MetLife Insurance Company of Connecticut, et al., 59118-59123 [E7-20542]
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Federal Register / Vol. 72, No. 201 / Thursday, October 18, 2007 / Notices
dispute, or, if the requester/petitioner
believes the application fails to contain
information on a relevant matter as
required by law, the identification of
each failure and the supporting reasons
for the requester’s/petitioner’s belief.
In addition, in accordance with 10
CFR 2.309 (f)(2), contentions must be
based on documents or other
information available at the time the
petition is to be filed, such as the
application, supporting safety analysis
report, environmental report or other
supporting document filed by an
applicant or licensee, or otherwise
available to the petitioner. On issues
arising under the National
Environmental Policy Act, the
requester/petitioner shall file
contentions based on the applicant’s
environmental report. The requester/
petitioner may amend those contentions
or file new contentions if there are data
or conclusions in the NRC draft, or final
environmental impact statement,
environmental assessment, or any
supplements relating thereto, that differ
significantly from the data or
conclusions in the applicant’s
documents. Otherwise, contentions may
be amended or new contentions filed
after the initial filing only with leave of
the presiding officer.
Each contention shall be given a
separate numeric or alpha designation
within one of the following groups:
1. Technical—primarily concerns
issues relating to matters discussed or
referenced in the Safety Evaluation
Report for the proposed action.
2. Environmental—primarily concerns
issues relating to matters discussed or
referenced in the Environmental Report
for the proposed action.
3. Emergency Planning—primarily
concerns issues relating to matters
discussed or referenced in the
Emergency Plan as it relates to the
proposed action.
4. Physical Security—primarily
concerns issues relating to matters
discussed or referenced in the Physical
Security Plan as it relates to the
proposed action.
5. Miscellaneous—does not fall into
one of the categories outlined above.
If the requester/petitioner believes a
contention raises issues that cannot be
classified as primarily falling into one of
these categories, the requester/petitioner
must set forth the contention and
supporting bases, in full, separately for
each category into which the requester/
petitioner asserts the contention belongs
with a separate designation for that
category.
Requesters/petitioners should, when
possible, consult with each other in
preparing contentions and combine
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21:55 Oct 17, 2007
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similar subject matter concerns into a
joint contention, for which one of the
co-sponsoring requesters/petitioners is
designated the lead representative.
Further, in accordance with 10 CFR
2.309(f)(3), any requester/petitioner that
wishes to adopt a contention proposed
by another requester/petitioner must do
so in writing within 10 days of the date
the contention is filed, and designate a
representative who shall have the
authority to act for the requester/
petitioner.
In accordance with 10 CFR 2.309 (g),
a request for hearing and/or petition for
leave to intervene may also address the
selection of the hearing procedures,
taking into account the provisions of 10
CFR 2.310.
III. Further Information
Documents related to this action,
including the application for
amendment and supporting
documentation, are available
electronically at the NRC’s Electronic
Reading Room at https://www.nrc.gov/
reading-rm/adams.html. From this site,
you can access the NRC’s Agencywide
Document Access and Management
System (ADAMS), which provides text
and image files of NRC’s public
documents. The ADAMS accession
number for the document related to this
Notice is ML072550166, Redacted
Version of Amendment Request to
Increase Uranium-235 Possession Limit.
If you do not have access to ADAMS or
if there are problems in accessing the
documents located in ADAMS, contact
the NRC Public Document Room (PDR)
Reference staff at 1–800–397–4209, 301–
415–4737, or by e-mail to pdr@nrc.gov.
These documents may also be viewed
electronically on the public computers
located at the NRC’s PDR, O 1 F21, One
White Flint North, 11555 Rockville
Pike, Rockville, MD 20852. The PDR
reproduction contractor will copy
documents for a fee.
Dated at Rockville, Maryland, this 9th day
of October 2007.
For the Nuclear Regulatory Commission.
Peter J. Habighorst,
Chief, Fuel Manufacturing Branch, Division
of Fuel Cycle Safety and Safeguards, Office
of Nuclear Material Safety and Safeguards.
[FR Doc. E7–20583 Filed 10–17–07; 8:45 am]
BILLING CODE 7590–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–28013; File No. 812–13380]
MetLife Insurance Company of
Connecticut, et al.
October 12, 2007.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order pursuant to section 26(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) approving certain substitutions
of securities and an order of exemption
pursuant to section 17(b) of the Act from
section 17(a) of the Act.
AGENCY:
The
Substitution Applicants (defined below)
request an order to permit certain unit
investment trusts to substitute: (a)
Shares of MetLife Investment Large
Company Stock Fund for shares of
MetLife Stock Index Portfolio; (b) shares
of MetLife Investment Small Company
Stock Fund for shares of Russell 2000
Index Portfolio; (c) shares of MetLife
Investments International Stock Fund
for shares of Morgan Stanley EAFE
Index Portfolio; and (d) shares of
MetLife Investment Diversified Bond
Fund for shares of Lehman Brothers
Aggregate Bond Index Portfolio. The
shares are currently held by certain unit
investment trusts to fund certain group
and individual variable annuity
contracts and variable life insurance
policies (collectively, the ‘‘Contracts’’)
issued by the Insurance Companies
(defined below). The Applicants also
hereby apply for an order of exemption
pursuant to section 17(b) of the Act from
section 17(a) of the Act to permit the
Insurance Companies to carry out
certain substitutions.
APPLICANTS: The MetLife Insurance
Company of Connecticut (‘‘MetLife of
CT’’), MetLife Life and Annuity
Company of Connecticut (‘‘MetLife
LAN’’), MetLife Investment Funds, Inc.
(‘‘MLIF’’) and Metropolitan Series Fund,
Inc. (‘‘Met Series Fund’’) (MLIF and Met
Series Fund are referred to as the
‘‘Investment Companies’’ and Metlife of
CT and Metlife LAN are referred to as
the ‘‘Insurance Companies’’), and
MetLife of CT Separate Account Five for
Variable Annuities (‘‘Separate Account
Five’’), MetLife of CT Separate Account
Six for Variable Annuities (‘‘Separate
Account Six’’), MetLife of CT Fund U
for Variable Annuities (‘‘Fund U’’),
MetLife of CT Separate Account QP for
Variable Annuities (‘‘Separate Account
QP’’), MetLife of CT Separate Account
QPN for Variable Annuities (‘‘Separate
Account QPN’’), MetLife of CT Fund UL
SUMMARY OF APPLICATION:
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II for Variable Life Insurance (‘‘Fund UL
II’’), and MetLife of CT Fund UL for
Variable Life Insurance (‘‘Fund UL ‘‘),
(together with Separate Account Five,
Separate Account Six, Fund U, Separate
Account QP, Separate Account QPN,
Fund UL II, and Fund UL, the ‘‘Separate
Accounts’’). The Insurance Companies
and the Separate Accounts are referred
to herein collectively as the
‘‘Substitution Applicants.’’ The
Insurance Companies, the Separate
Accounts and the Investment
Companies are referred to herein
collectively as the ‘‘Applicants.’’
FILING DATE: The application was filed
on April 26, 2007 and amended and
restated on October 11, 2007.
HEARING OF 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 the Secretary of the
Commission and serving Applicants
with a copy of the request personally by
mail. Hearing requests should be
received by the Commission by 5:30
p.m. on November 6, 2007 and should
be accompanied by proof of service on
Applicants, in the form of an affidavit
or for lawyers a certificate of service.
Hearing requests should state the nature
of the writer’s interest, the reasons for
the request and the issue contested.
Persons may request notification of a
hearing by writing to the Secretary of
the Commission.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549. Applicants:
Curtis A. Young, Senior Counsel—
Securities Products and Regulation,
MetLife Group, One MetLife Plaza, 27–
01 Queens Plaza North, Long Island
City, NY 11101.
FOR FURTHER INFORMATION CONTACT:
Alison White, Senior Counsel, or Joyce
M. Pickholz, Branch Chief, Office of
Insurance Products, Division of
Investment Management, at (202) 551–
6795.
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained for a fee from the
Public Reference Branch of the
Commission, 100 F Street, NE.,
Washington, DC 20549, (tel. (202–551–
8090).
Applicant’s Representations
1. MetLife of CT, formerly known as
The Travelers Insurance Company, is a
stock life insurance company organized
in 1863 under the laws of Connecticut.
MetLife of CT is a wholly-owned
subsidiary of MetLife, Inc. (‘‘MetLife’’)
MetLife of CT’s principal place of
business is located at One Cityplace,
Hartford, Connecticut 06103. For
purposes of the Act, MetLife of CT is the
depositor and sponsor of Separate
Account Five, Fund U, Separate
Account QP, Separate Account QPN and
Fund UL.
2. MetLife LAN, formerly known as
The Travelers Life and Annuity
Company, is a stock life insurance
company organized in 1973 under the
laws of Connecticut. MetLife LAN is an
indirect wholly-owned subsidiary of
MetLife, Inc. MetLife LAN’s principal
place of business is located at One
Cityplace, Hartford, Connecticut 06103.
For purposes of the Act, MetLife LAN is
the depositor and sponsor of Separate
Account Six and Fund UL II.
3. Separate Account Five, Separate
Account Six, Fund U, Separate Account
QP, Fund UL II, and Fund UL are
registered under the Act as unit
investment trusts for the purpose of
funding the Contracts. Security interests
under the Contracts have been
registered under the Securities Act of
1933.
4. Separate Account QPN is exempt
from registration under the Act. Security
interests under the Contracts have been
Management
fees
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Existing Fund—MetLife Investment
Large Company Stock Fund ......
Replacement Fund—MetLife Stock
Index Portfolio ............................
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Other
expenses
Acquired fund
fees and
expenses
Total annual
expenses
Expense
waivers
Net annual
expenses
.52%
........................
.11%
..........................
.63%
................
.63%
.25%
10. MetLife Investment Small
Company Stock Fund—Russell 2000
Index Portfolio: The MetLife Investment
Small Company Stock Fund seeks
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Distribution
(12b–1) fees
registered under the Securities Act of
1933.
5. MLIF and Met Series Fund are each
registered under the Act as open-end
management investment companies of
the series type, and their securities are
registered under the Securities Act of
1933. MetLife Investment Funds
Management LLC, an affiliate of
MetLife, serves as investment adviser to
MLIF. MetLife Advisers, LLC, an
affiliate of MetLife, serves as investment
adviser to the Met Series Fund.
6. The Contracts permit the Insurance
Companies to substitute shares of one
fund with shares of another, including
a fund of a different registered
investment company.
7. Each Insurance Company, on its
behalf and on behalf of the Separate
Accounts, proposes to make certain
substitutions of shares of four funds of
MLIF (the ‘‘Existing Funds’’) held in
sub-accounts of its respective Separate
Accounts for certain series (the
‘‘Replacement Funds’’) of the Met Series
Fund.
8. Set forth below are the fees and
expenses of each Existing Fund and its
corresponding Replacement Fund, as
well as a description of each fund’s
investment objectives and principal
investment policies. Additional
information including asset sizes, risk
factors, and comparable performance
history for each Existing Fund and
Replacement Fund can be found in the
application.
9. MetLife Investment Large Company
Stock Fund—MetLife Stock Index
Portfolio: The MetLife Investment Large
Company Stock Fund seeks maximum
long-term total return by investing
primarily in common stocks of wellestablished companies. The MetLife
Stock Index Portfolio seeks to equal the
performance of the S&P 500 Index. The
Fund purchases the common stocks of
all the companies in the S&P Index.
........................
.05%
..........................
.30%
.01%
.29%
maximum long-term total return by
investing primarily in common stocks of
small companies. The Russell 2000
Index Portfolio seeks to equal the return
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of the Russell 2000 Index. The Fund
invests in a statistically selected sample
of the 2000 stocks included in the
Index.
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Management
fees
Existing Fund—MetLife Investment
Small Company Stock Fund ......
Replacement Fund—Russell 2000
Index Portfolio ............................
Total annual
expenses
Expense
waivers
Net annual
expenses
.14%
..........................
.78%
................
.78%
.25%
Existing Fund—MetLife Investment
International Stock Fund ............
Replacement Fund—Morgan Stanley EAFE Index Portfolio ............
........................
.09%
.02%
.36%
.01%
.35%
maximum long-term total return by
investing primarily in common stocks of
established non-U.S. companies. The
Morgan Stanley EAFE Index Portfolio
Distribution
(12b–1) fees
Other
expenses
seeks to equal the performance of the
MSCI EAFE Index. The Fund invests in
a statistically selected sample of the
1000 stocks included in the Index.
Acquired fund
fees and
expenses
Total annual
expenses
Expense
waivers
Net annual
expenses
.73%
........................
.20%
..........................
.93%
................
.93%
.30%
12. MetLife Investment Diversified
Bond Fund—Lehman Brothers
Aggregate Bond Index Portfolio: The
MetLife Investment Diversified Bond
........................
.13%
.02%
.01
................
.44%
Fund seeks maximum long-term total
return by investing primarily in fixed
income securities. The Lehman
Brothers Aggregate Bond Index
Management
fees
Existing Fund—MetLife Investment
Diversified Bond Fund ................
Replacement
Fund—Lehman
Brothers Aggregate Bond Index
Portfolio ......................................
Other
expenses
Acquired fund
fees and
expenses
Total annual
expenses
Expense
waivers
Net annual
expenses
........................
.09%
..........................
.50%
................
.50%
.25%
1. The Substitution Applicants
request that the Commission issue an
order pursuant to section 26(c) of the
Act approving the proposed
substitutions.
2. The Contracts permit the applicable
Insurance Company, subject to
compliance with applicable law, to
substitute shares of another investment
company for shares of an investment
company held by a sub-account of the
Separate Accounts. The prospectuses for
the Contracts and the Separate Accounts
contain appropriate disclosure of this
right.
3. The proposed Replacement Fund
for each Existing Fund has an
investment objective that is at least
substantially similar to that of the
Existing Fund. Moreover, the principal
investment policies of the Replacement
Funds are similar to those of the
corresponding Existing Funds. In
addition, the Existing Funds are not
being offered for new sales, and are not
available as new investment options
under Contracts previously or currently
offered by the Insurance Companies or,
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Distribution
(12b–1) fees
Portfolio seeks to equal the performance
of the Lehman Brothers Aggregate Bond
Index and invests in a sampling of
bonds included in the Index.
.41%
Applicant’s Legal Analysis
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Acquired fund
fees and
expenses
........................
Management
fees
21:55 Oct 17, 2007
Other
expenses
.64%
11. MetLife Investment International
Stock Fund—Morgan Stanley EAFE
Index Portfolio: The MetLife Investment
International Stock Fund seeks
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Distribution
(12b–1) fees
........................
.06%
..........................
.31%
.01
.30%
if available, are not available for
additional contributions and/or
transfers from other investment options
under Contracts.
4. The Substitution Applicants submit
there is little likelihood that significant
additional assets, if any, will be
allocated to the Existing Funds and,
therefore, because of the cost of
maintaining such Funds as investment
options under the Contracts, it is in the
interest of shareholders to substitute the
applicable Replacement Funds which
are currently being offered as
investment options by the Insurance
Companies.
5. Applicants submit that because the
Replacement Funds are managed as
index funds or managed to replicate the
return of an index, each Replacement
Fund has lower management fees and
lower total operating expenses than the
corresponding Existing Fund. Contract
owners with balances invested in the
Replacement Fund will therefore have a
lower expense ratio. However, the
Substitution Applicants agree that the
Insurance Companies will not increase
total separate account charges (net of
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any reimbursements or waivers) for any
existing owner of the Contracts on the
date of the substitutions for a period of
two years from the date of the
substitutions.
6. The substitution will not negatively
impact the ability of contract owners to
choose from a variety of funds available
in the products. Of all the variable
products affected by this substitution,
the minimum number of funds currently
available in any product before the
substitution is 23, and after the
substitution the minimum number
available will be 22 funds (of the four
Replacement Funds, one is already
available in this product, leading to a
decrease of one in the number of
available funds).
7. The Substitution Applicants assert
that the replacement of the Existing
Funds with the Replacement Funds is
consistent with the protection of
Contract owners and the purposes fairly
intended by the policies and provisions
of the Act.
8. The Substitution Applicants
represent that by disclosure in the
prospectuses for the variable annuity
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Contracts, and supplements to the
prospectuses for the life insurance
Contracts, each Insurance Company will
notify all owners of the Contracts of its
intention to take the necessary actions,
including seeking the order requested
by this Application, to substitute shares
of the funds as described herein.
9. The disclosure in the prospectuses
and the prospectus supplements will
advise Contract owners that from the
date of the prospectuses and the
supplements until the date of the
proposed substitution, owners are
permitted to make one transfer of
Contract value (or annuity unit
exchange) out of the Existing Fund subaccount to one or more other subaccounts without the transfer (or
exchange) being treated as one of a
limited number of permitted transfers
(or exchanges) or a limited numbers of
transfers (or exchanges) permitted
without a transfer charge.
10. The disclosure in the prospectuses
and the prospectus supplements also
will inform Contract owners that the
Insurance Company will not exercise
any rights reserved under any Contract
to impose additional restrictions on
transfers until at least 30 days after the
proposed substitutions.
11. The disclosure in the prospectuses
and the prospectus supplements will
also advise Contract owners that for at
least 30 days following the proposed
substitutions, the Insurance Companies
will permit Contract owners affected by
the substitutions to make one transfer of
Contract value (or annuity unit
exchange) out of the Replacement Fund
sub-account to one or more other subaccounts without the transfer (or
exchange) being treated as one of a
limited number of permitted transfers
(or exchanges) or a limited number of
transfers (or exchanges) permitted
without a transfer charge. Other than the
restrictions concerning market timing/
excessive trading, as disclosed in the
prospectuses, the Contracts currently
permit transfers of all or part of contract
value between the variable funding
options at any time.
12. The proposed substitutions will
take place at relative net asset value
with no change in the amount of any
Contract owner’s Contract value, cash
value, or death benefit or in the dollar
value of his or her investment in the
Separate Accounts.
13. The process for accomplishing the
transfer of assets from each Existing
Fund to its corresponding Replacement
Fund will be determined on a case-bycase basis. In most cases, it is expected
that the substitutions will be effected by
redeeming shares of an Existing Fund
for cash and using the cash to purchase
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shares of the Replacement Fund. In
certain other cases, it is expected that
the substitutions will be effected by
redeeming the shares of an Existing
Fund in-kind; those assets will then be
contributed in-kind to the
corresponding Replacement Fund to
purchase shares of that Fund.
14. Contract owners will not incur
any fees or charges as a result of the
proposed substitutions, nor will their
rights or an Insurance Company’s
obligations under the Contracts be
altered in any way. All expenses
incurred in connection with the
proposed substitutions, including
brokerage, legal, accounting, and other
fees and expenses, will be paid by the
Insurance Companies. In addition, the
proposed substitutions will not impose
any tax liability on Contract owners.
The proposed substitutions will not
cause the Contract fees and charges
currently being paid by existing
Contract owners to be greater after the
proposed substitutions than before the
proposed substitutions. No fees will be
charged on the transfers made at the
time of the proposed substitutions
because the proposed substitutions will
not be treated as a transfer for the
purpose of assessing transfer charges or
for determining the number of
remaining permissible transfers in a
Contract year.
15. In addition to the prospectuses
and prospectus supplements distributed
to owners of Contracts, within five
business days after the proposed
substitutions are completed, Contract
owners will be sent a written notice
informing them that the substitutions
were carried out and that they may
make one transfer of all Contract value
or cash value under a Contract invested
in any one of the sub-accounts on the
date of the notice to one or more other
sub-accounts available under their
Contract at no cost and without regard
to the usual limit on the frequency of
transfers from the variable account
options to the fixed account options.
The notice will also reiterate that (other
than with respect to ‘‘market timing’’
activity) the Insurance Company will
not exercise any rights reserved by it
under the Contracts to impose
additional restrictions on transfers or to
impose any charges on transfers until at
least 30 days after the proposed
substitutions.
16. The Insurance Companies will
also send each Contract owner current
prospectuses for the Replacement Funds
involved to the extent that they have not
previously received a copy.
17. Each Insurance Company also is
seeking approval of the proposed
substitutions from any state insurance
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59121
regulators whose approval may be
necessary or appropriate.
18. The Substitution Applicants agree
that for those who were Contract owners
on the date of the proposed
substitutions, the Insurance Companies
will reimburse, on the last business day
of each fiscal period (not to exceed a
fiscal quarter) during the twenty-four
months following the date of the
proposed substitutions, those Contract
Owners whose subaccount invests in
the Replacement Fund such that the
sum of the Replacement Fund’s
operating expenses (taking into account
fee waivers and expense
reimbursements) and subaccount
expenses (asset-based fees and charges
deducted on a daily basis from
subaccount assets and reflected in the
calculation of subaccount unit values)
for such period will not exceed, on an
annualized basis, the sum of the
Existing Fund’s operating expenses
(taking into account fee waivers and
expense reimbursements) and
subaccount expenses for fiscal year
2006.
19. The Applicants request an order
under section 17(b) exempting them
from the provisions of section 17(a) to
the extent necessary to permit the
Insurance Companies to carry out each
of the proposed substitutions.
20. Section 17(a)(1) of the 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 Act generally prohibits
the persons described above, acting as
principals, from knowingly purchasing
any security or other property from the
registered company.
21. Because shares held by a separate
account of an insurance company are
legally owned by the insurance
company, the Insurance Companies and
their affiliates collectively own of record
substantially all of the shares of MLIF
and Met Series Fund. Therefore, MLIF
and Met Series Fund and their
respective funds are arguably under the
control of the Insurance Companies
notwithstanding the fact that Contract
owners may be considered the
beneficial owners of those shares held
in the Separate Accounts. If MLIF and
Met Series Fund and their respective
funds are under the control of the
Insurance Companies, then each
Insurance Company is an affiliated
person or an affiliated person of an
affiliated person of MLIF and Met Series
Fund and their respective funds. If
MLIF and Met Series Fund and their
respective funds are under the control of
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Federal Register / Vol. 72, No. 201 / Thursday, October 18, 2007 / Notices
the Insurance Companies, then MLIF
and Met Series Fund and their
respective funds are affiliated persons of
the Insurance Companies.
22. Regardless of whether or not the
Insurance Companies can be considered
to control MLIF and Met Series Fund
and their respective funds, because the
Insurance Companies own of record
more than 5% of the shares of each of
them and are under common control
with each Existing Fund’s and
Replacement Fund’s investment adviser,
the Insurance Companies are affiliated
persons of both MLIF and Met Series
Fund and their respective funds.
Likewise, their respective funds are
each an affiliated person of the
Insurance Companies.
23. Because the substitutions may be
effected, in whole or in part, by means
of in-kind redemptions and purchases,
the substitutions may be deemed to
involve one or more purchases or sales
of securities or property between
affiliated persons. The proposed
transactions may involve a transfer of
portfolio securities by the Existing
Funds to the Insurance Companies;
immediately thereafter, the Insurance
Companies would purchase shares of
the Replacement Funds with the
portfolio securities received from the
Existing Funds. Accordingly, as the
Insurance Companies and certain of the
Existing Funds listed above, and the
Insurance Companies and the
Replacement Funds, could be viewed as
affiliated persons of one another under
section 2(a)(3) of the Act, it is
conceivable that this aspect of the
substitutions could be viewed as being
prohibited by section 17(a).
24. Section 17(b) of the Act provides
that the Commission may, upon
application, grant an order exempting
any transaction from the prohibitions of
section 17(a) if the evidence establishes
that:
(a) The terms of the proposed
transaction, including the consideration
to be paid or received, are reasonable
and fair and do not involve
overreaching on the part of any person
concerned;
(b) the proposed transaction is
consistent with the policy of each
registered investment company
concerned, as recited in its registration
statement and records filed under the
Act; and (c) the proposed transaction is
consistent with the general purposes of
the Act.
25. The Applicants submit that for all
the reasons described herein the terms
of the proposed in-kind redemptions of
shares of the Existing Funds and in-kind
purchases of shares of the Replacement
Funds by the Insurance Companies,
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Jkt 214001
including the consideration to be paid
and received, are reasonable and fair
and do not involve overreaching on the
part of any person concerned. The
Applicants also submit that the
proposed in-kind redemptions and
purchases by the Insurance Companies
are consistent with the policies of MLIF
and the Met Series Fund. Finally, the
Applicants submit that the proposed
substitutions are consistent with the
general purposes of the Act.
26. To the extent that the in-kind
redemptions by the Insurance
Companies of the Existing Funds’ shares
and in-kind purchases by the Insurance
Companies of the Replacement Funds’
shares are deemed to involve principal
transactions among affiliated persons,
the procedures described below should
be sufficient to assure that the terms of
the proposed transactions are reasonable
and fair to all participants. The
Applicants maintain that the terms of
the proposed in-kind redemption and
purchase transactions, including the
consideration to be paid and received by
each fund 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.
The proposed transactions will take
place at relative net asset value in
conformity with the requirements of
section 22(c) of the Act and Rule 22c–
1 thereunder with no change in the
amount of any Contract owner’s contract
value or death benefit or in the dollar
value of his or her investment in any of
the Separate Accounts. Contract owners
will not suffer any adverse tax
consequences 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, the
Insurance Companies, MLIF and Met
Series Fund may not rely on Rule 17a–
7, the 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. In addition, any inkind redemptions will only be made in
accordance with the conditions set out
in the Signature Financial Group noaction letter (December 29, 1999).
27. The boards of MLIF and Met
Series Fund have adopted procedures,
as required by paragraph (e)(1) of Rule
17a–7, pursuant to which the series of
each may purchase and sell securities to
and from their affiliates. The Applicants
will carry out the proposed Insurance
Company in-kind redemptions and
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Frm 00054
Fmt 4703
Sfmt 4703
purchases in conformity with all of the
conditions of Rule 17a–7 and each
series’ procedures thereunder, except
that the consideration paid for the
securities being purchased or sold may
not be entirely cash. Nevertheless, the
circumstances surrounding the
proposed substitutions will be such as
to offer the same degree of protection to
each Existing Fund and Replacement
Fund from overreaching that Rule 17a–
7 provides to them generally in
connection with their purchase and sale
of securities under that Rule in the
ordinary course of their business. In
particular, the Insurance Companies (or
any of their affiliates) cannot effect the
proposed transactions at a price that is
disadvantageous to any of the Existing
Funds or Replacement Funds. Although
the transactions may not be entirely for
cash, each will be effected based upon
(1) the independent market price of the
portfolio securities valued as specified
in paragraph (b) of Rule 17a–7, and (2)
the net asset value per share of each
Existing Fund and corresponding
Replacement Fund valued in
accordance with the procedures
disclosed in its respective Investment
Company’s registration statement and as
required by Rule 22c–1 under the Act.
No brokerage commission, fee, or other
remuneration will be paid to any party
in connection with the proposed in kind
purchase transactions.
28. The sale of shares of Replacement
Funds for portfolio securities, as
contemplated by the proposed
Insurance Company in-kind purchases,
will be consistent with the investment
policies and restrictions of the
Replacement Funds because (1) the
shares will be sold at their net asset
value, and (2) the portfolio securities
will be of the type and quality that the
Replacement Funds would each have
acquired with the proceeds from share
sales had the shares been sold for cash.
To assure that the second of these
conditions is met, MetLife Advisers,
LLC and the subadviser, as applicable,
will examine the portfolio securities
being offered to each Replacement Fund
and accept only those securities as
consideration for shares that it would
have acquired for each such fund in a
cash transaction.
29. The Applicants submit that the
proposed Insurance Company in-kind
redemptions and purchases, as
described herein, are consistent with the
general purposes of the Act as stated in
the Findings and Declaration of Policy
in Section 1 of the Act. The proposed
transactions do not present any of the
conditions or abuses that the Act was
designed to prevent.
E:\FR\FM\18OCN1.SGM
18OCN1
Federal Register / Vol. 72, No. 201 / Thursday, October 18, 2007 / Notices
30. The Applicants request that the
Commission issue an order pursuant to
section 17(b) of the Act exempting the
Separate Accounts, the Insurance
Companies, MLIF, Met Series Fund and
each Replacement Fund from the
provisions of section 17(a) of the Act to
the extent necessary to permit the
Insurance Companies on behalf of the
Separate Accounts to carry out, as part
of the substitutions, the in-kind
redemption and purchase of shares of
the Existing Fund and Replacement
Funds which may be deemed to be
prohibited by section 17(a) of the Act.
31. The Applicants represent that the
proposed in-kind redemptions and
purchases meet all of the requirements
of section 17(b) of the Act and that an
exemption should be granted, to the
extent necessary, from the provisions of
section 17(a).
Conclusion
Applicants assert that for the reasons
summarized above the proposed
substitutions and related transactions
meet the standards of section 26(c) of
the Act and are consistent with the
standards of section 17(b) of the Act and
that the requested orders should be
granted.
For the Commission, by the Division of
Investment Management pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–20542 Filed 10–17–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56650; File No. SR–Amex–
2007–35]
Self-Regulatory Organizations;
American Stock Exchange LLC; Order
Granting Approval of a Proposed Rule
Change, as Modified by Amendment
No. 1 Thereto, Relating to the Criteria
for Securities That Underlie Options
Traded on the Exchange
mstockstill on PROD1PC66 with NOTICES
October 12, 2007.
I. Introduction
On April 5, 2007, the American Stock
Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’),1 and
Rule 19b–4 thereunder,2 a proposed rule
change to amend certain rules to permit
the initial and continued listing and
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate Aug<31>2005
21:55 Oct 17, 2007
Jkt 214001
trading on the Exchange of options on
Index Multiple Exchange Traded Fund
Shares (‘‘Multiple Fund Shares’’) and
Index Inverse Exchange Traded Fund
Shares (‘‘Inverse Fund Shares’’)
(collectively, the ‘‘Fund Shares’’). On
August 20, 2007, the Exchange filed
Amendment No. 1 to the proposed rule
change.3 The proposed rule change, as
modified by Amendment No. 1, was
published for comment in the Federal
Register on September 6, 2007.4 The
Commission received no comment
letters on the proposed rule change.
This order approves the proposed rule
change as modified by Amendment No.
1.
II. Description of the Proposal
The purpose of the proposed rule
change is to revise Amex Rules 915 and
916 to enable the listing and trading on
the Exchange of options on Multiple
Fund Shares 5 and Inverse Fund
Shares.6 Multiple and Index Fund
Shares differ from traditional exchangetraded fund (‘‘ETFs’’) shares in that they
do not merely correspond to the
performance of a given index, but rather
attempt to match a multiple or inverse
of such underlying index performance.
Current Multiple Fund Shares trading
on the Exchange include the ProShares
Ultra Funds and Index Inverse Fund
Shares trading on the Exchange include
the Short Funds and UltraShort Funds.7
In order to achieve investment results
that provide either a positive multiple
or inverse of the benchmark index,
3 Amendment No. 1 superseded and replaced the
original filing in its entirety.
4 See Securities Exchange Act Release No. 56336
(August 29, 2007), 72 FR 51281.
5 Multiple Fund Shares seek to provide
investment results, before fees and expenses, that
correspond to a specified multiple of the percentage
performance on a given day of a particular foreign
or domestic stock index.
6 Inverse Fund Shares seek to provide investment
results, before fees and expenses, that correspond
to the inverse (opposite) of the percentage
performance on a given day of a particular foreign
or domestic stock index by a specified multiple.
7 See Securities Exchange Act Release Nos. 52553
(October 3, 2005), 70 FR 59100 (October 11, 2005)
(SR–Amex–2004–62) (approving the listing and
trading of the Ultra Funds and Short Funds) and
54040 (June 23, 2006), 71 FR 37629 (June 30, 2006)
(SR–Amex–2006–41) (approving the listing and
trading of the UltraShort Funds). The Ultra Funds
are expected to gain, on a percentage basis,
approximately twice (200%) as much as the
underlying benchmark index and should lose
approximately twice (200%) as much as the
underlying benchmark index when such prices
decline. The Short Funds are expected to achieve
investment results, before fees and expenses, that
correspond to the inverse or opposite of the daily
performance (¥100%) of an underlying benchmark
index. Lastly, the UltraShort Funds are expected to
achieve investment results, before fees and
expenses that correspond to twice the inverse or
opposite of the daily performance (¥200%) of the
underlying benchmark index.
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Frm 00055
Fmt 4703
Sfmt 4703
59123
Multiple Fund Shares or Inverse Fund
Shares may hold a combination of
financial instruments, including, among
other things, stock index futures
contracts; options on futures; options on
securities and indices; equity caps,
collars and floors; swap agreements;
forward contracts; repurchase
agreements; and reverse repurchase
agreements (the ‘‘Financial
Instruments’’). The underlying
portfolios of Multiple Fund Shares
generally will hold at least 85% of their
assets in the component securities of the
underlying relevant benchmark index.
The remainder of any assets are devoted
to Financial Instruments that are
intended to create the additional needed
exposure to such Underlying Index
necessary to pursue its investment
objective. Normally, 100% of the value
of the underlying portfolios of Inverse
Fund Shares will be devoted to
Financial Instruments and money
market instruments, including U.S.
government securities and repurchase
agreements (the ‘‘Money Market
Instruments’’).
Currently, Commentary .06 to Amex
Rule 915 provides securities deemed
appropriate for options trading shall
include shares or other securities
(‘‘Exchange-Traded Fund Shares’’) that
are principally traded on a national
securities exchange or through the
facilities of a national securities
association and defined as an ‘‘NMS
stock’’ under Rule 600 of Regulation
NMS, and that (i) represent an interest
in a registered investment company
organized as an open-end management
investment company, a unit investment
trust or a similar entity which holds
securities constituting or otherwise
based on or representing an investment
in an index or portfolio of securities; (ii)
represent interest in a trust or other
similar entity that holds a specified nonU.S. currency and/or currencies
deposited with the trust or similar entity
when aggregated in some specified
minimum number may be surrendered
to the trust by the beneficial owner to
receive the specified non-U.S. currency
and/or currencies and pays the
beneficial owner interest and other
distributions on the deposited non-U.S.
currency and/or currencies, if any,
declared and paid by the trust; or (iii)
represent commodity pool interests
principally engaged, directly or
indirectly, in holding and/or managing
portfolios or baskets of securities,
commodity futures contracts, options on
commodity futures contracts, swaps,
forward contracts and/or options on
physical commodities and/or non-U.S.
currency (‘‘Commodity Pool ETFs’’).
E:\FR\FM\18OCN1.SGM
18OCN1
]]>Agencies
[Federal Register Volume 72, Number 201 (Thursday, October 18, 2007)]
[Notices]
[Pages 59118-59123]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-20542]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-28013; File No. 812-13380]
MetLife Insurance Company of Connecticut, et al.
October 12, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order pursuant to section 26(c) of
the Investment Company Act of 1940 (the ``Act'') approving certain
substitutions of securities and an order of exemption pursuant to
section 17(b) of the Act from section 17(a) of the Act.
-----------------------------------------------------------------------
Summary of Application: The Substitution Applicants (defined below)
request an order to permit certain unit investment trusts to
substitute: (a) Shares of MetLife Investment Large Company Stock Fund
for shares of MetLife Stock Index Portfolio; (b) shares of MetLife
Investment Small Company Stock Fund for shares of Russell 2000 Index
Portfolio; (c) shares of MetLife Investments International Stock Fund
for shares of Morgan Stanley EAFE Index Portfolio; and (d) shares of
MetLife Investment Diversified Bond Fund for shares of Lehman Brothers
Aggregate Bond Index Portfolio. The shares are currently held by
certain unit investment trusts to fund certain group and individual
variable annuity contracts and variable life insurance policies
(collectively, the ``Contracts'') issued by the Insurance Companies
(defined below). The Applicants also hereby apply for an order of
exemption pursuant to section 17(b) of the Act from section 17(a) of
the Act to permit the Insurance Companies to carry out certain
substitutions.
Applicants: The MetLife Insurance Company of Connecticut (``MetLife of
CT''), MetLife Life and Annuity Company of Connecticut (``MetLife
LAN''), MetLife Investment Funds, Inc. (``MLIF'') and Metropolitan
Series Fund, Inc. (``Met Series Fund'') (MLIF and Met Series Fund are
referred to as the ``Investment Companies'' and Metlife of CT and
Metlife LAN are referred to as the ``Insurance Companies''), and
MetLife of CT Separate Account Five for Variable Annuities (``Separate
Account Five''), MetLife of CT Separate Account Six for Variable
Annuities (``Separate Account Six''), MetLife of CT Fund U for Variable
Annuities (``Fund U''), MetLife of CT Separate Account QP for Variable
Annuities (``Separate Account QP''), MetLife of CT Separate Account QPN
for Variable Annuities (``Separate Account QPN''), MetLife of CT Fund
UL
[[Page 59119]]
II for Variable Life Insurance (``Fund UL II''), and MetLife of CT Fund
UL for Variable Life Insurance (``Fund UL ``), (together with Separate
Account Five, Separate Account Six, Fund U, Separate Account QP,
Separate Account QPN, Fund UL II, and Fund UL, the ``Separate
Accounts''). The Insurance Companies and the Separate Accounts are
referred to herein collectively as the ``Substitution Applicants.'' The
Insurance Companies, the Separate Accounts and the Investment Companies
are referred to herein collectively as the ``Applicants.''
Filing Date: The application was filed on April 26, 2007 and amended
and restated on October 11, 2007.
Hearing of 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 the Secretary of the
Commission and serving Applicants with a copy of the request personally
by mail. Hearing requests should be received by the Commission by 5:30
p.m. on November 6, 2007 and should be accompanied by proof of service
on Applicants, in the form of an affidavit or for lawyers a certificate
of service. Hearing requests should state the nature of the writer's
interest, the reasons for the request and the issue contested. Persons
may request notification of a hearing by writing to the Secretary of
the Commission.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549. Applicants: Curtis A. Young, Senior
Counsel--Securities Products and Regulation, MetLife Group, One MetLife
Plaza, 27-01 Queens Plaza North, Long Island City, NY 11101.
FOR FURTHER INFORMATION CONTACT: Alison White, Senior Counsel, or Joyce
M. Pickholz, Branch Chief, Office of Insurance Products, Division of
Investment Management, at (202) 551-6795.
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the Public Reference Branch of the Commission, 100 F Street, NE.,
Washington, DC 20549, (tel. (202-551-8090).
Applicant's Representations
1. MetLife of CT, formerly known as The Travelers Insurance
Company, is a stock life insurance company organized in 1863 under the
laws of Connecticut. MetLife of CT is a wholly-owned subsidiary of
MetLife, Inc. (``MetLife'') MetLife of CT's principal place of business
is located at One Cityplace, Hartford, Connecticut 06103. For purposes
of the Act, MetLife of CT is the depositor and sponsor of Separate
Account Five, Fund U, Separate Account QP, Separate Account QPN and
Fund UL.
2. MetLife LAN, formerly known as The Travelers Life and Annuity
Company, is a stock life insurance company organized in 1973 under the
laws of Connecticut. MetLife LAN is an indirect wholly-owned subsidiary
of MetLife, Inc. MetLife LAN's principal place of business is located
at One Cityplace, Hartford, Connecticut 06103. For purposes of the Act,
MetLife LAN is the depositor and sponsor of Separate Account Six and
Fund UL II.
3. Separate Account Five, Separate Account Six, Fund U, Separate
Account QP, Fund UL II, and Fund UL are registered under the Act as
unit investment trusts for the purpose of funding the Contracts.
Security interests under the Contracts have been registered under the
Securities Act of 1933.
4. Separate Account QPN is exempt from registration under the Act.
Security interests under the Contracts have been registered under the
Securities Act of 1933.
5. MLIF and Met Series Fund are each registered under the Act as
open-end management investment companies of the series type, and their
securities are registered under the Securities Act of 1933. MetLife
Investment Funds Management LLC, an affiliate of MetLife, serves as
investment adviser to MLIF. MetLife Advisers, LLC, an affiliate of
MetLife, serves as investment adviser to the Met Series Fund.
6. The Contracts permit the Insurance Companies to substitute
shares of one fund with shares of another, including a fund of a
different registered investment company.
7. Each Insurance Company, on its behalf and on behalf of the
Separate Accounts, proposes to make certain substitutions of shares of
four funds of MLIF (the ``Existing Funds'') held in sub-accounts of its
respective Separate Accounts for certain series (the ``Replacement
Funds'') of the Met Series Fund.
8. Set forth below are the fees and expenses of each Existing Fund
and its corresponding Replacement Fund, as well as a description of
each fund's investment objectives and principal investment policies.
Additional information including asset sizes, risk factors, and
comparable performance history for each Existing Fund and Replacement
Fund can be found in the application.
9. MetLife Investment Large Company Stock Fund--MetLife Stock Index
Portfolio: The MetLife Investment Large Company Stock Fund seeks
maximum long-term total return by investing primarily in common stocks
of well-established companies. The MetLife Stock Index Portfolio seeks
to equal the performance of the S&P 500 Index. The Fund purchases the
common stocks of all the companies in the S&P Index.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acquired fund
Management Distribution Other fees and Total annual Expense Net annual
fees (12b-1) fees expenses expenses expenses waivers expenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Existing Fund--MetLife Investment Large Company .52% .............. .11% ............... .63% ......... .63%
Stock Fund.........................................
Replacement Fund--MetLife Stock Index Portfolio..... .25% .............. .05% ............... .30% .01% .29%
--------------------------------------------------------------------------------------------------------------------------------------------------------
10. MetLife Investment Small Company Stock Fund--Russell
2000[supreg] Index Portfolio: The MetLife Investment Small Company
Stock Fund seeks maximum long-term total return by investing primarily
in common stocks of small companies. The Russell 2000[supreg] Index
Portfolio seeks to equal the return of the Russell 2000 Index. The Fund
invests in a statistically selected sample of the 2000 stocks included
in the Index.
[[Page 59120]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acquired fund
Management Distribution Other fees and Total annual Expense Net annual
fees (12b-1) fees expenses expenses expenses waivers expenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Existing Fund--MetLife Investment Small Company .64% .............. .14% ............... .78% ......... .78%
Stock Fund.........................................
Replacement Fund--Russell 2000 Index Portfolio...... .25% .............. .09% .02% .36% .01% .35%
--------------------------------------------------------------------------------------------------------------------------------------------------------
11. MetLife Investment International Stock Fund--Morgan Stanley
EAFE Index Portfolio: The MetLife Investment International Stock Fund
seeks maximum long-term total return by investing primarily in common
stocks of established non-U.S. companies. The Morgan Stanley EAFE Index
Portfolio seeks to equal the performance of the MSCI EAFE Index. The
Fund invests in a statistically selected sample of the 1000 stocks
included in the Index.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acquired fund
Management Distribution Other fees and Total annual Expense Net annual
fees (12b-1) fees expenses expenses expenses waivers expenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Existing Fund--MetLife Investment International .73% .............. .20% ............... .93% ......... .93%
Stock Fund.........................................
Replacement Fund--Morgan Stanley EAFE Index .30% .............. .13% .02% .01 ......... .44%
Portfolio..........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
12. MetLife Investment Diversified Bond Fund--Lehman
Brothers[supreg] Aggregate Bond Index Portfolio: The MetLife Investment
Diversified Bond Fund seeks maximum long-term total return by investing
primarily in fixed income securities. The Lehman Brothers[reg]
Aggregate Bond Index Portfolio seeks to equal the performance of the
Lehman Brothers Aggregate Bond Index and invests in a sampling of bonds
included in the Index.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acquired fund
Management Distribution Other fees and Total annual Expense Net annual
fees (12b-1) fees expenses expenses expenses waivers expenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Existing Fund--MetLife Investment Diversified Bond .41% .............. .09% ............... .50% ......... .50%
Fund...............................................
Replacement Fund--Lehman Brothers[supreg] Aggregate .25% .............. .06% ............... .31% .01 .30%
Bond Index Portfolio...............................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Applicant's Legal Analysis
1. The Substitution Applicants request that the Commission issue an
order pursuant to section 26(c) of the Act approving the proposed
substitutions.
2. The Contracts permit the applicable Insurance Company, subject
to compliance with applicable law, to substitute shares of another
investment company for shares of an investment company held by a sub-
account of the Separate Accounts. The prospectuses for the Contracts
and the Separate Accounts contain appropriate disclosure of this right.
3. The proposed Replacement Fund for each Existing Fund has an
investment objective that is at least substantially similar to that of
the Existing Fund. Moreover, the principal investment policies of the
Replacement Funds are similar to those of the corresponding Existing
Funds. In addition, the Existing Funds are not being offered for new
sales, and are not available as new investment options under Contracts
previously or currently offered by the Insurance Companies or, if
available, are not available for additional contributions and/or
transfers from other investment options under Contracts.
4. The Substitution Applicants submit there is little likelihood
that significant additional assets, if any, will be allocated to the
Existing Funds and, therefore, because of the cost of maintaining such
Funds as investment options under the Contracts, it is in the interest
of shareholders to substitute the applicable Replacement Funds which
are currently being offered as investment options by the Insurance
Companies.
5. Applicants submit that because the Replacement Funds are managed
as index funds or managed to replicate the return of an index, each
Replacement Fund has lower management fees and lower total operating
expenses than the corresponding Existing Fund. Contract owners with
balances invested in the Replacement Fund will therefore have a lower
expense ratio. However, the Substitution Applicants agree that the
Insurance Companies will not increase total separate account charges
(net of any reimbursements or waivers) for any existing owner of the
Contracts on the date of the substitutions for a period of two years
from the date of the substitutions.
6. The substitution will not negatively impact the ability of
contract owners to choose from a variety of funds available in the
products. Of all the variable products affected by this substitution,
the minimum number of funds currently available in any product before
the substitution is 23, and after the substitution the minimum number
available will be 22 funds (of the four Replacement Funds, one is
already available in this product, leading to a decrease of one in the
number of available funds).
7. The Substitution Applicants assert that the replacement of the
Existing Funds with the Replacement Funds is consistent with the
protection of Contract owners and the purposes fairly intended by the
policies and provisions of the Act.
8. The Substitution Applicants represent that by disclosure in the
prospectuses for the variable annuity
[[Page 59121]]
Contracts, and supplements to the prospectuses for the life insurance
Contracts, each Insurance Company will notify all owners of the
Contracts of its intention to take the necessary actions, including
seeking the order requested by this Application, to substitute shares
of the funds as described herein.
9. The disclosure in the prospectuses and the prospectus
supplements will advise Contract owners that from the date of the
prospectuses and the supplements until the date of the proposed
substitution, owners are permitted to make one transfer of Contract
value (or annuity unit exchange) out of the Existing Fund sub-account
to one or more other sub-accounts without the transfer (or exchange)
being treated as one of a limited number of permitted transfers (or
exchanges) or a limited numbers of transfers (or exchanges) permitted
without a transfer charge.
10. The disclosure in the prospectuses and the prospectus
supplements also will inform Contract owners that the Insurance Company
will not exercise any rights reserved under any Contract to impose
additional restrictions on transfers until at least 30 days after the
proposed substitutions.
11. The disclosure in the prospectuses and the prospectus
supplements will also advise Contract owners that for at least 30 days
following the proposed substitutions, the Insurance Companies will
permit Contract owners affected by the substitutions to make one
transfer of Contract value (or annuity unit exchange) out of the
Replacement Fund sub-account to one or more other sub-accounts without
the transfer (or exchange) being treated as one of a limited number of
permitted transfers (or exchanges) or a limited number of transfers (or
exchanges) permitted without a transfer charge. Other than the
restrictions concerning market timing/excessive trading, as disclosed
in the prospectuses, the Contracts currently permit transfers of all or
part of contract value between the variable funding options at any
time.
12. The proposed substitutions will take place at relative net
asset value with no change in the amount of any Contract owner's
Contract value, cash value, or death benefit or in the dollar value of
his or her investment in the Separate Accounts.
13. The process for accomplishing the transfer of assets from each
Existing Fund to its corresponding Replacement Fund 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 Fund
for cash and using the cash to purchase shares of the Replacement Fund.
In certain other cases, it is expected that the substitutions will be
effected by redeeming the shares of an Existing Fund in-kind; those
assets will then be contributed in-kind to the corresponding
Replacement Fund to purchase shares of that Fund.
14. Contract owners will not incur any fees or charges as a result
of the proposed substitutions, nor will their rights or an Insurance
Company's obligations under the Contracts be altered in any way. All
expenses incurred in connection with the proposed substitutions,
including brokerage, legal, accounting, and other fees and expenses,
will be paid by the Insurance Companies. In addition, the proposed
substitutions will not impose any tax liability on Contract owners. The
proposed substitutions will not cause the Contract fees and charges
currently being paid by existing Contract owners to be greater after
the proposed substitutions than before the proposed substitutions. No
fees will be charged on the transfers made at the time of the proposed
substitutions because the proposed substitutions will not be treated as
a transfer for the purpose of assessing transfer charges or for
determining the number of remaining permissible transfers in a Contract
year.
15. In addition to the prospectuses and prospectus supplements
distributed to owners of Contracts, within five business days after the
proposed substitutions are completed, Contract owners will be sent a
written notice informing them that the substitutions were carried out
and that they may make one transfer of all Contract value or cash value
under a Contract invested in any one of the sub-accounts on the date of
the notice to one or more other sub-accounts available under their
Contract at no cost and without regard to the usual limit on the
frequency of transfers from the variable account options to the fixed
account options. The notice will also reiterate that (other than with
respect to ``market timing'' activity) the Insurance Company will not
exercise any rights reserved by it under the Contracts to impose
additional restrictions on transfers or to impose any charges on
transfers until at least 30 days after the proposed substitutions.
16. The Insurance Companies will also send each Contract owner
current prospectuses for the Replacement Funds involved to the extent
that they have not previously received a copy.
17. Each Insurance Company also is seeking approval of the proposed
substitutions from any state insurance regulators whose approval may be
necessary or appropriate.
18. The Substitution Applicants agree that for those who were
Contract owners on the date of the proposed substitutions, the
Insurance Companies will reimburse, on the last business day of each
fiscal period (not to exceed a fiscal quarter) during the twenty-four
months following the date of the proposed substitutions, those Contract
Owners whose subaccount invests in the Replacement Fund such that the
sum of the Replacement Fund's operating expenses (taking into account
fee waivers and expense reimbursements) and subaccount expenses (asset-
based fees and charges deducted on a daily basis from subaccount assets
and reflected in the calculation of subaccount unit values) for such
period will not exceed, on an annualized basis, the sum of the Existing
Fund's operating expenses (taking into account fee waivers and expense
reimbursements) and subaccount expenses for fiscal year 2006.
19. The Applicants request an order under section 17(b) exempting
them from the provisions of section 17(a) to the extent necessary to
permit the Insurance Companies to carry out each of the proposed
substitutions.
20. Section 17(a)(1) of the 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 Act
generally prohibits the persons described above, acting as principals,
from knowingly purchasing any security or other property from the
registered company.
21. Because shares held by a separate account of an insurance
company are legally owned by the insurance company, the Insurance
Companies and their affiliates collectively own of record substantially
all of the shares of MLIF and Met Series Fund. Therefore, MLIF and Met
Series Fund and their respective funds are arguably under the control
of the Insurance Companies notwithstanding the fact that Contract
owners may be considered the beneficial owners of those shares held in
the Separate Accounts. If MLIF and Met Series Fund and their respective
funds are under the control of the Insurance Companies, then each
Insurance Company is an affiliated person or an affiliated person of an
affiliated person of MLIF and Met Series Fund and their respective
funds. If MLIF and Met Series Fund and their respective funds are under
the control of
[[Page 59122]]
the Insurance Companies, then MLIF and Met Series Fund and their
respective funds are affiliated persons of the Insurance Companies.
22. Regardless of whether or not the Insurance Companies can be
considered to control MLIF and Met Series Fund and their respective
funds, because the Insurance Companies own of record more than 5% of
the shares of each of them and are under common control with each
Existing Fund's and Replacement Fund's investment adviser, the
Insurance Companies are affiliated persons of both MLIF and Met Series
Fund and their respective funds. Likewise, their respective funds are
each an affiliated person of the Insurance Companies.
23. Because the substitutions may be effected, in whole or in part,
by means of in-kind redemptions and purchases, the substitutions may be
deemed to involve one or more purchases or sales of securities or
property between affiliated persons. The proposed transactions may
involve a transfer of portfolio securities by the Existing Funds to the
Insurance Companies; immediately thereafter, the Insurance Companies
would purchase shares of the Replacement Funds with the portfolio
securities received from the Existing Funds. Accordingly, as the
Insurance Companies and certain of the Existing Funds listed above, and
the Insurance Companies and the Replacement Funds, could be viewed as
affiliated persons of one another under section 2(a)(3) of the Act, it
is conceivable that this aspect of the substitutions could be viewed as
being prohibited by section 17(a).
24. Section 17(b) of the Act provides that the Commission may, upon
application, grant an order exempting any transaction from the
prohibitions of section 17(a) if the evidence establishes that:
(a) The terms of the proposed transaction, including the
consideration to be paid or received, are reasonable and fair and do
not involve overreaching on the part of any person concerned;
(b) the proposed transaction is consistent with the policy of each
registered investment company concerned, as recited in its registration
statement and records filed under the Act; and (c) the proposed
transaction is consistent with the general purposes of the Act.
25. The Applicants submit that for all the reasons described herein
the terms of the proposed in-kind redemptions of shares of the Existing
Funds and in-kind purchases of shares of the Replacement Funds by the
Insurance Companies, including the consideration to be paid and
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned. The Applicants also submit that the
proposed in-kind redemptions and purchases by the Insurance Companies
are consistent with the policies of MLIF and the Met Series Fund.
Finally, the Applicants submit that the proposed substitutions are
consistent with the general purposes of the Act.
26. To the extent that the in-kind redemptions by the Insurance
Companies of the Existing Funds' shares and in-kind purchases by the
Insurance Companies of the Replacement Funds' shares are deemed to
involve principal transactions among affiliated persons, the procedures
described below should be sufficient to assure that the terms of the
proposed transactions are reasonable and fair to all participants. The
Applicants maintain that the terms of the proposed in-kind redemption
and purchase transactions, including the consideration to be paid and
received by each fund 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. The proposed
transactions will take place at relative net asset value in conformity
with the requirements of section 22(c) of the Act and Rule 22c-1
thereunder with no change in the amount of any Contract owner's
contract value or death benefit or in the dollar value of his or her
investment in any of the Separate Accounts. Contract owners will not
suffer any adverse tax consequences 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, the Insurance
Companies, MLIF and Met Series Fund may not rely on Rule 17a-7, the
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. In
addition, any in-kind redemptions will only be made in accordance with
the conditions set out in the Signature Financial Group no-action
letter (December 29, 1999).
27. The boards of MLIF and Met Series Fund have adopted procedures,
as required by paragraph (e)(1) of Rule 17a-7, pursuant to which the
series of each may purchase and sell securities to and from their
affiliates. The Applicants will carry out the proposed Insurance
Company in-kind redemptions and purchases in conformity with all of the
conditions of Rule 17a-7 and each series' procedures thereunder, except
that the consideration paid for the securities being purchased or sold
may not be entirely cash. Nevertheless, the circumstances surrounding
the proposed substitutions will be such as to offer the same degree of
protection to each Existing Fund and Replacement Fund from overreaching
that Rule 17a-7 provides to them generally in connection with their
purchase and sale of securities under that Rule in the ordinary course
of their business. In particular, the Insurance Companies (or any of
their affiliates) cannot effect the proposed transactions at a price
that is disadvantageous to any of the Existing Funds or Replacement
Funds. Although the transactions may not be entirely for cash, each
will be effected based upon (1) the independent market price of the
portfolio securities valued as specified in paragraph (b) of Rule 17a-
7, and (2) the net asset value per share of each Existing Fund and
corresponding Replacement Fund valued in accordance with the procedures
disclosed in its respective Investment Company's registration statement
and as required by Rule 22c-1 under the Act. No brokerage commission,
fee, or other remuneration will be paid to any party in connection with
the proposed in kind purchase transactions.
28. The sale of shares of Replacement Funds for portfolio
securities, as contemplated by the proposed Insurance Company in-kind
purchases, will be consistent with the investment policies and
restrictions of the Replacement Funds because (1) the shares will be
sold at their net asset value, and (2) the portfolio securities will be
of the type and quality that the Replacement Funds would each have
acquired with the proceeds from share sales had the shares been sold
for cash. To assure that the second of these conditions is met, MetLife
Advisers, LLC and the subadviser, as applicable, will examine the
portfolio securities being offered to each Replacement Fund and accept
only those securities as consideration for shares that it would have
acquired for each such fund in a cash transaction.
29. The Applicants submit that the proposed Insurance Company in-
kind redemptions and purchases, as described herein, are consistent
with the general purposes of the Act as stated in the Findings and
Declaration of Policy in Section 1 of the Act. The proposed
transactions do not present any of the conditions or abuses that the
Act was designed to prevent.
[[Page 59123]]
30. The Applicants request that the Commission issue an order
pursuant to section 17(b) of the Act exempting the Separate Accounts,
the Insurance Companies, MLIF, Met Series Fund and each Replacement
Fund from the provisions of section 17(a) of the Act to the extent
necessary to permit the Insurance Companies on behalf of the Separate
Accounts to carry out, as part of the substitutions, the in-kind
redemption and purchase of shares of the Existing Fund and Replacement
Funds which may be deemed to be prohibited by section 17(a) of the Act.
31. The Applicants represent that the proposed in-kind redemptions
and purchases meet all of the requirements of section 17(b) of the Act
and that an exemption should be granted, to the extent necessary, from
the provisions of section 17(a).
Conclusion
Applicants assert that for the reasons summarized above the
proposed substitutions and related transactions meet the standards of
section 26(c) of the Act and are consistent with the standards of
section 17(b) of the Act and that the requested orders should be
granted.
For the Commission, by the Division of Investment Management
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-20542 Filed 10-17-07; 8:45 am]
BILLING CODE 8011-01-P
