Document ID: SEC-2017-0709-0001
Agency: sec
Document Type: Notice
Title: Applications: Commonwealth Annuity and Life Insurance Company, et al.
Posted Date: 2017-05-03T04:00Z

[Federal Register Volume 82, Number 84 (Wednesday, May 3, 2017)]
[Notices]
[Pages 20664-20671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08904]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32615; File No. 812-14646]

Commonwealth Annuity and Life Insurance Company, et al.

April 27, 2017.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice.

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    Notice of application for an order approving the substitution of 
certain securities pursuant to Section 26(c) of the Investment Company 
Act of 1940, as amended (the ``1940 Act'' or ``Act'') and an order of 
exemption pursuant to Section 17(b) of the Act from Section 17(a) of 
the Act.

[[Page 20665]]

Applicants: Commonwealth Annuity and Life Insurance Company 
(``Commonwealth'') and Commonwealth Select Separate Account of 
Commonwealth Annuity and Life Insurance Company, Commonwealth Select 
Separate Account II of Commonwealth Annuity and Life Insurance Company, 
Commonwealth Select Separate Account III of Commonwealth Annuity and 
Life Insurance Company, Fulcrum Separate Account of Commonwealth 
Annuity and Life Insurance Company, Group VEL Account of Commonwealth 
Annuity and Life Insurance Company, Inheritage Account of Commonwealth 
Annuity and Life Insurance Company, Separate Account FUVUL of 
Commonwealth Annuity and Life Insurance Company, Separate Account IMO 
of Commonwealth Annuity and Life Insurance Company, Separate Account KG 
of Commonwealth Annuity and Life Insurance Company, Separate Account 
KGC of Commonwealth Annuity and Life Insurance Company, Separate 
Account VA-K of Commonwealth Annuity and Life Insurance Company, 
Separate Account VA-P of Commonwealth Annuity and Life Insurance 
Company, Separate Account VEL of Commonwealth Annuity and Life 
Insurance Company, Separate Account VEL II of Commonwealth Annuity and 
Life Insurance Company, Separate Account VEL III of Commonwealth 
Annuity and Life Insurance Company (collectively, the ``Separate 
Accounts,'' and together with Commonwealth, the ``Section 26 
Applicants''); and Forethought Variable Insurance Trust (the 
``Trust''), and Global Atlantic Investment Advisors, LLC (``Global 
Atlantic,'' and collectively with the Section 26 Applicants, the 
``Section 17 Applicants'').

Summary of Application: The Section 26 Applicants seek an order 
pursuant to Section 26(c) of the 1940 Act, approving the substitution 
of shares of 77 investment portfolios (each, an ``Existing Portfolio,'' 
and collectively, the ``Existing Portfolios'') of 20 registered 
investment companies \1\ with shares of 13 investment portfolios (each, 
a ``Replacement Portfolio,'' and collectively, the ``Replacement 
Portfolios'') of the Trust, under certain variable annuity contracts 
and variable life insurance policies (the ``Contracts'') funded through 
the Separate Accounts.
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    \1\ (1) AB Variable Products Series Fund, Inc. (File Nos. 811-
05398; 033-18647); (2) Alger Portfolios (File Nos. 811-05550; 033-
21722); (3) AIM Variable Insurance Funds (Invesco Variable Insurance 
Funds) (File Nos. 811-07452; 033-57340); (4) Delaware VIP Trust 
(File Nos. 811-05162; 033-14363); (5) Deutsche Variable Series I 
(File Nos. 811-04257; 002-96461); (6) Deutsche Variable Series II 
(File Nos. 811-05002; 033-11802); (7) Dreyfus Investment Portfolios 
(File Nos. 811-08673; 333-47011); (8) Fidelity Variable Insurance 
Products Fund I (File Nos. 811-03329; 002-75010); (9) Fidelity 
Variable Insurance Products Fund II (File Nos. 811-05511; 033-
20773); (10) Fidelity Variable Insurance Products Fund III (File 
Nos. 811-07205; 033-54837); (11) Fidelity Variable Insurance 
Products Fund V (File Nos. 811-05361; 033-17704); (12) Franklin 
Templeton Variable Insurance Products Trust (File Nos. 811-05583; 
033-23493); (13) Goldman Sachs Variable Insurance Trust (File Nos. 
811-08361; 333-35883); (14) Janus Aspen Portfolio (File Nos. 811-
07736; 033-63212); (15) Lazard Retirement Series, Inc. (File Nos. 
811-08071; 333-22309); (16) Lincoln Variable Insurance Products 
Trust (File Nos. 811-08090; 033-70742); (17) MFS Variable Insurance 
Trust (File Nos. 811-08326; 033-74668); (18) Oppenheimer Variable 
Account Funds (File Nos. 811-04108; 002-93177); (19) Pioneer 
Variable Contracts Trust (File Nos. 811-08786; 033-84546); (20) T. 
Rowe Price International Series, Inc. (File Nos. 811-07145; 033-
07145).

Filing Date: The application was filed on April 29, 2016, and was 
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amended and restated on October 18, 2016 and March 3, 2017.

Hearing or Notification of Hearing: An order granting the requested 
relief 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 the 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 May 22, 2017 and should be accompanied by 
proof of service on the Applicants in the form of an affidavit or, for 
lawyers, a certificate of service. Pursuant to Rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, 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: 
    Commission: Secretary, SEC, 100 F Street NE., Washington, DC 20549-
1090.
    Applicants: Commonwealth Annuity and Life Insurance Company, 
Commonwealth Select Separate Account of Commonwealth Annuity and Life 
Insurance Company, Commonwealth Select Separate Account II of 
Commonwealth Annuity and Life Insurance Company, Commonwealth Select 
Separate Account III of Commonwealth Annuity and Life Insurance 
Company, Fulcrum Separate Account of Commonwealth Annuity and Life 
Insurance Company, Group VEL Account of Commonwealth Annuity and Life 
Insurance Company, Inheritage Account of Commonwealth Annuity and Life 
Insurance Company, Separate Account FUVUL of Commonwealth Annuity and 
Life Insurance Company, Separate Account IMO of Commonwealth Annuity 
and Life Insurance Company, Separate Account KG of Commonwealth Annuity 
and Life Insurance Company, Separate Account KGC of Commonwealth 
Annuity and Life Insurance Company, Separate Account VA-K of 
Commonwealth Annuity and Life Insurance Company, Separate Account VA-P 
of Commonwealth Annuity and Life Insurance Company, Separate Account 
VEL of Commonwealth Annuity and Life Insurance Company, Separate 
Account VEL II of Commonwealth Annuity and Life Insurance Company, 
Separate Account VEL III of Commonwealth Annuity and Life Insurance 
Company, 132 Turnpike Road Suite 210, Southborough, MA 01772; and 
Forethought Variable Insurance Trust and Global Atlantic Investment 
Advisors, LLC, 300 N. Meridian Street, Suite 1800, Indianapolis, IN, 
46204.

FOR FURTHER INFORMATION CONTACT: Erin C. Loomis, Senior Counsel, at 
(202) 551-6721, or Holly Hunter-Ceci, Acting Assistant Chief Counsel at 
(202) 551-6825 (Division of Investment Management, Chief Counsel's 
Office).

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. Commonwealth is a life insurance company engaged in the business 
of writing individual and group annuity contracts and life insurance 
policies. Commonwealth was originally organized under the laws of 
Delaware in July 1974 and was subsequently re-domiciled in the state of 
Massachusetts effective December 31, 2002.
    2. Prior to December 30, 2005, Commonwealth (formerly Allmerica 
Financial Life Insurance and Annuity Company) was an indirect wholly-
owned subsidiary of The Hanover Insurance Group (``THG''), formerly 
Allmerica Financial Corporation. On that date, THG completed the 
closing of the sale of Commonwealth to The Goldman Sachs Group, Inc. 
(``Goldman Sachs''). Effective September 1, 2006, Commonwealth changed 
its name from Allmerica Financial Life Insurance and

[[Page 20666]]

Annuity Company to Commonwealth Annuity and Life Insurance Company. 
Effective April 30, 2013, Goldman Sachs completed the transfer of the 
common stock of Commonwealth to Global Atlantic (Fin) Company, which is 
a wholly-owned indirect subsidiary of Global Atlantic Financial Group 
Limited. Effective January 2, 2014, Forethought Services LLC acquired 
ownership of 79% of the shares of Commonwealth. Forethought Services 
LLC is a wholly-owned subsidiary of Forethought Financial Group, Inc., 
which in turn is a wholly-owned subsidiary of Global Atlantic (Fin) 
Company. As of December 31, 2015, Goldman Sachs owns a total of 
approximately 22% of the outstanding shares of Global Atlantic; and 
other investors, none of whom own more than 9.9%, own the remaining 78% 
of the outstanding ordinary shares.
    3. Each of the Separate Accounts meets the definition of ``separate 
account,'' as defined in Section 2(a)(37) of the 1940 Act and Rule 0-
1(e) thereunder. The Separate Accounts are registered with the 
Commission under the 1940 Act as unit investment trusts. The assets of 
the Separate Accounts support the Contracts and interests in the 
Separate Accounts offered through such Contracts. Commonwealth is the 
legal owner of the assets in the Separate Accounts. The Separate 
Accounts are segmented into subaccounts, and each subaccount invests in 
an underlying registered open-end management investment company or a 
series thereof. A subaccount of one or more of the Separate Accounts 
corresponds to each of the Existing Portfolios. The business and 
affairs of the Separate Accounts, as unit investment trusts, are 
conducted by Commonwealth, as depositor thereof.
    4. The Contracts are each registered under the Securities Act of 
1933, as amended (the ``1933 Act''), on Form N-4 or Form N-6, as 
applicable. Each of the Contracts has particular fees, charges, and 
investment options, as described in the Contracts' respective 
registration statements.
    5. The Contracts are individual or group deferred variable annuity 
contracts or variable life insurance policies. As set forth in the 
prospectuses for the Contracts, Commonwealth reserves the right to 
substitute shares of another registered investment company for the 
shares of any registered investment company already purchased or to be 
purchased in the future by the Separate Accounts.
    6. Applicants propose, as set forth below, to substitute shares of 
the Replacement Portfolios for shares of the Existing Portfolios 
(``Substitutions''):

------------------------------------------------------------------------
           Existing portfolio                 Replacement portfolio
------------------------------------------------------------------------
AB Large Cap Growth Portfolio (Class A)  Global Atlantic BlackRock
                                          Disciplined Core Portfolio
                                          (Class I).
AB Large Cap Growth Portfolio (Class B)  Global Atlantic BlackRock
                                          Disciplined Core Portfolio
                                          (Class I, II).
Deutsche Core Equity VIP (Class A).....  Global Atlantic BlackRock
                                          Disciplined Core Portfolio
                                          (Class I).
Delaware VIP U.S. Growth Series          Global Atlantic BlackRock
 (Standard Class).                        Disciplined Core Portfolio
                                          (Class I).
Fidelity VIP Contrafund Portfolio        Global Atlantic BlackRock
 (Initial Class).                         Disciplined Core Portfolio
                                          (Class I).
Fidelity VIP Contrafund Portfolio        Global Atlantic BlackRock
 (Service Class 2).                       Disciplined Core Portfolio
                                          (Class I, Class II).
Fidelity VIP Growth Portfolio (Initial   Global Atlantic BlackRock
 Class).                                  Disciplined Core Portfolio
                                          (Class I).
Fidelity VIP Growth Portfolio (Service   Global Atlantic BlackRock
 Class 2).                                Disciplined Core Portfolio
                                          (Class I, Class II).
Fidelity VIP Growth & Income Portfolio   Global Atlantic BlackRock
 (Initial Class, Service Class 2).        Disciplined Core Portfolio
                                          (Class I).
Fidelity VIP Growth Opportunities        Global Atlantic BlackRock
 Portfolio (Service Class 2).             Disciplined Core Portfolio
                                          (Class I).
Franklin Large Cap Growth VIP Fund       Global Atlantic BlackRock
 (Class 2).                               Disciplined Core Portfolio
                                          (Class I, Class II).
Goldman Sachs Strategic Growth Fund      Global Atlantic BlackRock
 (Service Shares).                        Disciplined Core Portfolio
                                          (Class I, Class II).
Goldman Sachs U.S. Equity Insights Fund  Global Atlantic BlackRock
 (Service Shares).                        Disciplined Core Portfolio
                                          (Class I, Class II).
Invesco V.I. American Franchise Fund     Global Atlantic BlackRock
 (Series I).                              Disciplined Core Portfolio
                                          (Class I, II).
Invesco V.I. American Franchise Fund     Global Atlantic BlackRock
 (Series II).                             Disciplined Core Portfolio
                                          (Class II).
Invesco V.I. Core Equity Fund (Series    Global Atlantic BlackRock
 I).                                      Disciplined Core Portfolio
                                          (Class I).
Invesco V.I. Core Equity Fund (Series    Global Atlantic BlackRock
 II).                                     Disciplined Core Portfolio
                                          (Class II).
MFS Growth Series (Initial Class)......  Global Atlantic BlackRock
                                          Disciplined Core Portfolio
                                          (Class I).
MFS Investors Trust Series (Initial      Global Atlantic BlackRock
 Class).                                  Disciplined Core Portfolio
                                          (Class I).
Oppenheimer Capital Appreciation Fund/   Global Atlantic BlackRock
 VA (Service Shares).                     Disciplined Core Portfolio
                                          (Class I, Class II).
Pioneer Fund VCT Portfolio (Class I)...  Global Atlantic BlackRock
                                          Disciplined Core Portfolio
                                          (Class II).
Pioneer Fund VCT Portfolio (Class II)..  Global Atlantic BlackRock
                                          Disciplined Core Portfolio
                                          (Class I).
Alger Capital Appreciation Portfolio     Global Atlantic BlackRock
 (Class I-2).                             Disciplined Growth Portfolio
                                          (Class II).
Deutsche CROCI International VIP (Class  Global Atlantic BlackRock
 A).                                      Disciplined International Core
                                          Portfolio (Class I).
Delaware VIP International Value Equity  Global Atlantic BlackRock
 Series (Standard Class, Service Class).  Disciplined International Core
                                          Portfolio (Class I, Class II).
Fidelity VIP Overseas Portfolio          Global Atlantic BlackRock
 (Initial Class).                         Disciplined International Core
                                          Portfolio (Class I).
Invesco V.I. International Growth Fund   Global Atlantic BlackRock
 (Series I).                              Disciplined International Core
                                          Portfolio (Class I).
Goldman Sachs Strat. International       Global Atlantic BlackRock
 Equity Fund (Service Shares).            Disciplined International Core
                                          Portfolio (Class I, Class II).
Lazard Retirement International Equity   Global Atlantic BlackRock
 Portfolio (Service Shares).              Disciplined International Core
                                          Portfolio (Class II).
T. Rowe Price International Stock        Global Atlantic BlackRock
 Portfolio.                               Disciplined International Core
                                          Portfolio (Class I, Class II).
Templeton Foreign VIP Fund (Class 2)...  Global Atlantic BlackRock
                                          Disciplined International Core
                                          Portfolio (Class I, Class II).
AB Growth and Income Portfolio (Class    Global Atlantic BlackRock
 B).                                      Disciplined Value Portfolio
                                          (Class I, Class II).
AB Value Portfolio (Class B)...........  Global Atlantic BlackRock
                                          Disciplined Value Portfolio
                                          (Class I, Class II).
Deutsche Large Cap Value VIP (Class A).  Global Atlantic BlackRock
                                          Disciplined Value Portfolio
                                          (Class I).
Fidelity VIP Equity-Income Portfolio     Global Atlantic BlackRock
 (Initial Class).                         Disciplined Value Portfolio
                                          (Class I).
Fidelity VIP Equity-Income Portfolio     Global Atlantic BlackRock
 (Service Class 2).                       Disciplined Value Portfolio
                                          (Class I, Class II).
Franklin Mutual Shares VIP Fund (Class   Global Atlantic BlackRock
 2).                                      Disciplined Value Portfolio
                                          (Class I, Class II).
Franklin Growth & Income VIP Fund        Global Atlantic BlackRock
 (Class 2).                               Disciplined Value Portfolio
                                          (Class I).
Invesco V.I. Value Opportunities Fund    Global Atlantic BlackRock
 (Series II).                             Disciplined Value Portfolio
                                          (Class I, Class II).
Pioneer Equity Income VCT Portfolio      Global Atlantic BlackRock
 (Class I)..                              Disciplined Value Portfolio
                                          (Class I).

[[Page 20667]]

 
Alger Mid Cap Growth Portfolio (Class I- Global Atlantic BlackRock
 2).                                      Disciplined Mid Cap Growth
                                          Portfolio (Class I).
Deutsche Small Mid Cap Growth VIP        Global Atlantic BlackRock
 (Class A).                               Disciplined Mid Cap Growth
                                          Portfolio (Class I).
Delaware VIP Smid Cap Growth Series      Global Atlantic BlackRock
 (Standard Class).                        Disciplined Mid Cap Growth
                                          Portfolio (Class I).
Delaware VIP Smid Cap Growth Series      Global Atlantic BlackRock
 (Service Class).                         Disciplined Mid Cap Growth
                                          Portfolio (Class I, Class II).
Fidelity VIP Mid Cap Portfolio (Initial  Global Atlantic BlackRock
 Class, Service Class 2).                 Disciplined Mid Cap Growth
                                          Portfolio (Class I).
Franklin Small-Mid Cap Growth VIP Fund   Global Atlantic BlackRock
 (Class 2).                               Disciplined Mid Cap Growth
                                          Portfolio (Class I, Class II).
Invesco V.I. Mid Cap Growth Fund         Global Atlantic BlackRock
 (Series I, Series II).                   Disciplined Mid Cap Growth
                                          Portfolio (Class I).
Goldman Sachs Growth Opportunities Fund  Global Atlantic BlackRock
 (Service Shares).                        Disciplined Mid Cap Growth
                                          Portfolio (Class I, Class II).
Janus Aspen Enterprise Portfolio         Global Atlantic BlackRock
 (Service Shares).                        Disciplined Mid Cap Growth
                                          Portfolio (Class I).
MFS Mid Cap Growth Series (Service       Global Atlantic BlackRock
 Class).                                  Disciplined Mid Cap Growth
                                          Portfolio (Class I, Class II).
Alger Small Cap Growth Portfolio (Class  Global Atlantic BlackRock
 I-2).                                    Disciplined Small Cap
                                          Portfolio (Class I).
Delaware VIP Small Cap Value Series      Global Atlantic BlackRock
 (Standard Class).                        Disciplined Small Cap
                                          Portfolio (Class I).
Franklin Small Cap Value VIP Fund        Global Atlantic BlackRock
 (Class 2).                               Disciplined Small Cap
                                          Portfolio (Class II).
MFS New Discovery Series (Service        Global Atlantic BlackRock
 Class).                                  Disciplined Small Cap
                                          Portfolio (Class II).
AB Growth Portfolio (Class B)..........  Global Atlantic BlackRock
                                          Disciplined U.S. Core
                                          Portfolio (Class I, Class II).
Delaware VIP Value Series (Standard      Global Atlantic BlackRock
 Class).                                  Disciplined U.S. Core
                                          Portfolio (Class I).
Oppenheimer Main Street Fund/VA (Non-    Global Atlantic BlackRock
 Service Class, Service Class).           Disciplined U.S. Core
                                          Portfolio (Class II).
AB Global Thematic Growth Portfolio      Global Atlantic Goldman Sachs
 (Class B).                               Global Equity Insights
                                          Portfolio (Class II).
Deutsche Global Equity VIP (Class A)...  Global Atlantic Goldman Sachs
                                          Global Equity Insights
                                          Portfolio (Class I).
Deutsche Global Growth VIP (Class A)...  Global Atlantic Goldman Sachs
                                          Global Equity Insights
                                          Portfolio (Class I).
Oppenheimer Global Fund/VA (Service      Global Atlantic Goldman Sachs
 Shares).                                 Global Equity Insights
                                          Portfolio (Class II).
Templeton Growth VIP Fund (Class 2)....  Global Atlantic Goldman Sachs
                                          Global Equity Insights
                                          Portfolio (Class II).
Alger Large Cap Growth Portfolio (Class  Global Atlantic Goldman Sachs
 I-2).                                    Large Cap Growth Insights
                                          Portfolio (Class II).
Deutsche Capital Growth VIP (Class A)..  Global Atlantic Goldman Sachs
                                          Large Cap Growth Insights
                                          Portfolio (Class I).
Janus Aspen Janus Portfolio              Global Atlantic Goldman Sachs
 (Institutional Shares).                  Large Cap Growth Insights
                                          Portfolio (Class I).
Janus Aspen Janus Portfolio (Service     Global Atlantic Goldman Sachs
 Shares).                                 Large Cap Growth Insights
                                          Portfolio (Class I, Class II).
AB Small/Mid Cap Value Portfolio (Class  Global Atlantic Goldman Sachs
 B).                                      Mid Cap Value Insights
                                          Portfolio (Class II).
Deutsche Small Mid Cap Value VIP (Class  Global Atlantic Goldman Sachs
 A).                                      Mid Cap Value Insights
                                          Portfolio (Class I).
Dreyfus Midcap Stock Portfolio (Initial  Global Atlantic Goldman Sachs
 Shares).                                 Mid Cap Value Insights
                                          Portfolio (Class I).
Fidelity VIP Value Strategies Portfolio  Global Atlantic Goldman Sachs
 (Service Class 2).                       Mid Cap Value Insights
                                          Portfolio (Class II).
Goldman Sachs Mid Cap Value Fund         Global Atlantic Goldman Sachs
 (Service Shares).                        Mid Cap Value Insights
                                          Portfolio (Class II).
Pioneer Mid Cap Value VCT Portfolio      Global Atlantic Goldman Sachs
 (Class I).                               Mid Cap Value Insights
                                          Portfolio (Class I).
Pioneer Mid Cap Value VCT Portfolio      Global Atlantic Goldman Sachs
 (Class II).                              Mid Cap Value Insights
                                          Portfolio (Class II).
Deutsche High Income VIP (Class A).....  Global Atlantic BlackRock High
                                          Yield Portfolio (Class I).
Delaware VIP High Yield Series           Global Atlantic BlackRock High
 (Standard Class).                        Yield Portfolio (Class I).
Fidelity VIP High Income Portfolio       Global Atlantic BlackRock High
 (Initial Class).                         Yield Portfolio (Class I).
Fidelity VIP High Income Portfolio       Global Atlantic BlackRock High
 (Service Class 2).                       Yield Portfolio (Class II).
Invesco V.I. High Yield Fund (Series I)  Global Atlantic BlackRock High
                                          Yield Portfolio (Class I).
Pioneer High Yield VCT Portfolio (Class  Global Atlantic BlackRock High
 I, Class II).                            Yield Portfolio (Class I).
Deutsche Bond VIP (Class A)............  Global Atlantic Goldman Sachs
                                          Core Fixed Income Portfolio
                                          (Class I).
Deutsche Unconstrained Income VIP        Global Atlantic Goldman Sachs
 (Class A).                               Core Fixed Income Portfolio
                                          (Class I).
Goldman Sachs Core Fixed Income Fund     Global Atlantic Goldman Sachs
 (Service Shares).                        Core Fixed Income Portfolio
                                          (Class I).
Pioneer Bond VCT Portfolio (Class I)...  Global Atlantic Goldman Sachs
                                          Core Fixed Income Portfolio
                                          (Class I).
Alger Balanced Portfolio (Class I-2)...  Global Atlantic BlackRock
                                          Allocation Portfolio (Class
                                          I).
Deutsche Global Income Builder VIP       Global Atlantic BlackRock
 (Class A).                               Allocation Portfolio (Class
                                          I).
Fidelity VIP Asset Manager Portfolio     Global Atlantic BlackRock
 (Initial Class).                         Allocation Portfolio (Class
                                          I).
Fidelity VIP Asset Manager Portfolio     Global Atlantic BlackRock
 (Service Class 2).                       Allocation Portfolio (Class
                                          II).

[[Page 20668]]

 
LVIP Delaware Foundation Moderate        Global Atlantic BlackRock
 Allocation Fund (Standard Class).        Allocation Portfolio (Class I,
                                          Class II).
MFS Total Return Series (Service Class)  Global Atlantic BlackRock
                                          Allocation Portfolio (Class I,
                                          Class II).
------------------------------------------------------------------------

    7. The Replacement Portfolios are all series of the Trust. The 
Trust is an insurance-dedicated Delaware statutory trust that was 
organized on June 17, 2013. The Trust is registered with the Commission 
as an open-end management investment company under the 1940 Act (File 
No. 811-22865) and its shares are registered under the 1933 Act (File 
No. 333-189870). The Trust is a series investment company and currently 
has 30 separate portfolios (each, a ``Global Atlantic Fund,'' and 
collectively, the ``Global Atlantic Funds''). The following 13 Global 
Atlantic Funds comprise the Replacement Portfolios: Global Atlantic 
BlackRock Allocation Portfolio, Global Atlantic BlackRock Disciplined 
Core Portfolio, Global Atlantic BlackRock Disciplined Growth Portfolio, 
Global Atlantic BlackRock International Core Portfolio, Global Atlantic 
BlackRock Disciplined Mid Cap Growth Portfolio, Global Atlantic 
BlackRock Small Cap Portfolio, Global Atlantic BlackRock U.S. Core 
Portfolio, Global Atlantic BlackRock Disciplined Value Portfolio, 
Global Atlantic BlackRock High Yield Portfolio, Global Atlantic Goldman 
Sachs Core Fixed Income Portfolio, Global Atlantic Goldman Sachs Global 
Equity Insights Portfolio, Global Atlantic Goldman Sachs Large Cap 
Growth Insights Portfolio, and Global Atlantic Goldman Sachs Mid Cap 
Value Insights Portfolio.
    8. Global Atlantic, an Indiana limited liability company and a 
registered investment adviser, serves as investment adviser for each of 
the Global Atlantic Funds pursuant to an investment advisory agreement 
between the Trust, on behalf of each Global Atlantic Fund, and Global 
Atlantic.
    9. Each Replacement Portfolio is sub-advised by BlackRock 
Investment Management, LLC (``BlackRock'') or Goldman Sachs Asset 
Management, L.P. (``GSAM''). BlackRock is a wholly owned subsidiary of 
BlackRock, Inc. BlackRock is a registered investment adviser and a 
commodity pool operator organized in Princeton, New Jersey. BlackRock, 
Inc. and its affiliates had approximately $4.64 trillion in assets 
under management as of December 31, 2015. BlackRock is located at 1 
University Square, Princeton, NJ 08536. GSAM is a wholly-owned 
subsidiary of The Goldman Sachs Group, Inc. and an affiliate of Goldman 
Sachs. As of December 31, 2015, GSAM, including its investment advisory 
affiliates, had assets under supervision of approximately $1.08 
trillion. GSAM's principal offices are located at 200 West Street, New 
York, NY 20182.
    10. The Applicants believe that the Replacement Portfolios have 
investment objectives, principal investment strategies, and principle 
risks, as described in their prospectuses, that are substantially 
similar to, the corresponding Existing Portfolios to make those 
Replacement Portfolios appropriate candidates as substitutes.
    11. Information for each Existing Portfolio and Replacement 
Portfolio, including investment objectives, principal investment 
strategies, principal risks, and comparative performance history, can 
be found in the application.
    12. Applicants state that in selecting the Replacement Portfolios, 
Commonwealth sought to simplify fund lineups while reducing costs and 
maintaining a high-quality menu of investment options that would offer 
a similar diversity of investment options after the proposed 
Substitutions as is currently available under the Contracts. Contract 
owners with Contract value allocated to the subaccounts of the Existing 
Portfolios will have lower or equal net annual operating expenses 
immediately after the proposed Substitutions as before the proposed 
Substitutions. With respect to all of the proposed Substitutions, the 
combined management fee and Rule 12b-1 fees paid by the Replacement 
Portfolio are the same or lower than those of the corresponding 
Existing Portfolio. The application sets forth the fees and expenses of 
each Existing Portfolio and its corresponding Replacement Portfolio in 
greater detail.
    13. Applicants represent that as of the Substitution Date (defined 
below), the Separate Accounts will redeem shares of the Existing 
Portfolios for cash or in-kind. Redemption requests and purchase orders 
will be placed simultaneously so that Contract values will remain fully 
invested at all times.
    14. Each Substitution will be effected at the relative net asset 
values of the respective shares of the Replacement Portfolios in 
conformity with Section 22(c) of the 1940 Act and Rule 22c-1 thereunder 
without the imposition of any transfer or similar charges by the 
Section 26 Applicants. The Substitutions will be effected without 
change in the amount or value of any Contracts held by affected 
Contract owners.\2\
---------------------------------------------------------------------------

    \2\ The Section 26 Applicants state that, because the 
Substitutions will occur at relative net asset value, and the fees 
and charges under the Contracts will not change as a result of the 
Substitutions, the benefits offered by the guarantees under the 
Contracts will be the same immediately before and after the 
Substitutions. The Section 26 Applicants also state that what effect 
the Substitutions may have on the value of the benefits offered by 
the Contract guarantees would depend, among other things, on the 
relative future performance of the Existing Portfolios and 
Replacement Portfolios, which the Section 26 Applicants cannot 
predict. Nevertheless, the Section 26 Applicants note that at the 
time of the Substitutions, the Contracts will offer a comparable 
variety of investment options with as broad a range of risk/return 
characteristics.
---------------------------------------------------------------------------

    15. Contract owners will not incur any fees or charges as a result 
of the proposed Substitutions. The obligations of the Section 26 
Applicants, and the rights of the affected Contract owners, under the 
Contracts of affected Contract owners will not be altered in any way. 
Commonwealth and/or its affiliates will pay all expenses and 
transaction costs of the Substitutions, including legal and accounting 
expenses, any applicable brokerage expenses and other fees and 
expenses. No fees or charges will be assessed to the affected Contract 
owners to effect the Substitutions. The proposed Substitutions will not 
cause the Contract fees and charges currently being paid by Contract 
owners to be greater after the proposed Substitution than before the 
proposed Substitution. In addition, the Substitutions will in no way 
alter the tax treatment of affected Contract owners in connection with 
their Contracts, and no tax liability will arise for Contract owners as 
a result of the Substitutions.
    16. The Section 26 Applicants agree that, for a period of two years 
following the implementation of the proposed Substitution (the 
``Substitution Date''), and for those Contracts with assets allocated 
to the Existing Portfolio on the Substitution Date, Commonwealth or an 
affiliate thereof (other than the Trust) will reimburse, on the last 
business day of each fiscal quarter, the Contract owners whose 
subaccounts invest in the applicable Replacement Portfolio to the 
extent that the Replacement Portfolio's net annual operating expenses 
(taking into account fee waivers and expense reimbursements) for such 
period exceeds, on an annualized basis, the net annual operating 
expenses of the

[[Page 20669]]

Existing Portfolio for the most recent fiscal year preceding the date 
of the most recently filed application. Commonwealth will not increase 
the Contract fees and charges that would otherwise be assessed under 
the terms of the Contracts for a period of at least two years following 
the Substitution Date.
    17. From the date the Pre-Substitution Notice (defined below) 
through 30 days following the Substitution Date, Contract owners may 
make at least one transfer of Contract value from the subaccount 
investing in an Existing Portfolio (before the Substitution) or the 
Replacement Portfolio (after the Substitution) to any other available 
subaccount under the Contract without charge and without imposing any 
transfer limitations. Further, on the Substitution Date, Contract 
values attributable to investments in each Existing Portfolio will be 
transferred to the corresponding Replacement Portfolio without charge 
and without being subject to any transfer limitations. Moreover, 
Commonwealth will not exercise any rights reserved under the Contracts 
to impose restrictions on transfers between the subaccounts under the 
Contracts, including limitations on the future number of transfers, for 
a period beginning at least 30 days before the Substitution Date 
through at least 30 days following the Substitution Date.
    18. At least 30 days prior to the Substitution Date, Contract 
owners will be notified via prospectus supplements that the Section 26 
Applicants received or expect to receive Commission approval of the 
applicable proposed Substitutions and of the anticipated Substitution 
Date (the ``Pre-Substitution Notice''). Pre-Substitution Notices sent 
to Contract owners will be filed with the Commission pursuant to Rule 
497 under the 1940 Act. The Pre-Substitution Notice will advise 
Contract owners that from the date of the Pre-Substitution Notice 
through the date 30 days after the Substitutions, Contract owners may 
make at least one transfer of Contract value from the subaccounts 
investing in the Existing Portfolios (before the Substitutions) or the 
Replacement Portfolios (after the Substitutions) to any other available 
subaccount without charge and without imposing any transfer 
limitations. Among other information, the notice will inform affected 
Contract owners that that, except as described in the disruptive 
transfers or market timing provisions of the relevant prospectus, 
Commonwealth will not exercise any rights reserved under the Contracts 
to impose restrictions on transfers among the subaccounts under the 
Contracts, including limitations on the future number of transfers, 
through at least 30 days after the Substitution Date. Additionally, all 
affected Contract owners will be sent prospectuses of the applicable 
Replacement Portfolios at least 30 days before the Substitution Date.
    19. In addition to the Supplements distributed to the Contract 
owners, within five business days after the Substitution Date, Contract 
owners whose assets are allocated to a Replacement Portfolio as part of 
the proposed Substitutions will be sent a written notice (each, a 
``Confirmation'') informing them that the Substitutions were carried 
out as previously notified. The Confirmation also will restate the 
information set forth in the Pre-Substitution Notice. The Confirmation 
will also reflect the values of the Contract owner's positions in the 
Existing Portfolio before the Substitution and the Replacement 
Portfolio after the Substitution.

Legal Analysis

    1. The Section 26 Applicants request that the Commission issue an 
order pursuant to Section 26(c) of the 1940 Act approving the proposed 
Substitutions. Section 26(c) of the 1940 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 from the 
Commission if the evidence establishes that the substitution is 
consistent with the protection of investors and the purposes of the 
1940 Act.
    2. The Section 26 Applicants submit that the Substitutions meet the 
standards set forth in Section 26(c) and that, if implemented, the 
Substitutions would not raise any of the concerns that Congress 
intended to address when the 1940 Act was amended to include this 
provision. Applicants state that each Substitution protects the 
Contract owners who have Contract value allocated to an Existing 
Portfolio by providing Replacement Portfolios with substantially 
similar investment objectives, strategies, and risks, and providing 
Contract owners with investment options that would have total and net 
annual operating expense ratios that are lower than, or equal to, their 
corresponding investment options before the Substitutions.
    3. Commonwealth has reserved the right under the Contracts to 
substitute shares of another underlying fund for one of the current 
funds offered as an investment option under the Contracts. The 
Contracts and the Contracts' prospectuses disclose this right.
    4. The Section 26 Applicants submit that the ultimate effect of the 
proposed Substitutions will be to streamline and simplify the 
investment line-ups that are available to Contract owners while 
reducing expenses and continuing to provide Contract owners with a wide 
array of investment options. The Section 26 Applicants state that the 
proposed Substitutions will not reduce in any manner the nature or 
quality of the available investment options and the proposed 
Substitutions also will permit Commonwealth to present information to 
its Contract owners in a simpler and more concise manner. The Section 
26 Applicants also state it is anticipated that after the proposed 
Substitutions, Contract owners will be provided with disclosure 
documents that contain a simpler presentation of the available 
investment options under the Contracts. The Section 26 Applicants also 
assert that the proposed Substitutions are not of the type that Section 
26 was designed to prevent because they will not result in costly 
forced redemption, nor will they affect other aspects of the Contracts. 
In addition, the proposed Substitutions will not adversely affect any 
features or riders under the Contracts because none of the features or 
riders have any investment restrictions. Accordingly, no Contract owner 
will involuntarily lose his or her features or riders as a result of 
any proposed Substitution. Moreover, the Section 26 Applicants will 
offer Contract owners the opportunity to transfer amounts out of the 
affected subaccounts without any cost or other penalty (other than 
those necessary to implement policies and procedures designed to detect 
and deter disruptive transfer and other ``market timing'' activity) 
that may otherwise have been imposed for a period beginning on the date 
of the Pre-Substitution Notice (which supplement will be delivered to 
the Contract owners at least thirty (30) days before the Substitution 
Date) and ending no earlier than thirty (30) days after the 
Substitution Date. The proposed Substitutions are also unlike the type 
of substitution that Section 26(c) was designed to prevent in that the 
Substitutions have no impact on other aspects of the Contracts.
    5. The Section 17 Applicants request an order under Section 17(b) 
exempting them from the provisions of Section 17(a) to the extent 
necessary to permit the Section 17 Applicants to carry out some or all 
of the proposed Substitutions. The Section 17

[[Page 20670]]

Applicants state that because the proposed Substitutions may be 
effected, in whole or in part, by means of in-kind redemptions and 
purchases, the proposed Substitutions may be deemed to involve one or 
more purchases or sales of securities or property between affiliated 
persons.
    6. Section 17(a)(1) of the 1940 Act, in relevant part, prohibits 
any affiliated person of a registered investment company, or any 
affiliated person of such person, acting as principal, from knowingly 
selling any security or other property to that company. Section 
17(a)(2) of the 1940 Act generally prohibits the persons described 
above, acting as principals, from knowingly purchasing any security or 
other property from the registered investment company.
    7. The Section 17 Applicants state that the proposed transactions 
may involve a transfer of portfolio securities by the Existing 
Portfolios to the Separate Accounts. Immediately thereafter, the 
Separate Accounts would purchase shares of the Replacement Portfolios 
with the portfolio securities received from the Existing Portfolios. 
Accordingly, the Section 17 Applicants provide that to the extent 
Commonwealth and the Existing Portfolios, and Commonwealth and the 
Replacement Portfolios, are deemed to be affiliated persons of one 
another under Section 2(a)(3) or Section 2(a)(9) of the 1940 Act, it is 
conceivable that this aspect of the proposed Substitutions could be 
viewed as being prohibited by Section 17(a). Accordingly, the Section 
17 Applicants have determined to seek relief from Section 17(a).
    8. The Section 17 Applicants submit that the terms of the proposed 
in-kind purchases of shares of the Replacement Portfolios by the 
Separate Accounts, including the consideration to be paid and received, 
as described in the application, are reasonable and fair and do not 
involve overreaching on the part of any person concerned. The Section 
17 Applicants submit that the terms of the proposed in-kind 
transactions, including the considered to be paid to each Existing 
Portfolio and received by each Replacement Portfolio involved, are 
reasonable, fair and do not involve overreaching principally because 
the transactions will conform with all but one of the conditions 
enumerated in Rule 17a-7 under the 1940 Act. The proposed transactions 
will take place at relative net asset value in conformity with the 
requirements of Section 22(c) of the 1940 Act and Rule 22c-1 thereunder 
without the imposition of any transfer or similar charges by the 
Section 26 Applicants. The Substitutions will be effected without 
change in the amount or value of any Contract held by the affected 
Contract owners. The Substitutions will in no way alter the tax 
treatment of affected Contract owners in connection with their 
Contracts, and no tax liability will arise for Contract owners as a 
result of the Substitutions. The fees and charges under the Contracts 
will not increase because of the Substitutions. Even though the 
Separate Accounts, Commonwealth and the Trust may not rely on Rule 17a-
7, the Section 17 Applicants believe that the rule's conditions outline 
the type of safeguards that result in transactions that are fair and 
reasonable to registered investment company participants and preclude 
overreaching in connection with an investment company by its affiliated 
persons.
    9. The Section 17 Applicants also submit that the proposed in-kind 
purchases by the Separate Accounts are consistent with the policies of 
the Trust and the Replacement Portfolios, as provided in the Trust's 
registration statement and reports filed under the 1940 Act. Finally, 
the Section 17 Applicants submit that the proposed Substitutions are 
consistent with the general purposes of the 1940 Act.

Applicants' Conditions

    The Section 26 Applicants, and Global Atlantic as applicable, agree 
that any order granting the requested relief will be subject to the 
following conditions:
    1. The Substitutions will not be effected unless Commonwealth 
determines that: (i) The Contracts allow the substitution of shares of 
registered open-end investment companies in the manner contemplated by 
the application; (ii) the Substitutions can be consummated as described 
in the application under applicable insurance laws; and (iii) any 
regulatory requirements in each jurisdiction where the Contracts are 
qualified for sale have been complied with to the extent necessary to 
complete the Substitutions.
    2. After the Substitution Date, Global Atlantic will not change a 
sub-adviser, add a new sub-adviser, or otherwise rely on the Manager of 
Managers Order (as defined in the application), or any replacement 
order from the Commission, with respect to any Replacement Portfolio 
without first obtaining shareholder approval of the change in sub-
adviser, the new sub-adviser, or the Replacement Portfolio's ability to 
rely on the Manager of Managers Order, or any replacement order from 
the Commission.
    3. Commonwealth or an affiliate thereof (other than the Trust) will 
pay all expenses and transaction costs of the Substitutions, including 
legal and accounting expenses, any applicable brokerage expenses and 
other fees and expenses. No fees or charges will be assessed to the 
affected Contract owners to effect the Substitutions. The proposed 
Substitutions will not cause the Contract fees and charges currently 
being paid by Contract owners to be greater after the proposed 
Substitution than before the proposed Substitution.
    4. The Substitutions will be effected at the relative net asset 
values of the respective shares of the Replacement Portfolios in 
conformity with Section 22(c) of the 1940 Act and Rule 22c-1 thereunder 
without the imposition of any transfer or similar charges by the 
Section 26 Applicants. The Substitutions will be effected without 
change in the amount or value of any Contracts held by affected 
Contract owners.
    5. The Substitutions will in no way alter the tax treatment of 
affected Contract owners in connection with their Contracts, and no tax 
liability will arise for Contract owners as a result of the 
Substitutions.
    6. The obligations of the Section 26 Applicants, and the rights of 
the affected Contract owners, under the Contracts of affected Contract 
owners will not be altered in any way.
    7. Affected Contract owners will be permitted to make at least one 
transfer of Contract value from the subaccount investing in the 
Existing Portfolio (before the Substitution Date) or the Replacement 
Portfolio (after the Substitution Date) to any other available 
investment option under the Contract without charge for a period 
beginning at least 30 days before the Substitution Date through at 
least 30 days following the Substitution Date. Except as described in 
any market timing/short-term trading provisions of the relevant 
prospectus, the Section 26 Applicants will not exercise any rights 
reserved under the Contracts to impose restrictions on transfers 
between the subaccounts under the Contracts, including limitations on 
the future number of transfers, for a period beginning at least 30 days 
before the Substitution Date through at least 30 days following the 
Substitution Date.
    8. All affected Contract owners will be notified, at least 30 days 
before the Substitution Date about: (i) The intended Substitution of 
Existing Portfolios with the Replacement Portfolios; (ii) the intended 
Substitution Date; and (iii) information with respect to transfers as 
set forth in Condition 7

[[Page 20671]]

above. In addition, the Section 26 Applicants will also deliver to 
affected Contract owners, at least thirty days before the Substitution 
Date, a prospectus for each applicable Replacement Portfolio.
    9. The Section 26 Applicants will deliver to each affected Contract 
owner within five business days of the Substitution Date a written 
confirmation which will include: (i) A confirmation that the 
Substitutions were carried out as previously notified; (ii) a 
restatement of the information set forth in the Pre-Substitution 
Notice; and (iii) values of the Contract owner's positions in the 
Existing Portfolio before the Substitution and the Replacement 
Portfolio after the Substitution.
    10. For a period of two years following the Substitution Date, for 
Contract owners who were Contract owners as of the Substitution Date, 
Commonwealth or an affiliate thereof (other than the Trust) will 
reimburse, on the last business day of each fiscal quarter, the 
Contract owners whose subaccounts invest in the applicable Replacement 
Portfolio to the extent that the Replacement Portfolio's net annual 
operating expenses (taking into account fee waivers and expense 
reimbursements) for such period exceeds, on an annualized basis, the 
net annual operating expenses of the Existing Portfolio for the most 
recent fiscal year preceding the date of the application. In addition, 
the Section 26 Applicants will not increase the Contract fees and 
charges that would otherwise be assessed under the terms of the 
Contracts for a period of at least two years following the Substitution 
Date.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08904 Filed 5-2-17; 8:45 am]
 BILLING CODE 8011-01-P