[Federal Register Volume 67, Number 31 (Thursday, February 14, 2002)]
[Notices]
[Pages 6951-6953]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-3569]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-25413; 812-12474]


Maxim Series Fund, Inc., et al.; Notice of Application

February 8, 2002.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from section 15(a) 
of the Act and rule 18f-2 under the Act.

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SUMMARY OF APPLICATION: GW Capital Management, LLC (the ``Manager''), 
Maxim Series Fund, Inc. (``Maxim'') and Orchard Series Fund 
(``Orchard'') (Maxim and Orchard each, a ``Fund'' and together, the 
``Funds'') request an order that would permit them to enter into and 
materially amend subadvisory agreements without shareholder approval.
    Applicants: Manager, Maxim and Orchard.
    Filing Dates: The application was filed on March 9, 2001 and 
amended on October 5, 2001 and January 14, 2002.
    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 Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on March 5, 2002, and should be accompanied by proof of 
service on the applicants, in the form of an affidavit, or, for 
lawyers, a certificate of service. Hearing requests should state the 
nature of the 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 Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW., Washington, DC

[[Page 6952]]

20549-0609; Applicants, c/o Beverly A. Byrne, Maxim Series Fund, Inc., 
8525 East Orchard Road, Greenwood Village, CO 80111.

FOR FURTHER INFORMATION CONTACT: Stacy L. Fuller, Senior Counsel, at 
(202) 942-0553, or Nadya B. Roytblat, Assistant Director, at (202) 942-
0564, Division of Investment Management, Office of Investment Company 
Regulation.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, DC 20549-0102, telephone (202) 942-8090.

Applicants' Representations

    1. Maxim is a Maryland corporation registered under the Act as an 
open-end management investment company. Maxim is organized as a series 
company and currently has 36 separate series. Orchard is a Delaware 
business trust registered under the Act as an open-end management 
investment company. Orchard is organized as a series company and 
currently has six separate series. Each series (``Portfolio'') of Maxim 
and Orchard has its own distinct investment objectives, policies and 
restrictions. Shares of Maxim's Portfolios are offered for sale to 
qualified pension plans and through registered separate accounts as 
funding vehicles for variable annuity and variable life insurance 
contracts issued by insurance companies. Shares of Orchard's Portfolios 
are sold directly to the public, to pension plans and through 
unregistered separate accounts.\1\
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    \1\ The applicants request that any relief granted pursuant to 
the application also apply to future Portfolios of the Funds and any 
other registered open-end management investment companies and their 
series that (a) are advaised by the Manager or any entity 
controlling, controlled by, or under common control with the 
Manager; (b) are managed in a manner consistent with this 
application; and (c) comply with the terms and conditions in the 
application (together, the ``Future Investment Companies''). The 
Funds are the only existing investment companies that currently 
intend to rely on the requested order. Applicants state that if the 
name of any Portfolio or Future Investment Company contains the name 
of an Adviser, the name of the Adviser will be preceded by the name 
of the Manager.
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    2. The Manager, a Colorado limited liability company and wholly 
owned subsidiary of Great West Life Insurance and Annuity Company, is 
registered under the Investment Advisers Act of 1940, as amended (the 
``Advisers Act''). The Funds, on behalf of each Portfolio, have each 
entered into an investment advisory agreement with the Manager (each a 
``Management Agreement''), pursuant to which the Manager serves as the 
investment adviser to the Portfolios. Each Management Agreement has 
been approved by, in the case of Maxim, a majority of the Fund's board 
of directors, and in the case of Orchard, a majority of the Fund's 
board of trustees (each a ``Board'' and together the ``Boards''), 
including a majority of the directors or trustees (the ``Directors'') 
who are not ``interested persons,'' as defined in section 2(a)(19) of 
the Act (``Independent Directors''), of the Fund or the Manager, as 
well as by each Fund's initial shareholder(s). Under the terms of the 
Management Agreements, the Manager, subject to oversight by the Boards, 
has supervisory responsibility for the investment program of each Fund.
    3. The Funds and the Manager have entered or will enter into 
investment advisory agreements (each, an ``Advisory Agreement'') with 
subadvisers (each, an ``Adviser'') for each of the Portfolios. Under 
the Advisory Agreements, each Adviser, subject to general supervision 
by the Manager and the Board, has discretionary authority to invest the 
portion of a Portfolio's assets allocated to it by the Manager. 
Currently, Maxim has Advisers for 12 of its 36 Portfolios and Orchard 
has an Adviser for one of its six Portfolios. Unless exempt from 
registration, each Adviser is, and any future Adviser will be, 
registered under the Advisers Act. The Funds pay the Manager a fee 
based on the value of the average daily net assets of each Portfolio in 
the Fund.
    4. The Manager monitors the Portfolios and the Advisers and makes 
recommendations to the Boards regarding allocation, and reallocation, 
of assets between Advisers and is responsible for recommending the 
hiring, termination and replacement of Advisers. The Manager recommends 
Advisers based on a number of factors used to evaluate their skills in 
managing assets pursuant to particular investment objectives. Each 
Adviser will be paid by the Manager out of the fees received by the 
Manager from the Funds.
    5. Applicants request an order to permit the Manager to enter into 
and materially amend Advisory Agreements without obtaining shareholder 
approval. The requested relief will not extend to an Adviser that is an 
affiliated person, as defined in section 2(a)(3) of the Act, of the 
Funds or the Manager, other than by reason of serving as an Adviser to 
one or more of the Portfolios (``Affiliated Adviser''). None of the 
current Advisers is an Affiliated Adviser.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to act as an investment adviser to a registered 
investment company except under a written contract that has been 
approved by the vote of the company's outstanding voting securities. 
Rule 18f-2 under the Act provides, in relevant part, that each series 
or class of stock in a series company affected by a matter must approve 
such matter if the Act requires shareholder approval.
    2. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provision of the Act, or 
from any rule thereunder, if such exemption is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act. Applicants request an exemption under section 6(c) of the Act from 
section 15(a) of the Act and rule 18f-2 under the Act to permit them to 
enter into and materially amend Advisory Agreements without shareholder 
approval.
    3. Applicants assert that the shareholders are relying on the 
Manager's experience to select one or more Advisers best suited to 
achieve a Portfolio's desired investment objectives. Applicants assert 
that, from the perspective of the investor, the role of the Advisers is 
comparable to that of individual portfolio managers employed by other 
investment advisory firms. Applicants contend that requiring 
shareholder approval of each Advisory Agreement would impose costs and 
unnecessary delays on the Portfolios, and may preclude the Manager from 
acting promptly in a manner considered advisable by the Board. 
Applicants note that the Management Agreements will remain fully 
subject to section 15(a) of the Act and rule 18f-2 under the Act, 
including the requirements for shareholder approval.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before a Portfolio may rely on the requested order, the 
operation of the Portfolio in the manner described in the application 
will be approved by a majority of the Portfolio's outstanding voting 
securities (or, if the Portfolio serves as a funding medium for any 
sub-account of a registered separate account, pursuant to voting 
instructions provided by the owners of variable annuity

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contracts and variable life insurance policies (``Owners'') who have 
allocated assets to that sub-account) or, in the case of a Portfolio 
whose public shareholders (or Owners through a sub-account of a 
registered separate account) purchase shares on the basis of a 
prospectus containing the disclosure contemplated by condition 2 below, 
by the sole initial shareholder(s) before offering shares of that 
Portfolio to the public (or to Owners through a sub-account of a 
registered separate account).
    2. Each Portfolio relying on the requested order will hold itself 
out to the public as employing the management structure described in 
the application. In addition, each Portfolio will disclose in its 
prospectus the existence, substance, and effect of any order granted 
pursuant to the application. Such prospectus will prominently disclose 
that the Manager has the ultimate responsibility (subject to oversight 
by the Board) to oversee the Advisers and recommend their hiring, 
termination, and replacement.
    3. Within 90 days of the hiring of any new Adviser, the Manager 
will furnish shareholders (or, if the Portfolio serves as a funding 
medium for a sub-account of a registered separate account, Owners who 
have allocated assets to that sub-account) all information about the 
new Adviser that would be included in a proxy statement, including any 
change in such disclosure caused by the addition of the new Adviser. 
The Manager will satisfy this condition by providing shareholders (or 
Owners) with an information statement meeting the requirements of 
Regulation 14C, Schedule 14C, and Item 22 of Schedule 14A under the 
Securities Exchange Act of 1934.
    4. The Manager will not enter into an advisory agreement with any 
Affiliated Adviser without that agreement, including the compensation 
to be paid thereunder, being approved by the shareholders of the 
applicable Portfolio (or, if the Portfolio serves as a funding medium 
for any sub-account of a registered separate account, then by the 
Owners who have allocated assets to that sub-account).
    5. At all times, a majority of each Board will be Independent 
Directors, and the nomination of new or additional Independent 
Directors will be at the discretion of the then-existing Independent 
Directors.
    6. When an Adviser change is proposed for a Portfolio with an 
Affiliated Adviser, the Board, including a majority of the Independent 
Directors, will make a separate finding, reflected in the Board 
minutes, that the change is in the best interests of the Portfolio and 
its shareholders (or, if the Portfolio serves as a funding medium for 
any sub-account of a registered separate account, in the best interests 
of the Portfolio and the Owners who have allocated assets to that sub-
account), and does not involve a conflict of interest from which the 
Manager or the Affiliated Adviser derives an inappropriate advantage.
    7. The Manager will provide general management services to each 
Fund and Portfolio, including overall supervisory responsibility for 
the general management and investment of each Portfolio's assets, and, 
subject to review and approval by the Board, will: (a) Set each 
Portfolio's overall investment strategies, (b) evaluate, select, and 
recommend Advisers to manage all or part of a Portfolio's assets; (c) 
allocate and, when appropriate, reallocate a Portfolio's assets among 
multiple Advisers, (d) monitor and evaluate the performance of the 
Advisers, and (e) implement procedures reasonably designed to ensure 
that the Advisers comply with each Portfolio's investment objectives, 
policies, and restrictions.
    8. No Director or officer of a Fund, or director, manager or 
officer of the Manager will own, directly or indirectly (other than 
through a pooled investment vehicle that is not controlled by such 
person), any interest in any Adviser, except for: (a) Ownership of 
interests in the Manager or any entity that controls, is controlled by, 
or is under common control with the Manager, or (b) ownership of less 
than 1% of the outstanding securities of any class of equity or debt of 
a publicly traded company that is either an Adviser or an entity that 
controls, is controlled by or under common control with an Adviser.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 02-3569 Filed 2-13-02; 8:45 am]
BILLING CODE 8010-01-P