
[Federal Register Volume 79, Number 64 (Thursday, April 3, 2014)]
[Notices]
[Pages 18739-18748]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-07424]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-30999; File No. 812-14203]


Minnesota Life Insurance Company, et al.; Notice of Application

March 28, 2014.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: 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.

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Applicants:  Minnesota Life Insurance Company (``Minnesota Life''), 
Variable Annuity Account (``VAA''), Minnesota Life Variable Life 
Account (``VLI''), Minnesota Life Variable Universal Life Account 
(``VGUL''), Group Variable Universal Life Account (``Private VGUL I''), 
Variable Universal Life Account II (``Private VGUL II''), Securian Life 
Insurance Company (``Securian Life''), and Securian Life Variable 
Universal Life Account (``SVGUL''). Minnesota Life and Securian Life 
are referred to individually as a ``Life Company'' and collectively as 
``Life Companies.'' VAA, VLI, VGUL, Private VGUL I, Private

[[Page 18740]]

VGUL II, and SVGUL are referred to individually as a ``Separate 
Account'' and collectively as the ``Separate Accounts.'' The Life 
Companies and the Separate Accounts collectively referred to as the 
``Section 26 Applicants''. Securian Funds Trust (``SFT''), the Life 
Companies and the Separate Accounts are collectively, referred to as 
the ``Section 17 Applicants''.

Summary of Application: The Section 26 Applicants seek an order 
pursuant to Section 26(c) of the 1940 Act, approving certain proposed 
substitutions of securities (the ``Proposed Substitutions''). The 
Section 17 Applicants seek an order of exemption pursuant to Section 
17(b) of the 1940 Act from Section 17(a) of the Act to the extent 
necessary to permit them to effectuate the Proposed Substitutions by 
redeeming all or a portion of the securities of one or more of certain 
existing portfolios in-kind and using those portfolio securities 
received from these existing portfolios to purchase shares of 
replacement portfolios (the ``In-Kind Transactions''). The date of the 
Proposed Substitutions is expected to be on or about May 1, 2014 (the 
``Substitution Date'').

DATES:  Filing Date: The application was filed on August 22, 2013, and 
an amended and restated application was filed on March 27, 2014.

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 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 April 22, 2014, 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 requester's interest, the reason for the request, and the 
issues contested. Persons who wish to be notified of a hearing may 
request notification by writing to the Secretary of the Commission.

ADDRESSES: Secretary, SEC, 100 F Street NE., Washington, DC 20549-1090. 
Applicants, Minnesota Life, VAA, VLI, VGUL, Private VGUL I, Private 
VGUL II, Securian Life, SVGUL, and SFT, 400 Robert Street North, St. 
Paul, Minnesota 55101-2098.

FOR FURTHER INFORMATION CONTACT: Alberto H. Zapata, Senior Counsel, or 
Joyce M. Pickholz, Branch Chief, Insured Investments Office, Division 
of Investment Management, at (202) 551-6795.

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

Applicants' Representations

    1. Minnesota Life serves as the depositor of all the Separate 
Accounts except for SVGUL. Securian Life serves as the depositor for 
SVGUL.
    2. Each of the Separate Accounts is a segregated asset account of 
Minnesota Life or Securian Life, as applicable, and was established 
under Minnesota law pursuant to resolutions of the applicable Life 
Company's Board of Directors to fund the variable annuity contracts, 
variable life insurance policies, or variable universal life insurance 
policies described in the Application (the ``VA Contracts,'' ``VLI 
Policies,'' ``VGUL Policies,'' ``SVGUL Policies,'' ``Private VGUL I 
Policies,'' and ``Private VGUL II Policies,'' respectively; each a 
``Contract,'' and collectively, the ``Contracts''). Each Separate 
Account, except for Private VGUL I and Private VGUL II, is registered 
under the 1940 Act as a unit investment trust. Interests under the 
Contracts, except for Contracts issued through Private VGUL I and 
Private VGUL II, are registered under the Securities Act of 1933, as 
amended (the ``1933 Act''). Each Separate Account meets the definition 
of ``separate account'' contained in Section 2(a)(37) of the 1940 Act.
    3. Each Separate Account is divided into subaccounts (each a 
``Subaccount,'' collectively, the ``Subaccounts''). Each Subaccount 
invests in the securities of a single portfolio of an underlying mutual 
fund (``Portfolio''). Purchase payments under the Contracts are 
allocated to one or more Subaccounts.
    4. The Contracts include the VA Contracts, VLI Policies, VGUL 
Policies, SVGUL Policies, Private VGUL I Policies, and Private VGUL II 
Policies listed in the Application. The Contracts may be issued as 
individual or group Contracts. Contract owners (and participants in 
group Contracts) (each a ``Contract Owner,'' and collectively, the 
``Contract Owners'') may allocate some or all of their Contract value 
(``Contract value'') to one or more Subaccounts that are available as 
investment options under the Contracts.
    5. Under the Contracts, the Life Companies reserve the right to 
substitute, for the shares of a Portfolio held in any Subaccount, the 
shares of another Portfolio. The prospectuses or offering documents, as 
applicable, for the Contracts include appropriate disclosure of this 
reservation of right.
    6. SFT is registered with the Commission as an open-end management 
investment company under the 1940 Act and its securities are registered 
under the 1933 Act. SFT was organized as a Delaware statutory trust on 
July 8, 2011. SFT's predecessor, Advantus Series Fund, Inc. (``Series 
Fund'') was organized as a Minnesota corporation on February 25, 1985. 
Effective May 1, 2012, each of the seven then-existing series of the 
Series Fund was reorganized into a corresponding ``shell'' series of 
SFT (``Series'') pursuant to an agreement and plan of reorganization 
approved by a majority of the shareholders of each series of the Series 
Fund on October 21, 2011.
    7. SFT currently consists of eight Series. The SFT Board of 
Trustees (``Board'') has authorized the creation of four new Series. In 
addition to one unaffiliated Portfolio, the Proposed Substitutions will 
involve four new Series of SFT. Three of the new SFT Series, T. Rowe 
Price Value Fund, Ivy Growth Fund, and Ivy Small Cap Growth Fund, will 
offer a single class of shares. The fourth new SFT Series, Pyramis Core 
Equity Fund, will offer two classes of shares (Class 1 and Class 2). 
Each of the current eight Series offers two classes of shares (Class 1 
and Class 2), except that the money market fund and managed volatility 
fund offer shares in only one class. Shares of the Series are currently 
offered through Minnesota Life and Securian Life separate accounts, 
including the Separate Accounts, to fund variable annuities, variable 
life insurance policies and variable universal life policies, including 
the VA Contracts, VLI Policies, VGUL Policies, SVGUL Policies, Private 
VGUL I Policies, and Private VGUL II Policies. Series shares also may 
be offered to fund variable annuities, variable life insurance 
policies, and variable universal life insurance policies issued by 
other insurance companies. Currently, no other life insurance company 
invests in any Series. SFT has adopted a plan of distribution pursuant 
to rule 12b-1 under the 1940 Act (``Plan''), covering Class 2 shares 
and shares of the money market fund and the managed volatility fund 
(Class 1 shares are not part of the Plan). Under the Plan, each covered 
share class pays a distribution fee which, on an annual basis, is equal 
to .25% of the average daily net assets held in such covered share 
class.
    8. Advantus Capital Management, Inc. (``Advantus'' or the 
``Manager''), an indirect wholly-owned subsidiary of

[[Page 18741]]

Minnesota Mutual Companies, Inc., serves as the investment manager of 
each of the Series of SFT. Securian Financial Services, Inc., also an 
indirect wholly-owned subsidiary of Minnesota Mutual Companies, Inc., 
serves as the distributor for the shares of the Series.
    9. SFT and the Manager may rely on an order from the Commission (In 
the Matter of Advantus Capital Management, Inc., et al., Investment 
Company Act Release No. 23008 (Jan. 27, 1998) File No. 812-10542 (the 
``Manager of Managers Order'')) that permits the Manager, subject to 
certain conditions, including approval of the Board, including Trustees 
who are not ``interested persons,'' as defined in Section 2(a)(19) of 
the 1940 Act, and without the approval of shareholders, to: (i) Engage 
a new or additional subadviser (``Subadviser'') for each Series; (ii) 
enter into and materially amend existing sub-adviser agreements; and 
(iii) terminate and replace Subadvisers.
    10. The Life Companies, on behalf of themselves and their Separate 
Accounts, propose to exercise their contractual right to substitute 
shares of one Portfolio for that of another Portfolio by replacing the 
shares of 14 existing Portfolios listed below (the ``Existing 
Portfolios'') that are held in Subaccounts of their Separate Accounts 
with shares of the corresponding replacement Portfolios listed below 
(the ``Replacement Portfolios''). Twelve of the Proposed Substitutions 
will involve substitutions from unaffiliated Existing Portfolios to 
affiliated Replacement Portfolios. Two of the Proposed Substitutions 
will involve substitutions from unaffiliated Existing Portfolios to 
unaffiliated Replacement Portfolios.

------------------------------------------------------------------------
                                                         Replacement
  Proposed substitution       Existing portfolio          portfolio
------------------------------------------------------------------------
1........................  American Century VP       SFT--T. Rowe Price
                            Value Fund: Class II      Value Fund.
                            Shares.
2........................  MFS VIT Value Series:     SFT--T. Rowe Price
                            Service Class Shares.     Value Fund.
3........................  American Century VP       SFT--Ivy Growth
                            Ultra Fund: Class II      Fund.
                            Shares.
4........................  Franklin Templeton VIP    SFT--Ivy Growth
                            Trust--Franklin Large     Fund.
                            Cap Growth Securities
                            Class 2 Shares.
5........................  Invesco VI American       SFT--Ivy Growth
                            Franchise: Series II      Fund.
                            Shares.
6........................  Ivy Funds VIP Growth....  SFT--Ivy Growth
                                                      Fund.
7........................  MFS VIT Investors Growth  SFT--Ivy Growth
                            Stock Series Service      Fund.
                            Class Shares.
8........................  Oppenheimer Variable      SFT--Ivy Growth
                            Account Funds--Capital    Fund.
                            Appreciation Fund/VA:
                            Service Shares.
9........................  Ivy Funds VIP Small Cap   SFT--Ivy Small Cap
                            Growth.                   Growth Fund.
10.......................  MFS VIT New Discovery     SFT--Ivy Small Cap
                            Series: Service Class     Growth Fund.
                            Shares.
11.......................  Invesco VI Core Equity    SFT--Pyramis Core
                            Fund: Series II Shares.   Equity Fund: Class
                                                      2 Shares.
12.......................  Fidelity VIP Contrafund:  SFT--Pyramis Core
                                                      Equity Fund:
                           Initial Class Shares....  Class 1 Shares.
                           Service Class 2 Shares..  Class 2 Shares.
13.......................  Fidelity VIP High         Ivy Funds VIP High
                            Income: Service Class 2   Income.
                            Shares.
14.......................  Oppenheimer Variable      Ivy Funds VIP High
                            Account Funds--Global     Income.
                            Strategic Income/VA:
                            Service Shares.
------------------------------------------------------------------------

    11. The following tables compare the fees and expenses of the 
Existing Portfolio and the Replacement Portfolio using percentage daily 
net assets as of December 31, 2012. The data for the Replacement 
Portfolios in Proposed Substitutions 1 through 12 are estimates for the 
current year.

                         Proposed Substitution 1
------------------------------------------------------------------------
                               Existing portfolio        Replacement
                               American Century VP    portfolio SFT--T.
                               Value Fund-- Class     Rowe Price Value
                                    II Shares               Fund
------------------------------------------------------------------------
Management Fees.............  0.90% of first $500   0.67% of first $1
                               million.              billion.
                              0.85% of next $500    0.65% of next $1.5
                               million.              billion.
                              0.80% over $1         0.60% over $2.5
                               billion.              billion.
Other Expenses..............  0.01%...............  0.09%
12b-1 Fees..................  0.25%...............  0.25%
Total Gross Expenses........  1.13%...............  1.01%
Expense Waiver..............  0.04%...............  0.00%
Total Net Expenses..........  1.09%...............  1.01%
------------------------------------------------------------------------


                         Proposed Substitution 2
------------------------------------------------------------------------
                               Existing portfolio        Replacement
                                  MFS VIT Value       portfolio SFT--T.
                                 Series--Service      Rowe Price Value
                                  Class Shares              Fund
------------------------------------------------------------------------
Management Fees.............  0.75% of first $1     0.67% of first $1
                               billion.              billion.
                              0.65% over $1         0.65% of next $1.5
                               billion.              billion
                              0.60% over $2.5       0.60% over $2.5
                               billion.              billion.
Other Expenses..............  0.06%...............  0.09%.
12b-1 Fees..................  0.25%...............  0.25%.
Total Gross Expenses........  1.03%...............  1.01%.
Expense Waiver..............  0.00%...............  0.00%.

[[Page 18742]]

 
Total Net Expenses..........  1.03%...............  1.01%.
------------------------------------------------------------------------


                         Proposed Substitution 3
------------------------------------------------------------------------
                               Existing portfolio
                               American Century VP       Replacement
                               Ultra Fund-- Class    portfolio SFT--Ivy
                                    II Shares            Growth Fund
------------------------------------------------------------------------
Management Fees.............  0.90% of first $500   0.67% of first $500
                               million.              million.
                              0.85% of next $500    0.625% of next $300
                               million.              million.
                              0.80% over $1         0.60% of next $200
                               billion.              million.
                                                    0.50% over $1
                                                     billion.
Other Expenses..............  0.01%...............  0.05%.
12b-1 Fees..................  0.25%...............  0.25%.
Total Gross Expenses........  1.16%...............  0.97%.
Expense Waiver..............  0.04%...............  0.00%.
Total Net Expenses..........  1.12%...............  0.97%.
------------------------------------------------------------------------


                         Proposed Substitution 4
------------------------------------------------------------------------
                               Existing portfolio
                               Franklin Templeton
                               VIP Trust--Franklin       Replacement
                                Large Cap Growth     portfolio SFT--Ivy
                               Securities--Class 2       Growth Fund
                                     Shares
------------------------------------------------------------------------
Management Fees.............  0.75% up to $500      0.67% of first $500
                               million.              million.
                              0.625% over $500      0.625% of next $300
                               million.              million.
                              0.50% over $1         0.60% of next $200
                               billion.              million.
                                                    0.50% over $1
                                                     billion.
Other Expenses..............  0.05%...............  0.05%.
12b-1 Fees..................  0.25%...............  0.25%.
Total Gross Expenses........  1.05%...............  0.97%.
Expense Waiver..............  0.00%...............  0.00%.
Total Net Expenses..........  1.05%...............  0.97%.
------------------------------------------------------------------------


                         Proposed Substitution 5
------------------------------------------------------------------------
                               Existing portfolio
                               Invesco VI American       Replacement
                               Franchise-- Service   portfolio SFT--Ivy
                                    II Shares            Growth Fund
------------------------------------------------------------------------
Management Fees.............  0.695% first $250     0.67% of first $500
                               million.              million.
                              0.67% next $250       0.625% of next $300
                               million.              million.
                              0.645% next $500      0.60% of next $200
                               million.              million.
                              0.62% next $550       0.50% over $1
                               million.              billion.
                              0.60% next $3.45
                               billion.
                              0.595% next $250
                               million.
                              0.57% next $2.25
                               billion.
                              0.545% next $2.5
                               billion.
                              0.52% over $10
                               billion.
Other Expenses..............  0.30%...............  0.05%.
12b-1 Fees..................  0.25%...............  0.25%.
Total Gross Expenses........  1.23%...............  0.97%.
Expense Waiver..............  0.08%...............  0.00%.
Total Net Expenses..........  1.15%...............  0.97%.
------------------------------------------------------------------------


                         Proposed Substitution 6
------------------------------------------------------------------------
                                                         Replacement
                               Existing portfolio    portfolio SFT--Ivy
                              Ivy Funds VIP Growth       Growth Fund
------------------------------------------------------------------------
Management Fees.............  0.70% up to $1        0.67% of first $500
                               billion.              million.
                              0.65% over $1         0.625% of next $300
                               billion.              million.
                              0.60% over $2         0.60% of next $200
                               billion.              million.
                              0.55% over $3         0.50% over $1
                               billion.              billion.
Other Expenses..............  0.05%...............  0.05%.
12b-1 Fees..................  0.25%...............  0.25%.
Total Gross Expenses........  1.00%...............  0.97%.
Expense Waiver..............  0.03%...............  0.00%.

[[Page 18743]]

 
Total Net Expenses..........  0.97%...............  0.97%.
------------------------------------------------------------------------


                         Proposed Substitution 7
------------------------------------------------------------------------
                               Existing portfolio
                                MFS VIT Investors        Replacement
                              Growth Stock Series--  portfolio SFT--Ivy
                              Service Class Shares       Growth Fund
 
------------------------------------------------------------------------
Management Fees.............  0.75% of first $1     0.67% of first $500
                               billion.              million.
                              0.65% over $1         0.625% of next $300
                               billion.              million.
                                                    0.60% of next $200
                                                     million.
                                                    0.50% over $1
                                                     billion.
Other Expenses..............  0.08%...............  0.05%.
12b-1 Fees..................  0.25%...............  0.25%.
Total Gross Expenses........  1.08%...............  0.97%.
Expense Waiver..............  0.00%...............  0.00%.
Total Net Expenses..........  1.08%...............  0.97%.
------------------------------------------------------------------------


                         Proposed Substitution 8
------------------------------------------------------------------------
                               Existing portfolio
                              Oppenheimer Variable
                                 Account Funds--         Replacement
                              Capital Appreciation   portfolio SFT--Ivy
                                Fund/VA-- Service        Growth Fund
                                     Shares
------------------------------------------------------------------------
Management Fees.............  0 0.75% of first      0.67% of first $500
                               $200 million.         million.
                              0.72% of next $200    0.625% of next $300
                               million.              million.
                              0.69% of next $200    0.60% over $200
                               million.              million.
                              0.66% of next $200    0.50% over $1
                               million.              billion.
                              0.60% over $800
                               million.
Other Expenses..............  0.12%...............  0.05%.
12b-1 Fees..................  0.25%...............  0.25%.
Total Gross Expenses........  1.06%...............  0.97%.
Expense Waiver..............  0.01%...............  0.00%.
Total Net Expenses..........  1.05%...............  0.97%.
------------------------------------------------------------------------


                         Proposed Substitution 9
------------------------------------------------------------------------
                                                         Replacement
                               Existing portfolio    portfolio SFT--Ivy
                               Ivy Funds VIP Small    Small Cap Growth
                                   Cap Growth               Fund
------------------------------------------------------------------------
Management Fees.............  0.85% up to $1        0.85% up to $1
                               billion.              billion.
                              0.83% over $1         0.80% of next $2
                               billion.              billion.
                              0.80% over $2         0.76% over $3
                               billion.              billion.
                              0.76% over $3
                               billion.
Other Expenses..............  0.06%...............  0.11%.
12b-1 Fees..................  0.25%...............  0.25%.
Total Gross Expenses........  1.16%...............  1.21%.
Expense Waiver..............  0.02%...............  0.07%.
Total Net Expenses..........  1.14%...............  1.14%.
------------------------------------------------------------------------


                        Proposed Substitution 10
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                Existing portfolio                       Replacement
                                                          Portfolio
MFS VIT New Discovery Series--Service Class Shares   SFT--Ivy Small Cap
                                                         Growth Fund
------------------------------------------------------------------------
Management Fees.............  0.90% of first $1     0.85% up to $1
                               billion.              billion.
                              0.80% over $1         0.80% of next $2
                               billion.              billion.
                                                    0.76% over $3
                                                     billion.
Other Expenses..............  0.07%...............  0.11%.
12b-1 Fees..................  0.25%...............  0.25%.
Total Gross Expenses........  1.22%...............  1.21%.
Expense Waiver..............  0.00%...............  0.07%.
Total Net Expenses..........  1.22%...............  1.14%.
------------------------------------------------------------------------


[[Page 18744]]


                        Proposed Substitution 11
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                Existing portfolio                       Replacement
                                                          portfolio
   Invesco VI Core Equity Fund Series II Shares       SFT--Pyramis Core
                                                        Equity Fund--
                                                    Class 2 Shares
------------------------------------------------------------------------
Management Fees.............  0.65% first $250      0.65%.
                               million.
                              0.60% of the excess
                               over $250 million.
Other Expenses..............  0.29%...............  0.11%.
12b-1 Fees..................  0.25%...............  0.25%.
Total Gross Expenses........  1.15%...............  1.01%.
Expense Waiver..............  0.02%...............  0.12%.
Total Net Expenses..........  1.13%...............  0.89%.
------------------------------------------------------------------------


                        Proposed Substitution 12
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                Existing portfolio                       Replacement
                                                          portfolio
              Fidelity VIP Contrafund                 SFT--Pyramis Core
                                                         Equity Fund
------------------------------------------------------------------------
Management Fees.............  The Existing          0.65% Class I
                               Portfolio pays the    Shares.
                               Adviser a monthly    0.65% Class 2
                               management fee        Shares.
                               which has two
                               components: a group
                               fee rate and an
                               individual fund fee
                               rate. The group fee
                               rate is based on
                               the monthly average
                               net assets of all
                               of the registered
                               investment
                               companies with
                               which the Adviser
                               has management
                               contracts.
Other Expenses..............  0.06% Initial Class   0.11% Class I
                               Shares.               Shares.
                              0.08% Service Class   0.11% Class 2
                               2 Shares.             Shares.
12b-1 Fees..................  0.00% Initial Class   0.00% Class I
                               Shares.               Shares.
                              0.25% Service Class   0.25% Class 2
                               2 Shares.             Shares.
Total Gross Expenses........  0.64% Initial Class   0.76% Class I
                               Shares.               Shares.
                              0.89% Service Class   1.01% Class 2
                               2 Shares.             Shares.
Expense Waiver..............  0.00% Initial Class   0.12% Class I
                               Shares.               Shares.
                              000% Service Class 2  0.12% Class 2
                               Shares.               Shares.
Total Net Expenses..........  0.64% Initial Class   0.64% Class I
                               Shares.               Shares.
                              0.89% Service Class   0.89% Class 2
                               2 Shares.             Shares.
------------------------------------------------------------------------


                        Proposed Substitution 13
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                Existing portfolio                       Replacement
                                                          portfolio
 Fidelity VIP High Income--Service Class 2 Shares    Ivy Funds VIP High
                                                            Income
------------------------------------------------------------------------
Management Fees.............  The Existing          0.63%.
                               Portfolio pays the
                               Adviser a monthly
                               management fee
                               which has two
                               components: a group
                               fee rate and an
                               individual fund fee
                               rate. The group fee
                               rate is based on
                               the monthly average
                               net assets of all
                               of the registered
                               investment
                               companies with
                               which the Adviser
                               has management
                               contracts.
Other Expenses..............  0.12%...............  0.06%.
12b-1 Fees..................  0.25%...............  0.25%.
Total Gross Expenses........  0.93%...............  0.94%.
Expense Waiver..............  0.00%...............  0.00%.
Total Net Expenses..........  0.93%...............  0.94%.
------------------------------------------------------------------------


                        Proposed Substitution 14
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                Existing portfolio                       Replacement
                                                          portfolio
    Oppenheimer Variable Account Funds--Global       Ivy Funds VIP High
        Strategic Income/VA--Service Shares                 Income
------------------------------------------------------------------------
Management Fees.............  0.75% of first $200   0.63%.
                               million.
                              0.72% of next $200
                               million.
                              0.69% of next $200
                               million.
                              0.66% of next $200
                               million.
                              0.60% of next $200
                               million.
                              0.50% over $1
                               billion.
Other Expenses..............  0.14%...............  0.06%.
12b-1 Fees..................  0.25%...............  0.25%.
Acquired Fund Fees &          0.06%...............  0.00%.
 Expenses.

[[Page 18745]]

 
Total Gross Expenses........  1.03%...............  0.94%.
Expense Waiver..............  0.06%...............  0.00%.
Total Net Expenses..........  0.97%...............  0.94%.
------------------------------------------------------------------------

    12. The Proposed Substitutions are designed and intended to 
simplify the Portfolio offerings by eliminating overlapping offerings 
that largely duplicate one another by having substantially similar 
investment objectives, strategies and risks. The Section 26 Applicants 
believe that eliminating investment option redundancy via the Proposed 
Substitutions would result in a more consolidated and attractive menu 
of investment options under the Contracts. Moreover, because the 
Proposed Substitutions involve consolidating duplicative investment 
options, the diversity of investment options available under the 
Contracts will not be adversely impacted.
    13. Except for Proposed Substitutions 9, 12, and 13, Contract 
Owners with Contract value allocated to the Subaccounts of the Existing 
Portfolios will experience lower total annual operating expenses 
(before expense waivers or reimbursements) (``annual gross operating 
expenses'') for the Replacement Portfolio than those of the 
corresponding Existing Portfolio.
    14. Proposed Substitutions 9, 12 and 13 are expected to result in 
annual gross operating expenses for the Replacement Portfolio that are 
higher (0.05%, 0.12%, and 0.01%, respectively) than those of the 
corresponding Existing Portfolio. However, total net operating expenses 
are expected to be the same or lower for two years (for Proposed 
Substitutions 9 and 13) and for the life of the Contracts outstanding 
on the Substitution Date (for Proposed Substitution 12) after Life 
Company reimbursements.
    15. Proposed Substitutions 11, 12, 13 and 14 are expected to result 
in a management fee for the Replacement Portfolio that is higher 
(0.04%, 0.09%, 0.07%, and 0.05%, respectively) than that of the 
corresponding Existing Portfolio. Notwithstanding, total gross 
operating expenses for the Replacement Portfolios in Proposed 
Substitutions 11 and 14 are lower than the corresponding Existing 
Portfolio. Moreover, the Section 26 Applicants agree that, except for 
Proposed Substitutions 11 and 12, for a two year period commencing on 
the Substitution Date, and for those Contracts with assets allocated to 
an Existing Portfolio on the Substitution Date, the issuing Life 
Company, as applicable, will, no later than the last business day of 
each fiscal quarter, make a reduction in Separate Account (or 
Subaccount) expenses, for each Contract outstanding on the Substitution 
Date, to the extent that total annual operating expenses of each 
Replacement Portfolio (taking into account applicable fee waivers and 
expense reimbursements) (``annual net operating expenses'') for such 
period exceeds, on an annualized basis, the corresponding Existing 
Portfolio's total annual net operating expenses for the 2013 fiscal 
year. The Section 26 Applicants further agree that, except for Proposed 
Substitutions 11 and 12, Separate Account charges (net of any 
reimbursements or waivers) for any Contract Owner on the Substitution 
Date, will not be increased at any time during the two year period 
following the Substitution Date, while the caps discussed in this 
paragraph are in effect on the Replacement Portfolios. For Proposed 
Substitutions 11 and 12, the reimbursements described above will apply 
for the life of the Contract of all Contracts outstanding on the 
Substitution Date. Accordingly, Contract Owners will bear the same or 
lower expenses as a result of the Proposed Substitutions for a period 
of two years following the Substitution Date (for Proposed 
Substitutions 1-10, 13 and 14) and for the life of the Contract (for 
Proposed Substitutions 11 and 12).
    16. Section 26 Applicants believe another benefit of the Proposed 
Substitutions is that a greater number of Portfolios available through 
the Contracts will be Series of SFT. The Section 26 Applicants state 
that as a result more of the prospectuses and other disclosures and 
communications that Contract Owners receive regarding their investment 
options under the Contracts will be in a consistent format. The Section 
26 Applicants state that fewer and more uniform disclosures and 
communications also should result in cost savings to the Life 
Companies.
    17. Section 26 Applicants state that the Proposed Substitutions 
will result in more investment options under the Contracts having the 
improved portfolio manager selection afforded by the Manager of 
Managers Order, which the Section 26 Applicants believe will appeal to 
both existing and prospective Contract Owners.
    18. The Section 26 Applicants state that the Proposed Substitutions 
will enable the Life Companies to more efficiently administer those 
aspects of the Contracts that pertain to Portfolios. These aspects 
include not only coordinating mailings of Portfolio disclosures and 
other communications to Contract Owners but also various compliance 
matters, such as computing accumulation unit values pursuant to rule 
22c-1 under the 1940 Act, detecting and preventing market timing or 
other disruptive trading activities, and monitoring for potential 
conflicts, including material irreconcilable conflicts due to so-called 
``mixed and shared funding.''
    19. The Section 26 Applicants state that the Proposed Substitutions 
are designed to provide Contract Owners with the ability to continue 
their investment in similar investment options without interruptions 
and at no additional cost to them. In this regard, the Life Companies 
or an affiliate will bear all expenses and transaction costs incurred 
in connection with the Proposed Substitutions and related filings and 
notices, including legal, accounting, brokerage, and other fees and 
expenses. The Proposed Substitutions will not cause the fees and 
charges under the Contracts currently being paid by Contract Owners to 
be greater after the Proposed Substitutions than before the Proposed 
Substitutions. The charges for optional living benefit riders, of 
course, may change from time to time and any such changes would be 
unrelated to the Proposed Substitutions.
    20. The Proposed Substitutions will be described in supplements to 
the applicable prospectuses for the Contracts filed with the Commission 
or in other supplemental disclosure documents for the VGUL I and VGUL 
II Policies (collectively, ``Supplements'') and delivered to all 
affected Contract Owners at least 30 days before the Substitution Date. 
The Supplements will give Contract Owners notice of the respective Life 
Company's intent to take the necessary actions, including seeking the 
order requested by this Application, to substitute shares of the 
Existing Portfolios as described in this application on the 
Substitution Date.
    21. The Section 26 Applicants will send the appropriate prospectus 
supplement (or other notice, in the case of Contracts no longer 
actively marketed and for which there are a relatively small number of 
existing Contract Owners (``Inactive Contracts'')),

[[Page 18746]]

containing this disclosure to all existing Contract Owners. Prospective 
purchasers and new purchasers of Contracts will be provided with a 
Contract prospectus and the supplement containing disclosure regarding 
the proposed Substitutions, as well as prospectuses and supplements for 
the Replacement Portfolios.
    22. In addition to the Supplements distributed to Contract Owners, 
within five (5) business days after the Substitution Date, the Life 
Companies will send Contract Owners a written confirmation of the 
completed Proposed Substitutions in accordance with rule 10b-10 under 
the Securities Exchange Act of 1934, as amended. The confirmation 
statement will include or be accompanied by a statement that reiterates 
the free transfer rights disclosed in the Supplements. The Life 
Companies will also send each Contract Owner current prospectuses for 
the Replacement Portfolios involved to the extent that they have not 
previously received a copy.
    23. Each Substitution will take place at the applicable Existing 
and Replacement Portfolios' relative per share net asset values 
determined on the Substitution Date in accordance with Section 22 of 
the 1940 Act and rule 22c-1 under the Act.
    24. The process for accomplishing the transfer of assets from each 
Existing Portfolio to its corresponding Replacement Portfolio will be 
determined on a case-by-case basis. In most cases, it is expected that 
the substitutions will be effected by redeeming shares of an Existing 
Portfolio for cash and using the cash to purchase shares of the 
Replacement Portfolio. In certain other cases, it is expected that the 
substitutions will be effected by redeeming the shares of an Existing 
Portfolio in-kind; those assets will then be contributed in-kind to the 
corresponding Replacement Portfolio to purchase shares of that 
Portfolio. All in-kind redemptions from an Existing Portfolio of which 
any of the Section 26 Applicants is an affiliated person will be 
effected in accordance with the conditions set forth in the Commission 
staff's no-action letter issued to Signature Financial Group, Inc. 
(Dec. 28, 1999).

Legal Analysis and Conditions

Section 26(c) Relief

    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 makes it unlawful for the 
depositor of a registered unit investment trust that invests in the 
securities of a single issuer to substitute another security for such 
security unless the Commission approves the substitution. Section 26(c) 
requires the Commission to issue an order approving a substitution if 
the evidence establishes that it is consistent with the protection of 
investors and the purposes fairly intended by the policy and provisions 
of the 1940 Act.
    2. The Section 26 Applicants argue that the terms and conditions of 
the Proposed Substitutions are consistent with the principles and 
purposes of Section 26(c) and do not entail any of the abuses that 
Section 26(c) is designed to prevent. The Section 26 Applicants further 
state that the Proposed Substitutions will not result in the type of 
costly forced redemption that Section 26(c) was intended to guard 
against and, for the following reasons, are consistent with the 
protection of investors and the purposes fairly intended by the 1940 
Act.
    3. Minnesota Life and Securian Life are also seeking approval of 
the Proposed Substitutions from any state insurance regulator where 
approval may be necessary.
    4. The Section 26 Applicants submit that each of the Proposed 
Substitutions is consistent with the protection of investors and the 
policy and provisions of the 1940 Act and supported by applicable 
precedent.
    5. Moreover, the Section 26 Applicants agree that, except for 
Proposed Substitutions 11 and 12, for a two year period commencing on 
the Substitution Date, and for those Contracts with assets allocated to 
an Existing Portfolio on the Substitution Date, the issuing Life 
Company, as applicable, will, no later than the last business day of 
each fiscal quarter, make a reduction in Separate Account (or 
Subaccount) expenses, for each Contract outstanding on the Substitution 
Date, to the extent that total annual operating expenses of each 
Replacement Portfolio (taking into account applicable fee waivers and 
expense reimbursements) (``annual net operating expenses'') for such 
period exceeds, on an annualized basis, the corresponding Existing 
Portfolio's total annual net operating expenses for the 2013 fiscal 
year.
    6. The Section 26 Applicants further agree that, except for 
Proposed Substitutions 11 and 12, Separate Account charges (net of any 
reimbursements or waivers) for any Contract Owner on the Substitution 
Date, will not be increased at any time during the two year period 
following the Substitution Date, while the caps discussed above are in 
effect on the Replacement Portfolios.
    7. For Proposed Substitutions 11 and 12, the reimbursements 
described above will apply for the life of the Contract of all 
Contracts outstanding on the Substitution Date. Accordingly, Contract 
Owners will bear the same or lower expenses as a result of the Proposed 
Substitutions for a period of two years following the Substitution Date 
(for Proposed Substitutions 1-10, 13 and 14) and for the life of the 
Contract (for Proposed Substitutions 11 and 12).
    8. The Contract value for each Contract Owner impacted by the 
Proposed Substitutions will not change as a result of the 
Substitutions. In addition, the Section 26 Applicants agree that the 
Life Companies will not increase total Separate Account charges for any 
existing Contract Owner on the Substitution Date for two (2) years from 
the Substitution Date, or for Proposed Substitutions 11 and 12, for 
life of the Contracts outstanding on the Substitution Date.
    9. For Proposed Substitutions 13 and 14, Applicants will not 
receive, for three years from the Substitution Date, any direct or 
indirect benefits paid by the Replacement Portfolios, its advisers or 
underwriters (or their affiliates), in connection with assets 
attributable to Contracts affected by the Substitution, at a higher 
rate than Applicants have received from the corresponding Existing 
Portfolios, its advisers or underwriters (or their affiliates), 
including without limitation rule 12b-1 fees, shareholder service, 
administration, or other service fees, revenue sharing, or other 
arrangements in connection with such assets. Proposed Substitutions 13 
and 14, and the selection of the Replacement Portfolio were not 
motivated by any financial consideration paid or to be paid to the Life 
Companies or their affiliates by the Replacement Portfolio, its 
advisers underwriters or their affiliates.
    10. Notwithstanding the Manager of Managers Order, SFT has agreed, 
as a condition of this Application, that it will not change a 
Subadviser, add a new Subadviser, or otherwise relay on the Manager of 
Managers Order with respect to any SFT Replacement Portfolio without 
first obtaining shareholder approval of the change in Subadviser, the 
new Subadviser, or the SFT Replacement Portfolio's ability to add or to 
replace a Subadviser in reliance on the Manager of Managers Order at a 
shareholder meeting, the record date for which shall be after the 
Proposed Substitution has been effected.

[[Page 18747]]

Section 17(b) Relief

    1. The Section 17 Applicants respectfully request that the 
Commission issue an order pursuant to Section 17(b) of the 1940 Act 
exempting them from the provisions of Section 17(a) of the 1940 Act to 
the extent necessary to permit them to carry out the In-Kind 
Transactions.
    2. 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 a 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 same persons, acting 
as principals, from knowingly purchasing any security or other property 
from the registered investment company.
    3. Certain Existing and Replacement Portfolios may be deemed to be 
affiliated persons of one another, or affiliated persons of an 
affiliated person. Shares held by a separate account of an insurance 
company are legally owned by the insurance company. In addition, 
Advantus, as the Manager of the Replacement Portfolios, may be deemed 
to be a control person. Because the Life Companies and Advantus are 
under common control, entities that they control likewise may be deemed 
to be under common control, and thus affiliated persons of each other, 
notwithstanding the fact that the Contract Owners may be considered the 
beneficial owners of those shares held in the Separate Accounts. The 
Existing Portfolios and the Replacement Portfolios also may be deemed 
to be affiliated persons of affiliated persons. This result follows 
from the fact that, regardless of whether the Life Companies can be 
considered to control these Existing and Replacement Portfolios, the 
Life Companies may be deemed to be an affiliated person thereof because 
it, through its Separate Accounts, owns of record 5% or more of the 
outstanding shares of such Portfolios. In addition, the Life Companies 
may be deemed an affiliated person of the Replacement Portfolios 
because its affiliate, Advantus, may be deemed to control the 
Replacement Portfolios by virtue of serving as their investment 
adviser. As a result of these relationships, each of these Existing 
Portfolios may be deemed to be an affiliated person of an affiliated 
person (the Life Companies or the Separate Accounts) of the Replacement 
Portfolios, and vice versa. The proposed In-Kind Transactions, 
therefore, could be seen as the indirect purchase of shares of a 
Replacement Portfolio with portfolio securities of the corresponding 
Existing Portfolio and conversely the indirect sale of portfolio 
securities of the Existing Portfolio for shares of the corresponding 
Replacement Portfolio. The proposed In-Kind Transactions also could be 
categorized as a purchase of shares of the Replacement Portfolio by the 
Existing Portfolio, acting as principal, and a sale of portfolio 
securities by the Existing Portfolio, acting as principal, to the 
Replacement Portfolio. In addition, the proposed In-Kind Transactions 
could be viewed as a purchase of securities from the Existing Portfolio 
and a sale of securities to the Replacement Portfolio by the Life 
Companies (or the Separate Accounts), acting as principal. If 
characterized in this manner, the proposed In-Kind Transactions may be 
deemed to contravene Section 17(a) due to the affiliated status of 
these entities.
    4. The Section 17 Applicants submit that the terms of the proposed 
In-Kind Transactions, including the consideration to be paid and 
received, as described in this Application, are reasonable and fair and 
do not involve overreaching on the part of any person concerned 
because: (1) The proposed In-Kind Transactions will not adversely 
affect or dilute the interests of Contract Owners; and (2) the proposed 
In-Kind Transactions will comply with the conditions set forth in rule 
17a-7 and the 1940 Act, other than the requirement relating to cash 
consideration. The Section 17 Applicants also submit that the proposed 
In-Kind Transactions are, or will be, consistent with the policies of 
each of the Existing Portfolios and the Replacement Portfolios involved 
in such Transactions, as recited in their registration statements and 
reports filed with the Commission. Finally, the Section 17 Applicants 
submit that the proposed In-Kind Transactions are consistent with the 
general purposes of the 1940 Act.
    5. The In-Kind Transactions will be effected at the respective net 
asset values of the Existing Portfolio and the Replacement Portfolio 
involved, as determined in accordance with the procedures disclosed in 
their respective registration statements and as required by rule 22c-1 
under the 1940 Act. The In-Kind Transactions will not change the dollar 
value of any Contract Owner's investment in any of the Separate 
Accounts, the value of any Contract, the accumulation value or other 
value credited to any Contract, or the death benefit payable under any 
Contract. Immediately after the proposed In-Kind Transactions, the 
value of a Separate Account's investment in a Replacement Portfolio 
will equal the value of its investments in the corresponding Existing 
Portfolio (together with the value of any pre-existing investments in 
the Replacement Portfolio) immediately before the In-Kind Transactions. 
In addition, the Section 17 Applicants will carry out the In-Kind 
Transactions in compliance with the conditions of rule 17a-7, which 
outline the types of safeguards that parties to such transactions 
should implement to ensure that the terms of a transaction involving a 
registered investment company and an affiliated person thereof are fair 
and reasonable, and that the transaction does not involve overreaching 
on the part of any person involved in the transaction.
    6. The proposed In-Kind Transactions will be effected based upon 
the independent current market price of the portfolio securities as 
specified in paragraph (b) of rule 17a-7. The proposed In-Kind 
Transactions will be consistent with the policy of each registered 
investment company and separate series thereof participating in the In-
Kind Transactions, as recited in the relevant registered investment 
companies' registration statements or reports in accordance with 
paragraph (c) of rule 17a-7. In addition, the proposed In-Kind 
Transactions will comply with paragraph (d) of rule 17a-7 because no 
brokerage commission, fee, or other remuneration (except for any 
customary transfer fees) will be paid to any party in connection with 
the proposed In-Kind Transactions. Moreover, each of the Existing and 
Replacement Portfolios involved will be responsible for compliance with 
the applicable board oversight and fund governance provisions of 
paragraphs (e) and (f) of rule 17a-7. Finally, a written record of the 
proposed In-Kind Transactions will be maintained and preserved in 
accordance with paragraph (g) of rule 17a-7.
    7. Even though the proposed In-Kind Transactions will not comply 
with the cash consideration requirement of paragraph (a) of rule 17a-7, 
the terms of the proposed In-Kind Transactions will offer to the 
relevant Existing and Replacement Portfolios the same degree of 
protection from overreaching that rule 17a-7 generally provides in 
connection with the purchase and sale of securities under that rule in 
the ordinary course of business. The Section 17 Applicants represent 
that the In-Kind Transactions will be carried out in compliance with 
the other conditions of rule 17a-7.
    8. The proposed redemption of shares of each Existing Portfolio 
will be consistent with its investment policies,

[[Page 18748]]

as recited in its current registration statement, because the shares 
will be redeemed at their net asset value in conformity with rule 22c-1 
under the 1940 Act. Likewise, the proposed sale of shares of each 
Replacement Portfolio for investment securities will be consistent with 
its investment policies, as recited in its registration statement, 
because: (1) The shares will be sold at their net asset value; and (2) 
the investment securities will be of the type and quality that the 
Replacement Portfolio could have acquired with the proceeds from the 
sale of their shares had the shares been sold for cash.
    9. The Section 17 Applicants submit that the proposed In-Kind 
Transactions, are consistent with the general purposes of the 1940 Act 
as stated in the Findings and Declaration of Policy in Section 1 of the 
1940 Act. The proposed In-Kind Transactions do not present any 
conditions or abuses that the 1940 Act was designed to prevent.
    10. The Section 17 Applicants respectfully submit that, for all the 
reasons stated above, the Commission should issue an order pursuant to 
Section 17(b) of the 1940 Act exempting them from the provisions of 
Section 17(a) of the 1940 Act to the extent necessary to permit them to 
carry out the proposed In-Kind Transactions. The Section 17 Applicants 
assert that the terms of the proposed In-Kind Transactions, including 
the consideration to be paid and received, are reasonable and fair to: 
(1) Each Existing Portfolio and corresponding Replacement Portfolio; 
and (2) Contract Owners. The Section 17 Applicants also assert that the 
proposed In-Kind Transactions do not involve overreaching on the part 
of any person concerned. Furthermore, the Section 17 Applicants 
represent that the proposed In-Kind Transactions are, or will be, 
consistent with all relevant policies of (1) each Existing Portfolio 
and corresponding Replacement Portfolio as stated in their respective 
registration statements and reports filed under the 1940 Act, and (2) 
the general purposes of the 1940 Act.

Conclusion

    For the reasons and upon the facts set forth in this Application, 
the Section 26 Applicants and Section 17 Applicants, respectively, 
submit that the Proposed Substitutions and the related In-Kind 
Transactions meet the standards of Section 26(c) of the 1940 Act and 
Section 17(b) of the 1940 Act and respectfully request that the 
Commission issue an order of approval pursuant to Section 26(c) of the 
1940 Act and an order of exemption pursuant to Section 17(b) of the 
1940 Act.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07424 Filed 4-2-14; 8:45 am]
BILLING CODE 8011-01-P


