[Federal Register: March 25, 2008 (Volume 73, Number 58)]
[Notices]
[Page 15799-15805]
[DOCID:fr25mr08-102]

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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-28197; File No. 812-13445]

American Family Life Insurance Company, et al.

March 19, 2008.
AGENCY: U.S. Securities and Exchange Commission (``Commission'').

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

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Applicants: American Family Life Insurance Company (the ``Company''),
American Family Variable Account I (the ``Life Account''), and American
Family Variable Account II (the ``Annuity Account,'' and together with
the Company and Life Account, the ``Applicants'').

Summary of Application: Applicants request an order of the Commission,
pursuant to Section 26(c) of the Act, approving the substitution of (1)
Service Class Shares of the Fidelity Variable Insurance Products
Investment Grade Bond Portfolio (``Replacement Portfolio A'') of the
Fidelity Variable Insurance Products Fund V (``Fidelity Fund'') for
shares of the Federated Quality Bond Fund II (``Replaced Portfolio A'')
of the Federated Insurance Series (``Federated Fund'') and (2) shares
of the Vanguard International Portfolio (``Replacement Portfolio B'')
of the Vanguard Variable Insurance Fund (``Vanguard Fund'') for shares
of the Federated International Equity Fund II (``Replaced Portfolio
B'') of the Federated Fund, currently held by the Life Account and the
Annuity Account (each an ``Account,'' together, the ``Accounts'') to
support variable life insurance and annuity contracts issued by the
Company (collectively, the ``Contracts'').

Filing Date: The application was filed on November 2, 2007 and amended
and restated on March 14, 2008.

Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Secretary of the
Commission and serving Applicants with a copy of the request,
personally or by mail. Hearing requests must be received by the
Commission by 5:30 p.m. on April 15, 2008, and should be accompanied by
proof of service on Applicants in the form of an affidavit or, for
lawyers, a certificate of service. Hearing requests should state the
nature of the requester's interest, the reason for the request, and the
issues contested. Persons who wish to be notified of a hearing may
request notification by writing to the Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090. Applicants, c/o James F. Eldridge,
Esq., American Family Life Insurance Company, 6000 American Parkway,
Madison, Wisconsin 53783-0001. Copy to Thomas E. Bisset, Esq.,
Sutherland Asbill & Brennan LLP, 1275 Pennsylvania Ave., NW.,
Washington, DC 20004-2415.

FOR FURTHER INFORMATION CONTACT: Michael Kosoff, Staff Attorney, at
(202) 551-6754 or Harry Eisenstein, Branch Chief, Office of Insurance
Products, Division of Investment Management, at<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the Public Reference Branch of the Commission, 100 F Street, NE.,
Washington, DC 20549<PHONE_NUMBER>).

Applicants' Representations

    1. The Company is a stock life insurance company organized under
Wisconsin law in 1957. The company is a wholly-owned subsidiary of
AmFam, Inc. AmFam, Inc. is a downstream holding company and a wholly-
owned subsidiary of American Family Mutual Insurance Company
(``American Family Mutual''). American Family Mutual is one of the
leading property/casualty insurance companies in the United States with
operations in eighteen states. As of December 31, 2006, the Company had
assets in excess of $4.2 billion.
    2. The Company conducts a conventional life insurance business and
is authorized to transact the business of life insurance, including
annuities, in eighteen states. For purposes of the Act, the Company is
the depositor and sponsor of each of the Accounts as those terms have
been interpreted by the Commission with respect to variable life
insurance and variable annuity separate accounts.
    3. Under the insurance law of Wisconsin, the assets of each Account
attributable to the Contracts issued through that Account are owned by
the Company, but are held separately from the other assets of the
Company for the benefit of the owners of, and the persons entitled to
payment under, those Contracts. Each Account is registered with the
Commission as a unit investment trust. Each Account is comprised of a
number of subaccounts and each subaccount invests exclusively in one of
the insurance dedicated mutual fund portfolios made available as
investment vehicles underlying the Contracts. Currently, Replaced
Portfolio A and Replaced Portfolio B are each available as an
investment option under the Company's variable life insurance and
variable annuity contracts.
    4. The Life Account is currently divided into nine subaccounts. The
assets of the Life Account support variable life insurance contracts
and interests in the Account offered through such contracts have been
registered under the Securities Act of 1933, as amended (the ``1933
Act''), on Form N-6 (File No. 333-44956).
    5. The Annuity Account is currently divided into nine subaccounts.
The assets of the Annuity Account support variable annuity contracts
and interests in the Account offered through such contracts have been
registered under the 1933 Act on Form N-4 (File No. 333-45592).
    6. The Federated Fund is registered as an open-end management
investment company under the Act (File No. 811-08042) and currently
offers twelve (12) separate investment portfolios (each, a
``Portfolio''), two of which would be involved in the proposed
substitution. The Federated Fund issues a separate series of shares of
beneficial interest in connection with each Portfolio and has
registered those shares under the 1933 Act on Form N-1A (File No. 33-
69268).
    7. Federated Investment Management Company (``FIMC'') serves as the
investment advisor for Replaced Portfolio A. The advisor manages the
Fund's assets, including buying and selling portfolio securities.
Federated Advisory Services Company (``FASC''), an affiliate of the
advisor, provides certain support services to the advisor. The fee for
FASC's services is paid by FIMC and not by the Fund.

    8. Federated Global Investment Management Corp. (``FGIMC'') serves
as the investment advisor for Replaced Portfolio B. The advisor manages
the Fund's assets, including buying and selling portfolio securities.
FASC provides research, quantitative analysis, equity trading and
transaction settlement and certain support services to the advisor. The
fee for FASC's services is paid by FGIMC and not by the Fund.
    9. Neither the Federated Fund, any of its portfolios, FGIMC, FIMC,
nor FASC is affiliated with the Applicants. Neither Replaced Portfolio
A nor Replaced Portfolio B has exemptive relief from Section 15(a) of
the Act and Rule 18f-2 under the Act to permit the hiring of sub-
advisors and the revision of sub-advisory agreements without obtaining
a shareholder vote (``manager-of-manager relief'').
    10. The Fidelity Fund is registered as an open-end management
investment company under the Act (File No. 811-05361) and currently
offers twenty-three (23) investment portfolios, including Replacement
Portfolio A. The Fidelity Fund issues a series of shares of beneficial
interest in connection with each portfolio and has registered such
shares under the 1933 Act on Form N-1A (File No. 033-17704).
    11. Each portfolio of the Fidelity Fund has entered into an
advisory agreement with Fidelity Management and Research Company
(``FMR'') under which FMR acts as investment advisor for the portfolio.
Under each investment advisory agreement, FMR has overall
responsibility for the selection of investments in accordance with the
investment objective, policies, and limitations of the portfolio and
for handling the portfolio's business affairs. FMR, at its own expense,
provides or arranges for the provision of substantially all management
and administrative services required by each portfolio. Each portfolio
of the Fidelity Fund does, however, pay its own auditor's fees,
compensation to (and expenses of) trustees who are not interested
persons, independent counsel fees, custodian fees and extraordinary
expenses.
    12. Fidelity Investments Money Management, Inc. (``FIMM''), an
investment advisor affiliate of FMR, has entered into a sub-advisory
agreement with FMR under which FIMM acts as sub-advisor for the
Fidelity Fund, including Replacement Portfolio A. FIMM has day-to-day
responsibility for choosing investments for Replacement Portfolio A.
FMR pays FIMM for providing sub-advisory services. As of March 29,
2007, FMR and FIMM had over $1.6 billion and $370 billion in assets
under management, respectively.
    13. Fidelity Research & Analysis Company (``FRAC''), an affiliate
of FMR, also serves as sub-advisor for the Fidelity Fund and may
provide investment research and advice for the Fidelity Fund, including
Replacement Portfolio A.
    14. Fidelity International Investment Advisors (``FIIA'') and
Fidelity International Investment Advisors (U.K.) Limited
(``FIIA(U.K.)'') investment advisor affiliates of FMR, assist FMR with
the investment and reinvestment of assets in Replacement Portfolio A in
foreign investments. FIIA and FIAA(U.K.) have each entered into a sub-
advisory agreement with FMR and each acts as sub-advisor to Replacement
Fund A. Under the sub-advisory agreements, FMR may receive from FIIA
and FIAA(U.K.) investment research and advice on issuers based outside
the United States and, in particular, makes minimal credit risk and
comparable quality determinations for foreign issuers that issue U.S.
dollar-denominated securities. FMR or FIMM pays FIIA for providing sub-
advisory services. In turn, FIIA pays FIIA(U.K.) for providing sub-
advisory services.
    15. Neither the Fidelity Fund, any of its portfolios, FMR, FIMM,
FRAC, FIIA nor FIAA(U.K.) is affiliated with the Applicants. The
Fidelity Fund does not have manager-of-managers relief.
    16. The Vanguard Variable Insurance Fund is registered as an open-
end management investment company under the Act (File No. 811-05962)
and currently offers fifteen (15) portfolios. The Vanguard Fund issues
a series of shares of beneficial interest in connection with each
portfolio and has registered such shares under the 1933 Act on Form N-
1A (File No. 33-32216).
    17. The Vanguard Fund uses a multi-manager approach to investing
the assets of Replacement Portfolio B, and has entered into investment
advisory agreements with Baillie Gifford Overseas Ltd. (``Baillie
Gifford'') and Schroder Investment Management North America Inc.
(``Schroders''). The board of trustees of the Vanguard Fund designates
the proportion of Replacement Portfolio B assets to be managed by each
advisor, and may change those proportions at any time. Under the
supervision and oversight of the trustees and officers of the Vanguard
Fund, each advisor independently selects and maintains a portfolio of
common stocks for its assigned portion of the assets of Replacement
Portfolio B. The Fund pays each advisor a fee at the end of each
quarter.
    18. Baillie Gifford--located at Carlton Square, 1 Greenside Row,
Edinburgh, EH1 3AN, Scotland--is wholly-owned by Baillie Gifford & Co.,
one of the largest independently owned investment management firms in
the United Kingdom. As of December 31, 2006, Baillie Gifford & Co. had
assets under management that totaled approximately $95 billion.
    19. Schroders has entered into a sub-advisory agreement with its
affiliate, Schroder Investment Management North America Limited
(``Schroder Limited''), pursuant to which Schroder Limited has primary
responsibility for choosing investments for Schroder's assigned portion
of the Replacement Portfolio B assets. Schroders pays Schroder Limited
a portion of the management fees payable to Schroders under the
management agreement between Schroders and the Vanguard Fund. Both
Schroders and Schroder Limited are wholly-owned subsidiaries of
Schroders plc, the ultimate parent of a large world-wide group of
financial service companies. As of September 30, 2006, Schroders,
together with its affiliated companies, managed approximately $229.4
billion in assets.
    20. Neither the Vanguard Fund or any of its portfolios, Baillie
Gifford, or Schroders is affiliated with the Applicants. The Vanguard
Fund has manager-of-manager relief.\1\
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    \1\ Vanguard Convertible Securities Fund, et al., Inv. Co. Act
Rel. No. 26089 (June 25, 2003 (Order), File No. 812-12380.
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    21. The Contracts are flexible premium variable annuity and
variable life insurance contracts. The variable annuity Contracts
provide for the accumulation of values on a variable basis, fixed
basis, or both, during the accumulation period, and provide settlement
or annuity payment options on a fixed basis. The variable life
insurance Contracts provide for the accumulation of values on a
variable basis, fixed basis, or both, throughout the insured's life,
and for a substantial death benefit upon the death of the insured.
Under each of the Contracts, the Company reserves the right to
substitute shares of one Fund for shares of another, or of another
investment portfolio, including a portfolio of a different management
company.
    22. The Company proposes to substitute Service Class shares of
Replacement Portfolio A for shares of Replaced Portfolio A, and to
substitute shares of Replacement Portfolio B for shares of Replaced
Portfolio B held in the Accounts (the ``proposed substitutions'').

    23. The proposed substitutions are part of an effort by the Company
to provide a portfolio selection within the Contracts that: (1)
Provides a more competitive fee structure relative to other funds in
the asset class peer group; (2) provides more competitive long-term
returns relative to other funds in the asset class peer group; and (3)
maintains the goal of offering a mix of investment options covering
basic categories in the risk/return spectrum.
    24. The following charts set out the investment objectives,
principal investment strategies, and principal investment risks of each
Replaced and Replacement Portfolio, as stated in their respective
prospectuses.

------------------------------------------------------------------------
        Replaced Portfolio A               Replacement Portfolio A
------------------------------------------------------------------------
Federated Quality Bond Fund II       Fidelity VIP Investment Grade Bond
                                      Portfolio
Investment Objective                 Investment Objective
Current income                       High current income consistent with
                                      preservation of capital.
Principal Investment Strategies      Principal Investment Strategies
The fund invests in a diversified    FMR normally invests at least 80%
 portfolio of investment-grade,       of the fund's assets in investment-
 fixed-income securities,             grade debt securities (those of
 consisting primarily of corporate    high and medium quality) of all
 debt securities, U.S. government     types and repurchase agreements
 and privately issued mortgage-       for those securities. FMR manages
 backed securities, and U.S.          the fund to have an overall
 Treasury and agency securities.      interest rate risk similar to the
 The investment advisor seeks to      Lehman Brothers Aggregate Bond
 enhance the fund's performance by    Index. The investment advisor
 allocating relatively more of its    allocates assets across different
 portfolio to the security type       market sectors and maturities and
 that the advisor expects to offer    invests in domestic and foreign
 the best balance between current     issuers. FMR analyzes the credit
 income and risk. Some of the         quality of the issuer, security-
 corporate debt securities in which   specific features, current and
 the fund invests are considered to   potential future valuation, and
 be ``foreign securities.'' The       trading opportunities to select
 fund may invest in derivative        investments for the fund.
 contracts to implement its
 investment strategies.
Although the value of the Fund's     The fund may invest in lower-
 shares will fluctuate, the           quality debt securities, sometimes
 investment advisor seeks to manage   referred to as ``junk bond
 the magnitude of the fluctuation     securities,'' and in Fidelity's
 by limiting, under normal market     central funds. The fund may engage
 conditions, the Fund's dollar-       in transactions that have a
 weighted average maturity to         leveraging effect.
 between three and ten years and
 dollar-weighted average duration
 to between three and seven years.
Principal Investment Risks           Principal Investment Risks
Interest Rate Risk. Prices of fixed- Interest Rate Changes. Interest
 income securities generally fall     rate increases can cause the price
 when interest rates rise. Interest   of a debt security to decrease.
 rate changes have a greater effect  Foreign Exposure. Foreign markets
 on the price of fixed-income         can be more volatile than the U.S.
 securities with longer durations.    market due to increased risks of
Credit Risk. Issuers of securities    adverse issuer, political,
 in which the fund may invest may     regulatory, market, or economic
 default in the payment of interest   developments, and can perform
 or principal on securities when      differently than the U.S. market.
 due.                                Prepayment. The ability of an
Call and Prepayment Risk. An issuer   issuer of a debt security to repay
 of a security held by the fund may   principal prior to a security's
 redeem the security prior to         maturity can cause greater price
 maturity at a price below its        volatility if interest rates
 current market value.                change.
Risks of Foreign Investing. Share    Issuer-Specific Changes. The value
 price may be more affected by        of an individual security or
 foreign economic and political       particular type of security can be
 conditions, taxation policies and    more volatile than the market as a
 accounting standards than would      whole and can perform differently
 otherwise be the case.               from the value of the market as a
Liquidity Risk. Fixed-income          whole. Lower-quality debt
 securities may be less readily       securities (those of less than
 marketable and subject to greater    investment-grade quality) involve
 fluctuation in price than other      greater risk of default or price
 securities. Also, the fund may not   changes due to changes in the
 be able to sell a security or        credit quality of the issuer. The
 close out a derivative contract      value of lower-quality debt
 when desired.                        securities can be more volatile
                                      due to increased sensitivity to
                                      adverse issuer, political,
                                      regulatory, market, or economic
                                      developments.
                                     Leverage Risk. Leverage can
                                      increase market exposure and
                                      magnify investment risks.
------------------------------------------------------------------------

        Replaced Portfolio B               Replacement Portfolio B
------------------------------------------------------------------------
Federated International Equity Fund  Vanguard International Portfolio
 II
Investment Objective                 Investment Objective
Total return on assets by investing  Long-term capital appreciation.
 primarily in equity securities of
 companies based outside the United
 States. Total return will consist
 of two components: (1) changes in
 the market value of portfolio
 securities (both realized and
 unrealized appreciation); and (2)
 income received from portfolio
 securities. Changes in market
 value are expected to comprise the
 largest component of total return.
Principal Investment Strategies      Principal Investment Strategies
The investment advisor uses a        The portfolio invests predominantly
 ``bottom-up'' approach to stock      in the stocks of companies located
 selection and selection of           outside the United States. In
 industry and country are secondary   selecting stocks, the portfolio's
 considerations. The fund is not      investment advisors evaluate
 limited to investing according to    foreign markets around the world
 any particular style or size of      and choose companies with above-
 company, or to maintaining minimum   average growth potential. The
 allocations to any particular        portfolio uses multiple investment
 region or country. However, the      advisors.
 investment advisor anticipates
 that normally the fund will
 primarily invest in mid-to large-
 capitalization companies based
 outside the United States that
 have been selected using a growth
 style of stock selection. The fund
 may invest up to 20% of its assets
 in foreign companies based in
 emerging markets.

Principal Investment Risks           Principal Investment Risks
Stock Market Risks. The value of     Stock Market Risk. Stock market
 equity securities in the fund's      risk is the chance that stock
 portfolio will fluctuate and, as a   prices overall will decline. Stock
 result, the fund's share price may   markets tend to move in cycles,
 decline suddenly or over a           with periods of rising prices and
 sustained period of time.            periods of falling prices. In
Risks of Foreign Investing. Share     addition, investments in foreign
 price may be more affected by        stock markets can be riskier than
 foreign economic and political       U.S. stock investments. The prices
 conditions, taxation policies, and   of foreign stocks and the prices
 accounting and auditing standards    of U.S. stocks have, at times,
 than would otherwise be the case.    moved in opposite directions.
Currency Risks. Because the          Investment Style Risk. Investment
 exchange rates for currencies        style risk is the chance that
 fluctuate daily, prices of the       returns from non-U.S. growth
 foreign market securities in which   stocks, and, to the extent that
 the fund invests are more volatile   the portfolio is invested in them,
 than prices of securities traded     small- and mid-capitalizations
 exclusively in the United States.    stocks, will trail returns from
Emerging Market Risks. Securities     the overall domestic stock market.
 issued or traded in emerging         Historically, small- and mid-cap
 markets generally entail greater     stocks have been more volatile in
 risks than securities issued or      price than large-cap stocks that
 traded in developed markets.         dominate the market, and they
 Emerging market countries may have   often perform quite differently.
 relatively unstable governments     Country Risk/Regional Risk. Country
 and may present the risk of          risk/regional risk is the chance
 nationalization of businesses,       that domestic events--such as
 expropriation, confiscatory          political upheaval, financial
 taxation or, in certain instances,   troubles, or natural disasters--
 reversion to closed market,          will weaken a country's or
 centrally planned economies.         region's securities markets.
Liquidity Risks. Trading              Because the portfolio may invest a
 opportunities are more limited for   large portion of its assets in
 equity securities that are not       securities of companies located in
 widely held. This may make it more   any one country or region, its
 difficult to sell or buy a           performance may be hurt
 security at a favorable price or     disproportionately by the poor
 time. Consequently, the fund may     performance of investments in that
 have to accept a lower price to      area. Country/regional risk is
 sell a security, sell other          especially high in emerging
 securities to raise cash, or give    markets.
 up an investment opportunity, any   Currency Risk. Currency risk is the
 of which could have a negative       chance that the value of a foreign
 effect on the fund's performance.    investment, measured in U.S.
                                      dollars, will decrease because of
                                      unfavorable changes in currency
                                      exchange rates.
                                     Manager Risk. Manager risk is the
                                      chance that poor security
                                      selection will cause the portfolio
                                      to underperform relevant
                                      benchmarks or other funds with a
                                      similar investment objective.
------------------------------------------------------------------------

    25. The following charts compare advisory fees, other expenses,
total operating expenses (before and after any waivers and
reimbursements), and portfolio turnover rates for the year ended
December 31, 2006, expressed as an annual percentage of average daily
net assets, of the Replaced and Replacement Portfolios. Although
Replacement Portfolio A is subject to a distribution (12b-1) fee of the
Act, and none currently applies to Replaced Portfolio A, the net
operating expenses for Replacement Portfolio A are still significantly
less than the total operating expenses for Replaced Portfolio A.\2\
Neither the Replaced Portfolios nor the Replacement Portfolios impose a
redemption fee.
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    \2\ With regard to the Replaced Portfolios, the investment
adviser for each Portfolio has entered into an agreement with the
Company for the payment of a fee equal to an annual percentage of
the assets of the Replaced Portfolio attributable to the Contracts
for the performance of administrative services. With regard to
Replacement Portfolio A, the investment adviser for the Portfolio
and the Company have entered into a similar agreement, however, the
fee payable under that agreement is significantly less than the fee
payable under the agreement between the Company and the investment
adviser for Replaced Portfolio A. With regard to Replacement
Portfolio B, the investment adviser for the Portfolio and the
Company have not entered into a similar agreement. As such, the
Company will not receive revenue sharing payments from the
investment adviser for Replacement Portfolio B.

----------------------------------------------------------------------------------------------------------------
                                                                    Replaced Portfolio  A  Replacement Portfolio
                                                                   -----------------------            A
                                                                                ----------------------
                                                                      Federated Quality         Fidelity VIP
                                                                         Bond Fund II      Investment Grade Bond
                                                                          (percent)         Portfolio  (percent)
----------------------------------------------------------------------------------------------------------------
Advisory Fee......................................................                   0.60                   0.32
Distribution (12b-1) Fee..........................................                   0.25               \a\ 0.10
Other Expenses....................................................                   0.39                   0.12
Total Operating Expenses..........................................                   1.24                   0.54
Less Expense Waivers and Reimbursements...........................               \b\ 0.54                 N/A
Net Operating Expenses............................................                   0.70                   0.54
Portfolio Turnover Rate...........................................                  64                    34
----------------------------------------------------------------------------------------------------------------
\a\ With regard to Replacement Portfolio A, its Service Class is authorized to pay a 12b-1 fee at an annual rate
  of 0.25% of its average net assets, or such lesser amount as the Portfolio's Trustees may determine from time
  to time. The Service Class currently pays a 12b-1 fee at an annual rate of 0.10% of its average net assets
  throughout the month. The 12b-1 fee rate may be increased only when the Trustees believe that it is in the
  best interests of variable product owners to do so.
\b\ With regard to Replaced Portfolio A, the investment adviser waived and the distributor and shareholder
  services provider elected not to charge certain amounts. The investment adviser voluntarily waived a portion
  of the advisory fee which waiver the investment adviser may terminate at any time. The advisory fee paid by
  Replaced Portfolio A (after the voluntary waiver of the advisory fee) was 0.56% for the fiscal year ended
  December 31, 2006. Replaced Portfolio A did not pay or accrue the distribution (12b-1) fee during the fiscal
  year ended December 31, 2006. The prospectus for Replaced Portfolio A notes that there is no present intention
  for Replaced Portfolio A to pay or accrue a distribution (12b-1) fee during the fiscal year ended December 31,
  2007. Also, Replaced Portfolio A did not pay or accrue the shareholder services fee/account administration fee
  during the fiscal year ended December 31, 2006. Total other expenses for Replaced Portfolio A (after the
  voluntary waiver of the shareholder services fee/account administration fee) were 0.14% for the fiscal year
  ended December 31, 2006.

----------------------------------------------------------------------------------------------------------------
                                                                     Replaced Portfolio B  Replacement Portfolio
                                                                   -----------------------           B
                                                                                ----------------------
                                                                          Federated               Vanguard
                                                                     International Equity      International
                                                                      Fund II  (percent)    Portfolio  (percent)
----------------------------------------------------------------------------------------------------------------
Advisory Fee......................................................                   1.00                   0.39
Distribution (12b-1) Fee..........................................                 N/A                    N/A
Other Expenses....................................................                   0.77                   0.05
Total Operating Expenses..........................................                   1.77                   0.44
Less Expense Waivers and Reimbursements...........................               \c\ 0.28                 N/A
Net Operating Expenses............................................                   1.49                   0.44
Portfolio Turnover Rate...........................................                  83                    29
----------------------------------------------------------------------------------------------------------------
\c\ With regard to Replaced Portfolio B, the administrator and shareholder services provider waived and/or
  elected not to charge certain amounts. Replaced Portfolio B did not pay or accrue a shareholder services fee
  during the fiscal year ended December 31, 2006. The prospectus for Replaced Portfolio B notes that there is no
  present intention for Replaced Portfolio B to pay or accrue a shareholder services fee during the fiscal year
  ended December 31, 2007. Also, the administrator voluntarily waived a portion of its fee which waiver the
  administrator may terminate at any time. Total other expenses for Replaced Portfolio B (after the voluntary
  waivers and reduction) were 0.49% for the fiscal year ended December 31, 2006.

    26. The following tables compare the respective asset levels,
expenses ratios (after expense waivers and reimbursements) and
performance data for each Replaced Portfolio and each Replacement
Portfolio for fiscal years 2004, 2005 and 2006.

----------------------------------------------------------------------------------------------------------------
                                                                  Net assets at    Expense ratio   Total return
                                                                  end of period      (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
                                         Federated Quality Bond Fund II
----------------------------------------------------------------------------------------------------------------
2004...........................................................     $518,023,000            0.70            3.62
2005...........................................................      480,859,000            0.70            1.30
2006...........................................................      390,738,000            0.70            4.15
----------------------------------------------------------------------------------------------------------------
                                  Fidelity VIP Investment Grade Bond Portfolio
----------------------------------------------------------------------------------------------------------------
2004...........................................................    1,611,417,000            0.66            4.32
2005...........................................................    1,649,333,000            0.58            2.08
2006...........................................................    1,782,079,000            0.54            4.30
----------------------------------------------------------------------------------------------------------------
                                     Federated International Equity Fund II
----------------------------------------------------------------------------------------------------------------
2004...........................................................       53,093,000            1.57           14.06
2005...........................................................       58,700,000            1.58            9.08
2006...........................................................       70,213,000            1.49           18.89
----------------------------------------------------------------------------------------------------------------
                                        Vanguard International Portfolio
----------------------------------------------------------------------------------------------------------------
2004...........................................................      557,000,000            0.41           19.42
2005...........................................................      840,000,000            0.41           16.31
2006...........................................................    1,562,000,000            0.44           26.75
----------------------------------------------------------------------------------------------------------------

    27. Replaced Portfolio A, which has a high concentration in
corporate debt securities, is positioned on the conservative end of the
risk/return spectrum for fixed income investment options and offered
Contract owners a fixed income option with limited risk. Over the past
seven years, Replaced Portfolio A has significantly underperformed its
peers leading the Company to reassess the position of its fixed income
investment option. In an attempt to improve overall returns for the
fixed income investment option while still maintaining a relatively low
level of risk, the Company decided to select a fixed income investment
option which is more representative of the overall bond market.
Applicants believe that Replacement Portfolio A meets this goal.
    28. The Company selected Replaced Portfolio B to diversify the
investment options under the Contract to include a portfolio selection
that pursued international investment opportunities. The managers of
Replaced Portfolio B pursue positive total return on assets invested
primarily in equity securities of mid- to large-capitalization
companies based outside the U.S. Over the past five years, however,
Replaced Portfolio B has underperformed the Morgan Stanley Capital
International, Europe, Australasia, Far East Index (``MSCI EAFE
Index''), the benchmark used by Replaced Portfolio B as well as peer
funds. Replacement Portfolio B uses a multiple manager approach to
pursue long-term capital appreciation by investing primarily in non-
U.S. growth stocks of large, stable companies diversified across
countries that the investment managers believe demonstrate above-
average growth potential. Although the overall characteristics of the
assets of Replacement Portfolio B may differ from broad international
stock indices, over the past five years, the performance of Replacement
Portfolio B has, in each of the last three years, exceeded the
performance of Replaced Portfolio B.
    29. In the case of Replaced Portfolio A, performance has been in
the bottom quartile for comparable funds over the last three years, and
has been lower than

its benchmark for the past five years. In the case of Replaced
Portfolio B, performance ranks in the bottom decile for comparable
funds over the last 1-, 3-, and 5-year periods.
    30. The stated investment objective, principal investment
strategies and principal investment risks of the Replacement Portfolios
are substantially similar to those of the Replaced Portfolios, so that
Contract owners will have continuity in investment and risk
expectations. The net expenses of each Replacement Portfolio is
substantially less than those for the corresponding Replaced Portfolio
for the year ended December 31, 2006, even after expense waivers and
reimbursements for the Replaced Portfolio have been taken into account.
    31. Replacement Portfolio A has a substantially identical
investment objective as that of Replaced Portfolio A. Both pursue their
investment objective by investing, under normal market conditions, in a
diversified portfolio of investment grade fixed-income securities,
consisting of corporate debt securities, U.S government issued
mortgage-backed securities and U.S. Treasury and agency securities.
Each retains the flexibility to invest in corporate debt securities of
foreign issuers and in derivative instruments, such as options, futures
and swap contracts.
    32. The primary difference in the implementation of investment
strategies of Replaced Portfolio A and Replacement Portfolio A manifest
in the degree of flexibility exercised by their advisors in
implementing the strategies. Replaced Portfolio A's investment advisor
emphasizes an active trading approach and relies on a fundamental
analysis of each company in making an investment decision while the
investment advisor for Replacement Portfolio A uses the Lehman Brothers
U.S. Aggregate Index (the ``Lehman Index'') as the primary guide to
structure Replacement Portfolio A and select investments with the goal
of managing Replacement Portfolio A to have an overall interest rate
risk similar to the Lehman Index. Conversely, whereas Replaced
Portfolio A's investment advisor invests exclusively in fixed-income
securities rated investment grade, the investment advisor for
Replacement Portfolio A is not so constrained and may invest up to 10
percent of Replacement Portfolio A's assets in lower quality debt
securities, sometimes referred to as junk bond securities.
    33. Notwithstanding some difference in the stated investment
objectives of Replacement Portfolio B and Replaced Portfolio B, both
emphasize capital appreciation as the primary investment objective and
both follow substantially identical investment strategies to pursue
their investment objectives. Both pursue their investment objectives by
investing primarily in equity securities of well-capitalized companies
based outside the United States that have favorable growth prospects.
The investment advisor for Replaced Portfolio B and the investment
advisors for Replacement Portfolio B each use an active management
approach and rely on a combination of fundamental analysis of each
company and an analysis of stock market and economic cycles before
making an investment decision. None of the investment advisors are
limited with respect to the countries and industries in which they may
invest. Each investment advisor retains the flexibility to invest in
securities issued by mid-cap and small-cap companies as well as
securities of companies in emerging markets.
    34. The primary difference in investment objectives of Replaced
Portfolio B and Replacement Portfolio B manifests in the degree to
which Replaced Portfolio B emphasizes income from portfolio securities
as a secondary investment objective. In that regard, Replaced Portfolio
B's investment advisor may purchase a security solely to generate
income or for the potential to generate income without regard to
capital appreciation whereas the investment advisors for Replacement
Portfolio B would not purchase a security solely for that purpose.
Replaced Portfolio B also places a slightly greater emphasis on
investment in securities of mid-cap companies than Replacement
Portfolio B.
    35. Replacement Portfolio A has available to it transactional
advantages attributable to achieved economies of scale greater than
those of Replaced Portfolio A and has a significantly lower expense
ratio than Replaced Portfolio A even after expense waivers and
reimbursements for Replaced Portfolio A have been taken into account.
Although Replacement Portfolio B has not yet achieved a level of assets
equal to or greater than Replaced Portfolio B, Replacement Portfolio B
has a significantly lower expense ratio than Replaced Portfolio B even
after expense waivers and reimbursements for Replaced Portfolio B have
been taken into account.
    36. For Contract owners on the date of the proposed substitutions,
the Company will reimburse, on the last business day of each fiscal
period (not to exceed a fiscal quarter) during the twenty-four months
following the date of the proposed substitutions, the subaccount
investing in the Replacement Portfolio such that the sum of the
Replacement Portfolio's operating expenses (taking into account fee
waivers and expense reimbursements) and subaccount expenses for such
period will not exceed, on an annualized basis, the sum of the
corresponding Replaced Portfolio's operating expenses (taking into
account fee waivers and expense reimbursements) and subaccount expenses
for the fiscal year preceding the date of the proposed substitution. In
addition, for twenty-four months following the proposed substitutions,
the Company will not increase asset-based fees or charges for Contracts
outstanding on the date of the proposed substitutions.
    37. By the May 1, 2008 prospectuses for the Contracts and the
Accounts, the Company will notify owners of the Contracts of their
intention to take the necessary actions to carry out the proposed
substitutions. The current prospectus for each Replacement Fund, as
well as the current prospectuses for all other portfolios available as
investment options available under the Contracts, will be bound
together with the May 1, 2008 prospectuses for the Contracts and the
Accounts.
    38. The prospectuses for the Contracts will advise the Contract
owners that from the date of the prospectus until the date of the
proposed substitutions, the Company will not exercise any rights
reserved by it under any Contract to impose additional charges for
transfers until at least 30 days after the proposed substitutions.
Similarly, the prospectus will disclose that, from May 1, 2008 until
the date of the proposed substitutions, the Company will permit
Contract owners to transfer Contract value out of each subaccount
currently holding shares of a Replaced Portfolio to other subaccounts
and the fixed account without those transfers being treated as
transfers for purposes of determining the remaining number of transfers
that may be permitted in the Contract year without a transfer charge.
The prospectuses will also advise Contract owners that if the proposed
substitutions are carried out, then each Contract owner affected by the
substitutions will be sent a written notice (described immediately
below) informing them of the facts and details of the substitutions.
    39. Within five days after the proposed substitutions, Contract
owners who are affected by the substitutions will be sent a written
notice informing them that the substitutions were carried

out. The notice will also reiterate the facts that the Company: (1)
Will not exercise any rights reserved by it under any of the Contracts
to impose additional charges for transfers until at least 30 days after
the proposed substitutions, and (2) will, for at least 30 days
following the proposed substitutions, permit such Contract owners to
transfer Contract values out of the subaccounts holding shares of the
Replacement Portfolios to other subaccounts and the fixed account
without those transfers being treated as transfers for purposes of
determining the remaining number of transfers permitted in the Contract
year without a transfer charge. The notice as delivered in certain
jurisdictions may also explain that the right of a Contract owner to
make transfers in connection with the proposed substitutions will not
affect such Contract owner's right, under insurance regulations in
those jurisdictions, to exchange his or her Contract for a fixed-
benefit life insurance contract or a fixed-benefit annuity Contract
during the 60 days following the substitutions.
    40. The Company will carry out the proposed substitutions by
redeeming shares of each Replaced Portfolio held by the Accounts for
cash and applying the proceeds to the purchase of shares of the
Replacement Portfolios. The proposed substitutions will take place at
relative net asset value with no change in the amount of any Contract
owner's Contract value or death benefit or in the dollar value of his
or her investment in any of the Accounts. Contract owners will not
incur any fees or charges as a result of the proposed substitutions,
nor will their rights or the Company's obligations under the Contracts
be altered in any way. All applicable expenses incurred in connection
with the proposed substitutions, including brokerage commissions and
legal, accounting, and other fees and expenses, will be paid by the
Company. In addition, the proposed substitutions will not impose any
tax liability on Contract owners. The proposed substitutions will not
cause the Contract fees and charges currently being paid by existing
Contract owners to be greater after the proposed substitutions than
before the proposed substitutions.

Applicants' Legal Analysis

    1. The Applicants request that the Commission issue an order
pursuant to Section 26(c) of the Act approving the substitution by the
Company of Service Class shares of Replacement Portfolio A for shares
of Replaced Portfolio A, and the substitution of shares of Replacement
Portfolio B for shares of Replaced Portfolio B held by the Accounts.
    2. The Applicants assert that all the Contracts expressly reserve
for the Company the right, subject to compliance with applicable law,
to substitute shares of one fund or portfolio held by a subaccount of
an Account for another. The prospectuses for the Contracts and the
Accounts contain appropriate disclosure of this right.
    3. Applicants maintain that Contract owners will be better served
by the proposed substitutions and that the proposed substitutions are
appropriate given the Replacement Portfolios, the Replaced Portfolios,
and other investment options available under the Contracts. In the last
three years, Replacement Portfolio A has had investment performance
superior to that of Replaced Portfolio A, and Replacement Portfolio B
has had investment performance superior to that of Replaced Portfolio
B. In addition, Replacement Portfolio A has had substantially lower
expenses over this same period than Replaced Portfolio A, and
Replacement Portfolio B has had substantially lower expenses over this
same period than Replaced Portfolio B.
    4. Applicants believe that Replacement Portfolio A and Replaced
Portfolio A are substantially the same in their stated investment
objectives and principal investment strategies, and that Replacement
Portfolio B and Replaced Portfolio B are substantially similar in their
stated investment objectives and principal investment strategies, as to
afford investors continuity of investment and risk.
    5. Although each Replaced Portfolio benefits from an expense
reimbursement arrangement that reduces the Portfolio's expenses, even
after the reimbursement for each Replaced Portfolio has been taken into
account, the expenses of the corresponding Replacement Portfolio are
still significantly lower.
    6. The Applicants represent that the proposed substitutions retain
for Contract owners the investment flexibility that is a central
feature of the Contracts. If the proposed substitutions are carried
out, all Contract owners will be permitted to allocate purchase
payments and transfer Contract values between and among the remaining
subaccounts as they could before the proposed substitutions.
    7. The Applicants maintain that the proposed substitutions are not
the type of substitution that Section 26(c) was designed to prevent.
Unlike traditional unit investment trusts where a depositor could only
substitute an investment security in a manner which permanently
affected all the investors in the trust, the Contracts provide each
Contract owner with the right to exercise his or her own judgment and
transfer Contract values into other subaccounts and the fixed account.
Moreover, the Contracts will offer Contract owners the opportunity to
transfer amounts out of the affected subaccounts into any of the
remaining subaccounts without cost or disadvantage. The proposed
substitutions, therefore, will not result in the type of costly forced
redemption that Section 26(c) was designed to prevent.

Conclusion

    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
Act.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-5919 Filed 3-24-08; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 214 (Wednesday, November 5, 2014)]
[Notices]
[Pages 65731-65732]
[FR Doc No: 2014-26351]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31322; 812-14227]

AllianceBernstein Multi-Manager Alternative Fund, et al.; Notice
of Application

October 31, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (the ``Act'') for an exemption from sections 18(c)
and 18(i) of the Act and for an order pursuant to section 17(d) of the
Act and rule 17d-1 under the Act.

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Summary of Application: Applicants request an order to permit certain
registered closed-end management investment companies to issue multiple
classes of shares (``Shares'') and to impose asset-based distribution
and service fees and contingent deferred sales charges (``CDSCs'').

Applicants: AllianceBernstein Multi-Manager Alternative Fund (the
``Fund''), AllianceBernstein L.P. (the ``Adviser''), Sanford C.
Bernstein & Company, LLC (``SCB''), and AllianceBernstein Investments,
Inc. (``ABI'' and, together with SCB, the ``Distributors'' and each, a
``Distributor'').

Filing Dates: The application was filed on October 29, 2013 and amended
on May 22, 2014 and October 7, 2014.

Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving 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 November 21, 2014, and should be accompanied by proof of
service on the applicants, in the form of an affidavit, or, for
lawyers, a certificate of service. Pursuant to rule 0-5 under the Act,
hearing requests should state the nature of the writer's interest, any
facts bearing upon the desirability of a hearing on the matter, 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
Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants:
Emilie D. Wrapp, AllianceBernstein L.P., 1345 Avenue of the Americas,
New York, New York 10105.

FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at
(202) 551-6876 or Mary Kay Frech, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling<PHONE_NUMBER>.

Applicants' Representations

    1. The Fund is a continuously offered non-diversified closed-end
management investment company registered under the Act and organized as
a Delaware statutory trust. The Adviser is registered as an investment
adviser under the Investment Advisers Act of 1940 and serves as
investment adviser to the Fund. SCB, a broker-dealer registered under
the Securities Exchange Act of 1934 (the ``1934 Act''), acts as
principal underwriter to the Fund. ABI, a registered broker-dealer
under the 1934 Act, may enter into a distribution agreement with the
Fund, pursuant to which it would distribute certain classes of shares
(``Shares'') of the Fund. The Distributors are under common control
with the Adviser and are affiliated persons, as defined in section
2(a)(3) of the Act, of the Adviser.
    2. The Fund continuously offers its Shares to the public pursuant
to a registration statement under the Securities Act of 1933. The
Shares of the Fund are not listed on any securities exchange and are
not traded on an over-the-counter system such as NASDAQ. Applicants do
not expect that any secondary market will develop for the Shares.
    3. The Fund currently offers, and intends to continue to offer, an
initial class of Shares (``Initial Class'') at net asset value without
any sales load, service fee, or distribution fee. The Fund may offer
new Share classes at net asset value and may also charge a front-end
sales load, a CDSC, and/or an annual asset-based service and/or
distribution fee.\1\
---------------------------------------------------------------------------

    \1\ Shares may be subject to an early withdrawal fee at a rate
of 2% of the aggregate net asset value of a shareholder's Shares
repurchased by the Fund (the ``Early Withdrawal Fee'') if the
interval between the date of purchase of the Shares and the
valuation date with respect to the repurchase of those Shares is
less than one year. Any Early Withdrawal Fee imposed by the Fund
would apply to all classes of Shares of the Fund, consistent with
section 18 of the Act and rule 18f-3 thereunder. To the extent the
Fund determines to waive, impose scheduled variations of, or
eliminate any Early Withdrawal Fee, it will do so consistently with
the requirements of rule 22d-1 under the Act and the Fund's waiver
of, scheduled variation in, or elimination of, any such Early
Withdrawal Fee will apply uniformly to all shareholders of the Fund.
---------------------------------------------------------------------------

    4. In order to provide a degree of liquidity to shareholders, the
Fund may from time to time offer to repurchase Shares at net asset
value in accordance with rule 13e-4 under the 1934 Act. A Fund will
repurchase Shares at such times, in such amounts and on such terms as
may be determined by the board of trustees (``Board'') of the Fund in
its sole discretion. The Adviser expects to recommend ordinarily that
the Board authorize each Fund to offer to repurchase Shares from
shareholders quarterly.
    5. Applicants request that the order also apply to any other
continuously offered registered closed-end management investment
companies existing now or in the future for which the Adviser, a
Distributor, or any entity controlling, controlled by or under common
control with the Adviser or a Distributor acts as investment adviser or
principal underwriter, and which provides periodic liquidity with
respect to its Shares pursuant to rule 13e-4 under the 1934 Act (such
investment companies, together with the Fund, the ``Funds'').\2\
---------------------------------------------------------------------------

    \2\ Any Fund relying on this relief in the future will do so in
a manner consistent with the terms and conditions of the
application. Applicants represent that any investment company
presently intending to rely on the requested relief is listed as an
applicant.
---------------------------------------------------------------------------

    6. Applicants represent that any asset-based service and
distribution fees will comply with the provisions of rule 2830(d) of
the Conduct Rules of the National Association of Securities Dealers,
Inc. (``NASD Conduct Rule 2830'').\3\ Applicants also represent that
each Fund will disclose in its prospectus, the fees, expenses and other
characteristics of each class of Shares offered for sale by the
prospectus as is required for open-end multiple class funds under Form
N-1A. The Fund will disclose fund expenses in shareholder reports as if
it were an open-end management investment company, and disclose any
arrangements that result in breakpoints in, or elimination of, sales
loads in its prospectus.\4\ The Fund and

the Distributors will also comply with any requirements that may be
adopted by the Commission or FINRA regarding disclosure at the point of
sale and in transaction confirmations about the costs and conflicts of
interest arising out of the distribution of open-end investment company
shares, and regarding prospectus disclosure of sales loads and revenue
sharing arrangements as if those requirements applied to the Fund and
the Distributors.\5\
---------------------------------------------------------------------------

    \3\ All references to NASD Conduct Rule 2830 include any
successor or replacement rule that may be adopted by the Financial
Industry Regulatory Authority (``FINRA'').
    \4\ See Shareholder Reports and Quarterly Portfolio Disclosure
of Registered Management Investment Companies, Investment Company
Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring
open-end investment companies to disclose fund expenses in
shareholder reports); and Disclosure of Breakpoint Discounts by
Mutual Funds, Investment Company Act Release No. 26464 (June 7,
2004) (adopting release) (requiring open-end investment companies to
provide prospectus disclosure of certain sales load information).
    \5\ See, e.g., Confirmation Requirements and Point of Sale
Disclosure Requirements for Transactions in Certain Mutual Funds and
Other Securities, and Other Confirmation Requirement Amendments, and
Amendments to the Registration Form for Mutual Funds, Investment
Company Act Release No. 26341 (Jan. 29, 2004) (proposing release).
---------------------------------------------------------------------------

    7. The Fund will allocate all expenses incurred by it among the
various classes of Shares based on the respective net assets of the
Fund attributable to each such class, except that the net asset value
and expenses of each class will reflect distribution fees, service
fees, and any other incremental expenses of that class. Expenses of the
Fund respectively allocated to a particular class of the Fund's Shares
will be borne on a pro rata basis by each outstanding Share of that
class. Applicants state that the Fund will comply with the provisions
of rule 18f-3 under the Act as if it were an open-end investment
company.
    8. In the event a Fund imposes a CDSC, the applicants will comply
with the provisions of rule 6c-10, as if that rule applied to closed-
end management investment companies. With respect to any waiver of,
scheduled variation in, or elimination of the CDSC, the Fund will
comply with rule 22d-1 under the Act as if the Fund were an open-end
investment company.

Applicants' Legal Analysis

Multiple Classes of Shares

    1. Section 18(c) of the Act provides, in relevant part, that a
closed-end investment company may not issue or sell any senior security
if, immediately thereafter, the company has outstanding more than one
class of senior security. Applicants state that the creation of
multiple classes of Shares of the Funds may be prohibited by section
18(c).
    2. Section 18(i) of the Act provides that each share of stock
issued by a registered management investment company will be a voting
stock and have equal voting rights with every other outstanding voting
stock. Applicants state that permitting multiple classes of Shares of
the Funds may violate section 18(i) of the Act because each class would
be entitled to exclusive voting rights with respect to matters solely
related to that class.
    3. Section 6(c) of the Act provides that the Commission may exempt
any person, security or transaction or any class or classes of persons,
securities or transactions from any provision of the Act, or from any
rule under the Act, if and to the extent such exemption is necessary or
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policy and
provisions of the Act. Applicants request an exemption under section
6(c) from sections 18(c) and 18(i) to permit the Funds to issue
multiple classes of Shares.
    4. Applicants submit that the proposed allocation of expenses and
voting rights among multiple classes is equitable and will not
discriminate against any group or class of shareholders. Applicants
submit that the proposed arrangements would permit the Fund to
facilitate the distribution of its Shares and provide shareholders with
a broader choice of investment options. Applicants assert that the
proposed closed-end investment company multiple class structure does
not raise the concerns underlying section 18 of the Act to any greater
degree than open-end investment companies' multiple class structures
that are permitted by rule 18f-3 under the Act. Applicants state that
each Fund will comply with the provisions of rule 18f-3 as if it were
an open-end investment company.

CDSCs

    1. Applicants believe that the requested relief meets the standards
of section 6(c) of the Act. Rule 6c-10 under the Act permits open-end
investment companies to impose CDSCs, subject to certain conditions.
Applicants state that any CDSC imposed by the Fund will comply with
rule 6c-10 under the Act as if the rule were applicable to closed-end
investment companies. The Fund also will disclose CDSCs in accordance
with the requirements of Form N-1A concerning CDSCs as if the Fund were
an open-end investment company. Applicants further state that the Fund
will apply the CDSC (and any waivers or scheduled variations of the
CDSC) uniformly to all shareholders in a given class and consistently
with the requirements of rule 22d-1 under the Act. Any scheduled
variations in, or eliminations of, any sales load will be applied
consistently with the requirements of rule 22d-1 under the Act.

Asset-Based Service and Distribution Fees

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
an affiliated person of a registered investment company or an
affiliated person of such person, acting as principal, from
participating in or effecting any transaction in connection with any
joint enterprise or joint arrangement in which the investment company
participates unless the Commission issues an order permitting the
transaction. In reviewing applications submitted under section 17(d)
and rule 17d-1, the Commission considers whether the participation of
the investment company in a joint enterprise or joint arrangement is
consistent with the provisions, policies and purposes of the Act, and
the extent to which the participation is on a basis different from or
less advantageous than that of other participants.
    2. Rule 17d-3 under the Act provides an exemption from section
17(d) and rule 17d-1 to permit open-end investment companies to enter
into distribution arrangements pursuant to rule 12b-1 under the Act.
Applicants request an order under section 17(d) and rule 17d-1 under
the Act to permit the Funds to impose asset-based service and/or
distribution fees. Applicants will comply with rules 12b-1 and 17d-3 as
if those rules applied to closed-end investment companies.

Applicants' Condition

    Applicants agree that any order granting the requested relief will
be subject to the following condition:
    Applicants will comply with the provisions of rules 6c-10,12b-1,
17d-3, 18f-3, and 22d-1 under the Act, as amended from time to time or
replaced, as if those rules applied to closed-end management investment
companies, and will comply with NASD Conduct Rule 2830, as amended from
time to time, as if that rule applied to all closed-end management
investment companies.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26351 Filed 11-4-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 80, Number 125 (Tuesday, June 30, 2015)]
[Notices]
[Pages 37269-37270]
[FR Doc No: 2015-16022]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2009-N-0025]

Agency Information Collection Activities; Submission for Office
of Management and Budget Review; Comment Request; Animal Food Labeling;
Declaration of Certifiable Color Additives

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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

SUMMARY: The Food and Drug Administration (FDA) is announcing that a
proposed collection of information has been submitted to the Office of
Management and Budget (OMB) for review and clearance under the
Paperwork Reduction Act of 1995.

DATES: Fax written comments on the collection of information by July
30, 2015.

ADDRESSES: To ensure that comments on the information collection are
received, OMB recommends that written comments be faxed to the Office
of

Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer, FAX:
202-395-7285, or emailed to<EMAIL_ADDRESS>All comments
should be identified with the OMB control number 0910-0721. Also
include the FDA docket number found in brackets in the heading of this
document.

FOR FURTHER INFORMATION CONTACT: FDA PRA Staff, Office of Operations,
Food and Drug Administration, 8455 Colesville Rd.; COLE-14526, Silver
Spring, MD 20993-0002<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: In compliance with 44 U.S.C. 3507, FDA has
submitted the following proposed collection of information to OMB for
review and clearance.

Animal Food Labeling; Declaration of Certifiable Color Additives--21
CFR 501.22(k) OMB Control Number 0910-0721--Extension

    This information collection is associated with requirements under
21 CFR 501.22(k) in which animal food manufacturers must declare the
presence of certified and noncertified color additives in their animal
food products on the product label. The Agency issued this regulation
in response to the Nutrition Labeling and Education Act of 1990 (Pub.
L. 101-535) to make animal food regulations consistent with the
regulations regarding the declaration of color additives on human food
labels and to provide animal owners with information on the colors used
in animal food.
    Respondents to this collection are manufacturers of pet food that
contain color additives. Manufacturers of certain food or food
ingredients do not have products that contain color additives requiring
certification (e.g., food for chickens, fish, and some other species,
including some pet foods) and would thus be minimally affected by Sec.
501.22(k)(1). However, since we cannot rule out the possibility that
they may at some point use a color additive requiring certification, we
have consolidated the burden estimates for Sec. Sec.  501.22(k)(1) and
501.22(k)(2). Additionally, we believe that this burden is more
accurately characterized as a third-party disclosure burden because FDA
does not require routine submission of pet food labeling to the Agency.
    In the Federal Register of April 1, 2015 (80 FR 17445), FDA
published a 60-day notice requesting public comment on the proposed
collection of information. One comment was received but did not respond
to any of the four information collection topics solicited and is
therefore not addressed by the Agency.
    FDA estimates the burden of this collection of information as
follows:

                                               Table 1--Estimated Annual Third-Party Disclosure Burden \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Number of
            21 CFR Section/Activity                 Number of     disclosures per    Total annual      Average burden per disclosure       Total hours
                                                   respondents       respondent      disclosures
--------------------------------------------------------------------------------------------------------------------------------------------------------
501.22(k); labeling of color additive or make             3,120             0.83            2,587   .25                                             647
 of color additive; labeling of color additives                                                     (15 minutes)
 not subject to certification.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of information.

    Having become effective November 18, 2013, the Agency estimates
that the burden associated with the labeling requirements under Sec.
501.22(k) apply only to new product labels. Because the vast majority
of animal food products that contain certified color additives are pet
foods, we limit our burden estimate to reviewing labels for the use of
certified color additives to pet food manufacturers subject to this
regulation.
    Based on A.C. Nielsen Data, FDA estimates that the number of animal
food product units subject to Sec.  501.22(k) for which sales of the
products are greater than zero is 25,874. Assuming that the flow of new
products is 10 percent per year, then 2,587 new animal food products
subject to Sec.  501.22(k) will come on the market each year. FDA also
estimates that there are about 3,120 manufacturers of pet food subject
to either Sec.  501.22(k)(1) or (k)(2). Assuming the approximately
2,587 new products are split equally among the firms, then each firm
would prepare labels for approximately 0.83 new products per year
(2,587 new products/3,120 firms is approximately 0.83 labels per firm).
    The Agency expects that firms prepare the required labeling for
their products in a manner that takes into account at one time all
information required to be disclosed on their product labels. Based on
our experience with reviewing pet food labeling, FDA estimates that
firms would require less than 0.25 hour (15 minutes) per product to
comply with the requirement to include the color additive information
pursuant to Sec.  501.22(k). The total burden of this activity is 647
hours (2,587 labels x 0.25 hour/label is approximately 647 hours).

    Dated: June 25, 2015.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2015-16022 Filed 6-29-15; 8:45 am]
 BILLING CODE 4164-01-P