[Federal Register Volume 64, Number 226 (Wednesday, November 24, 1999)]
[Notices]
[Pages 66219-66221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30584]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC- 24142; File No. 812-11586]


Great-West Life & Annuity Insurance Company, et al.; Notice of 
Application

November 18, 1999.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of Application for approval under Section 26(b) of the 
Investment Company Act of 1940, as amended (the ``1940 Act'').

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SUMMARY OF APPLICATION: Applicants seek an order approving the 
substitutions of shares of the Maxim INVESCO ADR Portfolio for shares 
of the Foreign Equity Portfolio of the Maxim Series Fund, Inc.

APPLICANTS: Great-West Life & Annuity Insurance Company (``GWL&A''), 
Retirement Plan Series Account of GWL&A (the ``Separate Account'') and 
One Orchard Equities, Inc. (``Orchard'') (hereinafter all parties are 
collectively referred to as the ``Applicants'').

FILING DATE: The application was filed on April 20, 1999, and amended 
and restated on July 9, 1999.

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 should be received by the 
Commission by 5:30 p.m. on December 13, 1999, 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 writer'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, 450 Fifth 
Street, NW., Washington, DC 20549-0609. Applicants, c/o Jorden Burt 
Boros Cicchetti Berenson & Johnson, LLP, 1025 Thomas Jefferson Street, 
NW., Suite 400 East, Washington, DC 20007-0805; Attention: Thomas C. 
Mira, Esq.

FOR FURTHER INFORMATION CONTACT: Michael Pappas, Senior Counsel, or 
Susan Olson, Branch Chief, Office of Insurance Products, Division of 
Investment Management, at (202) 942-0670.

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, 450 Fifth Street NW., 
Washington, DC 20549-0102 (tel. (202) 942-8090).

Applicant's Representations

    1. GWL&A is a stock life insurance company organized under the laws 
of the State of Colorado. GWL&A is wholly owned by The Great-West Life 
Assurance Company, which is a subsidiary of Great-West Lifeco, Inc., an 
insurance holding company ultimately controlled by Power Corporation of 
Canada. GWL&A is principally engaged

[[Page 66220]]

in offering life insurance, annuity contracts, and accident and health 
insurance and is admitted to do business in the District of Columbia, 
Puerto Rico, Guam and in all states of the United States, except New 
York.
    2. The Separate Account has fourteen investment divisions each of 
which invests exclusively in one of the corresponding portfolios of 
Maxim Series Fund, Inc. (``Maxim Series Fund'' or ``Maxim'') an open-
end management investment company. The assets of the Separate Account 
are kept separate from the other assets of GWL&A. The income, gains, 
and losses of the Separate Account, whether or not realized, are 
credited to or charged against the Separate Account without regard to 
other income, gains, or losses of any other Separate Account or arising 
out of any other business GWL&A may conduct.
    3. The Separate Account is a unit investment trust (``UIT'') and 
has filed a registration statement on Form N-4 (Registration Nos. 33-
83928 and 811-8762) for the purpose of registering the Separate Account 
under the 1940 Act and the Contracts as securities under the Securities 
Act of 1933, as amended (the ``1933 Act'').
    4. Orchard is the principal underwriter and distributor of the 
Contracts. Orchard is registered with the Commission under the 
Securities Exchange Act of 1934, as amended, as a broker/dealer and is 
a member of the National Association of Securities Dealers, Inc.
    5. The Contracts are individual, flexible premium, variable annuity 
contracts designed for Individual Retirement Annuity (``IRA'') 
programs. The Contracts can be purchased only in connection with IRA 
programs in one of three ways: with rollover proceeds from qualified 
plans, such as 401(k) plans; with rollover proceeds from other eligible 
rollover sources; or with earned income.
    6. The Contracts have no front-end or contingent deferred sales 
load. If the Contract is surrendered in part or whole within the first 
twelve months, the Contracts have an administrative surrender fee. 
There are no limits on the number of transfers that a Contract owner 
can make and there are no transfer charges for transfers among the 
investment divisions offered in the Contract.
    7. The Contracts expressly reserve GWL&A's right, both on its own 
behalf and on behalf of the Separate Account, to eliminate investment 
divisions, combine two or more investment divisions, or substitute one 
or more underlying portfolios for other in which its investment 
divisions are invested or for a new underlying portfolio.
    8. GWL&A, on its own behalf and on behalf of the Separate Account, 
purposes to exercise its contractual right to eliminate the Foreign 
Equity Portfolio (``Foreign Equity Portfolio'' or the ``Eliminated 
Portfolio'') as a funding option under the Contracts. GWL&A proposes to 
substitute shares of the Maxim INVESCO ADR Portfolio (``ADR Portfolio'' 
or the ``Substituted Portfolio'') for the Foreign Equity Portfolio. The 
proposed transaction will be referred to as the ``Substitution.''
    9. Maxim Series Fund, the underlying fund, is affiliated with GWL&A 
and the Separate Account. No other underlying fund is used in 
connection with the Contracts.
    10. Applicants believe the Substitution will benefit the Contract 
owners by eliminating a portfolio which, in the Applicants' view, has 
had poor historical performance returns. The Applicants also believe 
the Substitution will benefit Contract owners by replacing the 
Eliminated Portfolio with a portfolio having comparable investment 
objectives and policies and better historical performance returns, and 
which the Applicants believe is more likely to provide Contract owners 
with favorable investment performance in the future. The Substitution 
will not result in a reduction of variable investment options available 
under the Contracts. Fourteen options would remain in the Contracts.
    11. GWL&A will schedule the Substitution to occur on the Automatic 
Selection Date. Such date will be as soon as practicable following the 
issuance of an order by the Commission granting the relief requested in 
the Application. By way of sticker, the prospectus will disclose the 
proposed Substitution for several months prior to the Automatic 
Selection Date. After the Order is issued, a second notification will 
be provided to all Contract owners who have amounts allocated to the 
Eliminated Portfolio again advising them of the pending Substitution 
and of their ability to transfer free of charge to the remaining 
investment division(s) of their choice (or remain in the Eliminated 
Portfolio until the automatic substitution on the Automatic Selection 
Date).
    12. The affected Contract owners will also receive a confirmation 
of the Substitution transaction that will be mailed within five days of 
the Automatic Selection Date. The confirmation will contain a remainder 
that the Contract owner may effect transfers from the investment 
division corresponding to the Substituted Portfolio, to any other 
investment division without incurring any charges.
    13. In an effort to provide continuity of investment choice to 
Contract owners after the Substitution, GWL&A has determined to replace 
the Eliminated Portfolio with an underlying portfolio that has 
investment objectives and policies that are comparable with those of 
the Eliminated Portfolio. After thoroughly comparing and contrasting 
all other Maxim profolios with the Eliminated Portfolio, GWL&A 
represents that it has determined the ADR Portfolio is the most 
appropriate replacement for the Foreign Equity Portfolio within the 
Maxim family of funds.
    14. The investment objective of the Foreign Equity Portfolio is to 
seek total return from long-term growth of capital and dividend income 
by investing its assets primarily in equity securities of issuers 
headquartered outside the United States. The ADR Portfolio's investment 
objective is to seek a high total return through capital appreciation 
and current income, while reducing risk through diversification. This 
portfolio invests primarily in foreign securities that are issued in 
the form of American Depository Receipts (``ADRs'') or foreign stocks 
that are registered with the Commission and traded in the United 
States. Therefore, after the Substitution, Contract owners who have 
allocated value to an investment division which invests in the Foreign 
Equity Portfolio will continue to have their value allocated to an 
investment division which invests in an underlying portfolio that 
invests primarily in foreign securities.
    15. Applicants represent that, for the most recent fiscal year of 
the Eliminated and Substituted Portfolios, the comparative total 
expenses (after waivers and reimbursements) of the ADR Portfolio were 
1.30%, which were the same as the 1.30% current total expenses (after 
waivers and reimbursements) of the Foreign Equity Portfolio. The total 
expenses before waiver or reimbursement for the 1998 fiscal year were 
1.32% for the ADR Portfolio and 1.31% for the Foreign Equity Portfolio. 
Applicants state that the ADR Portfolio's expenses are capped at 1.30% 
while the Foreign Equity Portfolio expenses are capped at 1.50%. The 
average annual total returns for the one year and since inception 
periods ending December 31, 1998 for the ADR Portfolio were 10.64% and 
13.82%, respectively, compared to the Foreign Equity Portfolio, which 
had returns of 7.67% and 2.13% for the same periods. Both Portfolios 
commenced operations on November 1, 1994. Based on the foregoing 
historical performance data,

[[Page 66221]]

Applicants submit that the ADR Portfolio has substantially outperformed 
the Foreign Equity Portfolio. Moreover, the total expenses of the 
Substituted Portfolio will not rise above the current level of 1.30% as 
can the Foreign Equity Portfolio's expenses. Should Contract owners 
with current allocations in the Eliminated Portfolio determine that 
another investment is more appropriate, they will be able to transfer 
their Contract value to any of the remaining investment divisions 
available under the Contract without incurring any charges.
    16. The Substitution (1) Will be effected by redeeming shares of 
the Eliminated Portfolio on the Automatic Selection Date at net asset 
value and using the proceeds to purchase shares of the Substituted 
Portfolio as net asset value on the same date: (2) Contract owners will 
not incur any fees or charges as a result of the transfer of account 
values from the Eliminated Portfolio; (3) All Contract values will 
remain unchanged and fully invested; (4) The Substitution will not 
increase Contract or Separate Account fees and charges after the 
Substitution; (5) Contract owners' rights and GWL&A's obligations under 
the Contracts will not be altered in any way; and (6) All expenses 
incurred in connection with the Substitution, including legal, 
according and other expenses, will not be borne by Contract owners as 
they will be paid by either GWL&A or GW Capital Management, LLC. The 
Substitution will be effected as net asset value in conformity with 
section 22 of the 1940 Act and Rule 22c-1 thereunder. In addition, as 
of the date of filing this amended and restated Application, Applicants 
represent that to the best of their knowledge, the Substitution will 
not result in any adverse federal income tax consequences to Contract 
owners.

Applicants' Legal Analysis

    1. Section 26(b) of the 1940 Act provides that it shall be 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 shall have approved such 
substitution; and the Commission shall issue an order approving such 
substitution if the evidence establishes that it is consistent with the 
protection of investors and the purposes fairly intended by the 
policies and provisions of the 1940 Act.
    2. Applicants request an order pursuant to Section 26(b) of the 
1940 Act approving the substitution of securities.
    3. Applicants represent that the purposes, terms and conditions of 
the Substitution are consistent with the protections for which Section 
26(b) was designed and will not result in any of the harms which 
Section 26(b) was designed to prevent.
    4. Any Contract owner who does not want his or her assets allocated 
to the Substituted Portfolio would be able to transfer assets to any 
one of the other investment divisions available under his/her Contract 
without charge. Such transfers could be made prior to or after the 
Automatic Selection Date.

Conclusion

    In light of the foregoing facts and representations, Applicants 
believe that the request to allow the Substitution meets the applicable 
standards of an order under Section 26(b) of the 2940 Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-30584 Filed 11-23-99; 8:45 am]
BILLING CODE 8010-01-M