated underlying mutual funds, the Existing Funds, as shown in
the following table:
------------------------------------------------------------------------
Existing funds Replacement funds
------------------------------------------------------------------------
AllianceBernstein Variable Products Lincoln Variable Products Trust--
Series Fund--AllianceBernstein VPS LVIP SSgA S&P 500 Index Fund:
Growth and Income Portfolio:
Class A........................ Standard Class
Class B........................ Service Class
AllianceBernstein Variable Products Lincoln Variable Insurance Products
Series Fund--AllianceBernstein VPS Trust--LVIP Mondrian International
International Value Portfolio: Value Fund:
Class B........................ Standard Class
Class B........................ Service Class
American Century Investment Lincoln Variable Products Trust--
Variable Products--American LVIP BlackRock Inflation Protected
Century VP Inflation Protection Bond Fund:
Fund:
Class I........................ Standard Class
Class II....................... Service Class
Dreyfus Stock Index Fund, Inc.-- Lincoln Variable Products Trust--
Dreyfus Stock Index Fund:. LVIP SSgA S&P 500 Index Fund:
Initial Class.................. Standard Class
Dreyfus Variable Investment Fund-- Lincoln Variable Products Trust--
Dreyfus VIF Opportunistic Small LVIP SSgA Small-Cap Index Fund:
Cap Portfolio:
Initial Class.................. Standard Class
DWS Investments VIT Funds--DWS Lincoln Variable Products Trust--
Equity 500 Index VIP Portfolio:. LVIP SSgA S&P 500 Index Fund:
Class A........................ Standard Class
Class B........................ Service Class
DWS Investments VIT Funds--DWS Lincoln Variable Products Trust--
Small Cap Index VIP Portfolio:. LVIP SSgA Small-Cap Index Fund:
Class A........................ Standard Class
Class B........................ Service Class
Fidelity Variable Insurance Lincoln Variable Products Trust--
Products Trust--Fidelity VIP LVIP SSgA S&P 500 Index Fund:
Equity-Income Portfolio:
Initial Class.................. Standard Class
Service Class 2................ Service Class
Fidelity Variable Insurance Lincoln Variable Products Trust--
Products Trust--Fidelity VIP LVIP SSgA International Index
Overseas Portfolio: Fund:
Initial Class.................. Service Class
[[Page 24251]]
Service Class 2................ Service Class
Franklin Templeton Variable Lincoln Variable Products Trust--
Insurance Products Trust--FTVIPT LVIP SSgA Small-Cap Index Fund:
Franklin Small-Mid Cap Growth
Securities Fund:
Class 1........................ Standard Class
Class 2........................ Service Class
MFS Variable Insurance Trust--MFS Lincoln Variable Products Trust--
VIT Total Return Series:. LVIP SSgA Moderate Structured
Allocation Fund:
Service Class.................. Service Class
Neuberger Berman Advisers Lincoln Variable Products Trust--
Management Trust--Neuberger Berman LVIP SSgA S&P 500 Index Fund:
AMT Mid-Cap Growth Portfolio:
I Class........................ Standard Class
I Class........................ Service Class
------------------------------------------------------------------------
The class into which a Contract Owner will be transferred is set
forth in the relevant Contract, which lists the class of the
Replacement Fund available within the Contract. Comparisons of the
investing strategies and risks of the Existing Funds and the
Replacement Funds are included in the application.
10. The following tables compare the fees and expenses of the
Existing Fund and the Replacement Fund as of December 31, 2012:
------------------------------------------------------------------------
Existing fund Replacement fund
------------------------------------------------------------------------
AllianceBernstein Lincoln Variable
Variable Products Products Trust--
Series Fund-- LVIP SSgA S&P 500
AllianceBernstein Index Fund.
VPS Growth and
Income Portfolio.
------------------------------------------------------------------------
Management Fees............. 0.55% Class A....... 0.19% Standard Class
0.55% Class B....... 0.19% Service Class
12b-1 Fees.................. 0.00% Class A....... 0.00% Standard Class
0.25% Class B....... 0.25% Service Class
Other Expenses.............. 0.05% Class A....... 0.06% Standard Class
0.05% Class B....... 0.06% Service Class
Total Gross Expenses........ 0.60% Class A....... 0.25% Standard Class
0.85% Class B....... 0.50% Service Class
Waivers/Reimbursements...... 0.00% Class A....... 0.00% Standard Class
0.00% Class B....... 0.00% Service Class
Total Net Expenses.......... 0.60% Class A....... 0.25% Standard Class
0.85% Class B....... 0.50% Service Class
------------------------------------------------------------------------
AllianceBernstein Lincoln Variable
Variable Products Products Trust--
Series Fund-- LVIP Mondrian
AllianceBernstein International Value
VPS International Fund.
Value Portfolio.
------------------------------------------------------------------------
Management Fees............. 0.75% Class B....... 0.75% Standard Class
0.75% Class B....... 0.75% Service Class
12b-1 Fees.................. 0.25% Class B....... 0.00% Standard Class
0.25% Class B....... 0.25% Service Class
Other Expenses.............. 0.06% Class B....... 0.08% Standard Class
0.06% Class B....... 0.08% Service Class
Total Gross Expenses........ 1.06% Class B....... 0.83% Standard Class
1.06% Class B....... 1.08% Service Class
Waivers/Reimbursements...... 0.00% Class B....... 0.00% Standard Class
0.00% Class B....... 0.00% Service Class
Total Net Expenses.......... 1.06% Class B....... 0.83% Standard Class
1.06% Class B....... 1.08% Service Class
------------------------------------------------------------------------
American Century Lincoln Variable
Investments Products Trust--
Variable Products-- LVIP BlackRock
American Century VP Inflation Protected
Inflation Bond Fund.
Protection Fund.
------------------------------------------------------------------------
Management Fees............. 0.47% Class I....... 0.44% Standard Class
0.47% Class......... 0.44% Service Class
12b-1 Fees.................. 0.00% Class I....... 0.00% Standard Class
0.25% Class II...... 0.25% Service Class
Other Expenses.............. 0.01% Class I....... 0.07% Standard Class
0.01% Class II...... 0.07% Service Class
Total Gross Expenses........ 0.48% Class I....... 0.54% Standard Class
0.73% Class II...... 0.79% Service Class
Waivers/Reimbursements...... 0.00% Class I....... 0.00% Standard Class
0.00% Class II...... 0.00% Service Class
Total Net Expenses.......... 0.48% Class I....... 0.54% Standard Class
0.73% Class II...... 0.79% Service Class
------------------------------------------------------------------------
[[Page 24252]]
Dreyfus Stock Index Lincoln Variable
Fund, Inc.--Dreyfus Products Trust--
Stock Index Fund. LVIP SSgA S&P 500
Index Fund.
------------------------------------------------------------------------
Management Fees............. 0.25% Initial Class. 0.19% Standard Class
12b-1 Fees.................. 0.00% Initial Class. 0.00% Standard Class
Other Expenses.............. 0.03% Initial Class. 0.06% Standard Class
Total Gross Expenses........ 0.28% Initial Class. 0.25% Standard Class
Waivers/Reimbursements...... 0.00% Initial Class. 0.00% Standard Class
Total Net Expenses.......... 0.28% Initial Class. 0.25% Standard Class
------------------------------------------------------------------------
Dreyfus Variable Lincoln Variable
Investment Fund-- Products Trust--
Dreyfus VIF LVIP SSgA Small-Cap
Opportunistic Small Index Fund.
Cap Portfolio.
------------------------------------------------------------------------
Management Fees............. 0.75% Initial Class. 0.32% Standard Class
12b-1 Fees.................. 0.00% Initial Class. 0.00% Standard Class
Other Expenses.............. 0.13% Initial Class. 0.09% Standard Class
Total Gross Expenses........ 0.88% Initial Class. 0.41% Standard Class
Waivers/Reimbursements...... 0.00% Initial Class. 0.00% Standard Class
Total Net Expenses.......... 0.88% Initial Class. 0.41% Standard Class
------------------------------------------------------------------------
DWS Investments VIT Lincoln Variable
Funds--DWS Equity Products Trust--
500 Index VIP LVIP SSgA S&P 500
Portfolio. Index Fund.
------------------------------------------------------------------------
Management Fees............. 0.20% Class A....... 0.19% Standard Class
0.20% Class B....... 0.19% Service Class
12b-1 Fees.................. 0.00% Class A....... 0.00% Standard Class
0.25% Class B....... 0.25% Service Class
Other Expenses.............. 0.15% Class A....... 0.06% Standard Class
0.15% Class B....... 0.06% Service Class
Total Gross Expenses........ 0.35% Class A....... 0.25% Standard Class
0.60% Class B....... 0.50% Service Class
Waivers/Reimbursements...... 0.00% Class A....... 0.00% Standard Class
0.00% Class B....... 0.00% Service Class
Total Net Expenses.......... 0.35% Class A....... 0.25% Standard Class
0.60% Class B....... 0.50% Service Class
------------------------------------------------------------------------
DWS Investments VIT Lincoln Variable
Funds--DWS Small Products Trust--
Cap Index VIP LVIP SSgA Small-Cap
Portfolio. Index Fund.
------------------------------------------------------------------------
Management Fees............. 0.35% Class A....... 0.32% Standard Class
0.35% Class B....... 0.32% Service Class
12b-1 Fees.................. 0.00% Class A....... 0.00% Standard Class
0.25% Class B....... 0.25% Service Class
Other Expenses.............. 0.20% Class A....... 0.09% Standard Class
0.20% Class B....... 0.09% Service Class
Total Gross Expenses........ 0.55% Class A....... 0.41% Standard Class
0.80% Class B....... 0.66% Service Class
Waivers/Reimbursements...... -0.06% Class A...... 0.00% Standard Class
-0.06% Class B...... 0.00% Service Class
Total Net Expenses.......... 0.49% Class A....... 0.41% Standard Class
0.74% Class B....... 0.66% Service Class
------------------------------------------------------------------------
Fidelity[supreg] Lincoln Variable
Variable Insurance Products Trust--
Products Trust-- LVIP SSgA S&P 500
Fidelity[supreg] Index Fund.
VIP Equity-Income
Portfolio.
------------------------------------------------------------------------
Management Fees............. 0.46% Initial Class. 0.19% Standard Class
0.46% Service Class 0.19% Service Class
2.
12b-1 Fees.................. 0.00% Initial Class. 0.00% Standard Class
0.25% Service Class 0.25% Service Class
2.
Other Expenses.............. 0.10% Initial Class. 0.06% Standard Class
0.10% Service Class 0.06% Service Class
2.
Total Gross Expenses........ 0.56% Initial Class. 0.25% Standard Class
0.81% Service Class 0.50% Service Class
2.
Waivers/Reimbursements...... 0.00% Initial Class. 0.00% Standard Class
0.00% Service Class 0.00% Service Class
2.
Total Net Expenses.......... 0.56% Initial Class. 0.25% Standard Class
0.81% Service Class 0.50% Service Class
2.
------------------------------------------------------------------------
Fidelity[supreg] Lincoln Variable
Variable Insurance Products Trust--
Products Trust-- LVIP SSgA
Fidelity[supreg] International Index
VIP Overseas Fund.
Portfolio.
------------------------------------------------------------------------
Management Fees............. 0.71% Initial Class. 0.40% Service Class
0.71% Service Class 0.40% Service Class
2.
12b-1 Fees.................. 0.00% Initial Class. 0.25% Service Class
0.25% Service Class 0.25% Service Class
2.
[[Page 24253]]
Other Expenses.............. 0.14% Initial Class. 0.14% Standard Class
0.14% Service Class 0.14% Service Class
2.
Total Gross Expenses........ 0.85% Initial Class. 0.79% Service Class
1.10% Service Class 0.79% Service Class
2.
Waivers/Reimbursements...... 0.00% Initial Class. -0.04% Service Class
0.00% Service Class -0.04% Service Class
2.
Total Net Expenses.......... 0.85% Initial Class. 0.75% Service Class
1.10% Service Class 0.75% Service Class
2.
------------------------------------------------------------------------
Franklin Templeton Lincoln Variable
Variable Insurance Products Trust--
Products Trust-- LVIP SSgA Small-Cap
FTVIPT Franklin Index Fund.
Small-Mid Cap
Growth Securities
Fund.
------------------------------------------------------------------------
Management Fees............. 0.51% Class 1....... 0.32% Standard Class
0.51% Class 2....... 0.32% Service Class
12b-1 Fees.................. 0.00% Class 1....... 0.00% Standard Class
0.25% Class 2....... 0.25% Service Class
Other Expenses.............. 0.29% Class 1....... 0.09% Standard Class
0.29% Class 2....... 0.09% Service Class
Acquired Fund Fees and 0.00% Class 1....... 0.00% Standard Class
Expenses.
0.00% Class 2....... 0.00% Service Class
Total Gross Expenses........ 0.80% Class 1....... 0.41% Standard Class
1.05% Class 2....... 0.66% Service Class
Waivers/Reimbursements...... 0.00% Class 1....... 0.00% Standard Class
0.00% Class 2....... 0.00% Service Class
Total Net Expenses.......... 0.80% Class 1....... 0.41% Standard Class
1.05% Class 2....... 0.66% Service Class
------------------------------------------------------------------------
MFS Variable Lincoln Variable
Insurance Trust-- Products Trust--
MFS VIT Total LVIP SSgA Moderate
Return Series. Structured
Allocation Fund.
------------------------------------------------------------------------
Management Fees............. 0.75% Service Class. 0.25% Service Class
12b-1 Fees.................. 0.25% Service Class. 0.25% Service Class
Other Expenses.............. 0.05% Service Class. 0.04% Service Class
Acquired Fund Fees and 0.00% Service Class. 0.37% Service Class
Expenses.
Total Gross Expenses........ 1.05% Service Class. 0.91% Service Class
Waivers/Reimbursements...... -0.03% Service Class -0.10% Service Class
Total Net Expenses.......... 1.02% Service Class. 0.81% Service Class
------------------------------------------------------------------------
Neuberger Berman Lincoln Variable
Advisers Management Products Trust--
Trust--Neuberger LVIP SSgA S&P 500
Berman AMT Mid-Cap Index Fund
Growth Portfolio.
------------------------------------------------------------------------
Management Fees............. 0.84% Class I....... 0.19% Standard Class
0.84% Class I....... 0.19% Service Class
12b-1 Fees.................. 0.00% Class I....... 0.00% Standard Class
0.00% Class I....... 0.25% Service Class
Other Expenses.............. 0.15% Class I....... 0.06% Standard Class
0.15% Class I....... 0.06% Service Class
Total Gross Expenses........ 0.99% Class I....... 0.25% Standard Class
0.99% Class I....... 0.50% Service Class
Waivers/Reimbursements...... 0.00% Class I....... 0.00% Standard Class
0.00% Class I....... 0.00% Service Class
Total Net Expenses.......... 0.99% Class I....... 0.25% Standard Class
0.99% Class I....... 0.50% Service Class
------------------------------------------------------------------------
11. The Section 26 Applicants propose the Substitutions as part of
a continued and overall business plan by each Insurance Company to make
its Contracts more attractive to both existing and prospective Contract
Owners, and more efficient to administer and oversee via enhanced
flexibility to deliver to the Contract Owners changes that are designed
to promote their best interests.
12. The Section 26 Applicants believe that eliminating investment
option redundancy via the proposed Substitutions would result in a more
consolidated and less confusing menu of investment options for
investors. Since the proposed Substitutions involve consolidating
duplicative investment options, the diversity of investment options
available under the Contracts will not be adversely impacted.
Furthermore, this consolidation of investment options would result in
greater efficiency in administration of the Contracts because there
will be fewer investment options to support, resulting in the
availability of resources to apply elsewhere to the Contracts. Finally
reducing overlapping investment options gives the Contracts the
capacity to add other types of investment options.
13. The Section 26 Applicants submit that the Substitutions will,
after implementation, simplify the prospectuses and related materials
with respect to the Contracts and the investment options available
through the Separate Accounts. By reducing the number of underlying
mutual funds and mutual fund companies offered in the
[[Page 24254]]
Contracts, the offering Insurance Company necessarily reduces the
number of underlying mutual fund prospectuses and prospectus formats
the Contract Owner must navigate. By consolidating overlapping
investment options into the Trust, the number of mutual fund companies,
and varying prospectus formats, is reduced, simplifying the investment
decision process for Contract Owners. The Trust Funds employ a common
share class structure, a common set of valuation procedures that is
administered by a single investment adviser, and the same prospectus
style, vocabulary, look and feel. The Section 26 Applicants believe
that the proposed Substitutions will continue to provide Contract
Owners with access to quality investment managers and a large variety
of investment options, but will make the investment decision process
more manageable for the investor by having the underlying fund
disclosure presented in a consistent format using consistent
terminology, making it easier for Contract Owners to analyze fund
information and make informed investment decisions relating to
allocation of his or her Contract value.
14. Also, the proposed Substitutions involve substituting a
Replacement Fund for an Existing Fund with very similar, and in some
cases substantially identical, investment objective and investment
strategy.
15. Contract Owners with Contract value allocated to the sub-
accounts of the Existing Funds will experience the same or lower fund
net annual operating expenses after the Substitutions as prior to the
Substitutions, except for the following:
------------------------------------------------------------------------
Existing funds Replacement funds
------------------------------------------------------------------------
AllianceBernstein Variable Products Lincoln Variable Products Trust--
Series Fund--AllianceBernstein VPS LVIP Mondrian International Value
International Value Portfolio: Fund:
Class B........................ Service Class
American Century Investment Lincoln Variable Products Trust--
Variable Products--American LVIP BlackRock Inflation Protected
Century VP Inflation Protection Bond Fund:
Fund:
Class I........................ Standard Class
Class II....................... Service Class
------------------------------------------------------------------------
16. Each Replacement Fund has a combined management fee and 12b-1
Fee that is less than or equal to that of the Existing Fund, except for
the DWS Equity 500 Index VIP Portfolio/LVIP SSgA S&P 500 Index Fund
substitution in which the combined management and 12b-1 Fees of the
Replacement fund could be higher than those of the Existing Fund at
certain management fee breakpoints.
17. The Substitutions are designed to provide Contract Owners with
the ability to continue their investment in similar investment options
without interruption and at no additional cost to them. In this regard,
the Insurance Companies have agreed to bear all expenses incurred in
connection with the Substitutions and related filings and notices,
including legal, accounting, brokerage, and other fees and expenses.
Also, the Contract value of each Contract Owner impacted by the
Substitutions will not change as a result of the Substitutions.
18. Prospectus supplements (``Pre-Substitution Notices'') were sent
to Contract Owners on April 1, 2013. The Pre-Substitution Notices: (i)
Notify all Contract Owners of the Insurance Company's intent to
implement the Substitutions, that it has filed the application in order
to obtain the necessary orders to do so, and indicate the anticipated
Substitution Date; (ii) advise Contract Owners that from the date of
the Pre-Substitution Notice until the Substitution Date, Contract
Owners are permitted to transfer Contract value out of any Existing
Fund sub-account to any other sub-account(s) offered under the Contract
without the transfer being treated as a transfer for purposes of
transfer limitations and fees that would otherwise be applicable under
the terms of the Contract; (iii) instruct Contract Owners how to submit
transfer requests in light of the proposed Substitutions; (iv) advise
Contract Owners that any Contract value remaining in an Existing Fund
sub-account on the Substitution Date will be transferred to the
corresponding Replacement Fund sub-account, and that the Substitutions
will take place at relative net asset value; (v) inform Contract Owners
that for at least thirty days following the Substitution Date, the
Insurance Companies will permit Contract Owners to make transfers of
Contract value out of each Replacement Fund sub-account to any other
sub-account(s) offered under the Contract without the transfer being
treated as a transfer for purposes of transfer limitations and fees
that would otherwise be applicable under the terms of the Contract; and
(vi) inform Contract Owners that, except as described in the market
timing/short-term trading provision of the relevant prospectus, the
respective Insurance Company will not exercise any rights reserved by
it under the Contracts to impose additional restrictions on transfers
out of a Replacement Fund for at least thirty days after the
Substitution Date. Existing Contract Owners will receive the Pre-
Substitution Notice and the prospectus for the Replacement Fund before
the Substitution Date, if they have not already received such
information. The prospectus for the Replacement Fund will disclose and
explain the substance and effect of the Manager of Managers Order. New
purchasers of the Contracts will be provided the Pre-Substitution
Notice, the Contract prospectus and the prospectus for the Replacement
Funds in accordance with all applicable legal requirements. Prospective
purchasers of the Contracts will be provided the Pre-Substitution
Notice and the Contract prospectus.
19. In addition to the Pre-Substitution Notice distributed to
Contract Owners, within five business days after the Substitution Date,
Contract Owners will be sent a written confirmation of the
Substitutions in accordance with Rule 10b-10 under the Securities
Exchange Act of 1934. The confirmation statement will restate the
information set forth in the Pre-Substitution Notice.
20. As of the Substitution Date, a portion of the securities of the
Existing Funds will be redeemed in kind and those securities received
will be used to purchase shares of the Replacement Funds. The
redemption of each Existing Fund's shares and repurchase of the
corresponding Replacement Fund's shares will be effected and take place
at relative net asset value determined on the Substitution Date
pursuant to Section 22 of the 1940 Act and Rule 22c-1 thereunder with
no change in the amount of any Contract Owner's Contract value, cash
value, death benefit, or dollar value of his or her investment in the
Separate Accounts and without such transactions counting as a transfer
for purposes of transfer limitations and fees that would otherwise be
applicable under the terms
[[Page 24255]]
of the Contracts. Each Substitution will be effected by redeeming
shares of the Existing Fund in cash and/or in-kind on the Substitution
Date at their net asset value. In the event that either LIAC or the
relevant Subadviser of a Replacement Fund declines to accept, on behalf
of the Replacement Fund, securities redeemed in-kind by an Existing
Fund, such Existing Fund shall instead provide cash equal to the value
of the declined securities so that Contract Owners' Contract values
will not be adversely impacted or diluted. Each Substitution will be
effected by redeeming shares of Existing Funds in cash and/or in kind
on the Substitution Date and using the proceeds of those redemptions to
purchase shares of the Replacement Funds. Therefore, simultaneous to
the redemption of the Existing Fund's shares, all the proceeds of such
redemptions shall be used to purchase shares of the Replacement Fund at
their net asset value so that each Contract Owner's Contract value will
remain fully invested at all times.
21. Contract Owners will not incur any fees or charges as a result
of the proposed Substitutions, nor will their rights or insurance
benefits or the Insurance Companies' obligations under the Contracts be
altered in any way. All expenses incurred in connection with the
proposed Substitutions, including any brokerage, legal, accounting, and
other fees and expenses, will be paid by the Insurance Companies. In
addition, the Substitutions will not result in adverse tax consequences
to Contract Owners and will not alter any tax benefits associated with
the Contracts. The proposed Substitutions will not cause the Contract
fees and charges currently being paid by Contract Owners to be greater
after the proposed Substitution than before the proposed Substitution.
Redemptions and repurchases that occur in connection with effecting the
Substitution will not count as a transfer for purposes of transfer
limitations and fees that would otherwise be applicable under the terms
of the Contracts. Consequently, no fees will be charged on transfers
made to effectuate the Substitutions.
22. The Section 26 Applicants represent that, after the
Substitution Date, the Replacement Funds will not change a Subadviser,
add a new Subadviser, or otherwise rely on the Manager of Managers
Order without first obtaining shareholder approval of the change in
Subadviser, the new Subadviser, or the Fund's ability to add or to
replace a Subadviser in reliance on the Manager of Managers Order.
Additionally, the Section 26 Applicants represent that a prospectus for
the relevant Replacement Fund(s) containing disclosure describing the
existence, substance, and effect of the Manager of Managers Order will
have been provided to each Contract Owner prior to the Substitution
Date.
Legal Analysis and Conditions
Section 26(c) Relief
1. The Section 26 Applicants request that the Commission issue an
order pursuant to Section 26(c) of the 1940 Act approving the proposed
substitutions. Section 26(c) of the 1940 Act makes it unlawful for the
depositor of a registered unit investment trust that invests in the
securities of a single issuer to substitute another security for such
security without Commission approval.
2. The Section 26 Applicants have reserved the right under the
Contracts to substitute shares of another underlying mutual fund for
one of the current underlying mutual funds offered as an investment
option under the Contracts. The Contract prospectuses disclose this
right.
3. Each Replacement Fund and its corresponding Existing Fund have
similar, and in some cases substantially similar or identical,
investment objectives and strategies. In addition, each proposed
Substitution retains for Contract Owners the investment flexibility and
expertise in asset management, which are core investment features of
the Contracts. Any impact on the investment programs of affected
Contract Owners should be negligible.
4. In each Substitution, except the DWS Equity 500 Index VIP
Portfolio/LVIP SSgA 500 Index Fund substitutions, the Replacement Fund
has a combined management fee and 12b-1 Fee that is less than or equal
to that of the Existing Fund. Except with respect to the
AllianceBernstein VPS International Value Portfolio/LVIP Mondrian
International Value Fund, and American Century VP Inflation Protection
Fund/LVIP BlackRock Inflation Protected Bond Fund, Contract Owners with
Contracts value allocated to the sub-accounts of the Existing Funds
will experience the same or lower fund net annual operating expenses
after the Substitutions as prior to the Substitutions.
5. Section 26 Applicants agree that for a period of two years
following the Substitution date and for those Contracts with assets
allocated to the Existing Fund on the date of the Substitution, the
Insurance Companies will reimburse, on the last business day of each
fiscal quarter, the contract owners whose sub-accounts invest in the
applicable Replacement Fund to the extent that the Replacement Fund's
net annual operating expenses for such period exceeds, on an annualized
basis, the net annual operating expenses of the Existing Fund for
fiscal year 2012, except with respect to the DWS Equity 500 Index VIP
Portfolio/LVIP SSgA S&P 500 Index Fund substitution. With respect to
the DWS Equity 500 Index VIP Portfolio/LVIP SSgA S&P 500 Index Fund
substitution, the reimbursement agreement with respect to the
Replacement Fund's net annual operating expenses will extend for the
life of each Contract outstanding on the date of the proposed
Substitutions.
6. In addition, the Section 26 Applicants agree that, except with
respect to the DWS Equity 500 Index VIP Portfolio/LVIP SSgA S&P 500
Index Fund, the Insurance Companies will not increase total separate
account charges (net of any reimbursements or waivers) for any existing
owner of the Contracts on the date of the Substitutions for a period of
two (2) years from the date of the Substitutions. With respect to the
DWS Equity 500 Index VIP Portfolio/LVIP SSgA S&P 500 Index Fund
substitution, the agreement not to increase the separate account
charges will extend for the life of each Contract outstanding on the
date of the proposed Substitutions.
7. The Section 26 Applicants submit that the proposed Substitutions
are not of the type that Section 26 was designed to prevent:
Overreaching on the part of the depositor by permanently impacting the
investment allocations of the entire trust. In the current situation,
the Contracts provide Contract Owners with investment discretion to
allocate and reallocate their Contract value among the available
underlying mutual funds. This flexibility provides Contract Owners with
the ability to reallocate their assets at any time--either before the
Substitution Date, or after the Substitution Date--if they do not wish
to invest in the Replacement Fund. Thus, the likelihood of being
invested in an undesired underlying mutual fund is minimized, with the
discretion remaining with the Contract Owners. The Substitutions,
therefore, will not result in the type of costly forced redemption that
Section 26(c) was designed to prevent. The Section 26 Applicants submit
that, for all the reasons stated above, the proposed Substitutions are
consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the 1940 Act.
[[Page 24256]]
Section 17(b) Relief
1. The Section 17 Applicants request that the Commission issue an
order pursuant to Section 17(b) of the 1940 Act exempting them from the
provisions of Section 17(a) of the 1940 Act to the extent necessary to
permit them to carry out the In-Kind Transactions.
2. Section 17(a)(1) of the 1940 Act, in relevant part, generally
prohibits any affiliated person of a registered investment company (or
any affiliated person of such a person), acting as principal, from
knowingly selling any security or other property to that company.
Section 17(a)(2) of the 1940 Act generally prohibits the same persons,
acting as principals, from knowingly purchasing any security or other
property from the registered investment company.
3. Shares held by an insurance company separate account are legally
owned by the insurance company. Thus, the Insurance Companies
collectively own substantially all of the shares of the Trust.
Accordingly, the Trust and its respective Trust Funds are arguably
under the control of the Insurance Companies, as per Section 2(a)(9) of
the 1940 Act (notwithstanding the fact that the Contract Owners are the
beneficial owners of those Separate Account shares). If the Trust is
under the common control of the Insurance Companies, then each
Insurance Company is an affiliated person of the Trust and its
respective Trust Funds. If the Trust and its respective Trust Funds are
under the control of the Insurance Companies, then the Trust and its
respective affiliates are affiliated persons of the Insurance
Companies. Regardless of whether or not the Insurance Companies can be
considered to actually control the Trust and its Trust Funds, because
the Insurance Companies and their affiliates own of record more than 5%
of the shares of each Trust Fund and are under common control with
LIAC, the Insurance Companies are affiliated persons of the Trust and
its Trust Funds. Likewise, the Trust and its respective Trust Funds are
each an affiliated person of the Insurance Companies. The proposed In-
Kind Transactions could be seen as the indirect purchase of shares of
certain Replacement Funds with portfolio securities of certain Existing
Funds and the indirect sale of portfolio securities of certain Existing
Funds for shares of certain Replacement Funds. Pursuant to this
analysis, the proposed In-Kind Transactions also could be categorized
as a purchase of shares of certain Replacement Funds by certain
Existing Funds, acting as principal, and a sale of portfolio securities
by certain Existing Funds, acting as principal, to certain Replacement
Funds. In addition, the proposed In-Kind Transactions could be viewed
as a purchase of securities from certain Existing Portfolios, and a
sale of securities to certain Replacement Funds, by the Insurance
Companies (or their Separate Accounts), acting as principal. If
categorized in this manner, the proposed In-Kind Transactions may be
deemed to contravene Section 17(a) due to the affiliated status of
these participants.
4. The Section 17 Applicants submit that the In-Kind Transactions,
as described in the application, meet the conditions set forth in
Section 17(b) of the 1940 Act.
5. Contract Owners' Contract values will not be adversely impacted
or diluted because the In-Kind Transactions will be effected at the
respective net asset values of the Existing Funds and the Replacement
Funds, as described in each fund's registration statement and as
required by Rule 22c-1 under the 1940 Act. The In-Kind Transactions
will not change the dollar value of any Contract, the accumulation unit
value or annuity unit value of any Contract, or the death benefit
payable under any Contract. After the In-Kind Transactions, the value
of a Separate Account's investment in a Replacement Fund will equal the
value of its investments in the corresponding Existing Fund (in
addition to any pre-existing investment in the Replacement Fund) before
the In-Kind Transactions.
6. Additionally, the Section 17 Applicants will cause the In-Kind
Transactions to be implemented in compliance with the conditions set
forth in Rule 17a-7 under the 1940 Act, except that the consideration
paid for the securities being purchased or sold will not be in cash.
7. The proposed In-Kind Transactions will be effected based upon
the independent current market price of the portfolio securities as
specified in Rule 17a-7(b). Because, per the terms of Rule 17a-7(a),
Rule 17a-7 is available only with respect to securities for which
market quotations are readily available, the proposed In-Kind
Transactions will include only securities for which market quotations
are readily available on the Substitution Date. Further, the proposed
In-Kind Transactions will be consistent with the policy of each
registered investment company and separate series thereof participating
in the In-Kind Transactions, as recited in the relevant registered
investment company's registration statement and reports in accordance
with Rule 17a-7(c). No brokerage commission, fee (except for any
customary transfer fees), or other remuneration will be paid in
connection with the proposed In-Kind Transactions as specified in Rule
17a-7(d). The Trust's Board of Trustees has adopted and implemented the
fund governance and oversight procedures as required by Rule 17a-7(e)
and (f). In addition, pursuant to Rule 17a-7(e)(3), during the calendar
quarter following the quarter in which any In-Kind Transactions occur,
the Trust's Board of Trustees will review reports submitted by LIAC in
respect of such In-Kind Transactions in order to determine that all
such In-Kind Transactions made during the preceding quarter were
effected in accordance with the representations stated herein. Finally,
a written record of the procedures for the proposed In-Kind
Transactions will be maintained and preserved in accordance with Rule
17a-7(g).
Although the proposed In-Kind Transactions will not comply with the
cash consideration requirement of Rule 17a-7(a), the terms of the
proposed In-Kind Transactions will offer to each of the relevant
Existing Funds and each of the relevant Replacement Funds the same
degree of protection from overreaching that Rule 17a-7 generally
provides in connection with the purchase and sale of securities under
that Rule in the ordinary course of business. Specifically, the
Insurance Companies and their affiliates cannot effect the proposed In-
Kind Transactions at a price that is disadvantageous to any Replacement
Fund and the proposed In-Kind Transactions will not occur absent an
exemptive order from the Commission.
8. For those Existing Funds that will redeem their shares in-kind
as part of the In-Kind Transactions, such transactions will be
consistent with the investment policies of the Existing Fund because:
(1) The redemption in-kind policy is stated in the relevant Existing
Fund's current registration statement; and (2) the shares will be
redeemed at their net asset value in conformity with Rule 22c-1 under
the 1940 Act. In addition, to the extent applicable to the Section 17
Applicants as affiliated persons redeeming in-kind from an Existing
Fund, the Section 17 Applicants will comply with the Commission's no-
action letter issued to Signature Financial Group, Inc. (pub. avail.
Dec. 28, 1999). Likewise, for the Replacement Funds that will sell
shares in exchange for portfolio securities as part of the In-Kind
Transactions, such transactions will be consistent with the investment
policies of the Replacement Fund because: (1) The Trust's policy of
[[Page 24257]]
selling shares in exchange for investment securities is stated in the
Trust's current registration statement; (2) the shares will be sold at
their net asset value in conformity with Rule 22c-1 under the Act; and
(3) the investment securities will be of the type and quality that a
Replacement Fund could have acquired with the proceeds from the sale of
its shares had the shares been sold for cash. For each of the proposed
In-Kind Transactions, LIAC and the relevant Subadviser(s) will analyze
the portfolio securities being offered to each relevant Replacement
Fund and will retain only those securities that it would have acquired
for each such Fund in a cash transaction.
9. The Section 17 Applicants submit that, for all the reasons
stated above: (1) The terms of the proposed In-Kind Transactions,
including the consideration to be paid and received, are reasonable and
fair to each of the relevant Replacement Funds, each of the relevant
Existing Funds, and Contract Owners, and that the proposed In-Kind
Transactions do not involve overreaching on the part of any person
concerned; (2) the proposed In-Kind Transactions are, or will be,
consistent with the policies of the relevant Replacement Funds and the
relevant Existing Funds as stated in the relevant investment company's
registration statement and reports filed under the 1940 Act; and (3)
the proposed In-Kind Transactions are, or will be, consistent with the
general purposes of the 1940 Act. The Section 17 Applicants maintain
that the proposed In-Kind Transactions, as described herein, are
consistent with the general purposes of the 1940 Act set forth in
Section 1 of the 1940 Act. In particular, the proposed In-Kind
Transactions do not present any conditions or abuses that the 1940 Act
was designed to prevent.
Conclusion
For the reasons set forth in the application, the Applicants submit
that the proposed Substitutions and related transactions meet the
standards of Section 26(c) of the 1940 Act and are consistent with the
standards of Section 17(b) of the 1940 Act and that the requested
orders should be granted.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-09633 Filed 4-23-13; 8:45 am]
BILLING CODE 8011-01-P
