
[Federal Register: December 31, 2008 (Volume 73, Number 251)]
[Notices]               
[Page 80464-80468]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31de08-105]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-28570; File No. 812-13402]

 
Sun Life Assurance Company of Canada (U.S.), et al., Notice of 
Application

December 23, 2008.
AGENCY: Securities and Exchange Commission (the ``Commission'').

ACTION: Notice of application for an order of approval pursuant to 
Section 26(c) of the Investment Company Act of 1940, as amended (the 
``Act''), and an order of exemption pursuant to Section 17(b) of the 
Act from Section 17(a) of the Act.

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    Applicants: Sun Life Assurance Company of Canada (U.S.) (``Sun Life 
U.S.''), Sun Life Insurance and Annuity Company of New York (``Sun Life 
N.Y.'') (together with Sun Life U.S., the ``Companies''), Sun Life of 
Canada (U.S.) Variable Account F (``Account F''), Sun Life of Canada 
(U.S.) Variable Account G (``Account G''), Sun Life of Canada (U.S.) 
Variable Account I (``Account I''), Sun Life (N.Y.) Variable Account C 
(``Account C''), Sun Life (N.Y.) Variable Account D (``Account D''), 
and Sun Life (N.Y.) Variable Account J (``Account J'') (collectively, 
the ``Applicants''). Applicants, together with Sun Capital Advisers 
Trust (``Sun Capital Trust'') are ``Section 17(b) Applicants.''
    Summary of Application: Applicants seek an order approving the 
proposed substitutions (the ``Substitutions'') under certain variable 
life insurance policies and variable annuity contracts (``Contracts'') 
of Class VC shares of the Lord Abbett Growth and Income Portfolio and 
the Lord Abbett Mid-Cap Value Portfolio of Lord Abbett Series Fund, 
Inc. (``LA Series''), and Administrative Class shares of the PIMCO High 
Yield Portfolio and the PIMCO Low Duration Portfolio of the PIMCO 
Variable Insurance Trust with Initial Class shares of the following 
portfolios of Sun Capital Trust, respectively: The SC Lord Abbett 
Growth & Income Fund, the SC Goldman Sachs Mid Cap Value Fund, the SC 
PIMCO High Yield Fund, and the SC Goldman Sachs Short Duration Fund. 
Section 17(b) Applicants also seek an order pursuant to Section 17(b) 
of the Act to permit certain in-kind transactions in connection with 
the Substitutions.
    Filing Date: The application was originally filed on July 9, 2007, 
and an amended and restated application was filed on December 18, 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 January 21, 2009, 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: The Commission: Secretary, Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549-1090; Applicants: 
c/o Maura A. Murphy, Esq., Sun Life Assurance Company of Canada (U.S.), 
One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481.

FOR FURTHER INFORMATION CONTACT: Rebecca A. Marquigny, Senior Counsel, 
or Joyce M. Pickholz, Branch Chief, Office of Insurance Products, 
Division of Investment Management, at (202) 551-6795.

SUPPLEMENTARY INFORMATION:  The following is a summary of the 
application. The complete application is available for a fee from the 
Public Reference Branch of the Commission, 100 F Street, NE., 
Washington, DC 20549 (202-551-8090).
    Applicants' and Section 17 Applicants' Representations and 
Conditions:
    1. Sun Life U.S. is a stock life insurance company ultimately 
controlled by Sun Life Financial Inc. (``Sun Life Financial''), a 
Canadian reporting company under the Securities Exchange Act of 1934 
(the ``1934 Act''). Sun Life U.S. is the depositor and sponsor of 
Account F, Account G, and Account I.
    2. Account F is registered as a unit investment trust (File No. 
811-05846); its interests are offered through Contracts (the ``Account 
F Contracts'') registered under the Securities Act of 1933 (``1933 
Act'') on Form N-4 (File Nos. 033-41628, 333-37907, 333-05227, 333-
30844, 333-31248, 333-41438, 333-74844, 333-82957, 333-83362, 333-
83364, 333-83516, 333-115536, and 333-115525). Similarly, Account G, 
registered as a unit investment trust (File No. 811-07837) offers its 
interests through Contracts (the ``Account G Contracts'') registered 
under the 1933 Act on Form N-6 (File Nos. 333-65048, 333-13087, and 
333-111688). Account I, registered as a unit investment trust (File No. 
811-09137) also offers its interests through Contracts (the ``Account I 
Contracts'') registered under the 1933 Act on Form N-6 (File Nos. 333-
68601, 333-100831, 333-59662, 333-100829, 333-94359, 333-143353, 333-
143354, and 333-144628).
    3. Sun Life N.Y., a wholly owned subsidiary of Sun Life U.S., is a 
stock life insurance company and is the depositor and sponsor of 
Account C, Account D, and Account J.
    4. Account C, a registered unit investment trust (File No. 811-
04440), also offers its interests through certain Contracts (the 
``Account C Contracts'') registered under the 1933 Act on Form N-4 
(File Nos. 333-05037, 333-67864, 333-119151, 333-119154, 333-100474, 
333-107983, 333-99907, and 333-100475). Similarly, Account D, 
registered as a unit investment trust (File No. 811-04633) offers its 
interests through Contracts (the ``Account D Contracts'') registered 
under the 2933 Act on Form N-6 (File Nos. 333-105437, 333-105438, and 
333-105441). Account J, registered as a unit investment trust (File No. 
811-21937) also offers its interests through Contracts (the ``Account J 
Contracts'') registered under the 1933 Act on Form N-6 (File Nos. 333-
136433 and 333-136435).
    5. All of the Contracts involved in the Substitutions (a) reserve 
the right to substitute shares of one portfolio for shares of another; 
(b) permit transfers of contract value among the subaccounts pursuant 
to the limitations of the particular Contract, (c) impose or

[[Page 80465]]

reserve the right to impose a transfer charge (except Accounts G and 
J); and (d) are subject to market timing policies and procedures that 
may operate to limit transfers.
    6. Applicants represent that all of the portfolios involved in the 
Substitutions are currently available to new and existing Contract 
owners (and will continue to be available until the time the 
substitutions occur) for the allocation of purchase payments and 
transfer of contract value.
    7. Lord Abbett Growth and Income Portfolio (``Old Growth & 
Income'') and Lord Abbett Mid-Cap Value Portfolio (``Old Mid-Cap 
Value'') (each, individually, an ``Old Portfolio'' and collectively, 
``Old LA Portfolios'') are portfolios of LA Series, a registered, 
diversified, open-end management investment company (File No. 811-
05876). Class VC shares of Old LA Portfolios are registered under the 
1933 Act on Form N-1A (File No. 33-31072). The investment adviser to 
Old LA Portfolios is Lord Abbett & Co., LLC (``Lord Abbett'').
    8. PIMCO High Yield Portfolio (``Old High Yield'') and PIMCO Low 
Duration Portfolio (``Old Low Duration'') (each, individually, an ``Old 
Portfolio'' and collectively, ``Old PIMCO Portfolios'') are portfolios 
of PIMCO Variable Insurance Trust, a registered, diversified, open-end 
management investment company (File No. 811-08399). Administrative 
Class shares of Old PIMCO Portfolios are registered under the 1933 Act 
on Form N-1A (File No. 333-37115). The investment adviser to Old PIMCO 
Portfolios is Pacific Investment Management Company LLC (``PIMCO'').
    9. The following ``New Portfolios'' (each, individually, a ``New 
Portfolio'') are portfolios of Sun Capital Trust, a registered, 
diversified, open-end management investment company (File No. 811-
08879): SC Lord Abbett Growth & Income Fund (``New Growth & Income''), 
SC Goldman Sachs Mid Cap Value Fund (``New Mid Cap Value''), SC PIMCO 
High Yield Fund (``New High Yield''), and SC Goldman Sachs Short 
Duration Fund (``New Short Duration''). Initial Class shares of New 
Portfolios are registered under the 1933 Act on Form N-1A (File No. 
333-59093) and are not subject to a distribution fee.
    10. Sun Capital Advisers LLC (``Sun Capital''), an indirect, wholly 
owned subsidiary of Sun Life Financial, is investment adviser to all 
the Sun Capital Trust portfolios. Through an order from the Commission 
pursuant to Section 6(c) of the Act, Sun Capital is exempt from Section 
15(a) of the Act and Rule 18f-2 thereunder with respect to subadvisory 
agreements (the ``Manager of Managers Order'').\1\
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    \1\ Sun Capital Advisers Trust and Sun Capital Advisers, Inc., 
1940 Act Rel. No. 24401 (April 24, 2000) (Order), File No. 812-
11790; see also Sun Capital Advisers Trust and Sun Capital Advisers, 
Inc., 1940 Act Rel. No. 23793 (Apr. 20, 1999) (Order), File No. 812-
11464.
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    11. Applicants represent that the relief granted in the Manager of 
Managers Order extends to New Portfolios permitting Sun Capital to 
enter into and materially amend investment subadvisory agreements 
without obtaining shareholder approval. Applicants also indicate that 
the prospectus for the New Portfolios will disclose and explain the 
existence, substance and effect of the Manager of Managers Order.
    12. Applicants propose to substitute Initial Class shares of (a) 
New Growth & Income for Class VC shares of Old Growth & Income; (b) New 
Mid Cap Value for Class VC shares of Old Mid Cap Value; (c) New High 
Yield for Administrative Class shares of Old High Yield; and (d) New 
Short Duration for Administrative Class shares of Old Low Duration. 
Applicants state that the proposed Substitutions are not intended to 
effect an overall reorganization or merger of any of the underlying 
investment options offered in the Contracts. Applicants assert their 
belief that:
    (a) Reducing the number of nonproprietary funds will provide the 
Companies with more control over fund changes that affect the 
Contracts;
    (b) The New Portfolios better promote their goals of increasing 
administrative efficiency of, and control over, their Contracts as the 
New Portfolios are part of their proprietary fund family;
    (c) This streamlining will allow the Companies to enhance their 
communication efforts to Contract owners and sales representatives 
regarding the available portfolios, and may provide for more enhanced 
and timely reporting from the Companies to Contract owners with respect 
to changes in the underlying funds.
    13. Applicants represent that because the New Portfolios operate 
pursuant to the Manager of Managers Order (and assuming that the 
Applicants first obtain shareholder approval of a change in a New 
Portfolio's subadviser or of a New Portfolio's continued ability to 
rely on the Manager of Manager's Order), the Substitutions would 
provide protection to Contract owners by giving Sun Capital the agility 
and flexibility to change the subadviser of the New Portfolios should 
such a change become warranted or advisable. In support of the 
Substitutions, Applicants assert that the investment objectives and 
policies of the New Portfolios are sufficiently similar to those of the 
corresponding Old Portfolios that Contract owners will have reasonable 
continuity in investment expectations. The following summarizes the 
more complete comparison of New and Old Portfolios provided in the 
Application.
    14. Growth & Income Portfolio Substitution
    Applicants state that both Old Growth & Income and New Growth & 
Income share the identical investment objective to ``seek long-term 
growth of capital and income without excessive fluctuations in market 
value.'' Applicants state that the principal investment strategies of 
the two portfolios are virtually identical noting that both invest at 
least 80% of net assets in equity securities of large companies defined 
as those having capitalization within the range of the companies in the 
Russell 1000 Index at the time of purchase. Both portfolios primarily 
purchase equity securities of large, seasoned, U.S. and multinational 
companies that are believed to be undervalued, and both attempt to 
invest in securities selling at reasonable prices in relation to their 
potential value. Applicants also represent that both portfolios share 
substantially similar risk profiles.
    Charges for Class VC of Old Growth & Income include Management Fees 
of 0.47% and Other Expenses of 0.41%.\2\ Total Operating Expenses for 
Initial Class shares of New Growth & Income are 0.88% which represents 
0.01% in Other Expenses and a 0.87% unified management fee (subject to 
a 0.87% contractual limitation on Total Operating Expenses). Neither 
portfolio charges a 12b-1 Fee. Old Growth & Income's total gross and 
net operating expenses are both 0.88%. Respectively, New Growth & 
Income's total gross and net operating expenses are 0.88% and 0.87% 
(reflecting the contractual expense limitation agreement).
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    \2\ For the descriptions of charges involved in the 
Substitution, all percentages for the Management Fees, 12b-1 Fees, 
Other Expenses, Fee Reductions, Total Gross and Net Annual Operating 
Expenses, and Separate Account Fees represent a percentage of 
average annual assets.
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    15. Mid Cap Value Portfolio Substitution
    Applicants state that both Old Mid Cap Value and New Mid Cap Value 
share a similar investment objective because Old Mid Cap Value ``seeks 
capital appreciation through investments, primarily in equity 
securities, which are believed to be undervalued in the marketplace'' 
and New Mid Cap Value ``seeks long-term return of capital.'' Applicants 
state that

[[Page 80466]]

the principal investment strategies of the two portfolios are similar 
noting that both employ a value approach to investing and normally 
invest at least 80% of net assets, plus the amount of any borrowings 
for investment purposes, in securities of mid-sized companies. 
Applicants represent that both Old Mid Cap Value and New Mid Cap Value 
have substantially similar risk characteristics which are presented in 
greater detail in the Application.
    Charges for Class VC of Old Mid Cap Value include Management Fees 
of 0.74% and Other Expenses of 0.38%. Total Operating Expenses for 
Initial Class shares of New Mid Cap Value are 1.06% which represents 
0.01% in Other Expenses and a 1.05% unified management fee (subject to 
a 1.07% contractual limitation on Total Operating Expenses). Neither 
portfolio charges a 12b-1 Fee. Old Mid Cap Value's total gross and net 
operating expenses are both 1.12% while New Mid Cap Value's total gross 
and net operating expenses are both 1.06%.
    16. High Yield Portfolio Substitutions
    Applicants represent that Old High Yield and New High Yield share a 
virtually identical investment objective because New High Yield seeks 
``maximum total return, consistent with capital preservation'' and Old 
High Yield seeks the same ``and prudent investment management.'' 
Applicants represent that under normal circumstances both invest at 
least 80% of assets in a diversified portfolio of high yield junk bonds 
rated at least Caa by Moody's or equivalently rated by S&P or Fitch, 
or, if unrated, determined by the adviser or subadviser to be of 
comparable quality. Applicants state that neither portfolio may invest 
more than 5% of total assets in securities of equal or lower rating. 
Applicants represent that both portfolios employ an average portfolio 
duration within a two-to-six year time frame and may invest up to the 
same percentages of total assets in issuers located in countries with 
developing economies. Applicants assert that the limits for investment 
in foreign currency denominated securities and U.S. dollar-denominated 
securities of foreign issuers are the same for both portfolios. 
Applicants also identify other similar strategies including that both 
portfolios may invest all of their assets in derivative instruments. In 
addition, Applicants represent that both Old High Yield and New High 
Yield have substantially similar risk characteristics discussed at 
length in the Application.
    Charges for Administrative Class shares of Old High Yield include 
Management Fees of 0.25%, Service Fees of 0.15%, and Other Expenses of 
0.35%. Charges for Initial Class shares of New High Yield include a 
0.74% unified management fee and 0.01% in Other Expenses. New High 
Yield does not charge a service fee, and neither portfolio charges a 
12b-1 Fee. The total gross and net operating expenses for both Old High 
Yield and New High Yield are 0.75%. In addition, New High Yield's fees 
are also subject to a 0.75% contractual expense limitation on total 
operating expenses for at least 24 months following the date of the 
Substitutions.
    17. Low/Short Duration Portfolio Substitutions
    Applicants represent that Old Low Duration and New Short Duration 
share a similar investment objective in that Old Low Duration ``seeks 
maximum total return, consistent with preservation of capital and 
prudent investment management,'' while New Short Duration ``primarily 
seeks a high level of current income, with capital appreciation as a 
secondary goal.'' Applicants also represent that the principal 
investment strategies of the two portfolios are similar. Both invest 
primarily in fixed income securities at levels of total assets equal to 
at least 65% for Old Low Duration and 80% for New Short Duration. In 
addition, Applicants represent that both Old Low Duration and New Short 
Duration have similar risk characteristics discussed at length in the 
Application.
    Charges for Administrative Class shares of Old Low Duration include 
Management Fees of 0.25%, Service Fees of 0.15%, and Other Expenses of 
0.25%. Charges for Initial Class shares of New Short Duration include a 
0.64% unified management fee and 0.01% in Other Expenses. New Short 
Duration does not charge a service fee, and neither portfolio charges a 
12b-1 Fee. The total gross and net operating expenses for both Old Low 
Duration and New Short Duration are 0.65%. In addition, New Short 
Duration's fees are also subject to a 0.65% contractual expense 
limitation on total operating expenses for at least 24 months following 
the date of the Substitutions.
    18. Applicants assert that as of the effective date of the 
Substitutions (``Effective Date'' or ``Substitution Date''), each 
Separate Account will redeem shares of the applicable Old Portfolio in-
kind. Applicants state that if Sun Capital declines to accept 
particular portfolio securities of any of the Old Portfolios for 
purchase in-kind of shares of the New Portfolios, the applicable Old 
Portfolio will liquidate portfolio securities as necessary, and shares 
of the New Portfolio will be purchased with cash. Applicants represent 
that in either event, the proceeds of such redemptions will then be 
used to purchase shares of the New Portfolios, with each subaccount of 
the applicable Separate Account investing the proceeds of its 
redemption from the Old Portfolios in the applicable New Portfolio.
    19. Applicants further state that redemption requests and purchase 
orders will be placed simultaneously so that contract values will 
remain fully invested at all times. Applicants represent that all 
redemptions of shares of the Old Portfolios and purchases of shares of 
the New Portfolios will be effected in accordance with Section 22(c) of 
the Act and Rule 22c-1 thereunder. Applicants state that the 
Substitutions will take place at relative net asset value as of the 
Effective Date 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 
investments in any of the subaccounts. Applicants represent that 
Contract values attributable to investments in the Old Portfolios will 
be transferred to the New Portfolios without charge and without 
counting toward the number of transfers that may be permitted without 
charge.
    20. Applicants further represent that all expenses incurred in 
connection with the Substitutions, including legal, accounting, 
transactional, and other fees and expenses, including brokerage 
commissions, will be paid by Sun Life U.S. or Sun Life N.Y. Applicants 
also state that, as a result of the Substitutions, Contract owners will 
not incur any additional fees or charges, nor will their rights or 
insurance benefits or the Companies' obligations under the Contracts be 
altered. Applicants assert that the Substitutions: (a) Will not impose 
any tax liability on Contract owners; and (b) will not cause the 
Contract fees and charges currently being paid by existing Contract 
owners to be greater after the Substitutions than before the 
Substitutions. Applicants represent that neither Sun Life U.S. nor Sun 
Life N.Y. will exercise any right either may have under the Contracts 
to impose restrictions on transfers under the Contracts for the period 
from the date the Application was filed with the Commission through at 
least thirty days following the Effective Date.
    21. The Companies represent that during the twenty-four months 
following the Effective Date, the total net operating expenses of each 
New Portfolio (taking into account any expense waiver or reimbursement) 
will not exceed the net expense level of the corresponding Old 
Portfolio for the fiscal year ended December 31, 2007.

[[Page 80467]]

Applicants also state that for at least twenty-four months following 
the date of the Substitutions, Sun Capital has contractually agreed to 
waive its management fee and, if necessary, to limit other ordinary 
operating expenses so that total operating expenses, as a percentage of 
average net assets, do not exceed 0.87%, 1.07%, 0.75%, or 0.65%, as 
applicable. In addition, Applicants represent that for twenty-four 
months following the date of the Substitutions, the Companies will not 
increase asset-based fees or charges for Contracts outstanding on the 
Effective Date.
    22. Applicants represent that a prospectus for the New Portfolio 
containing disclosure describing the existence, substance and effect of 
the Manager of Managers Order will be provided to each Contract owner 
prior to or at the time of the Substitutions. Notwithstanding the 
Manager of Managers Order, the Applicants agree not to change any New 
Portfolio's subadviser, add a new subadviser, or otherwise rely on the 
Manager of Managers Order without first obtaining shareholder approval, 
following the Effective Date of the Substitutions, of either: (1) The 
subadviser change; or (2) the New Portfolio's continued ability to rely 
on the Manager of Managers Order.
    23. Applicants state that Contract owners were or will be notified 
of the proposed Substitutions by means of a prospectus or prospectus 
supplement for each of the Contracts stating that the Applicants filed 
the Application and seek approval for the Substitutions (``Pre-
Substitution Notice''). The Pre-Substitution Notice sets forth the 
anticipated Effective Date and explains that contract values 
attributable to investments in the Old Portfolios will be transferred 
to the New Portfolios on the Effective Date without charge (including 
sales charges or surrender charges) and without counting toward the 
number of transfers that may be permitted without charge. Applicants 
indicate that the Pre-Substitution Notice states that, from the date 
the initial application was filed with the Commission through the date 
thirty days after the Substitutions, Contract owners may make one 
transfer of contract value from each subaccount investing in the Old 
Portfolios (before the Substitutions) or a New Portfolio (after the 
Substitutions) to one or more other subaccount(s) without a transfer 
charge and without that transfer counting against their contractual 
transfer limitations.
    24. Applicants represent that all Contract owners will have 
received a copy of the most recent prospectus for the New Portfolios 
prior to the Substitutions. Applicants also agree that, within five 
days following the Substitutions, Contract owners affected by the 
Substitutions will be notified in writing that the Substitutions were 
carried out and that this notice will restate the information set forth 
in the Pre-Substitution Notice.

Applicants' Legal Analysis

    1. Section 26(c) of the Act makes it unlawful for any depositor or 
trustee of a registered unit investment trust holding the security of a 
single issuer to substitute another security for such security unless 
the Commission approves the substitution. The Commission shall approve 
such a substitution if the evidence establishes that it is consistent 
with the protection of investors and the purposes fairly intended by 
the policy and provisions of the Act.
    2. Applicants submit that the Substitutions meet the standards set 
forth in Section 26(c) and assert that replacement of the Old 
Portfolios with the New Portfolio is consistent with the protection of 
Contract owners and the purposes fairly intended by the policy and 
provisions of the Act. Applicants have reserved the right to make such 
a substitution under the Contracts and represent that this reserved 
right is disclosed in the prospectus for the Contracts.
    3. Section 17(a)(1) of the Act, in relevant part, prohibits any 
affiliated person of a registered investment company, or any affiliated 
person of such person, acting as principal, from knowingly selling any 
security or other property to that company. Section 17(a)(2) of the Act 
generally prohibits the persons described above, acting as principal, 
from knowingly purchasing any security or other property from the 
registered company. Pursuant to Section 17(a)(1) of the Act, the 
Section 17(b) Applicants may be considered affiliates of one or more of 
the portfolios involved in the Substitutions. Because the Substitutions 
may be effected, in whole or in part, by means of in-kind redemptions 
and subsequent purchases of shares and by means of in-kind 
transactions, the Substitutions may be deemed to involve one or more 
purchases or sales of securities or property between affiliates.
    4. Section 17(b) of the Act provides that the Commission may, upon 
application, grant an order exempting any transaction from the 
prohibitions of Section 17(a) if the evidence establishes that: the 
terms of the proposed transaction, including the consideration to be 
paid or received, are reasonable and fair and do not involve 
overreaching on the part of any person concerned; the proposed 
transaction is consistent with the policy of each registered investment 
company concerned, as recited in its registration statement and records 
filed under the Act; and the proposed transaction is consistent with 
the general purposes of the Act.
    5. The Section 17(b) Applicants state that the terms under which 
the in-kind redemptions and purchases will be effected are reasonable 
and fair and do not involve overreaching on the part of any person 
principally because the Substitutions will conform with all but one of 
the conditions enumerated in Rule 17a-7. Applicants assert that the use 
of in-kind transactions will not cause Contract owner interests to be 
diluted. In support, Applicants represent that: (a) The proposed 
transactions will take place at relative net asset value as of the 
Effective Date in conformity with the requirements of Section 22(c) of 
the 1940 Act and Rule 22c-1 thereunder 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 Separate Accounts; (b) 
Contract owners will not suffer any adverse tax consequences as a 
result of the Substitutions; and (c) fees and charges under the 
Contracts will not increase because of the Substitutions.
    6. Further, though the Section 17(b) Applicants may not rely on 
Rule 17a-7 because they cannot meet all of its conditions, the Section 
17(b) Applicants agree to carry out the proposed in-kind purchases in 
conformity with all of the conditions of Rule 17a-7 and the procedures 
adopted thereunder, except that the consideration paid for the 
securities being purchased or sold may not be entirely cash. However, 
Applicants assert that the circumstances surrounding the Substitutions 
will offer the same degree of protection to the New Portfolios from 
overreaching that Rule 17a-7 provides to it generally in connection 
with its purchase and sale of securities under that Rule in the 
ordinary course of its business.
    7. Applicants assert that the Board of Sun Capital Trust has 
adopted procedures, as required by paragraph (e)(1) of Rule 17a-7, 
pursuant to which its portfolios may purchase and sell securities to 
and from their affiliates. Applicants also note that the Companies (or 
any of their affiliates) cannot effect the proposed Substitutions at a 
price disadvantageous to the New Portfolio. Although the Substitutions 
may not be entirely for cash, Applicants represent that each will be 
effected based upon (1) the independent market price of the portfolio 
securities valued as specified

[[Page 80468]]

in paragraph (b) of Rule 17a-7, and (2) the net asset value per share 
of each portfolio involved valued according to the procedures disclosed 
in its registration statement and as required by Rule 22c-1 under the 
Act. The Section 17(b) Applicants state that if Sun Capital declines to 
accept particular portfolio securities of either of the Old Portfolios 
for purchase in-kind of shares of a New Portfolio, the applicable Old 
Portfolio will liquidate portfolio securities as necessary and shares 
of the New Portfolios will be purchased with cash. Consistent with Rule 
17a-7(d), Applicants also agree that no brokerage commissions, fees, or 
other remuneration will be paid in connection with the in-kind 
transactions.

Conclusions

    1. Applicants submit that for the reasons and upon the facts set 
forth in their application, the requested order pursuant to Section 
26(c) of the Act is consistent with the protection of investors and the 
purposes fairly intended by the policy of the Contracts and provisions 
of the Act and should, therefore, be granted.
    2. Section 17 Applicants represent that the proposed in-kind 
transactions are consistent with the general purposes of the Act, do 
not present any of the conditions or abuses the Act was designed to 
prevent, and that an exemption should be granted, to the extent 
necessary, from the provisions of Section 17(a).

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-31088 Filed 12-30-08; 8:45 am]

BILLING CODE 8011-01-P
