Federal Register, Volume 76 Issue 59 (Monday, March 28, 2011)

[Federal Register Volume 76, Number 59 (Monday, March 28, 2011)]
[Notices]
[Pages 17166-17174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-7152]

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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-29600; File No. 812-13791]

TIAA-CREF Life Insurance Company, et al.

March 22, 2011.
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 ``1940 Act'').

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Applicants: TIAA-CREF Life Insurance Company (``TC LIFE''), TIAA-CREF
Life Separate Account VA-1 (``Separate Account VA-1''), and TIAA-CREF
Life Separate Account VLI-1 (``Separate Account VLI-1'') (together
with, Separate Account VA-1, the ``Separate Accounts'') (all foregoing
parties collectively referred to herein as the ``Applicants'').

Summary of Application: Applicants request an order of the Commission,
pursuant to Section 26(c) of the Act, approving the substitution of
shares of the Commodity Return Strategy Portfolio of the Credit Suisse
Trust (the ``Substituted Portfolio'') for Class II shares of the
Natural Resources Portfolio of The Prudential Series Fund (the
``Replacement Portfolio'') under certain variable life insurance
policies and variable annuity contracts (the ``Contracts''), each
issued through a Separate Account.

Filing Date: The application was filed on July 7, 2010 and amended and
restated on November 3, 2010, January 20, 2011, and March 14, 2011.

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 20, 2011, 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 Ken Reitz, Associate
General Counsel, TIAA-CREF Life Insurance Company, 8500 Andrew Carnegie
Boulevard, Charlotte, North Carolina 28262-8500.

FOR FURTHER INFORMATION CONTACT: Michael L. Kosoff, Branch Chief, at
(202) 551-6754 or Harry Eisenstein, Senior Special Counsel, Office of
Insurance Products, Division of Investment Management, at (202) 551-
6795.

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Applicants' Representations:

1. TC LIFE is a stock life insurance company organized under the
laws of the State of New York on November 20, 1996. TC LIFE's executive
office mailing address is 730 Third Avenue, New York, New York 10017.
2. TC LIFE established Separate Account VA-1 under New York state
law on July 27, 1998. Separate Account VA-1 meets the definition of a
``separate account'' under the federal securities laws and is
registered with the Commission under the Act as a unit investment trust
(File No. 811-08963). Separate Account VA-1 consists of 47 subaccounts,
each investing in a different investment portfolio and including
subaccounts investing in both the Substituted Portfolio and Replacement
Portfolio. The subaccount investing in the Substituted Portfolio was
closed to additional payments and transfers of contract value on April
12, 2010. The assets of Separate Account VA-1 support Contracts (the
``Separate Account VA-1 Contracts'') that offer the Substituted
Portfolio and the Replacement Portfolio as investment options, and
interests in Separate Account VA-1 offered through such Contracts have
been registered under the Securities Act of 1933 Act (the ``1933 Act'')
on Form N-4 (File No. 333-145064). Other than the subaccounts investing
in the Substituted Portfolio and the two other Credit Suisse
portfolios, all of the Separate Account VA-1 subaccounts are currently
available under the Separate Account VA-1 Contracts.
3. TC LIFE is the legal owner of the assets in Separate Account VA-
1. Pursuant to the Separate Account VA-1 Contracts and prospectuses, TC
LIFE reserves the right to substitute shares of one portfolio for
shares of another. The terms of the Separate Account VA-1

[[Page 17167]]

Contracts and the prospectus for the Separate Account VA-1 Contracts
also permit Contract owners to transfer contract value among the
subaccounts. TC LIFE does not assess a transfer charge or limit the
number of transfers permitted per year, although TC LIFE does have in
place market timing policies and procedures that may operate to limit
transfers.
4. TC LIFE established Separate Account VLI-1 under New York state
law on May 23, 2001. Separate Account VLI-1 meets the definition of a
``separate account'' under the Federal securities laws and is
registered with the Commission under the Act as a unit investment trust
(File No. 811-10393). Separate Account VLI-1 consists of 47
subaccounts, each investing in a different investment portfolio and
including subaccounts investing in both the Substituted Portfolio and
the Replacement Portfolio. The subaccount investing in the Substituted
Portfolio was closed to additional payments and transfers of contract
value on April 12, 2010. The assets of Separate Account VLI-1 support
Contracts (the ``Separate Account VLI-1 Contracts'') that offer the
Substituted Portfolio and the Replacement Portfolio as investment
options, and interests in Separate Account VLI-1 offered through such
Contracts have been registered under the 1933 Act on Form N-6 (File
Nos. 333-128699 and 333-151910). Other than the subaccounts investing
in the Substituted Portfolio and the two other Credit Suisse
portfolios, all of the Separate Account VLI-1 subaccounts are currently
available under the Separate Account VLI-1 Contracts.
5. TC LIFE is the legal owner of the assets in Separate Account
VLI-1. Pursuant to the Separate Account VLI-1 Contracts and
prospectuses, TC LIFE reserves the right to substitute shares of one
portfolio for shares of another. The terms of the Separate Account VLI-
1 Contracts and the prospectuses for the Separate Account VLI-1
Contracts also permit Contract owners to transfer contract value among
the subaccounts. TC LIFE currently does not assess a transfer charge or
limit the number of transfers permitted per year, although TC LIFE does
reserve the right to deduct a $25 charge for the thirteenth and each
additional transfer during a policy year. Transfers due to dollar cost
averaging, automatic account rebalancing, loans, changes in a
subaccount's investment policy, or the initial reallocation from a
money market subaccount do not count as transfers for the purpose of
assessing the transfer charge. Contract owners also must transfer at
least $250, or the total value in the allocation option being
transferred, if less. TC LIFE also has in place market timing policies
and procedures that may operate to limit transfers. TC LIFE also
imposes certain restrictions on transfers from the fixed account.
6. Credit Suisse Trust was organized on March 15, 1995 under the
laws of the Commonwealth of Massachusetts as a Massachusetts business
trust. It is registered under the Act as a open-end management
investment company (File No. 811-07261). Credit Suisse Trust currently
consists of three portfolios, one of which--the Commodity Return
Strategy Portfolio--is the Substituted Portfolio. The Credit Suisse
Trust issues a separate 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. 33-58125). Credit Suisse Asset
Management, LLC (``Credit Suisse Management'') serves as the investment
adviser to each portfolio of the Credit Suisse Trust.
7. Aberdeen Investment Management acquired Credit Suisse Management
in December 2009. Applicants state that they are concerned that the
acquisition could result in a change in investment style so that the
Substituted Portfolio may no longer serve the investment purposes for
which it was selected as an investment option in the Contracts.
8. The Prudential Series Fund is organized as a Delaware statutory
trust and is registered under the Act as an open-end management
investment company (File No. 811-03623). The Prudential Series Fund
currently consists of 19 separate portfolios, one of which--the Natural
Resources Portfolio--is the Replacement Portfolio. The Prudential
Series Fund issues a separate 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. 2-80896). Prudential Investments
LLC (``P.I.''), a wholly-owned subsidiary of Prudential Financial,
Inc., serves as the investment adviser to each portfolio of The
Prudential Series Fund and receives an investment management fee from
each portfolio it manages.
9. Prudential Mutual Fund Management, Inc. (``PMFM''), the former
investment adviser to funds sponsored by Prudential Financial, Inc. and
its affiliates, obtained an order from the Commission pursuant to
Section 6(c) of the Act exempting it from Section 15(a) of the Act and
Rule 18f-2 under the Act, with respect to subadvisory agreements (the
``Manager of Managers Order'').\1\
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\1\ The Target Portfolio Trust and Prudential Mutual Fund
Management, Inc., Act Rel. No. 22215 (Sept. 11, 1996) (Order), File
No. 812-10208.
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10. The Manager of Managers Order applies not only to the specific
applicants but also to any future open-end management investment
company advised by PMFM or a person controlling, controlled by, or
under common control with PMFM, provided that such investment company
operates in substantially the same manner as the applicant investment
company and complies with the condition of the Manager of Managers
Order. More particularly, Applicants believe that the Manager of
Managers Order permits P.I. to enter into and materially amend
investment subadvisory agreements with respect to The Prudential Series
Fund without obtaining shareholder approval. For this reason, the
Applicants believe that the relief granted in the Manager of Managers
Order extends to the Natural Resources Portfolio.
11. Neither the Substituted Portfolio nor the Replacement Portfolio
nor their investment advisers are affiliated with the Applicants.
12. The following charts set out the investment objective of the
Substituted Portfolio and the Replacement Portfolio, as stated in their
respective prospectuses dated May 1, 2010.

Investment Objective Investment Objective

Seeks total return relative to the Seeks long-term growth of capital.
performance of the Dow Jones-UBS
Commodity Index Total Return (``DJ-UBS
Index'').
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[[Page 17168]]

13. The following information sets out the current principal
investment strategies of the Substituted Portfolio and the Replacement
Portfolio, as stated in their respective prospectuses and/or Statements
of Additional Information (``SAI'') dated May 1, 2010.

Principal Investment Strategies Principal Investment Strategies

The Portfolio is designed to achieve positive total The Portfolio normally invests at least 80% of its net
return relative to the performance of the Dow Jones- assets (plus any borrowings made for investment
UBS Commodity Index Total Return (``DJ-UBS Index''). purposes) in common stocks and convertible securities
The Portfolio intends to invest its assets in a of natural resource companies and securities that are
combination of commodity-linked derivative instruments related to the market value of some natural resource.
and fixed income securities. The Portfolio gains
exposure to commodities markets by investing in
structured notes whose principal and/or coupon
payments are linked to the DJ-UBS Index and swap
agreements on the DJ-UBS Index.
The Portfolio may invest up to 25% of its total assets Natural resource companies are companies that primarily
in a wholly owned subsidiary of the Portfolio formed own, explore, mine, process or otherwise develop
in the Cayman Islands (the ``Subsidiary''), which has natural resources, or supply goods and services to
the same investment objective as the Portfolio and has such companies. Natural resources generally include
a strategy of investing in commodity-linked swap agricultural commodities, precious metals, such as
agreements and other commodity-linked derivative gold, silver and platinum, ferrous and nonferrous
instruments, futures contracts on individual metals, such as iron, aluminum and copper, strategic
commodities, or a subset of commodities and options on metals such as uranium and titanium, hydrocarbons such
commodities. as coal and oil, timberland and undeveloped real
property.
The Portfolio seeks securities with an attractive
combination of valuation versus peers, organic reserve
and production growth, and competitive unit cost
structure.
The Portfolio invests in a portfolio of fixed income Up to 20% of the Portfolio's total assets may be
securities normally having an average duration of one invested in securities that are not asset-indexed or
year or less, and emphasizes investment-grade fixed natural resource-related, including common stock,
income securities. The Portfolio may invest without convertible stock, debt securities and money market
limit in U.S. dollar-denominated foreign securities instruments.
and may invest up to 30% of its assets in non-U.S.
dollar-denominated securities.
The Portfolio is a non-diversified mutual fund Up to 50% of the Portfolio's total assets may be
portfolio, meaning the Portfolio may invest a invested in foreign equity and equity-related
relatively high percentage of its assets in a small securities.
number of issuers \2\. The Portfolio may also pursue the following types of
investment strategies and/or invest in the following
types of securities: (i) alternative investment
strategies--including derivatives--to try and improve
the Portfolio's returns, to protect its assets or for
short-term cash management. Derivatives includes
options, futures contracts, swaps and swap options;
(ii) forward foreign currency exchange contracts;
(iii) purchase securities on a when-issued or delayed
delivery basis; (iv) short sales against-the-box; (v)
repurchase agreements. The Portfolio may participate
with certain other portfolios of the Fund in a joint
repurchase account under an order obtained from the
SEC; and (vi) illiquid securities.
Under normal circumstances, the Portfolio may invest up
to 20% of its net assets in money market instruments.
The Portfolio is a non-diversified mutual fund
portfolio, meaning the Portfolio may invest a
relatively high percentage of its assets in a small
number of issuers.\3\ The Portfolio will concentrate
its investments (i.e., will invest at least 25% of its
assets under normal circumstance) in securities of
companies in the natural resources group of
industries.
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14. The following sets out the principal investment risks of the
Substituted Portfolio and the Replacement Portfolio, as stated in their
respective prospectuses and/or SAIs dated May 1, 2010.
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\2\ The Commodity Return Strategy Portfolio's investments will
be limited, however, in order to qualify as a ``regulated investment
company'' for purposes of the Internal Revenue Code. The Portfolio
has obtained a private letter ruling from the Internal Revenue
Service confirming that the income produced by certain types of
commodity-index linked structured notes constitutes qualifying
income for purposes of qualifying as a ``regulated investment
company.'' To qualify, the Portfolio complies with certain
requirements, including limiting its investments so that at the
close of each quarter of the taxable year (i) not more than 25% of
the market value of its total assets are invested in the securities
of a single issuer, and (ii) with respect to 50% of the market value
of its total assets, not more than 5% of the market value of its
total assets are invested in the securities of a single issuer and
the portfolio does not own more than 10% of the outstanding voting
securities of a single issuer.
\3\ The Natural Resources Portfolio may not purchase any
security (other than obligations of the U.S. government, its
agencies or instrumentalities) if, as a result of such purchase, 25%
or more of the Portfolio's total assets (determined at the time of
investment) would be invested in any one industry; provided,
however, that the Portfolio will concentrate its investment in
securities of companies in the natural resources group of
industries.
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The Commodity Return Strategy Portfolio is subject to the following
principal investment risks:
Commodity Risk. The Portfolio's investment in commodity-
linked derivative instruments may subject the Portfolio to greater
volatility than investments in traditional securities, particularly if
the instruments involve leverage. The value of commodity-linked
derivative instruments may be affected by changes in overall market
movements, commodity index volatility,

[[Page 17169]]

changes in interest rates, or factors affecting a particular industry
or commodity, such as drought, floods, weather, livestock disease,
embargoes, tariffs, and international economic, political, and
regulatory developments. Use of leveraged commodity-linked derivatives
creates an opportunity for increased return but, at the same time,
creates the possibility for greater loss (including the likelihood of
greater volatility of the portfolio's net asset value), and there can
be no assurance that the portfolio's use of leverage will be
successful.
Correlation Risk. Changes in the value of a hedging
instrument may not match those of the investment being hedged. In
addition, commodity-linked structured notes may be structured in a way
that results in the portfolio's performance diverging from the DJ-UBS
Index, perhaps materially. For example, a note can be structured to
limit the loss or the gain on the investment, which would result in the
portfolio not participating in declines or increases in the DJ-UBS
Index that exceed the limits.
Credit Risk. The issuer of a security or the counterparty
to a contract, including derivatives contracts, may default or
otherwise become unable to honor a financial obligation.
Derivatives Risk. Derivatives are financial contracts
whose value depends on, or is derived from, the value of an underlying
asset, reference rate, or index. The Portfolio typically uses
derivatives as a substitute for taking a position in the underlying
asset and/or as part of a strategy designed to reduce exposure to other
risks, such as interest rate or currency risk. The Portfolio may also
use derivatives for leverage. The Portfolio's use of derivative
instruments, particularly commodity-linked derivatives, involves risks
different from, or possibly greater than, the risks associated with
investing directly in securities and other traditional investments.
Derivatives are subject to a number of risks, such as commodity risk,
correlation risk, liquidity risk, interest-rate risk, market risk, and
credit risk. Also, suitable derivative transactions may not be
available in all circumstances and there can be no assurance that the
portfolio will engage in these transactions to reduce exposure to other
risks that would be beneficial.
Exposure Risk. There is a risk associated with investments
(such as derivatives) or practices (such as short selling) that
increase the amount of money the portfolio could gain or lose on an
investment. Exposure risk could multiply losses generated by a
derivative or practice used for hedging purposes. Such losses should be
substantially offset by gains on the hedged investment. However, while
hedging can reduce or eliminate losses, it can also reduce or eliminate
gains. To the extent that a derivative or practice is not used as a
hedge, the Portfolio is directly exposed to its risks. Gains or losses
from speculative positions in a derivative may be much greater than the
derivative's original cost. For example, potential losses from writing
uncovered call options and from speculative short sales are unlimited.
Extension Risk. An unexpected rise in interest rates may
extend the life of a fixed income security beyond the expected payment
time, typically reducing the security's value.
Focus Risk. The Portfolio will be exposed to the
performance of commodities in the DJ-UBS Index, which may from time to
time have a small number of commodity sectors (e.g., energy, metals or
agricultural) representing a large portion of the index. As a result,
the Portfolio may be subject to greater volatility than if the index
were more broadly diversified among commodity sectors.
Foreign Securities Risk. A portfolio that invests outside
the United States carries additional risks. Fluctuations in exchange
rates between the U.S. dollar and foreign currencies may negatively
affect an investment. Adverse changes in exchange rates may erode or
reverse any gains produced by foreign-currency denominated investments
and may widen any losses. Although the Portfolio may seek to reduce
currency risk by hedging part or all of its exposure to various foreign
currencies, it is not required to do so. Key information about an
issuer, security, or market may be inaccurate or unavailable. Moreover,
foreign governments may expropriate assets, impose capital or currency
controls, impose punitive taxes, or nationalize a company or industry.
Any of these actions could have a severe effect on security prices and
impair the Portfolio's ability to bring its capital or income back to
the U.S. Other political risks include: economic policy changes, social
and political instability, military action and war.
Interest Rate Risk. Changes in interest rates may cause a
decline in the market value of an investment. With bonds and other
fixed-income securities, a rise in interest rates typically causes a
fall in values, while a fall in interest rates typically causes a risk
in values.
Liquidity Risk. Certain portfolio securities, such as
commodity-linked notes and swaps, may be difficult or impossible to
sell at the time and the price that the Portfolio would like. The
Portfolio may have to lower the price, sell other securities instead,
or forgo an investment opportunity. Any of these could have a negative
effect on portfolio management or performance.
Market Risk. The market value of a security may fluctuate,
sometimes rapidly and unpredictably. These fluctuations, which are
often referred to as ``volatility,'' may cause a security to be worth
less than it was worth at an earlier time. Market risk may affect a
single issuer, industry, commodity, sector of the economy, or the
market as a whole. Market risk is common to most investments,
including: stocks, bonds and commodities, and the mutual funds that
invest in them.
Non-diversified Status. The Portfolio is considered a non-
diversified investment company under the Act and is permitted to invest
a greater proportion of its assets in the securities of a smaller
number of issuers. As a result, the portfolio may be subject to greater
volatility with respect to its portfolio securities than a fund that is
diversified.
Subsidiary Risk. By investing in the Credit Suisse Cayman
Commodity Fund II, Ltd. (the ``Subsidiary''), the Portfolio is
indirectly exposed to the risks associated with the Subsidiary's
investments. The derivatives and other investments held by the
Subsidiary are generally similar to those that are permitted to be held
by the Portfolio and are subject to the same risks that apply to
similar investments if held directly by the Portfolio. There can be no
assurance that the investment objective of the Subsidiary will be
achieved. The Subsidiary is not registered under the Act and is not
subject to all the investor protections of the Act. However, the
Portfolio wholly owns and controls the Subsidiary, and the Portfolio
and the Subsidiary are both managed by Credit Suisse Asset Management,
LLC, making it unlikely that the Subsidiary will take action contrary
to the risks of the Portfolio and its shareholders. Changes in the laws
of the United States and/or the Cayman Islands could result in the
inability of the Portfolio and/or the Subsidiary to operate as it does
currently and could adversely affect the Portfolio.
Tax Risk. Any income the Portfolio derives from direct
investments in commodity-linked swaps or certain other commodity-linked
derivatives must be limited to a maximum of 10% of the portfolio's
gross income in order for the portfolio to maintain its pass through
tax status. The Portfolio has obtained a private letter ruling from the

[[Page 17170]]

Internal Revenue Service (the ``IRS'') confirming that the income
produced by certain types of structured notes constitutes ``qualifying
income'' under the Internal Revenue Code. In addition, the IRS has
issued a private letter ruling to the Portfolio confirming that income
derived from the Portfolio's investment in its Subsidiary will also
constitute qualifying income to the Portfolio. Based on such rulings,
the Portfolio seeks to gain exposure to the commodity markets primarily
through investments in commodity index-linked notes and, through
investments in the Subsidiary, commodity-linked swaps and commodity
futures.
The Natural Resources Portfolio is subject to the following
principal investment risks:
Derivatives Risk. The use of derivatives involves a
variety of risks. There is a risk that the counterparty on a derivative
transaction will be unable to honor its financial obligation to the
Portfolio. Certain derivatives and related trading strategies create
debt obligations similar to borrowings and, therefore, create leverage
which can result in losses to a Portfolio that exceed the amount the
Portfolio originally invested. Certain exchange-traded derivatives may
be difficult or impossible to buy or sell at the time that the seller
would like or at the price that the seller believes the derivative is
currently worth. Privately negotiated derivatives may be difficult to
terminate or otherwise offset. Derivatives used for hedging may reduce
losses but also reduce or eliminate gains and cause losses if the
market moves in a manner different from that anticipated by the
Portfolio. Furthermore, commodity-linked derivative instruments may be
more volatile than the prices of investments in traditional equity and
debt securities.
Equity Securities Risk. There is a risk that the value or
price of a particular stock or other equity or equity-related security
owned by the Portfolio could go down. In addition to an individual
stock losing value, the value of the equity markets or a sector of
those markets in which the Portfolio invests could go down.
Expense Risk. The actual cost of investing in the
Portfolio may be higher than the expenses shown in the Annual Portfolio
Operating Expenses.
Foreign Investment Risk. Investment in foreign securities
generally involves more risk than investing in securities of U.S.
issuers. Changes in currency exchange rates may affect the value of
foreign securities held by the Portfolio. Securities of issuers located
in emerging markets tend to have volatile prices and may be less liquid
than investments in more established markets. Moreover, foreign markets
generally are more volatile than U.S. markets, are not subject to
regulatory requirements comparable to those in the U.S., and are
subject to differing custody and settlement practices. Foreign
financial reporting standards usually differ from those in the U.S.,
and foreign exchanges are smaller and less liquid than the U.S. market.
Political developments may adversely affect the value of a Portfolio's
foreign securities, and foreign holdings may be subject to special
taxation and limitations on repatriating investment proceeds.
Industry/Sector Risk. A portfolio that invests in a single
market sector or industry can accumulate larger positions in a single
issuer or an industry sector. As a result, the Portfolio's performance
may be tied more directly to the success or failure of a small group of
portfolio holdings.
Liquidity and Valuation Risk. From time to time, the
Portfolio may hold one or more securities for which there are no or few
buyers and sellers or which are subject to limitations on transfer. The
Portfolio also may have difficulty disposing of those securities at the
values determined by the Portfolio for the purpose of determining the
Portfolio's net asset value, especially during periods of significant
net redemptions of Portfolio shares.
Market and Management Risk. Markets in which the Portfolio
invests may experience volatility and go down in value, and possibly
sharply and unpredictably. All decisions by an adviser require judgment
and are based on imperfect information. Additionally, the investment
techniques, risk analysis and investment strategies used by an adviser
in making investment decisions for the Portfolio may not produce the
desired results.
Non-diversification Risk. As a non-diversified portfolio,
the Portfolio may hold larger positions in single issuers than a
diversified fund. Because the Portfolio is not required to meet
diversification requirements that are applicable to some funds, there
is an increased risk that the Portfolio may be adversely affected by
the performance of relatively few securities or the securities of a
single issuer.
15. The following charts compare the investment management fees and
total operating expenses (before and after any waivers and
reimbursements) for the year ended December 31, 2010, expressed as an
annual percentage of average daily net assets, of the Substituted
Portfolio and the Replacement Portfolio.

------------------------------------------------------------------------
Substituted Replacement
portfolio portfolio
-------------------------------------------
Prudential series
Credit Suisse Trust fund natural
commodity return resources portfolio
strategy portfolio (Class II)
------------------------------------------------------------------------
Investment Management Fees.. 0.50% \4\........... 0.45%
Distribution and Service 0.25%............... 0.25%
(12b-1) Fee.
Administration Fees......... None................ None
Other Expenses.............. 0.34%............... 0.20%
Total Operating Expenses.... 1.09%............... 0.90%
Less Expense Waivers and 0.14% \5\........... N/A
Reimbursements.
-------------------------------------------
Total Net Operating 0.95%............... 0.90%
Expenses.
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16. The following charts compare the average annual total returns
of the Substituted Portfolio and the Replacement Portfolio for the one-
year, five-year, and ten-year (or since inception) periods ended
December 31, 2010.
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\4\ Management fee of the Commodity Return Strategy Portfolio
and the Credit Suisse Cayman Commodity Fund II, Ltd. (the
``Subsidiary'').
\5\ Credit Suisse Management has voluntarily agreed to waive
fees and reimburse expenses so that total operating expenses will
not exceed 1.05% of the portfolio's average daily net assets.

[[Page 17171]]

------------------------------------------------------------------------
Substituted Replacement
portfolio portfolio
-------------------------------------------
Credit Suisse Trust Prudential fund
commodity return series natural
strategy portfolio resources portfolio
------------------------------------------------------------------------
Average Annual Total Return +16.66%............. +27.48%
for One Year.
Average Annual Total Return N/A................. 13.61%
for Five Years.
Average Annual Total Return 2.99% (Date of +20.28% (Date of
for Ten Years or, if less, Inception: February Inception: April
Since Inception. 28, 2006). 28, 2005)
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17. The following charts compare the levels of net assets (rounded
to the nearest thousand) of the Substituted Portfolio and the
Replacement Portfolio on December 31, 2010 and the prior four calendar
years, as well as the levels of net assets of the Separate Accounts
invested in the Substituted Portfolio for the same time period and the
percentage of the Substituted Portfolio's total net assets represented
by the investments of the Separate Accounts.

----------------------------------------------------------------------------------------------------------------
Substituted portfolio Replacement portfolio
----------------------------------------------------------------------------------
Credit Suisse trust commodity return strategy Prudential fund series
portfolio natural resources
------------------------------------------------------ portfolio
% of portfolio ----------------------------
Total separate total net assets
account assets represented by Total net assets Total net assets (in
invested in the separate account (in thousands) thousands)
portfolio investment
----------------------------------------------------------------------------------------------------------------
On 12/31/2010................ $1,671,571...... 1.34%........... $124,550........ $1,360,056
On 12/31/2009................ 1,713,589....... 1.58%........... 108,211......... 1,079,600
On 12/31/2008................ 424,299......... 0.61%........... 69,919.......... 677,400
On 12/31/2007................ 21,813.......... 0.04%........... 56,624.......... 1,669,900
On 12/31/2006................ 287............. 0.0002%......... 145,907 \6\..... 1,193,000
On 12/31/2005................ N/A............. N/A............. N/A............. 1,016,300
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18. Applicants represent that the Substitution is part of an
overall business goal of TC LIFE to make the Contracts more attractive
to Contract owners and to assure a consistency in the range of overall
investment options provided by the Contracts. Pursuant to this goal, TC
LIFE has engaged in a thorough review of the efficiencies and
structures of all of the investment options it offers under the
Contracts. This review involved an evaluation of the investment
objectives and strategies, asset sizes, expense ratios, investment
performance, investment process, and investment teams responsible for
the management of each investment option, with a view to past
performance as well as future expectations. Based on this evaluation,
TC LIFE has determined that the Substituted Portfolio warrants
replacement. In particular, due to a recent change in the management of
the Substituted Portfolio that resulted in changes in the investment
strategies of two other Credit Suisse portfolios offered in the
Contracts, TC LIFE believes there may be some question regarding the
continuity of management, the application of a continuing investment
process, and the dedication of resources to the Substituted Portfolio.
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\6\ For the period February 28, 2006 (commencement of
operations) through December 31, 2006.
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19. Applicants represent that TC LIFE reviewed all of the
underlying fund options with the goal of ensuring that Contract owners
would be provided with investment options under their Contracts
following the Substitution that are similar to the investment options
under their Contracts before the Substitution. Based in particular on a
better performance record and lower total expenses of the Replacement
Portfolio, TC LIFE believes that the adviser to the Replacement
Portfolio is better positioned overall to provide exposure to the asset
classes that were originally selected as well as being able to offer
the potential for consistent above-average performance for the
Portfolio than is the adviser to the Substituted Portfolio. The
Replacement Portfolio also is considerably larger than the Substituted
Portfolio, thus offering better economies of scale with a larger asset
base over which to spread the various portfolio costs ultimately passed
on to Contract owners. As such, TC LIFE believes that effecting the
Substitution will provide Contract owners with a Replacement Portfolio
that has a comparable investment objective to the Substituted Portfolio
but is, overall, less expensive, consistent with the desired asset
class exposure, better positioned to provide consistent above-average
performance, and with greater expectations for growth. Moreover, TC
LIFE maintains that the investment objective and policies of the
Replacement Portfolio are sufficiently similar to those of the
Substituted Portfolio so that Contract owners will have reasonable
continuity in investment expectations.
20. Applicants seek the Commission's approval under Section 26(c)
to engage in the substitution transaction described below. Pursuant to
its authority under the respective Contracts and the prospectuses
describing the same, and subject to the approval of the Commission
under Section 26(c) of the Act, TC LIFE proposes to substitute shares
of the Commodity Return Strategy Portfolio of the Credit Suisse Trust
for Class II Shares of the Natural Resources Portfolio of The
Prudential Series Fund.
21. Applicants represent that TC LIFE will effect the Substitution
as soon as practicable following the issuance of the requested order as
follows. As of the effective date of the Substitution (the ``Effective
Date''), shares of the Substituted Portfolio will be redeemed for cash
and that cash will be used to purchase shares of the Replacement
Portfolio. Redemption requests and purchase orders will be placed
simultaneously so that contract values will remain fully invested at
all times. All redemptions of shares of the Substituted Portfolio and
purchases of shares of the Replacement Portfolio will be effected in
accordance with Section 22(c) of the Act and Rule 22c-1 thereunder. The
Substitution will take place at relative net asset value as of the
Effective Date with no change in the

[[Page 17172]]

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.
22. Applicants represent that contract values attributable to
investments in the Substituted Portfolio will be transferred to the
Replacement Portfolio without charge (including sales charges or
surrender charges) and without counting toward the number of transfers
that may be permitted without charge. Contract owners will not incur
any additional fees or charges as a result of the Substitution, nor
will their rights or TC LIFE's obligations under the Contracts be
altered in any way, and the Substitution will not change Contract
owners' insurance benefits under the Contracts. All expenses incurred
in connection with the Substitution, including legal, accounting,
transactional, and other fees and expenses, including brokerage
commissions, will be paid by TC LIFE. In addition, the Substitution
will not impose any tax liability on Contract owners. The Substitution
will not cause the Contract fees and charges currently paid by existing
Contract owners to be greater after the Substitution than before the
Substitution. TC LIFE will not exercise any right it may have under the
Contracts to impose a transfer charge or restrictions on transfers
under the Contracts for the period beginning on the date the initial
application was filed with the Commission through at least thirty (30)
days following the Effective Date for transfers of contract value from
the subaccount investing in the Substituted Portfolio (before the
Substitution) or the Replacement Portfolio (after the Substitution) to
one or more other subaccount(s).\7\
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\7\ One exception to this would be restrictions that TIAA-CREF
may impose to prevent or restrict ``market timing'' activities by
Contract owners or their agents.
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23. The Applicants represent that they will not receive, for three
years from the date of the Substitution, any direct or indirect
benefits from the Replacement Portfolio, its advisors or underwriters
(or their affiliates), in connection with assets attributable to
Contracts affected by the Substitution, at a higher rate than
Applicants have received from the Substituted Portfolio, its advisors
or underwriters (or their affiliates), including without limitation
Rule 12b-1 fees, shareholder service, administration, or other service
fees, revenue sharing, or other arrangements in connection with such
assets. Applicants represent that the Substitution and the selection of
the Replacement Portfolio were not motivated by any financial
consideration paid or to be paid to TC LIFE or its affiliates by the
Replacement Portfolio, its advisors, underwriters, or their respective
affiliates.
24. The Applicants assert that the procedures to be implemented are
sufficient to assure that each Contract owner's cash values immediately
after the Substitution shall be equal to the cash value immediately
before the Substitution.
25. The Applicants represent that Existing Contract owners as of
the date the initial application was filed, and new Contract owners who
have purchased or who will purchase a Contract subsequent to that date
but prior to the Effective Date, have been or will be notified of the
proposed Substitution by means of a prospectus or prospectus supplement
for each of the Contracts (``Pre-Substitution Notice''). The Pre-
Substitution Notice:
States that the Applicants filed the application to seek
approval of the Substitution;
Sets forth the anticipated Effective Date;
Explains that contract values attributable to investments
in the Substituted Portfolio would be transferred to the Replacement
Portfolio on the Effective Date; and
States that, from the date the initial application was
filed with the Commission through the date thirty (30) days after the
Substitution, Contract owners may transfer contract value from the
subaccount investing in the Substituted Portfolio (before the
Substitution) or the Replacement Portfolio (after the Substitution) to
one or more other subaccount(s) without a transfer charge and without
that transfer counting against their contractual transfer limitations.
Further, all Contract owners will have received a copy of the most
recent prospectus for the Replacement Portfolio prior to the
Substitution.
26. Finally, the Applicants represent that within five (5) days
following the Substitution, Contract owners affected by the
Substitution will be notified in writing that the Substitution was
carried out. This notice will restate the information set forth in the
Pre-Substitution Notice, and will also explain that the contract values
attributable to investments in the Substituted Portfolio were
transferred to the Replacement Portfolio without charge (including
sales charges or surrender charges) and without counting toward the
number of transfers that may be permitted without charge.
27. Applicants represent that Section 26(c) of the Act prohibits
any depositor or trustee of a unit investment trust that invests
exclusively in the securities of a single issuer from substituting the
securities of another issuer without the approval of the Commission.
Section 26(c) provides that such approval shall be granted by order of
the Commission, if the evidence establishes that the substitution is
consistent with the protection of investors and the purposes of the
Act. Section 26(c) was intended to provide for Commission scrutiny of
proposed substitutions which could, in effect, force shareholders
dissatisfied with the substitute security to redeem their shares,
thereby possibly incurring a loss of the sales load deducted from
initial premium, an additional sales load upon reinvestment of the
proceeds of redemption, or both.\8\ The section was designed to
forestall the ability of a depositor to present holders of interest in
a unit investment trust with situations in which a holder's only choice
would be to continue an investment in an unsuitable underlying
security, or to elect a costly and, in effect, forced redemption. For
the reasons described below, the Applicants submit that the
Substitution meets the standards set forth in Section 26(c) and that,
if implemented, the Substitution would not raise any of the
aforementioned concerns that Congress intended to address when the Act
was amended to include this provision. In addition, the Applicants
submit that the proposed Substitution meets the standards that the
Commission and its Staff have applied to substitutions that have been
approved in the past.
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\8\ House Comm. Interstate Commerce, Report of the Securities
and Exchange Commission on the Public Policy Implications of
Investment Company Growth, H.R. Rep. No. 2337, 89th Cong. 2d Session
337 (1966).
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28. Applicants represent that the replacement of the Substituted
Portfolio with the Replacement Portfolio is consistent with the
protection of Contract owners and the purposes fairly intended by the
policy and provisions of the Act and, thus, meets the standards
necessary to support an order pursuant to Section 26(c) of the Act.
29. The Applicants assert that the investment objective and
principal investment strategies of the Replacement Portfolio are
substantially similar to those of the Substituted Portfolio. The
Commodity Return Strategy Portfolio seeks total return relative to the
performance of the DJ-UBS Index, and the Natural Resources Portfolio
seeks long-term growth of capital. Applicants submit that these are
substantially similar investment objectives and, while the Portfolios'
principal investment strategies are

[[Page 17173]]

somewhat different, there is nonetheless a high correlation between the
two sets of investment strategies. The Commodity Return Strategy
Portfolio is designed to achieve positive total return relative to the
performance of the DJ-UBS Index by investing in commodity-linked
derivative instruments and fixed income securities, whereas the Natural
Resources Portfolio normally invests at least 80% of its net assets in
common stocks and convertible securities of natural resource companies
and securities that are related to the market value of some natural
resource. However, the companies in which the Natural Resources
Portfolio invests derive the vast majority of their respective revenue
from commodities. In other words, the valuation of the companies in
which the Natural Resources Portfolio invests move directly with the
underlying commodities that represent these firms' primary businesses.
As such, there is a high correlation between the Natural Resources
Portfolio's performance to the price changes in the DJ-UBS Index which
underlies the Commodity Return Strategy Portfolio's investment
strategy. This high correlation is demonstrated by comparing the
performance of investments in natural resources companies (as measured
by the S&P North American Natural Resources Index) and commodities (as
measured by DJ-UBS Index), for which the correlation (as reported by
Morningstar) exceeds 80% over both the trailing three-year and five-
year periods. Given the high correlation between the performance of the
Natural Resources Portfolio and the Commodity Return Strategy
Portfolio, the Applicants believe that the Natural Resources Portfolio
is a suitable replacement for the Commodity Return Strategy Portfolio.
While the holdings of companies in which the Natural Resources
Portfolio invests, with their resultant capital structures, tax
exposures, and idiosyncratic risks, do not provide a perfect
correlation to a spot commodities index, Applicants believe the same is
true with a portfolio comprised of structured notes tied to commodities
futures. Accordingly, the Applicants believe that the close
approximation of the Natural Resources Portfolio to the commodities
sector exposure supports a determination that the Natural Resources
Portfolio will provide Contract owners currently invested in the
Commodity Return Strategy Portfolio an acceptable level of exposure to
the commodities sector and, given the uncertainty posed by the change
of control of management of the Commodity Return Strategy Portfolio, is
a reasonable substitution for the Commodity Return Strategy Portfolio.
30. The Applicants represent that, although not identical, the
principal investment risks of the Natural Resources Portfolio are
comparable to those of the Commodity Return Strategy Portfolio. Both
Portfolios use derivatives, exposing each Portfolio to a number of
specific derivative-related risks such as the possibility that the
counterparty to the transaction is unable to honor its financial
obligation; using derivatives may also subject each Portfolio to other
more general risks including commodity risk, correlation risk,
liquidity risk, interest-rate risk, market risk, and credit risk.
Because both Portfolios may invest in foreign securities, they also are
subject to increased risk relating to currency exchange rate
fluctuations, price volatility, adverse political developments, etc.
Both Portfolios also are subject to market risk relating to increased
and/or unpredictable fluctuations in the market value of the securities
in which they invest, as well as to liquidity risk. Finally, both the
Natural Resources Portfolio and the Commodity Return Strategy Portfolio
are non-diversified investment companies, and therefore may invest in
fewer issuers and be more greatly affected by the performance of
relatively few securities. Further, the Applicants do not believe that
overall the Natural Resources Portfolio is exposed to greater risk than
the Commodity Return Strategy Portfolio, despite the fact that certain
enumerated risks of the Natural Resources Portfolio are not explicitly
detailed as principal investment risks in the prospectus for the
Commodity Return Strategy Portfolio. For example, the Applicants
believe that the Commodity Return Strategy Portfolio, like the Natural
Resources Portfolio, is subject to commodity price risk, expense risk,
industry/sector risk, and valuation risk--all typical risks that are
generally present for most portfolios that invest in the commodity and
natural resources asset categories. Moreover, the Natural Resources
Portfolio is not subject to the specific derivative, tax, and focus
risks the Commodity Return Strategy Portfolio is exposed to as a result
of the latter's primary investment in commodity-linked instruments.
Lastly, because the Commodity Return Strategy Portfolio invests in the
Credit Suisse Cayman Commodity Fund II, Ltd., the Portfolio also is
indirectly exposed to the risks associated with that portfolio's
investments.
31. The Applicants represent that the investment management fee of
the Natural Resources Portfolio is lower than that of the Commodity
Return Strategy Portfolio, and each Portfolio imposes a 12b-1 fee of
0.25%. Moreover, total operating expenses of the Natural Resources
Portfolio were lower than those of the Commodity Return Strategy
Portfolio as of December 31, 2010.
32. The Applicants represent that the Natural Resources Portfolio
outperformed the Commodity Return Strategy Portfolio for the one-year
period ending December 31, 2010 and since inception. In addition, the
assets of the Natural Resources Portfolio have been consistently (and
significantly) higher than those of the Commodity Return Strategy
Portfolio as of December 31, 2010 and for each of the prior four
calendar years.
33. For purposes of the approval sought pursuant to Section 26(c)
of the Act, the Applicants represent that the Substitution will not be
completed unless all of the following conditions are met.
The Commission shall have issued an order approving the
Substitution under Section 26(c) of the Act as necessary to carry out
the transactions described in the Application.
Each Contract owner will have been sent (i) prior to the
Effective Date, a copy of the effective prospectus for the Replacement
Portfolio, (ii) prior to the Effective Date, a Pre-Substitution Notice
describing the terms of the Substitution and the rights of the Contract
owners in connection with the Substitution, and (iii) within five (5)
days after the Substitution occurs, a notice informing Contract owners
affected by the Substitution that the Substitution was carried out
(this notice will restate the information set forth in the Pre-
Substitution Notice, and also explain that the contract values
attributable to investments in the Substituted Portfolio were
transferred to the Replacement Portfolio without charge (including
sales charges or surrender charges) and without counting toward the
number of transfers that may be permitted without charge).
The Applicants have satisfied themselves that (i) The
Contracts allow the substitution of the Portfolios in the manner
contemplated by the Substitution and related transactions described
herein, (ii) the transactions can be consummated as described in the
Application under applicable insurance laws, and (iii) any applicable
regulatory requirements in each jurisdiction where the Contracts are
qualified for sale have

[[Page 17174]]

been complied with to the extent necessary to complete the transaction.
34. The Applicants acknowledge that reliance on exemptive relief,
if granted, depends upon compliance with all of the representations and
conditions set forth in the Application.
Conclusion:
Applicants assert that, for all the reasons stated in the
Applicant, the Substitution is consistent with the protection of
investors and the purposes fairly intended by the policy of the
Contracts and provisions of the Act and that the requested order should
be granted.

For the Commission, by the Division of Investment Management
pursuant to delegated authority.
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-7152 Filed 3-25-11; 8:45 am]
BILLING CODE 8011-01-P