19794 Federal Register / Vol. 60, No. 76 / Thursday, April 20, 1995 / Notices

SUMMARY OF APPLICATION: Applicant

requests an order declaring that it has

ceased to be an investment company.

FILING DATE: The application was filed

on December 13, 1994, and amended on

March 30, 1995.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicant with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

May 9, 1995 and should be

accompanied by proof of service on the

applicant, 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 may request notification of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 5th

Street, NW., Washington, DC 20549.

Applicant, 809 North State Street, suite

215; Jackson, Mississippi 39202.

FOR FURTHER INFORMATION CONTACT:

Sarah A. Buescher, Staff Attorney, at

(202) 942–0573, or Robert A. Robertson,

Branch Chief, 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 from the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant, a New York corporation,

registered under the Act on November 8,

1961. Applicant also was licensed as a

small business investment company by

the Small Business Administration

(‘‘SBA’’).

2. In 1973, applicant acquired certain

oil and gas mineral rights and real estate

from a small business company in

exchange for the securities of that

company held by applicant. By

December 31, 1974, those assets

constituted approximately 52 percent of

the fair value of applicant’s assets. At

the 1975 annual meeting, stockholders

adopted amendments to applicant’s

fundamental policies to allow applicant

to concentrate its investment in real

estate and oil and gas mineral rights and

leases.

3. In 1980, Applicant defaulted on a

subordinated debenture payable to the

SBA (‘‘SBA Indebtedness’’) which

resulted in the acceleration of the entire

SBA Indebtedness. Applicant and the

SBA entered into an agreement (‘‘SBA

Agreement’’) which extended the

maturity of the SBA Indebtedness and

replaced an earlier agreement with the

SBA. On December 31, 1986, applicant

defaulted on its principal and accrued

interest payment obligations to the SBA.

Applicant repaid the principal balance

in cash in June 1988 and in September

1989, applicant transferred two tracts of

property to the SBA for settlement of

accrued interest. Applicant relinquished

its license as a small business

investment company to the SBA in

September 1989.

4. At a 1993 special meeting,

applicant’s shareholders approved an

amendment to applicant’s fundamental

policies to state that applicant’s

business shall consist of purchasing,

selling, owning or holding oil, gas, or

other mineral royalties or leases.

Applicant does not anticipate any

substantial income and/or loss in the

future from investment in investment

securities. Income is expected to be

derived from the mineral interests held

by applicant. Applicant now manages

its mineral interests and real property

holdings and proposes to continue in

such business for the foreseeable future.

Applicant’s Legal Analysis

1. Applicant believes that it is no

longer an investment company by virtue

of the exception in section 3(c)(9) of the

Act. Section 3(c)(9) specifically excepts

from the definition of investment

company ‘‘[a]ny person substantially all

of whose business consists of owning or

holding oil, gas, or other mineral

royalties or leases, or fractional interests

therein, or certificates of interest or

participation in or investment contracts

relative to such royalties, leases, or

fractional interests.’’ Section 8(f) of the

Act provides, in pertinent part, that

whenever the SEC, on its own motion or

upon application, finds that a registered

investment company has ceased to be an

investment company it shall so declare

by order, and upon the taking effect of

such order the registration of such

company shall cease to be in effect.

2. Applicant believes it is appropriate

for the SEC to deregister the applicant

because it engages in section 3(c)(9)

activities. Applicant’s fundamental

policy is similar to section 3(c)(9) since

it provides that ‘‘The Company’s

business shall consist of purchasing,

selling, owning or holding oil, gas, or

other mineral royalties or leases, or

fractional interests therein * * *.’’

Applicant owns both the mineral rights

and mineral royalties for certain

properties and, for other properties,

owns the mineral rights only. Its

mineral rights are direct ownership

interests in minerals in the ground, and

it receives income from mineral leases

when it leases the mineral rights and

mineral royalty income when the

minerals are extracted. Applicant

believes that these activities are the type

of business referred to in section 3(c)(9),

i.e., ‘‘owning or holding oil, gas, or other

mineral royalties or leases.’’

3. As of December 31, 1993, 98.9

percent of the fair value of applicant’s

assets (exclusive of cash and land)

consisted of mineral rights and leases.

10.5 percent of the fair value of

applicant’s assets consisted of land not

incident to the mineral rights and

leases. For the fiscal year ended

December 31, 1993, other than interest

income from cash in banks, 99 percent

of applicant’s income was derived from

mineral lease royalties.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–9725 Filed 4–19–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21010; File No. 812–9226]

Great-West Life & Annuity Insurance

Company, et al.

April 14, 1995.

AGENCY: U.S. Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Great-West Life & Annuity

Insurance Company (the ‘‘Company’’),

The Great-West Life Assurance

Company (‘‘GWLAC’’), and Retirement

Plan Series Account (the ‘‘Separate

Account’’).

RELEVANT ACT SECTIONS: Order requested

under Section 6(c) for exemptions from

Sections 26(a)(2)(C) and 27(c)(2) of the

Act.

SUMMARY OF APPLICATION: Applicants

request exemptions from Sections

26(a)(2)(C) and 27(c)(2) of the Act to the

extent necessary to permit the Company

to deduct from the Separate Account the

mortality and expense risk charge

imposed under (1) flexible premium

deferred individual variable annuity

contracts (‘‘Contracts’’) and (2) any other

variable annuity contracts offered by the

Company and made available through

the Separate Account or through any

other similar separate account(s)

established by the Company, whether

currently existing or hereafter created

(‘‘Other Separate Accounts’’), which are

substantially similar in all material
Federal Register / Vol. 60, No. 76 / Thursday, April 20, 1995 / Notices 19795

1The Applicants represent that they will amend

the application during the notice period to include

this representation.

respects (‘‘Future Contracts’’).

Applicants also request that the relief be

extended to any other broker-dealer,

whether currently existing or hereafter

created, which may serve in the future

as principal underwriter of Contracts or

Future Contracts.

FILING DATE: The Application was filed

on September 13, 1994 and amended on

February 23, 1995 and March 21, 1995.

HEARING OR NOTIFICATION OF HEARING: An

order granting the Application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving Applicants with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

May 9, 1995, 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 SEC’s Secretary.

ADDRESSES: SEC, Secretary, 450 Fifth

Street, NW., Washington, DC 20549.

Applicants, c/o Jorden Burt & Berenson,

1025 Thomas Jefferson Street, NW.,

suite 400 East, Washington, DC 20007.

FOR FURTHER INFORMATION CONTACT:

Edward P. Macdonald, Staff Attorney, or

Wendy Friedlander, Deputy Chief, at

(202) 942–0670, Office of Insurance

Products, Division of Investment

Management.

SUPPLEMENTARY INFORMATION: The

following is a summary of the

Application. The complete Application

may be obtained for a fee from the SEC’s

Public Reference Branch.

Applicants’ Representations

1. The Company is a stock life

insurance company initially organized

under the laws of the State of Kansas.

In 1990, the Company redomesticated

and is now organized under the laws of

the State of Colorado. The Company, a

wholly-owned subsidiary of the

GWLAC, is qualified to do business in

49 states and the District of Columbia.

2. GWLAC, a life insurance company

organized under the laws of Canada,

will be the principal underwriter with

respect to the Contracts. GWLAC is

registered with the Commission under

the Securities Exchange Act of 1934 as

a broker-dealer and is a member of the

National Association of Securities

Dealers, Inc.

3. The Separate Account was

established under the laws of the State

of Colorado on January 25, 1994, as a

funding vehicle for the Contracts and is

registered under the Act as a unit

investment trust. The Separate Account

initially will have twelve investment

divisions (‘‘Divisions’’) available for

allocation of contributions by

contractowners (‘‘Owners’’). Each

Division invests solely in a

corresponding portfolio of Maxim Series

Fund, Inc., an open-end management

investment company registered under

the Act. The shares of each portfolio

may also be offered to other Separate

Accounts.

4. Interests under the Contracts are

registered under the Securities Act of

1933. The Contracts will receive

favorable tax treatment under Section

408(b) of the Internal Revenue Code

(‘‘Code’’) as individual retirement

annuities and will be available for an

initial contribution of at least $3,500

rolled-over from retirement plans which

qualify under Section 401(k) of the

Code. Additional contributions may be

made in amounts of at least $250. The

Contracts provide that contributions can

accumulate on a variable basis, a

guaranteed basis, or on a combination of

both. The Contracts also will offer

several annuity options payable on a

variable basis, a fixed basis, or on a

combination of both.

5. The Company will not impose a

sales charge or a Contract maintenance

charge in connection with the Contracts.

6. A $50 charge will be imposed on

any Contract surrendered in whole

during the first 12 months after issue,

excluding the ‘‘free look’’ period. A $25

charge will be imposed on any Contract

surrendered in part during the first 12

months after issue. These charges reflect

the actual expenses associated with

such surrenders which the company

expects to incur and would be assessed

in reliance on Rule 269–1 under the

Act.1

7. At any time prior to the annuity

commencement date, Owners may make

unlimited transfers between Divisions.

The Company does not charge any fee

for these transfers.

8. The Company may make a

deduction for premium taxes imposed

by states or other governmental entities,

either (i) when a surrender or

cancellation occurs, or (ii) at the annuity

commencement date. Currently, these

taxes range up to 2.5%.

9. The Company will impose a

mortality and expense risk charge of up

to .75% as compensation for bearing

certain mortality and expense risks

assumed under the Contracts. Contracts

having a balance of: (1) $0 to $9,999.99

will be subject to a mortality and

expense risk charge equal to .75%; (2)

$10,000 to $24,999.99 will be subject to

a mortality and expense risk charge

equal to .50%; and (3) $25,000 to

$49,999.99 will be subject to a mortality

and expense risk charge equal to .25%.

No mortality and expense risk charge

will be imposed for an account balance

of $50,000 or greater. The levels of these

charges are guaranteed and will not be

increased. Of the amounts charged for

mortality and expense risk, where the

total charge is: (1) .75%: 0.60% is a

mortality risk charge and 0.15% is an

expense risk charge; (2) .50%: 0.40% is

a mortality risk charge and 0.10% is an

expense risk charge; and (3) .25%:

0.20% is a mortality risk charge and

0.05% is an expense risk charge.

10. These annual charges will be

assessed daily and will be based on the

assets of the Separate Account. The

level of the mortality and expense risk

charge applicable to the Contract during

the first calendar year will be based

upon the initial account balance of the

Contract. The initial account balance

used to determine the appropriate

mortality and expense risk charge level

will include both fixed and variable

money; however, the charge will only

apply to the variable portion.

11. The level of mortality and expense

risk charge applicable in subsequent

calendar years will be based upon the

account balance of the Contract as of

December 31 of the previous calendar

year.

12. The mortality risk to be borne by

the Company under the Contracts arises

from its obligations to make annuity

payments, in the case where the life

annuity is selected, regardless of how

long an annuitant may live. The

mortality risk under the Contracts,

where a life annuity with a life

contingency is selected, is the risk that

annuitants will live longer than the

Company’s actuarial projections

indicate resulting in higher than

expected annuity payments.

13. The expense risk to be borne by

the Company under the Contracts is the

risk that the actual administrative

expenses incurred in connection with

the Contracts may exceed the

anticipated administrative expenses.

Applicants’ Legal Analysis

1. Section 6(c) of the Act authorizes

the Commission to grant an exemption

from any provision, rule or regulation of

the Act to the extent that it 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
19796 Federal Register / Vol. 60, No. 76 / Thursday, April 20, 1995 / Notices

the Act. Sections 26(a)(2)(C) and 27(c)(2)

of the Act, in relevant part, prohibit a

registered unit investment trust, its

depositor or principal underwriter, from

selling periodic payment plan

certificates unless the proceeds of all

payments, other than sales loads, are

deposited with a qualified bank and

held under arrangements which prohibit

any payment to the depositor or

principal underwriter except a

reasonable fee, as the Commission may

prescribe, for performing bookkeeping

and other administrative duties

normally performed by the bank itself.

2. Applicants request exemptions

from Sections 26(a)(2)(C) and 27(c)(2) of

the Act to the extent necessary to permit

the deduction of a charge up to .75%

from (i) the assets of the Separate

Account with respect to the Contracts

and Future Contracts and (ii) from the

assets of Other Separate Accounts in

connection with Future Contracts, to

compensate the Company for the

assumption of mortality and expense

risks. In addition, Applicants also

request that the exemptive relief

requested extend to any other brokerdealer, whether currently existing or

hereinafter created, which may serve in

the future as principal underwriter of

Contracts or Future Contracts.

Applicants assert that the requested

exemptions are necessary and

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.

3. With respect to the level of the

mortality and expense risk charge,

Applicants hereby represent that they

have reviewed publicly available

information regarding the aggregate

level of mortality and expense risk

charges under variable annuity contracts

comparable to the Contracts currently

being offered in the insurance industry,

taking into consideration such factors as

current charge levels, the manner in

which charges are imposed, the

presence of charge level or annuity rate

guarantees and the markets in which the

Contracts will be offered. Based upon

the foregoing, Applicants further

represent that the mortality and expense

risk charge contemplated under the

Contracts are within the range of

industry practice for comparable

contracts. Applicants will maintain at

their principal office and will make

available to the Commission upon

request a memorandum setting forth in

detail the products analyzed in the

course of, and the methodology and

results of, the comparative survey.

4. Similarly, prior to issuing any

Future Contracts, Applicants will

represent that the mortality and expense

charges under any Future Contracts will

be within the range of industry practice

for comparable contracts. Applicants

will maintain at their principal office

and will make available to the

Commission upon request a

memorandum setting forth in detail the

products analyzed in the course of, and

the methodology and results of, the

comparative survey.

5. Applicants acknowledge that, if a

profit is realized from the mortality and

expense risk charge, all or a portion of

such profit may be available for any

lawful purpose including shortfalls in

the costs of distributing the Contracts.

The Company represents that there is a

reasonable likelihood that the proposed

distribution financing arrangements will

benefit the Separate Account and

Owners. The Company represents that

the basis for that conclusion is set forth

in a memorandum which will be

maintained at its home office and will

be available to the Commission upon

request.

6. Applicants further represent that

the Separate Account, and any Other

Separate Accounts, will only invest in

underlying funds which have

undertaken to have a board of directors/

trustees, a majority of whom are not

interested persons of any such fund,

formulate and approve any plan under

Rule 12b–1 under the Act to finance

distribution expenses.

7. Applicants assert that extending

relief to Future Contracts, Other

Separate Accounts, and any other

broker-dealer, whether currently

existing or hereinafter created, which

may serve in the future as principal

underwriter of Contracts or Future

Contracts is appropriate in the public

interest because it would promote

competitiveness in the variable annuity

market by eliminating the need for the

Company to file redundant exemptive

applications, thereby reducing

administrative expenses and

maximizing the efficient use of its

resources. The delay and expense

involved in having to repeatedly seek

exemptive relief would impair the

Company’s ability to effectively take

advantage of business opportunities as

they arise. If the Company were

repeatedly required to seek exemptive

relief with respect to the same issues

addressed in the Application, investors

would not receive any additional benefit

or protection. Therefore, Applicants

believe that the requested exemptions

are 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.

Conclusion

For the reasons set forth above,

Applicants represent that the

exemptions requested are necessary and

appropriate in the public interest and

consistent with the protection of

investors and purposes fairly intended

by the policy and provisions of the Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–9842 Filed 4–19–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21011; File No. 812–9272]

Montgomery Asset Management, L.P.

et al.

April 14, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘1940 Act’’

or ‘‘Act’’).

APPLICANTS: Montgomery Asset

Management, L.P. (‘‘Montgomery’’) and

The Montgomery Funds III (the

‘‘Fund’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) for

exemptions from Sections 9(a), 13(a),

15(a), and 15(b) and Rules 6e–2(b)(15)

and 6e–3(T)(b)(15) thereunder.

SUMMARY OF APPLICATION: Applicants

seek an order of exemption to the extent

necessary to permit shares of the Fund

and shares of certain other investment

companies for which Montgomery or an

affiliate of Montgomery serves as

investment adviser, administrator,

manager, principal underwriter or

sponsor (collectively with the Fund, the

‘‘Funds’’) to be sold to and held by

variable annuity and variable life

insurance separate accounts of both

affiliated and unaffiliated life insurance

companies and qualified pension and

retirement plans.

FILING DATE: The application was filed

on October 12, 1994.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving Applicants with a

copy of the request, personally or by

mail. Hearing requests must be received

by the SEC by 5:30 p.m. on May 9, 1995,

and should be accompanied by proof of

service on the Applicants, in the form

of an affidavit or, for lawyers, a