MetLife Insurance Company of Connecticut, et al., 14598-14604 [E9-7086]
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14598
Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Notices
be submitted to OMB within 30 days of
this notice.
Dated: March 25, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–7088 Filed 3–30–09; 8:45 am]
BILLING CODE
SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
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Extension:
Form SH; OMB Control No. 3235–0646;
SEC File No. 270–585.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Form SH (17 CFR 249.326T) is
required to be submitted to the
Commission by institutional investment
managers subject to the existing Form
13F (CFR 249.325) filing requirements
on the first business day of each week
in which the institutional investment
manager has entered into any new short
positions or closed part or all of any
short positions with respect to any
Section 13(f) (15 U.S.C. 78m(f))
securities except for options. The
information provided under Form SH is
mandatory and responses will be kept
confidential. We estimate that 1,000
institutional investment managers
subject to the Form 13F filing
requirements will file Form SH to report
the entry into short positions with
respect to Section 13(f) securities. We
estimate that each will file 36 Form SH
reports during the nine-month period
that Rule 10a–3T (17 CFR 240.10a–3T)
will be in effect. We further estimate
that each of the 1,000 institutional
investment managers will spend an
average of 20 hours preparing each
Form SH. Therefore the estimated total
reporting burden associated with Form
SH is 720,000 hours (1,000 respondents
× 20 hours per form × 36 forms).
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
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Written comments regarding the
above information should be directed to
the following persons: (i) Desk Officer
for the Securities and Exchange
Commission, Office of Information and
Regulatory Affairs, Office of
Management and Budget, Room 10102,
New Executive Office Building,
Washington, DC 20503 or send an email to Shagufta_Ahmed@omb.eop.gov;
and (ii) Charles Boucher, Director/CIO,
Securities and Exchange Commission,
C/O Shirley Martinson, 6432 General
Green Way, Alexandria, VA 22312; or
send an e-mail to:
PRA_Mailbox@sec.gov. Comments must
be submitted to OMB within 30 days of
this notice.
Dated: March 25, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–7089 Filed 3–30–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–28678; File No. 812–13588]
MetLife Insurance Company of
Connecticut, et al.
March 25, 2009.
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.
APPLICANTS: MetLife Insurance
Company of Connecticut (‘‘MetLife of
CT’’), MetLife of CT Separate Account
Eleven for Variable Annuities
(‘‘Separate Account Eleven’’), MetLife of
CT Separate Account QPN for Variable
Annuities (‘‘Separate Account QPN’’),
MetLife of CT Fund UL for Variable Life
Insurance (‘‘Fund UL’’), MetLife of CT
Fund UL III for Variable Life Insurance
(‘‘Fund UL III’’), MetLife Investors
Insurance Company (‘‘MetLife
Investors’’), MetLife Investors Variable
Annuity Account One (‘‘VA Account
One’’), MetLife Investors Variable
Annuity Account Five (‘‘VA Account
Five’’), First MetLife Investors Insurance
Company (‘‘First MetLife Investors’’),
First MetLife Investors Variable Annuity
Account One (‘‘First VA Account One’’),
MetLife Investors USA Insurance
Company (‘‘MetLife Investors USA’’),
MetLife Investors USA Separate
Account A (‘‘Separate Account A’’),
Metropolitan Life Insurance Company
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(‘‘MetLife’’), Metropolitan Life Variable
Annuity Separate Account I (‘‘Separate
Account I’’), Metropolitan Life Variable
Annuity Separate Account II (‘‘Separate
Account II’’), General American Life
Insurance Company (‘‘General
American’’) (together with MetLife of
CT, MetLife Investors, First MetLife
Investors, MetLife Investors USA and
MetLife, the ‘‘Insurance Companies’’),
General American Separate Account
Seven (‘‘GA Separate Account Seven’’)
(together with Separate Account Eleven,
Separate Account QPN, Fund UL, Fund
UL III, VA Account One, VA Account
Five, First VA Account One, Separate
Account A, Separate Account I, and
Separate Account II, the ‘‘Separate
Accounts’’), Met Investors Series Trust
(‘‘MIST’’) and Metropolitan Series Fund,
Inc. (‘‘Met Series Fund’’). The Insurance
Companies and the Separate Accounts
are referred to as the ‘‘Substitution
Applicants.’’ The Insurance Companies,
the Separate Accounts and the
Investment Companies are referred to as
the ‘‘Section 17 Applicants.’’
SUMMARY OF APPLICATION: Applicants
seek an order approving the substitution
of certain series of the Investment
Companies for shares of series of other
registered investment companies held
by the Separate Accounts to fund
certain group and individual variable
annuity contracts and variable life
insurance policies issued by the
Insurance Companies (collectively, the
‘‘Contracts’’). The Section 17 Applicants
seek an order pursuant to Section 17(b)
of the Act to permit certain in-kind
transactions in connection with certain
of the Substitutions.
FILING DATE: The application was filed
on October 21, 2008, and an amended
and restated application was filed on
March 13, 2009 and March 24, 2009.
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 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 17, 2009, and should be
accompanied by proof of service on
Applicants, in the form of an affidavit
or for lawyers a certificate of service.
Hearing requests should state the nature
of the writer’s interest, the reason for the
request and the issued 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 20549–1090.
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Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Notices
Applicants c/o Paul G. Cellupica, Chief
Counsel—Securities Regulation and
Corporate Services, MetLife Group, One
MetLife Plaza, 27–01 Queens Plaza
North, Long Island City, NY 11101 and
Robert N. Hickey, Esq., Sullivan &
Worcester LLP, 1666 K Street, NW.,
Washington, DC 20006.
FOR FURTHER INFORMATION CONTACT:
Alison T. 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 (202–551–8090).
Applicants’ Representations
1. MetLife of CT is a stock life
insurance company organized in 1863
under the laws of Connecticut. MetLife
Investors is a stock life insurance
company organized on August 17, 1981
under the laws of Missouri. First
MetLife Investors is a stock life
insurance company organized on
December 31, 1992 under the laws of
New York. MetLife Investors USA is a
stock life insurance company organized
on September 13, 1960 under the laws
of Delaware. MetLife is a stock life
insurance company organized in 1868
under the laws of New York. General
American is a stock life insurance
company organized in 1933 under the
laws of Missouri.
2. Separate Account Eleven, Fund UL,
Fund UL III, VA Account One, VA
Account Five, First VA Account One,
Separate Account A, Separate Account
I and Separate Account II 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.
3. Separate Account QPN is exempt
from registration under the Act. Security
interests under the Contracts have been
registered under the Securities Act of
1933.
4. GA Separate Account Seven serves
as separate account funding vehicles for
certain Contracts that are exempt from
registration under Section 4(2) of the
Securities Act of 1933 and Regulation D
thereunder.
5. MIST 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. Met Investors Advisory, LLC and
Metlife Advisers, LLC serve as
investment adviser to MIST and Met
Series Fund, respectively.
6. The annuity 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
14599
Accounts proposes to make certain
substitutions of shares of 9 funds (the
‘‘Existing Funds’’) held in sub-accounts
of its respective Separate Accounts for
certain series (the ‘‘Replacement
Funds’’) of MIST and Met Series Fund.
8. The proposed substitutions are as
follows: shares of MetLife Moderate
Strategy Portfolio for shares of DWS
Conservative Allocation VIP; shares of
MetLife Growth Strategy Portfolio for
shares of DWS Growth Allocation VIP;
shares of MetLife Balanced Strategy
Portfolio for shares of DWS Moderate
Allocation VIP; shares of Janus Forty
Portfolio for shares of Janus (Aspen
Series) Forty Portfolio; shares of MetLife
Stock Index Portfolio for shares of Legg
Mason Partners Variable Equity Index
Portfolio; shares of PIMCO Total Return
Portfolio for shares of PIMCO (VIT)
Total Return Portfolio; shares of Pioneer
Strategic Income Portfolio for shares of
Pioneer Strategic Income VCT Portfolio;
shares of BlackRock Bond Income
Portfolio for shares of UIF Core Plus
Fixed Income Portfolio; shares of Van
Kampen Comstock Portfolio for shares
of Van Kampen LIT Comstock Portfolio.
9. The following is a summary of the
investment objectives and policies of
each Existing Fund and its
corresponding Replacement Fund.
Additional information including asset
sizes, risk factors and comparative
performance history for each Existing
Fund and Replacement Fund can be
found in the Application.
Existing fund
Replacement fund
DWS Conservative Allocation VIP—seeks a balance of current income
and long-term growth of capital with an emphasis on current income.
The Portfolio invests in other DWS VIP portfolios. The Portfolio’s target allocation is 60% in underlying portfolios which invest primarily in
fixed-income securities and 40% in underlying portfolios which invest
primarily in equity securities.
MetLife Moderate Strategy Portfolio—seeks high total return in the form
of income and growth of capital, with a greater emphasis on income.
The Portfolio invests in a diversified group of affiliated underlying
funds. The Portfolio normally invests in accordance with targeted allocations of 50% to equity securities and 50% to fixed income securities. Changes between these asset classes will be in the range of
plus or minus 10%.
MetLife Growth Strategy Portfolio—seeks growth of capital. The Portfolio invests in a diversified group of affiliated underlying funds. The
Portfolio normally invests in accordance with targeted allocations of
85% to equity securities and 15% to fixed income securities.
Changes between these asset classes will be in the range of plus or
minus 10%.
MetLife Balanced Strategy Portfolio—seeks a balance between a high
level of current income and growth of capital with a greater emphasis
on growth of capital. The Portfolio invests in a diversified group of affiliated underlying funds. The Portfolio normally primarily invests in
accordance with targeted allocations of 65% to equity securities and
35% to fixed income securities. Changes between these asset classes will be in the range of plus or minus 10%.
Janus Forty Portfolio—seeks long-term growth of capital. The Portfolio
normally invests primarily in a core group of 20–40 common stocks
selected for their growth potential.
MetLife Stock Index Portfolio—seeks to equal the performance of the
S&P 500 Index (before expenses).
DWS Growth Allocation VIP—seeks long-term growth of capital. The
Portfolio invests in other DWS VIP portfolios. The Portfolio’s target
allocation is 25% in underlying portfolios which invest primarily in
fixed income securities, and 75% in underlying portfolios which invest
primarily in equity securities.
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DWS Moderate Allocation VIP—seeks a balance of long-term growth of
capital and current income with an emphasis on growth of capital.
The Portfolio invests in other DWS VIP portfolios. The Portfolio’s target allocation is 40% in underlying portfolios which invest primarily in
fixed income securities and 60% in underlying portfolios which invest
primarily in equity securities.
Janus (Aspen Series) Forty Portfolio—seeks long-term growth of capital. The Portfolio normally invests primarily in a core group of 20–40
common stocks selected for their growth potential.
Legg Mason Partners Variable Equity Index Portfolio—seeks investment results that, before expenses, correspond to the price and yield
performance of the S&P 500 Index.
UIF Core Plus Fixed Income Portfolio—seeks above-average total return over a market cycle of three to five years by investing primarily
in a diversified portfolio of fixed income securities.
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BlackRock Bond Income Portfolio—seeks a competitive total return primarily from investing in fixed-income securities.
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Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Notices
Existing fund
Replacement fund
PIMCO (VIT) Total Return Portfolio—seeks maximum total return, consistent with preservation of capital and prudent investment management.
Pioneer Strategic Income VCT Portfolio– seeks a high level of current
income. Normally, the Portfolio invests at least 80% of its assets in
debt securities.
Van Kampen LIT Comstock Portfolio—seeks capital growth and income. Normally, the Portfolio invests at least 80% of its assets in
common stocks.
PIMCO Total Return Portfolio—seeks maximum total return, consistent
with preservation of capital and prudent investment management.
10. The management fees, 12b–1 fees
(if applicable), other expenses and total
Pioneer Strategic Income Portfolio—seeks a high level of current income. The Portfolio invests, under normal circumstances at least
80% of its assets in debt securities.
Van Kampen Comstock Portfolio—seeks capital growth and income.
Normally, the Portfolio invests at least 80% of its assets in common
stocks.
operating expenses for each Existing
and Replacement Fund are as follows:
Management fees
(percent)
Replacement Fund: MetLife Moderate Strategy Portfolio (Class B) .......
Existing Fund: DWS Conservative Allocation VIP (Class B) ..................
Replacement Fund: MetLife Growth Strategy Portfolio (Class B) ...........
Existing Fund: DWS Growth Allocation VIP (Class B) ............................
Replacement Fund: MetLife Balanced Strategy Portfolio (Class B) .......
Existing Fund: DWS Moderate Allocation VIP (Class B) ........................
Replacement Fund: Janus Forty Portfolio (Class E) ...............................
Existing Fund: Janus (Aspen Series) Forty Portfolio (Service Class) .....
Replacement Fund: MetLife Stock Index Portfolio (Class D) ..................
Existing Fund: Legg Mason Partners Variable Equity Index Portfolio
(Class I) ................................................................................................
Replacement Fund: MetLife Stock Index Portfolio (Class B) ..................
Existing Fund: Legg Mason Partners Variable Equity Index Portfolio
(Class II) ...............................................................................................
Replacement Fund: Blackrock Bond Income Portfolio (Class A) ............
Existing Fund: UIF Core Plus Fixed Income Portfolio (Class I) ..............
Replacement Fund: Blackrock Bond Income Portfolio (Class B) ............
Existing Fund: UIF Core Plus Fixed Income Portfolio (Class II) .............
Replacement Fund: PIMCO Total Return Portfolio (Class B) .................
Existing Fund: PIMCO (VIT) Total Return Portfolio (Admin Class) ........
Replacement Fund: Pioneer Strategic Income Portfolio (Class E) .........
Existing Fund: Pioneer Strategic Income VCT Portfolio (Class II) ..........
Replacement Fund: Van Kampen Comstock Portfolio (Class A) ............
Existing Fund: Van Kampen LIT Comstock Portfolio (Class I) ...............
Replacement Fund: Van Kampen Comstock Portfolio (Class B) ............
Existing Fund: Van Kampen LIT Comstock Portfolio (Class II) ..............
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1 Contractual
Other
expenses
(percent)
Waiver/
Reimbursement
(percent)
Total
expenses
(percent)
.07
.07
.06
.07
.06
.07
.65
.64
.25
.25
.25
.25
.25
.25
.25
.15
.25
.10
.65
1.01
.72
1.00
.69
.98
.06
.06
.04
....................
....................
....................
....................
....................
....................
....................
....................
1 .01
.97
1.33
1.03
1.32
1.00
1.30
.86
.95
.38
.31
.25
....................
.25
.08
.04
....................
1 .01
.39
.53
.31
.38
.38
.38
.38
.48
.25
.60
.65
.58
.56
.58
.56
.25
....................
....................
25
.35
25
....................
.15
.25
....................
....................
25
.25
.08
.06
.27
.06
.27
.04
.58
.09
.18
.03
.03
.03
.03
....................
1 .01
....................
1 .01
....................
....................
....................
....................
....................
....................
....................
....................
....................
.64
.43
.65
.68
1.00
.77
.83
.84
1.08
.61
.59
.86
.84
fee waiver expiring 4/30/10 unless extended.
11. MetLife Advisers, LLC or Met
Investors Advisory, LLC is the adviser of
each of the Replacement Funds. Each
Replacement Fund currently offers up to
five classes of shares, four of which,
Class A, Class B, Class D and Class E are
involved in the substitutions.
12. The Applicants believe the
substitutions will provide significant
benefits to Contract owners, including
improved selection of sub-advisers and
simplification of fund offerings through
the elimination of overlapping offerings.
13. As a result of the substitutions, the
number of investment options under
each Contract will either not be
decreased, or, in those cases where the
number of investment options is being
reduced, continue to offer a significant
number of alternative investment
options (currently expected to range in
number from 2 to 134 after the
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(percent)
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substitutions versus 2 to 134 before the
substitutions).
14. Those substitutions which replace
investment options advised by
investment advisers that are not
affiliated with the Substitution
Applicants with funds for which either
Met Investors Advisory, LLC or MetLife
Advisers, LLC acts as investment
adviser will permit each adviser, under
the Multi-Manager Order, [IC–22824
(1997) and IC–23859 (1999)], to hire,
monitor and replace sub-advisers as
necessary to achieve optimal
performance.
15. Contract owners with sub-account
balances invested (through the separate
account) in shares of the Replacement
Funds will have either lower or
substantially similar total expense
ratios.
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16. In the following substitutions, the
management fee and/or applicable Rule
12b–1 fee of the Replacement Fund are
either currently higher, or, at certain
management fee breakpoints, may be
higher than those of the respective
Existing Fund: DWS Conservative
Allocation VIP/MetLife Moderate
Strategy Portfolio; DWS Growth
Allocation VIP/MetLife Growth Strategy
Portfolio; DWS Moderate Allocation
VIP/MetLife Balanced Strategy Portfolio;
Legg Mason Partners Variable Equity
Index Portfolio/MetLife Stock Index
Portfolio; UIF Core Plus Fixed Income
Portfolio/BlackRock Bond Income
Portfolio; PIMCO (VIT) Total Return
Portfolio/PIMCO Total Return Portfolio;
and Van Kampen LIT Comstock
Portfolio/Van Kampen Comstock
Portfolio.
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Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Notices
17. The Substitution Applicants
propose to limit Contract charges
attributable to Contract value invested
in the Replacement Funds following the
proposed substitutions to a rate that
would offset the difference in the
expense ratio between each Existing
Fund’s net expense ratio and the net
expense ratio for the respective
Replacement Fund.
18. The substitutions will result in
decreased net expense ratios, except for
the Van Kampen LIT Comstock
Portfolio/Van Kampen Comstock
Portfolio substitution. Moreover, there
will be no increase in Contract fees and
expenses, including mortality and
expense risk fees and administration
and distribution fees charged to the
Separate Accounts as a result of the
substitutions.
19. The Substitution Applicants
believe that the Replacement Funds
have investment objectives, policies and
risk profiles that are either substantially
the same as, or sufficiently similar to,
the corresponding Existing Funds to
make those Replacement Funds
appropriate candidates as substitutes.
20. In addition, after the substitutions,
neither Met Investors Advisory, LLC,
MetLife Advisers, LLC nor any of their
affiliates will receive compensation
from the charges to the Separate
Accounts related to the Contracts or
from Rule 12b–1 fees or revenue sharing
from the Replacement Funds in excess
of the compensation currently received
from the investment advisers or
distributors of the Existing Funds.
21. The share classes of the
Replacement Funds are either identical
to or less than the share classes of the
Existing Funds with respect to the
imposition of Rule 12b–1 fees currently
imposed, except with respect to the
substitution of MetLife Stock Index
Portfolio for Legg Mason Partners
Variable Equity Index Portfolio and
PIMCO Total Return Portfolio for
PIMCO (VIT) Total Return Portfolio.
22. Each Met Series Fund
Replacement Fund’s Class B, Class D
and Class E Rule 12b–1 fees can be
raised to 0.50% of net assets by the
Replacement Fund’s Board of Directors
without shareholder approval. Each
MIST Replacement Fund’s Class B and
Class E Rule 12b–1 fees can be raised to
0.50% and 0.25%, respectively, of net
assets by the Replacement Fund’s Board
of Trustees without shareholder
approval. However, Met Series Fund
and MIST represent that Rule 12b–1 fees
of the Class B, Class D and Class E
shares of the Replacement Funds issued
in connection with the proposed
substitutions will not be raised above
the current rate without approval of a
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majority in interest of the respective
Replacement Funds’ shareholders after
the substitutions.
23. The distributors of the Existing
Funds pay to the Insurance Companies,
or their affiliates, any 12b–1 fees
associated with the class of shares sold
to the Separate Accounts. Similarly, the
distributors for MIST and Met Series
Fund will receive from the applicable
class of shares held by the Separate
Accounts Rule 12b–1 fees in the same
amount or a lesser amount than the
amount paid by the Existing Funds,
except as described above.
24. Further, in addition to any Rule
12b–1 fees, the investment advisers or
distributors of the Existing Funds pay
the Insurance Companies or one of their
affiliates from 0 to 45 basis points for
the Existing Funds’ classes of shares
involved in the substitutions. Following
the substitutions, these payments will
not be made on behalf of the
Replacement Funds. Rather, 25, 10 and
15 basis points in Rule 12b–1 fees from
the Replacement Funds (with respect to
Class B, Class D and Class E shares,
respectively) and profit distributions to
members from the Replacement Funds’
advisers, will be available to the
Insurance Companies. These profits
from investment advisory fees may be
more or less than the fees being paid by
the Existing Funds.
Applicants’ Legal Analysis and
Conditions
1. The Substitution Applicants
request that the Commission issue an
order pursuant to Section 26(c) of the
Act approving the proposed
substitutions.
2. Applicants represent that 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. By a supplement to the
prospectuses for the Contracts and the
Separate Accounts, each Insurance
Company has notified 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. The supplement has
advised Contract owners that from the
date of the supplement 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-
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14601
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. The
supplement also has informed 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.
The supplement has also advised
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.
4. 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.
5. 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
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. All inkind redemptions from an Existing
Fund of which any of the Substitution
Applicants is an affiliated person will
be effected in accordance with the
conditions set forth in the Commission’s
no-action letter issued to Signature
Financial Group, Inc. (available
December 28, 1999).
6. 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
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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.
7. In addition to the 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 subaccounts 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. 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.
8. Each Insurance Company also is
seeking approval of the proposed
substitutions from any state insurance
regulators whose approval may be
necessary or appropriate.
9. 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 sub-account invests in
the Replacement Fund such that the
sum of the Replacement Fund’s
operating expenses and sub-account
expenses (asset-based fees and charges
deducted on a daily basis from subaccount assets and reflected in the
calculation of sub-account unit values)
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for such period will not exceed, on an
annualized basis, the sum of the
Existing Fund’s operating expenses and
sub-account expenses for fiscal year
2007, except with respect to the DWS
Conservative Allocation VIP/MetLife
Moderate Strategy Portfolio, DWS
Growth Allocation VIP/MetLife Growth
Strategy Portfolio, DWS Moderate
Allocation VIP/MetLife Balanced
Strategy Portfolio, Legg Mason Partners
Variable Equity Index Portfolio/MetLife
Stock Index Portfolio, UIF Core Plus
Fixed Income Portfolio/BlackRock Bond
Income Portfolio, PIMCO (VIT) Total
Return Portfolio/PIMCO Total Return
Portfolio and Van Kampen LIT
Comstock Portfolio/Van Kampen
Comstock Portfolio substitutions.
10. With respect to the DWS
Conservative Allocation VIP/MetLife
Moderate Strategy Portfolio, DWS
Growth Allocation VIP/MetLife Growth
Strategy Portfolio, DWS Moderate
Allocation VIP/MetLife Balanced
Strategy Portfolio, Legg Mason Partners
Variable Equity Index Portfolio/MetLife
Stock Index Portfolio, UIF Core Plus
Fixed Income Portfolio/BlackRock Bond
Income Portfolio, PIMCO (VIT) Total
Return Portfolio/PIMCO Total Return
Portfolio and Van Kampen LIT
Comstock Portfolio/Van Kampen
Comstock Portfolio substitutions, the
reimbursement agreement with respect
to the Replacement Fund’s operating
expenses and sub-account expenses,
will extend for the life of each Contract
outstanding on the date of the proposed
substitutions.
11. The Substitution Applicants
further agree that, except with respect to
the DWS Conservative Allocation VIP/
MetLife Moderate Strategy Portfolio,
DWS Growth Allocation VIP/MetLife
Growth Strategy Portfolio, DWS
Moderate Allocation VIP/MetLife
Balanced Strategy Portfolio, Legg Mason
Partners Variable Equity Index
Portfolio/MetLife Stock Index Portfolio,
UIF Core Plus Fixed Income Portfolio/
BlackRock Bond Income Portfolio,
PIMCO (VIT) Total Return Portfolio/
PIMCO Total Return Portfolio and Van
Kampen LIT Comstock Portfolio/Van
Kampen Comstock Portfolio
substitutions, 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.
12. With respect to the DWS
Conservative Allocation VIP/MetLife
Moderate Strategy Portfolio, DWS
Growth Allocation VIP/MetLife Growth
Strategy Portfolio, DWS Moderate
Allocation VIP/MetLife Balanced
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Strategy Portfolio, Legg Mason Partners
Variable Equity Index Portfolio/MetLife
Stock Index Portfolio, UIF Core Plus
Fixed Income Portfolio/BlackRock Bond
Income Portfolio, PIMCO (VIT) Total
Return Portfolio/PIMCO Total Return
Portfolio and Van Kampen LIT
Comstock Portfolio/Van Kampen
Comstock Portfolio substitutions, the
agreement not to increase the separate
account charges will extend for the life
of each Contract outstanding on the date
of the proposed substitutions.
13. The Substitution Applicants
submit that, in general, there is little
likelihood that significant additional
assets, if any, will be allocated to the
above-listed 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.
14. In each case, the applicable
Insurance Companies believe that it is
in the best interests of the Contract
owners to substitute the Replacement
Fund for the Existing Fund. The
Insurance Companies believe that in
cases where the Replacement Fund has
a new sub-adviser, the new sub-adviser
will, over the long term, be positioned
to provide at least comparable
performance to that of the Existing
Fund’s sub-adviser. In certain
substitutions, the same entity serves as
sub-adviser for both the Existing Fund
and the Replacement Fund.
15. The Substitution Applicants
anticipate that Contract owners will be
better off with the array of sub-accounts
offered after the proposed substitutions
than they have been with the array of
sub-accounts offered prior to the
substitutions.
16. The Substitution Applicants
submit that none of the proposed
substitutions is of the type that Section
26(c) was designed to prevent.
17. The Substitution Applicants
request an order of the Commission
pursuant to Section 26(c) of the Act
approving the proposed substitutions by
the Insurance Companies.
18. The Section 17 Applicants request
an order under Section 17(b) exempting
them from the provisions of Section
17(a) to the extent necessary to permit
the Insurance Companies to carry out
each of the proposed substitutions,
except for the DWS Conservative
Allocation VIP/MetLife Moderate
Strategy Portfolio, DWS Growth
Allocation VIP/MetLife Growth Strategy
Portfolio and DWS Moderate Allocation
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VIP/MetLife Balanced Strategy Portfolio
substitutions.
19. 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.
20. 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 MIST
and Met Series Fund. Therefore, MIST
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 MIST 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 MIST and Met Series
Fund and their respective funds. If
MIST and Met Series Fund and their
respective funds are under the control of
the Insurance Companies, then MIST
and Met Series Fund and their
respective funds are affiliated persons of
the Insurance Companies.
21. Regardless of whether or not the
Insurance Companies can be considered
to control MIST 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 Replacement Fund’s
investment adviser, the Insurance
Companies are affiliated persons of both
MIST and Met Series Fund and their
respective funds. Likewise, their
respective funds are each an affiliated
person of the Insurance Companies.
22. The Insurance Companies,
through their separate accounts in the
aggregate own more than 5% of the
outstanding shares of the following
Existing Funds: Legg Mason Partners
Variable Equity Index Portfolio, PIMCO
(VIT) Total Return Portfolio, Pioneer
Strategic Income VCT Portfolio, Van
Kampen LIT Comstock Portfolio.
Therefore, each Insurance Company is
an affiliated person of those funds.
23. Because the substitutions other
than the DWS Conservative Allocation
VIP/MetLife Moderate Strategy
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14:35 Mar 30, 2009
Jkt 217001
Portfolio, DWS Growth Allocation VIP/
MetLife Growth Strategy Portfolio and
DWS Moderate Allocation VIP/MetLife
Balanced Strategy Portfolio
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 Section 17 Applicants submit
that for all the reasons stated above the
terms of the proposed in-kind purchases
of shares of the Replacement Funds by
the Insurance Companies, 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. The Section 17 Applicants
also submit that the proposed in-kind
purchases by the Insurance Companies
are consistent with the policies of: (a)
MIST and of its Janus Forty, PIMCO
Total Return, Pioneer Strategic Income
and Van Kampen Comstock Portfolios;
and (b) Met Series Fund and of its
MetLife Stock Index and BlackRock
Bond Income Portfolios, as recited in
the current registration statements and
reports filed by each under the Act.
Finally, the Section 17 Applicants
submit that the proposed substitutions
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14603
set forth above are consistent with the
general purposes of the Act.
26. To the extent that the in-kind
purchases by the Insurance Company 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 Section
17 Applicants maintain that the terms of
the proposed in-kind 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, MIST and Met
Series Fund may not rely on Rule 17a–
7, the Section 17 Applicants believe that
the Rule’s conditions outline the type of
safeguards that result in transactions
that are fair and reasonable to registered
investment company participants and
preclude overreaching in connection
with an investment company by its
affiliated persons. In addition, as stated
above, the 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 MIST 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 Section 17
Applicants will carry out the proposed
Insurance Company in-kind 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 Replacement Fund from
overreaching that Rule 17a–7 provides
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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
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
fund involved valued in accordance
with the procedures disclosed in its
respective investment company
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 investment securities, as
contemplated by the proposed
Insurance Company in-kind purchases,
is consistent with the investment
policies and restrictions of the
Investment Companies and the
Replacement Funds because (a) the
shares are sold at their net asset value,
and (b) the portfolio securities are 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,
Met Investors Advisory, LLC, MetLife
Advisers, LLC and the sub-adviser, 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 Section 17 Applicants submit
that the proposed Insurance Company
in-kind purchases are consistent with
the general purposes of the Act as stated
in the Findings and Declaration of
Policy in Section 1 of the Act and that
the proposed transactions do not
present any of the conditions or abuses
that the Act was designed to prevent.
30. The Section 17 Applicants
represent that the proposed in-kind
purchases meet all of the requirements
of Section 17(b) of the Act and request
that the Commission issue an order
pursuant to Section 17(b) of the Act
exempting the Separate Accounts, the
Insurance Companies, MIST, 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
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14:35 Mar 30, 2009
Jkt 217001
of the substitutions, the in-kind
purchase of shares of the Replacement
Funds which may be deemed to be
prohibited by Section 17(a) of the Act.
Conclusion
Applicants assert that for the reasons
summarized above that 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. E9–7086 Filed 3–30–09; 8:45 am]
BILLING CODE
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59615; File No. SR–BX–
2009–005]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Order
Approving Proposed Rule Change To
Establish New Fees for Services
Available to Members and NonMembers
March 20, 2009.
I. Introduction
On January 14, 2009, NASDAQ OMX
BX, Inc. (‘‘BX’’ or the ‘‘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 adopt fees applicable to
members and non-members in
connection with its cash equities trading
business. The proposed rule change was
published for comment in the Federal
Register on February 4, 2009.3 The
Commission did not receive any
comment letters on the proposal. This
order approves the proposed rule
change.
II. Description of the Proposal
Pursuant to SR–BSE–2008–48, the
Exchange adopted a new rulebook with
rules governing membership, the
regulatory obligations of members,
listing, and equities trading.4 The new
1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 59307
(January 28, 2009), 74 FR 6069 (SR–BX–2009–005).
4 Securities Exchange Act Release No. 59154
(December 23, 2008), 73 FR 80468 (December 31,
2008) (SR–BSE–2008–48).
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rules, which are designated as the
‘‘Equity Rules,’’ are substantially based
on the rules of The NASDAQ Stock
Market LLC (the ‘‘NASDAQ Exchange’’).
Through this proposal, the Exchange
seeks to establish non-member and
member fees for its cash equities trading
business.5 The Exchange states that the
proposed fee schedule is similar to the
NASDAQ Exchange but differs in that it
omits several fees that are not pertinent
to the Exchange’s business and differs in
the level of certain fees.
A. Market Data
The Exchange proposes to establish
fees for its BX TotalView data product.
Like NASDAQ TotalView, BX
TotalView will provide all displayed
quotes and orders in the market, with
attribution to the relevant market
participant, at every price level, as well
as total displayed anonymous interest at
every price level. In recognition of the
start-up nature of the new market, the
data feed will be provided free of charge
to subscribers and distributors for the
first year of operation.
After the initial free period,
subscribers to BX TotalView will pay a
monthly charge of $20; however, new
subscribers receiving BX TotalView for
the first time after the expiration of the
one-year introductory period will be
able to use the product free of charge for
an individual 30-day trial period.6
Distributors of BX TotalView will pay a
$1,000 monthly fee to receive the data
directly from the Exchange, since the
Exchange incurs costs to support the
connection to each direct distributor;
indirect distributors (i.e., those
receiving data from a direct distributor)
would not pay this charge.7 Distributors
will also pay a $500 monthly fee to
distribute the data feed internally (i.e.,
to employees) and a $1,250 monthly fee
to distribute to external customers.8
All of the foregoing fees will be
waived during the initial free period.
Upon approval of this filing, however,
the Exchange will begin to assess a
limited number of fees in connection
with data provision. Specifically,
extranet providers that connect to the
Exchange to provide direct access
connectivity to market data will be
charged a monthly access fee of $750 for
each technical configuration used to
provide a connection to a recipient’s
site.9 In addition, data distributors will
5 The Exchange previously adopted fees
applicable solely to its members. See Securities
Exchange Act Release No. 59337 (February 2, 2009),
74 FR 6441 (February 9, 2009) (SR–BX–2009–004).
6 See proposed Equity Rule 7023.
7 See proposed Equity Rule 7019.
8 Id.
9 See proposed Equity Rule 7025.
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]]>Agencies
[Federal Register Volume 74, Number 60 (Tuesday, March 31, 2009)]
[Notices]
[Pages 14598-14604]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-7086]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-28678; File No. 812-13588]
MetLife Insurance Company of Connecticut, et al.
March 25, 2009.
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.
-----------------------------------------------------------------------
Applicants: MetLife Insurance Company of Connecticut (``MetLife of
CT''), MetLife of CT Separate Account Eleven for Variable Annuities
(``Separate Account Eleven''), MetLife of CT Separate Account QPN for
Variable Annuities (``Separate Account QPN''), MetLife of CT Fund UL
for Variable Life Insurance (``Fund UL''), MetLife of CT Fund UL III
for Variable Life Insurance (``Fund UL III''), MetLife Investors
Insurance Company (``MetLife Investors''), MetLife Investors Variable
Annuity Account One (``VA Account One''), MetLife Investors Variable
Annuity Account Five (``VA Account Five''), First MetLife Investors
Insurance Company (``First MetLife Investors''), First MetLife
Investors Variable Annuity Account One (``First VA Account One''),
MetLife Investors USA Insurance Company (``MetLife Investors USA''),
MetLife Investors USA Separate Account A (``Separate Account A''),
Metropolitan Life Insurance Company (``MetLife''), Metropolitan Life
Variable Annuity Separate Account I (``Separate Account I''),
Metropolitan Life Variable Annuity Separate Account II (``Separate
Account II''), General American Life Insurance Company (``General
American'') (together with MetLife of CT, MetLife Investors, First
MetLife Investors, MetLife Investors USA and MetLife, the ``Insurance
Companies''), General American Separate Account Seven (``GA Separate
Account Seven'') (together with Separate Account Eleven, Separate
Account QPN, Fund UL, Fund UL III, VA Account One, VA Account Five,
First VA Account One, Separate Account A, Separate Account I, and
Separate Account II, the ``Separate Accounts''), Met Investors Series
Trust (``MIST'') and Metropolitan Series Fund, Inc. (``Met Series
Fund''). The Insurance Companies and the Separate Accounts are referred
to as the ``Substitution Applicants.'' The Insurance Companies, the
Separate Accounts and the Investment Companies are referred to as the
``Section 17 Applicants.''
Summary of Application: Applicants seek an order approving the
substitution of certain series of the Investment Companies for shares
of series of other registered investment companies held by the Separate
Accounts to fund certain group and individual variable annuity
contracts and variable life insurance policies issued by the Insurance
Companies (collectively, the ``Contracts''). The Section 17 Applicants
seek an order pursuant to Section 17(b) of the Act to permit certain
in-kind transactions in connection with certain of the Substitutions.
Filing Date: The application was filed on October 21, 2008, and an
amended and restated application was filed on March 13, 2009 and March
24, 2009.
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 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 17, 2009, and should be accompanied by proof of
service on Applicants, in the form of an affidavit or for lawyers a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request and the issued 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 20549-1090.
[[Page 14599]]
Applicants c/o Paul G. Cellupica, Chief Counsel--Securities Regulation
and Corporate Services, MetLife Group, One MetLife Plaza, 27-01 Queens
Plaza North, Long Island City, NY 11101 and Robert N. Hickey, Esq.,
Sullivan & Worcester LLP, 1666 K Street, NW., Washington, DC 20006.
FOR FURTHER INFORMATION CONTACT: Alison T. 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 (202-551-8090).
Applicants' Representations
1. MetLife of CT is a stock life insurance company organized in
1863 under the laws of Connecticut. MetLife Investors is a stock life
insurance company organized on August 17, 1981 under the laws of
Missouri. First MetLife Investors is a stock life insurance company
organized on December 31, 1992 under the laws of New York. MetLife
Investors USA is a stock life insurance company organized on September
13, 1960 under the laws of Delaware. MetLife is a stock life insurance
company organized in 1868 under the laws of New York. General American
is a stock life insurance company organized in 1933 under the laws of
Missouri.
2. Separate Account Eleven, Fund UL, Fund UL III, VA Account One,
VA Account Five, First VA Account One, Separate Account A, Separate
Account I and Separate Account II 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.
3. Separate Account QPN is exempt from registration under the Act.
Security interests under the Contracts have been registered under the
Securities Act of 1933.
4. GA Separate Account Seven serves as separate account funding
vehicles for certain Contracts that are exempt from registration under
Section 4(2) of the Securities Act of 1933 and Regulation D thereunder.
5. MIST 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. Met
Investors Advisory, LLC and Metlife Advisers, LLC serve as investment
adviser to MIST and Met Series Fund, respectively.
6. The annuity 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 9
funds (the ``Existing Funds'') held in sub-accounts of its respective
Separate Accounts for certain series (the ``Replacement Funds'') of
MIST and Met Series Fund.
8. The proposed substitutions are as follows: shares of MetLife
Moderate Strategy Portfolio for shares of DWS Conservative Allocation
VIP; shares of MetLife Growth Strategy Portfolio for shares of DWS
Growth Allocation VIP; shares of MetLife Balanced Strategy Portfolio
for shares of DWS Moderate Allocation VIP; shares of Janus Forty
Portfolio for shares of Janus (Aspen Series) Forty Portfolio; shares of
MetLife Stock Index Portfolio for shares of Legg Mason Partners
Variable Equity Index Portfolio; shares of PIMCO Total Return Portfolio
for shares of PIMCO (VIT) Total Return Portfolio; shares of Pioneer
Strategic Income Portfolio for shares of Pioneer Strategic Income VCT
Portfolio; shares of BlackRock Bond Income Portfolio for shares of UIF
Core Plus Fixed Income Portfolio; shares of Van Kampen Comstock
Portfolio for shares of Van Kampen LIT Comstock Portfolio.
9. The following is a summary of the investment objectives and
policies of each Existing Fund and its corresponding Replacement Fund.
Additional information including asset sizes, risk factors and
comparative performance history for each Existing Fund and Replacement
Fund can be found in the Application.
------------------------------------------------------------------------
Existing fund Replacement fund
------------------------------------------------------------------------
DWS Conservative Allocation VIP--seeks MetLife Moderate Strategy
a balance of current income and long- Portfolio--seeks high total
term growth of capital with an return in the form of income
emphasis on current income. The and growth of capital, with a
Portfolio invests in other DWS VIP greater emphasis on income.
portfolios. The Portfolio's target The Portfolio invests in a
allocation is 60% in underlying diversified group of
portfolios which invest primarily in affiliated underlying funds.
fixed-income securities and 40% in The Portfolio normally invests
underlying portfolios which invest in accordance with targeted
primarily in equity securities. allocations of 50% to equity
securities and 50% to fixed
income securities. Changes
between these asset classes
will be in the range of plus
or minus 10%.
DWS Growth Allocation VIP--seeks long- MetLife Growth Strategy
term growth of capital. The Portfolio Portfolio--seeks growth of
invests in other DWS VIP portfolios. capital. The Portfolio invests
The Portfolio's target allocation is in a diversified group of
25% in underlying portfolios which affiliated underlying funds.
invest primarily in fixed income The Portfolio normally invests
securities, and 75% in underlying in accordance with targeted
portfolios which invest primarily in allocations of 85% to equity
equity securities. securities and 15% to fixed
income securities. Changes
between these asset classes
will be in the range of plus
or minus 10%.
DWS Moderate Allocation VIP--seeks a MetLife Balanced Strategy
balance of long-term growth of capital Portfolio--seeks a balance
and current income with an emphasis on between a high level of
growth of capital. The Portfolio current income and growth of
invests in other DWS VIP portfolios. capital with a greater
The Portfolio's target allocation is emphasis on growth of capital.
40% in underlying portfolios which The Portfolio invests in a
invest primarily in fixed income diversified group of
securities and 60% in underlying affiliated underlying funds.
portfolios which invest primarily in The Portfolio normally
equity securities. primarily invests in
accordance with targeted
allocations of 65% to equity
securities and 35% to fixed
income securities. Changes
between these asset classes
will be in the range of plus
or minus 10%.
Janus (Aspen Series) Forty Portfolio-- Janus Forty Portfolio--seeks
seeks long-term growth of capital. The long-term growth of capital.
Portfolio normally invests primarily The Portfolio normally invests
in a core group of 20-40 common stocks primarily in a core group of
selected for their growth potential. 20-40 common stocks selected
for their growth potential.
Legg Mason Partners Variable Equity MetLife Stock Index Portfolio--
Index Portfolio--seeks investment seeks to equal the performance
results that, before expenses, of the S&P 500 Index (before
correspond to the price and yield expenses).
performance of the S&P 500 Index.
UIF Core Plus Fixed Income Portfolio-- BlackRock Bond Income
seeks above-average total return over Portfolio--seeks a competitive
a market cycle of three to five years total return primarily from
by investing primarily in a investing in fixed-income
diversified portfolio of fixed income securities.
securities.
[[Page 14600]]
PIMCO (VIT) Total Return Portfolio-- PIMCO Total Return Portfolio--
seeks maximum total return, consistent seeks maximum total return,
with preservation of capital and consistent with preservation
prudent investment management. of capital and prudent
investment management.
Pioneer Strategic Income VCT Portfolio- Pioneer Strategic Income
seeks a high level of current income. Portfolio--seeks a high level
Normally, the Portfolio invests at of current income. The
least 80% of its assets in debt Portfolio invests, under
securities. normal circumstances at least
80% of its assets in debt
securities.
Van Kampen LIT Comstock Portfolio-- Van Kampen Comstock Portfolio--
seeks capital growth and income. seeks capital growth and
Normally, the Portfolio invests at income. Normally, the
least 80% of its assets in common Portfolio invests at least 80%
stocks. of its assets in common
stocks.
------------------------------------------------------------------------
10. The management fees, 12b-1 fees (if applicable), other expenses
and total operating expenses for each Existing and Replacement Fund are
as follows:
----------------------------------------------------------------------------------------------------------------
Management Other Waiver/ Total
fees 12b-1 fees expenses Reimbursement expenses
(percent) (percent) (percent) (percent) (percent)
----------------------------------------------------------------------------------------------------------------
Replacement Fund: MetLife Moderate Strategy .07 .25 .65 ............. .97
Portfolio (Class B).........................
Existing Fund: DWS Conservative Allocation .07 .25 1.01 ............. 1.33
VIP (Class B)...............................
Replacement Fund: MetLife Growth Strategy .06 .25 .72 ............. 1.03
Portfolio (Class B).........................
Existing Fund: DWS Growth Allocation VIP .07 .25 1.00 ............. 1.32
(Class B)...................................
Replacement Fund: MetLife Balanced Strategy .06 .25 .69 ............. 1.00
Portfolio (Class B).........................
Existing Fund: DWS Moderate Allocation VIP .07 .25 .98 ............. 1.30
(Class B)...................................
Replacement Fund: Janus Forty Portfolio .65 .15 .06 ............. .86
(Class E)...................................
Existing Fund: Janus (Aspen Series) Forty .64 .25 .06 ............. .95
Portfolio (Service Class)...................
Replacement Fund: MetLife Stock Index .25 .10 .04 \1\ .01 .38
Portfolio (Class D).........................
Existing Fund: Legg Mason Partners Variable .31 ........... .08 ............. .39
Equity Index Portfolio (Class I)............
Replacement Fund: MetLife Stock Index .25 .25 .04 \1\ .01 .53
Portfolio (Class B).........................
Existing Fund: Legg Mason Partners Variable .31 .25 .08 ............. .64
Equity Index Portfolio (Class II)...........
Replacement Fund: Blackrock Bond Income .38 ........... .06 \1\ .01 .43
Portfolio (Class A).........................
Existing Fund: UIF Core Plus Fixed Income .38 ........... .27 ............. .65
Portfolio (Class I).........................
Replacement Fund: Blackrock Bond Income .38 25 .06 \1\ .01 .68
Portfolio (Class B).........................
Existing Fund: UIF Core Plus Fixed Income .38 .35 .27 ............. 1.00
Portfolio (Class II)........................
Replacement Fund: PIMCO Total Return .48 25 .04 ............. .77
Portfolio (Class B).........................
Existing Fund: PIMCO (VIT) Total Return .25 ........... .58 ............. .83
Portfolio (Admin Class).....................
Replacement Fund: Pioneer Strategic Income .60 .15 .09 ............. .84
Portfolio (Class E).........................
Existing Fund: Pioneer Strategic Income VCT .65 .25 .18 ............. 1.08
Portfolio (Class II)........................
Replacement Fund: Van Kampen Comstock .58 ........... .03 ............. .61
Portfolio (Class A).........................
Existing Fund: Van Kampen LIT Comstock .56 ........... .03 ............. .59
Portfolio (Class I).........................
Replacement Fund: Van Kampen Comstock .58 25 .03 ............. .86
Portfolio (Class B).........................
Existing Fund: Van Kampen LIT Comstock .56 .25 .03 ............. .84
Portfolio (Class II)........................
----------------------------------------------------------------------------------------------------------------
\1\ Contractual fee waiver expiring 4/30/10 unless extended.
11. MetLife Advisers, LLC or Met Investors Advisory, LLC is the
adviser of each of the Replacement Funds. Each Replacement Fund
currently offers up to five classes of shares, four of which, Class A,
Class B, Class D and Class E are involved in the substitutions.
12. The Applicants believe the substitutions will provide
significant benefits to Contract owners, including improved selection
of sub-advisers and simplification of fund offerings through the
elimination of overlapping offerings.
13. As a result of the substitutions, the number of investment
options under each Contract will either not be decreased, or, in those
cases where the number of investment options is being reduced, continue
to offer a significant number of alternative investment options
(currently expected to range in number from 2 to 134 after the
substitutions versus 2 to 134 before the substitutions).
14. Those substitutions which replace investment options advised by
investment advisers that are not affiliated with the Substitution
Applicants with funds for which either Met Investors Advisory, LLC or
MetLife Advisers, LLC acts as investment adviser will permit each
adviser, under the Multi-Manager Order, [IC-22824 (1997) and IC-23859
(1999)], to hire, monitor and replace sub-advisers as necessary to
achieve optimal performance.
15. Contract owners with sub-account balances invested (through the
separate account) in shares of the Replacement Funds will have either
lower or substantially similar total expense ratios.
16. In the following substitutions, the management fee and/or
applicable Rule 12b-1 fee of the Replacement Fund are either currently
higher, or, at certain management fee breakpoints, may be higher than
those of the respective Existing Fund: DWS Conservative Allocation VIP/
MetLife Moderate Strategy Portfolio; DWS Growth Allocation VIP/MetLife
Growth Strategy Portfolio; DWS Moderate Allocation VIP/MetLife Balanced
Strategy Portfolio; Legg Mason Partners Variable Equity Index
Portfolio/MetLife Stock Index Portfolio; UIF Core Plus Fixed Income
Portfolio/BlackRock Bond Income Portfolio; PIMCO (VIT) Total Return
Portfolio/PIMCO Total Return Portfolio; and Van Kampen LIT Comstock
Portfolio/Van Kampen Comstock Portfolio.
[[Page 14601]]
17. The Substitution Applicants propose to limit Contract charges
attributable to Contract value invested in the Replacement Funds
following the proposed substitutions to a rate that would offset the
difference in the expense ratio between each Existing Fund's net
expense ratio and the net expense ratio for the respective Replacement
Fund.
18. The substitutions will result in decreased net expense ratios,
except for the Van Kampen LIT Comstock Portfolio/Van Kampen Comstock
Portfolio substitution. Moreover, there will be no increase in Contract
fees and expenses, including mortality and expense risk fees and
administration and distribution fees charged to the Separate Accounts
as a result of the substitutions.
19. The Substitution Applicants believe that the Replacement Funds
have investment objectives, policies and risk profiles that are either
substantially the same as, or sufficiently similar to, the
corresponding Existing Funds to make those Replacement Funds
appropriate candidates as substitutes.
20. In addition, after the substitutions, neither Met Investors
Advisory, LLC, MetLife Advisers, LLC nor any of their affiliates will
receive compensation from the charges to the Separate Accounts related
to the Contracts or from Rule 12b-1 fees or revenue sharing from the
Replacement Funds in excess of the compensation currently received from
the investment advisers or distributors of the Existing Funds.
21. The share classes of the Replacement Funds are either identical
to or less than the share classes of the Existing Funds with respect to
the imposition of Rule 12b-1 fees currently imposed, except with
respect to the substitution of MetLife Stock Index Portfolio for Legg
Mason Partners Variable Equity Index Portfolio and PIMCO Total Return
Portfolio for PIMCO (VIT) Total Return Portfolio.
22. Each Met Series Fund Replacement Fund's Class B, Class D and
Class E Rule 12b-1 fees can be raised to 0.50% of net assets by the
Replacement Fund's Board of Directors without shareholder approval.
Each MIST Replacement Fund's Class B and Class E Rule 12b-1 fees can be
raised to 0.50% and 0.25%, respectively, of net assets by the
Replacement Fund's Board of Trustees without shareholder approval.
However, Met Series Fund and MIST represent that Rule 12b-1 fees of the
Class B, Class D and Class E shares of the Replacement Funds issued in
connection with the proposed substitutions will not be raised above the
current rate without approval of a majority in interest of the
respective Replacement Funds' shareholders after the substitutions.
23. The distributors of the Existing Funds pay to the Insurance
Companies, or their affiliates, any 12b-1 fees associated with the
class of shares sold to the Separate Accounts. Similarly, the
distributors for MIST and Met Series Fund will receive from the
applicable class of shares held by the Separate Accounts Rule 12b-1
fees in the same amount or a lesser amount than the amount paid by the
Existing Funds, except as described above.
24. Further, in addition to any Rule 12b-1 fees, the investment
advisers or distributors of the Existing Funds pay the Insurance
Companies or one of their affiliates from 0 to 45 basis points for the
Existing Funds' classes of shares involved in the substitutions.
Following the substitutions, these payments will not be made on behalf
of the Replacement Funds. Rather, 25, 10 and 15 basis points in Rule
12b-1 fees from the Replacement Funds (with respect to Class B, Class D
and Class E shares, respectively) and profit distributions to members
from the Replacement Funds' advisers, will be available to the
Insurance Companies. These profits from investment advisory fees may be
more or less than the fees being paid by the Existing Funds.
Applicants' Legal Analysis and Conditions
1. The Substitution Applicants request that the Commission issue an
order pursuant to Section 26(c) of the Act approving the proposed
substitutions.
2. Applicants represent that 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. By a supplement to the prospectuses for the Contracts and the
Separate Accounts, each Insurance Company has notified 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. The supplement has advised Contract
owners that from the date of the supplement 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 number of transfers (or
exchanges) permitted without a transfer charge. The supplement also has
informed 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. The supplement has also advised 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.
4. 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.
5. 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. All in-kind
redemptions from an Existing Fund of which any of the Substitution
Applicants is an affiliated person will be effected in accordance with
the conditions set forth in the Commission's no-action letter issued to
Signature Financial Group, Inc. (available December 28, 1999).
6. 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
[[Page 14602]]
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.
7. In addition to the 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. 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.
8. Each Insurance Company also is seeking approval of the proposed
substitutions from any state insurance regulators whose approval may be
necessary or appropriate.
9. 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 sub-account invests in the Replacement Fund such that the
sum of the Replacement Fund's operating expenses and sub-account
expenses (asset-based fees and charges deducted on a daily basis from
sub-account assets and reflected in the calculation of sub-account unit
values) for such period will not exceed, on an annualized basis, the
sum of the Existing Fund's operating expenses and sub-account expenses
for fiscal year 2007, except with respect to the DWS Conservative
Allocation VIP/MetLife Moderate Strategy Portfolio, DWS Growth
Allocation VIP/MetLife Growth Strategy Portfolio, DWS Moderate
Allocation VIP/MetLife Balanced Strategy Portfolio, Legg Mason Partners
Variable Equity Index Portfolio/MetLife Stock Index Portfolio, UIF Core
Plus Fixed Income Portfolio/BlackRock Bond Income Portfolio, PIMCO
(VIT) Total Return Portfolio/PIMCO Total Return Portfolio and Van
Kampen LIT Comstock Portfolio/Van Kampen Comstock Portfolio
substitutions.
10. With respect to the DWS Conservative Allocation VIP/MetLife
Moderate Strategy Portfolio, DWS Growth Allocation VIP/MetLife Growth
Strategy Portfolio, DWS Moderate Allocation VIP/MetLife Balanced
Strategy Portfolio, Legg Mason Partners Variable Equity Index
Portfolio/MetLife Stock Index Portfolio, UIF Core Plus Fixed Income
Portfolio/BlackRock Bond Income Portfolio, PIMCO (VIT) Total Return
Portfolio/PIMCO Total Return Portfolio and Van Kampen LIT Comstock
Portfolio/Van Kampen Comstock Portfolio substitutions, the
reimbursement agreement with respect to the Replacement Fund's
operating expenses and sub-account expenses, will extend for the life
of each Contract outstanding on the date of the proposed substitutions.
11. The Substitution Applicants further agree that, except with
respect to the DWS Conservative Allocation VIP/MetLife Moderate
Strategy Portfolio, DWS Growth Allocation VIP/MetLife Growth Strategy
Portfolio, DWS Moderate Allocation VIP/MetLife Balanced Strategy
Portfolio, Legg Mason Partners Variable Equity Index Portfolio/MetLife
Stock Index Portfolio, UIF Core Plus Fixed Income Portfolio/BlackRock
Bond Income Portfolio, PIMCO (VIT) Total Return Portfolio/PIMCO Total
Return Portfolio and Van Kampen LIT Comstock Portfolio/Van Kampen
Comstock Portfolio substitutions, 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.
12. With respect to the DWS Conservative Allocation VIP/MetLife
Moderate Strategy Portfolio, DWS Growth Allocation VIP/MetLife Growth
Strategy Portfolio, DWS Moderate Allocation VIP/MetLife Balanced
Strategy Portfolio, Legg Mason Partners Variable Equity Index
Portfolio/MetLife Stock Index Portfolio, UIF Core Plus Fixed Income
Portfolio/BlackRock Bond Income Portfolio, PIMCO (VIT) Total Return
Portfolio/PIMCO Total Return Portfolio and Van Kampen LIT Comstock
Portfolio/Van Kampen Comstock Portfolio substitutions, the agreement
not to increase the separate account charges will extend for the life
of each Contract outstanding on the date of the proposed substitutions.
13. The Substitution Applicants submit that, in general, there is
little likelihood that significant additional assets, if any, will be
allocated to the above-listed 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.
14. In each case, the applicable Insurance Companies believe that
it is in the best interests of the Contract owners to substitute the
Replacement Fund for the Existing Fund. The Insurance Companies believe
that in cases where the Replacement Fund has a new sub-adviser, the new
sub-adviser will, over the long term, be positioned to provide at least
comparable performance to that of the Existing Fund's sub-adviser. In
certain substitutions, the same entity serves as sub-adviser for both
the Existing Fund and the Replacement Fund.
15. The Substitution Applicants anticipate that Contract owners
will be better off with the array of sub-accounts offered after the
proposed substitutions than they have been with the array of sub-
accounts offered prior to the substitutions.
16. The Substitution Applicants submit that none of the proposed
substitutions is of the type that Section 26(c) was designed to
prevent.
17. The Substitution Applicants request an order of the Commission
pursuant to Section 26(c) of the Act approving the proposed
substitutions by the Insurance Companies.
18. The Section 17 Applicants request an order under Section 17(b)
exempting them from the provisions of Section 17(a) to the extent
necessary to permit the Insurance Companies to carry out each of the
proposed substitutions, except for the DWS Conservative Allocation VIP/
MetLife Moderate Strategy Portfolio, DWS Growth Allocation VIP/MetLife
Growth Strategy Portfolio and DWS Moderate Allocation
[[Page 14603]]
VIP/MetLife Balanced Strategy Portfolio substitutions.
19. 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.
20. 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 MIST and Met Series Fund. Therefore, MIST 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 MIST 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 MIST and Met Series Fund and their respective
funds. If MIST and Met Series Fund and their respective funds are under
the control of the Insurance Companies, then MIST and Met Series Fund
and their respective funds are affiliated persons of the Insurance
Companies.
21. Regardless of whether or not the Insurance Companies can be
considered to control MIST 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
Replacement Fund's investment adviser, the Insurance Companies are
affiliated persons of both MIST and Met Series Fund and their
respective funds. Likewise, their respective funds are each an
affiliated person of the Insurance Companies.
22. The Insurance Companies, through their separate accounts in the
aggregate own more than 5% of the outstanding shares of the following
Existing Funds: Legg Mason Partners Variable Equity Index Portfolio,
PIMCO (VIT) Total Return Portfolio, Pioneer Strategic Income VCT
Portfolio, Van Kampen LIT Comstock Portfolio. Therefore, each Insurance
Company is an affiliated person of those funds.
23. Because the substitutions other than the DWS Conservative
Allocation VIP/MetLife Moderate Strategy Portfolio, DWS Growth
Allocation VIP/MetLife Growth Strategy Portfolio and DWS Moderate
Allocation VIP/MetLife Balanced Strategy Portfolio 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 Section 17 Applicants submit that for all the reasons
stated above the terms of the proposed in-kind purchases of shares of
the Replacement Funds by the Insurance Companies, 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. The Section 17 Applicants also submit
that the proposed in-kind purchases by the Insurance Companies are
consistent with the policies of: (a) MIST and of its Janus Forty, PIMCO
Total Return, Pioneer Strategic Income and Van Kampen Comstock
Portfolios; and (b) Met Series Fund and of its MetLife Stock Index and
BlackRock Bond Income Portfolios, as recited in the current
registration statements and reports filed by each under the Act.
Finally, the Section 17 Applicants submit that the proposed
substitutions set forth above are consistent with the general purposes
of the Act.
26. To the extent that the in-kind purchases by the Insurance
Company 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
Section 17 Applicants maintain that the terms of the proposed in-kind
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, MIST and Met Series Fund may not rely on Rule 17a-7, the
Section 17 Applicants believe that the Rule's conditions outline the
type of safeguards that result in transactions that are fair and
reasonable to registered investment company participants and preclude
overreaching in connection with an investment company by its affiliated
persons. In addition, as stated above, the 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 MIST 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 Section 17 Applicants will carry out the proposed
Insurance Company in-kind 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 Replacement Fund from overreaching that Rule 17a-7
provides
[[Page 14604]]
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 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 fund involved valued in accordance with the procedures disclosed
in its respective investment company 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 investment
securities, as contemplated by the proposed Insurance Company in-kind
purchases, is consistent with the investment policies and restrictions
of the Investment Companies and the Replacement Funds because (a) the
shares are sold at their net asset value, and (b) the portfolio
securities are 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, Met Investors Advisory, LLC, MetLife Advisers, LLC and the sub-
adviser, 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 Section 17 Applicants submit that the proposed Insurance
Company in-kind purchases are consistent with the general purposes of
the Act as stated in the Findings and Declaration of Policy in Section
1 of the Act and that the proposed transactions do not present any of
the conditions or abuses that the Act was designed to prevent.
30. The Section 17 Applicants represent that the proposed in-kind
purchases meet all of the requirements of Section 17(b) of the Act and
request that the Commission issue an order pursuant to Section 17(b) of
the Act exempting the Separate Accounts, the Insurance Companies, MIST,
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 purchase of shares of the
Replacement Funds which may be deemed to be prohibited by Section 17(a)
of the Act.
Conclusion
Applicants assert that for the reasons summarized above that 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. E9-7086 Filed 3-30-09; 8:45 am]
BILLING CODE
