MetLife Insurance Company of Connecticut, et al.; Notice of Application, 18937-18944 [2014-07512]
Download as PDF
<![CDATA[
Federal Register / Vol. 79, No. 65 / Friday, April 4, 2014 / Notices
OFFICE OF PERSONNEL
MANAGEMENT
SECURITIES AND EXCHANGE
COMMISSION
Hispanic Council on Federal
Employment
[Release No. IC–31000; File No. 812–14221]
MetLife Insurance Company of
Connecticut, et al.; Notice of
Application
Office of Personnel
Management.
AGENCY:
Cancelling and re-scheduling of
Council Meetings.
ACTION:
The Hispanic Council on
Federal Employment (Council) is
cancelling the April 17, 2014 Council
meeting and will hold its remaining
2014 Council meetings on the dates and
location shown below. The Council is
an advisory committee composed of
representatives from Hispanic
organizations and senior government
officials. Along with its other
responsibilities, the Council shall advise
the Director of the Office of Personnel
Management on matters involving the
recruitment, hiring, and advancement of
Hispanics in the Federal workforce. The
Council is co-chaired by the Chief of
Staff of the Office of Personnel
Management and the Chair of the
National Hispanic Leadership Agenda
(NHLA).
The meeting is open to the public.
Please contact the Office of Personnel
Management at the address shown
below if you wish to present material to
the Council at any of the meetings. The
manner and time prescribed for
presentations may be limited,
depending upon the number of parties
that express interest in presenting
information.
SUMMARY:
DATES:
• April 25, 2014 from 2 p.m.–4 p.m.
• June 19, 2014 from 2 p.m.–4 p.m.
• August 21, 2014 from 2 p.m.–4 p.m.
• October 16, 2014 from 2 p.m.–4
p.m.
• December 19, 2014 from 10 a.m.–12
p.m.
Location: U.S. Office of Personnel
Management, 1900 E St. NW.,
Washington, DC 20415.
mstockstill on DSK4VPTVN1PROD with NOTICES
FOR FURTHER INFORMATION CONTACT:
Veronica E. Villalobos, Director for the
Office of Diversity and Inclusion, Office
of Personnel Management, 1900 E St.
NW., Suite 5H35, Washington, DC
20415. Phone (202) 606–0020 FAX (202)
606–2183 or email at
veronica.villalobos@opm.gov.
U.S. Office of Personnel Management.
Katherine Archuleta,
Director.
[FR Doc. 2014–07492 Filed 4–3–14; 8:45 am]
BILLING CODE 6820–B2–P
VerDate Mar<15>2010
17:37 Apr 03, 2014
Jkt 232001
March 31, 2014.
Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’).
ACTION: Notice of application for an
order approving the substitution of
certain securities pursuant to Section
26(c) of the Investment Company Act of
1940, as amended (the ‘‘1940 Act’’ or
‘‘Act’’) and an order of exemption
pursuant to Section 17(b) of the Act
from Section 17(a) of the Act.
AGENCY:
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 of CT Separate
Account CPPVUL1 (‘‘Separate Account
CPPVUL1’’), First MetLife Investors
Variable Annuity Account One
(‘‘Separate Account One’’), MetLife
Investors USA Separate Account A
(‘‘Separate Account A’’), Metropolitan
Life Separate Account UL (‘‘Separate
Account UL’’), Metropolitan Life
Variable Annuity Separate Account II
(‘‘Separate Account II’’), Security Equity
Separate Account Twenty-Seven
(‘‘Separate Account Twenty-Seven’’),
(collectively, the ‘‘Separate Accounts’’)
and MetLife Insurance Company of
Connecticut (‘‘MetLife of CT’’), First
MetLife Investors Insurance Company
(‘‘First MetLife Investors’’), MetLife
Investors USA Insurance Company
(‘‘MetLife Investors USA’’) and
Metropolitan Life Insurance Company
(‘‘MetLife’’), (collectively the ‘‘Insurance
Companies’’), Met Investors Series Trust
(‘‘MIST’’) and Metropolitan Series Fund
(‘‘Met Series Fund,’’ and, together with
MIST, the ‘‘Investment Companies’’).
The Insurance Companies and the
Separate Accounts are referred to herein
collectively as the ‘‘Substitution
Applicants.’’ The Insurance Companies,
the Separate Accounts and the
Investment Companies are referred to in
this notice as the ‘‘Section 17
Applicants.’’
SUMMARY: Summary of Application:
The Substitution Applicants seek an
order pursuant to Section 26(c) of the
1940 Act, approving the substitution of
certain shares of the Trust for shares of
other registered investment companies
APPLICANTS:
PO 00000
Frm 00061
Fmt 4703
Sfmt 4703
18937
unaffiliated with the Substitution
Applicants (the ‘‘Substitutions’’) each of
which is currently used as an
underlying investment option for
certain variable annuity contracts
(collectively, the ‘‘Contracts’’). The
Section 17 Applicants seek an order
pursuant to Section 17(b) of the 1940
Act exempting them from Section 17(a)
of the Act to the extent necessary to
permit them to engage in certain in-kind
transactions (‘‘In-Kind Transfers’’) in
connection with the Substitutions.
DATES: Filing Date: The application was
filed on September 30, 2013, and an
amended and restated application was
filed on February 28, 2014.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the Secretary of
the Commission and serving the
Applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on April 21, 2014, and
should be accompanied by proof of
service on the Applicants in the form of
an affidavit or, for lawyers, a certificate
of service. Hearing requests should state
the nature of the requester’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the Secretary
of the Commission.
ADDRESSES: Secretary, SEC, 100 F Street
NE., Washington, DC 20549–1090.
Applicants: Applicants c/o Paul G.
Cellupica, Chief Counsel—Securities
Regulation and Corporate Services,
MetLife Group, 1095 Avenue of the
Americas, New York, NY 10036 and
John Chilton, Esq., Sullivan & Worcester
LLP, 1666 K Street NW., Washington,
DC 20006.
FOR FURTHER INFORMATION CONTACT:
Ashley Vroman-Lee, Senior Counsel, or
Michael Kosoff, Branch Chief, Division
of Investment Management, at (202)
551–6795.
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm, or by
calling (202) 551–8090.
Applicants’ Representations
1. MetLife of CT is a stock life
insurance company organized in 1863
under the laws of Connecticut and is a
wholly-owned subsidiary of MetLife,
Inc. MetLife of CT is the depositor and
E:\FR\FM\04APN1.SGM
04APN1
18938
Federal Register / Vol. 79, No. 65 / Friday, April 4, 2014 / Notices
sponsor of Separate Account Eleven,
Separate Account QPN, Fund UL, Fund
UL III and Separate Account CPPVUL1.
First MetLife Investors is a stock life
insurance company organized on
December 31, 1992 under the laws of
New York. First MetLife Investors is a
wholly-owned subsidiary of MetLife,
Inc. First MetLife Investors is the
depositor and sponsor of Separate
Account One. MetLife Investors USA is
a stock life insurance company
organized on September 13, 1960 under
the laws of Delaware. MetLife Investors
USA is an indirect wholly-owned
subsidiary of MetLife, Inc. MetLife
Investors USA is the depositor and
sponsor of Separate Account A. MetLife
is a stock life insurance company
organized in 1868 under the laws of
New York. MetLife is the depositor and
sponsor of Separate Account UL,
Separate Account II and Separate
Account Twenty-Seven.
2. Separate Account Eleven, Fund UL,
Fund UL III, Separate Account One,
Separate Account A, Separate Account
UL, Separate Account II, and Separate
Account Twenty-Seven 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. Separate Account CPPVUL1 serves
as a separate account funding vehicle
for certain Contracts that are exempt
from registration under Section 4(2) of
the Securities Act of 1933 and
Regulation D thereunder.
5. Although Separate Account QPN
and Separate Account CPPVUL1 are
exempt from registration under the Act,
they would be subject to the investment
limitations of Section 12 but for the
exclusion contained in Section
12(d)(1)(E) of the Act. To rely on such
exclusion, an investment company that
is not a registered investment company
must, among other things, agree to
refrain from substituting a security
unless the Commission approves the
substitution in the manner provided in
Section 26 of the Act.
6. 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. MetLife Advisers, LLC serves as
investment adviser to MIST and Met
Series Fund. The investment adviser is
an affiliate of the Insurance Companies.
7. MetLife Investors Distribution
Company, an affiliate of the Insurance
Companies, is the distributor of the
Contracts and serves as the principal
underwriter of MIST and Met Series
Fund.
8. 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 disclosures of this
right. File numbers for the Contracts, the
Separate Accounts and the Investment
Companies are included in the
application.
9. Each Insurance Company, on its
behalf and on behalf of the Separate
Accounts proposes to make certain
substitutions of shares of 13 funds (the
‘‘Existing Funds’’) held in sub-accounts
of its respective Separate Accounts into
certain series of MIST and Met Series
Fund (the ‘‘Replacement Funds’’).
The Substitution Applicants request
an order from the Commission pursuant
to Section 26(c) of the 1940 Act
approving the proposed Substitutions of
shares of the following series of the
Trust, the Replacement Funds, for
shares of the corresponding third party,
unaffiliated underlying mutual funds,
the Existing Funds, as shown in the
following table:
Existing fund
Replacement fund
DWS Capital Growth VIP (Class B) .........................................................
DWS Global Growth VIP (Class B) ..........................................................
Invesco V.I. American Franchise Fund (Series I and Series II) ..............
Invesco V.I. American Value Fund (Series II) ..........................................
Jennison Growth Portfolio (Class B).
Oppenheimer Global Equity Portfolio (Class B).
T. Rowe Price Large Cap Growth Portfolio (Class A and Class B).
Invesco Mid Cap Value Portfolio (currently known as Lord Abbett Mid
Cap Value Portfolio) (Class B).
Clarion Global Real Estate Portfolio (Class A and Class B).
Invesco Comstock Portfolio (Class A and Class B).
T. Rowe Price Large Cap Value Portfolio (Class E).
Clarion Global Real Estate Portfolio (Class B).
MFS® Value Portfolio (Class B).
MFS® Emerging Markets Equity Portfolio (Class A and Class B).
Invesco Comstock Portfolio (Class B).
MetLife Moderate to Aggressive Allocation Portfolio (Class B).
MetLife Moderate Allocation Portfolio (Class B).
Invesco V.I. Global Real Estate Fund (Series I and Series II) ................
Invesco V.I. Growth and Income Fund (Series I and Series II) ...............
ClearBridge Variable All Cap Value Portfolio (Class I) ............................
UIF U.S. Real Estate Portfolio (Class I) ...................................................
Pioneer Disciplined Value VCT Portfolio (Class II) ..................................
Pioneer Emerging Markets VCT Portfolio (Class II) ................................
Pioneer Equity Income VCT Portfolio (Class II) .......................................
Pioneer Ibbotson Growth Allocation VCT Portfolio (Class II) ..................
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Class II) ...............
For Existing Funds and Replacement
Funds with multiple classes, the
application specifies which class of the
Replacement Fund will be substituted
for each class of an Existing Fund.
Comparisons of the investment
objectives, principal strategies, principal
risks, and performance of the Existing
Funds and the Replacement Funds are
included in the application.
10. The following tables compare the
fees and expenses of the Existing Fund
and the Replacement Fund as of
December 31, 2012 (A more detailed fee
table is included in the application):
mstockstill on DSK4VPTVN1PROD with NOTICES
FEE AND EXPENSE DATA AS OF DECEMBER 31, 2012
Existing fund
DWS Capital
Growth VIP
(Class B)
Management Fee .....................................................................................................................................
12b–1 Fee ................................................................................................................................................
Other Expenses .......................................................................................................................................
VerDate Mar<15>2010
17:37 Apr 03, 2014
Jkt 232001
PO 00000
Frm 00062
Fmt 4703
Sfmt 4703
E:\FR\FM\04APN1.SGM
0.37%
0.25%
0.21%
04APN1
Replacement fund
Jennison Growth
Portfolio
(Class B)
0.61%
0.25%
0.03%
18939
Federal Register / Vol. 79, No. 65 / Friday, April 4, 2014 / Notices
FEE AND EXPENSE DATA AS OF DECEMBER 31, 2012—Continued
Existing fund
DWS Capital
Growth VIP
(Class B)
Total Expenses ........................................................................................................................................
Waivers ....................................................................................................................................................
Net Expenses ..........................................................................................................................................
0.83%
0.00%
0.83%
Existing fund
DWS Global
Growth VIP
(Class B)
Management Fee .....................................................................................................................................
12b–1 Fee ................................................................................................................................................
Other Expenses .......................................................................................................................................
Total Expenses ........................................................................................................................................
Waivers ....................................................................................................................................................
Net Expenses ..........................................................................................................................................
Replacement fund
Jennison Growth
Portfolio
(Class B)
0.89%
0.07%
0.82%
Replacement fund
Oppenheimer
Global Equity
Portfolio
(Class B)
0.92%
0.25%
0.59%
1.76%
0.37%
1.39%
0.67%
0.25%
0.09%
1.01%
0.02%
0.99%
Existing fund
Invesco V.I.
American Franchise
Fund
(Series I)
Existing fund
Invesco V.I.
American Franchise
Fund
(Series II)
Replacement fund
T. Rowe Price
Large Cap Growth
Portfolio
(Class A)
Replacement fund
T. Rowe Price
Large Cap Growth
Portfolio
(Class B)
0.68%
0.00%
0.30%
0.98%
0.08%
0.90%
0.68%
0.25%
0.30%
1.23%
0.08%
1.15%
0.60%
0.00%
0.04%
0.64%
0.01%
0.63%
0.60%
0.25%
0.04%
0.89%
0.01%
0.88%
Management Fee .............................................................
12b–1 Fee ........................................................................
Other Expenses ...............................................................
Total Expenses ................................................................
Waivers ............................................................................
Net Expenses ..................................................................
Existing fund
Invesco V.I.
American Value
Fund
(Series II)
Management Fee .....................................................................................................................................
12b–1 Fee ................................................................................................................................................
Other Expenses .......................................................................................................................................
Acquired Expenses ..................................................................................................................................
Total Expenses ........................................................................................................................................
Waivers ....................................................................................................................................................
Net Expenses ..........................................................................................................................................
Replacement fund
Invesco Mid Cap
Value Portfolio
(Class B)†
0.72%
0.25%
0.28%
0.00%
1.25%
0.00%
1.25%
0.65%
0.25%
0.04%
0.06%
1.00%
0.02%
0.98%
Existing fund
Invesco V.I. Global
Real Estate Fund
(Series I)
Existing fund
Invesco V.I. Global
Real Estate Fund
(Series II)
Replacement fund
Clarion Global Real
Estate Portfolio
(Class A)
Replacement fund
Clarion Global Real
Estate Portfolio
(Class B)
0.75%
0.00%
0.39%
1.14%
0.00%
1.14%
0.75%
0.25%
0.39%
1.39%
0.00%
1.39%
0.60%
0.00%
0.06%
0.66%
0.00%
0.66%
0.60%
0.25%
0.06%
0.91%
0.00%
0.91%
Existing fund
Invesco V.I. Growth
and Income Fund
(Series I)
Existing fund
Invesco V.I. Growth
and Income Fund
(Series II)
Replacement fund
Invesco Comstock
Portfolio
(Class A)
Replacement fund
Invesco Comstock
Portfolio
(Class B)
0.56%
0.00%
0.28%
0.84%
0.06%
0.56%
0.25%
0.28%
1.09%
0.06%
0.57%
0.00%
0.03%
0.60%
0.02%
0.57%
0.25%
0.03%
0.85%
0.02%
mstockstill on DSK4VPTVN1PROD with NOTICES
Management Fee .............................................................
12b–1 Fee ........................................................................
Other Expenses ...............................................................
Total Expenses ................................................................
Waivers ............................................................................
Net Expenses ..................................................................
Management Fee .............................................................
12b-1 Fee ........................................................................
Other Expenses ...............................................................
Total Expenses ................................................................
Waivers ............................................................................
VerDate Mar<15>2010
17:37 Apr 03, 2014
Jkt 232001
PO 00000
Frm 00063
Fmt 4703
Sfmt 4703
E:\FR\FM\04APN1.SGM
04APN1
18940
Federal Register / Vol. 79, No. 65 / Friday, April 4, 2014 / Notices
Existing fund
Invesco V.I. Growth
and Income Fund
(Series I)
Existing fund
Invesco V.I. Growth
and Income Fund
(Series II)
Replacement fund
Invesco Comstock
Portfolio
(Class A)
Replacement fund
Invesco Comstock
Portfolio
(Class B)
0.78%
1.03%
0.58%
0.83%
Net Expenses ..................................................................
Existing fund
ClearBridge
Variable All
Cap Value
Portfolio
(Class I)
Management Fee .....................................................................................................................................
12b–1 Fee ................................................................................................................................................
Other Expenses .......................................................................................................................................
Total Expenses ........................................................................................................................................
Waivers ....................................................................................................................................................
Net Expenses ..........................................................................................................................................
0.75%
0.00%
0.06%
0.81%
0.00%
0.81%
Existing fund
UIF U.S.
Real Estate
Portfolio
(Class I)
Management Fee .....................................................................................................................................
12b–1 Fee ................................................................................................................................................
Other Expenses .......................................................................................................................................
Total Expenses ........................................................................................................................................
Waivers ....................................................................................................................................................
Net Expenses ..........................................................................................................................................
0.80%
0.00%
0.30%
1.10%
0.00%
1.10%
Existing fund
Pioneer
Disciplined
Value VCT
Portfolio
(Class II)
Management Fee .....................................................................................................................................
12b–1 Fee ................................................................................................................................................
Other Expenses .......................................................................................................................................
Total Expenses ........................................................................................................................................
Waivers ....................................................................................................................................................
Net Expenses ..........................................................................................................................................
Existing fund
Pioneer
Emerging Markets
VCT Portfolio
(Class II)
mstockstill on DSK4VPTVN1PROD with NOTICES
Management Fee .................................................................................................
12b–1 Fee ............................................................................................................
Other Expenses ...................................................................................................
Acquired Expenses ..............................................................................................
Total Expenses ....................................................................................................
Waivers ................................................................................................................
Net Expenses ......................................................................................................
0.70%
0.25%
0.08%
1.03%
0.03%
1.00%
Replacement fund
MFS®
Emerging Markets
Equity Portfolio
(Class A)
1.15%
0.25%
0.30%
0.01%
1.71%
0.00%
1.71%
0.91%
0.00%
0.16%
0.00%
1.07%
0.02%
1.05%
Existing fund
Pioneer
Equity Income
VCT Portfolio
(Class II)
Management Fee .....................................................................................................................................
12b–1 Fee ................................................................................................................................................
Other Expenses .......................................................................................................................................
Total Expenses ........................................................................................................................................
Waivers ....................................................................................................................................................
Net Expenses ..........................................................................................................................................
VerDate Mar<15>2010
17:37 Apr 03, 2014
Jkt 232001
PO 00000
Frm 00064
Fmt 4703
Sfmt 4703
E:\FR\FM\04APN1.SGM
0.65%
0.25%
0.10%
1.00%
0.00%
1.00%
04APN1
Replacement fund
T. Rowe Price
Large Cap
Value
Portfolio
(Class E)
0.57%
0.15%
0.02%
0.74%
0.00%
0.74%
Replacement fund
Clarion Global
Real Estate
Portfolio
(Class B)
0.60%
0.25%
0.06%
0.91%
0.00%
0.91%
Replacement fund
MFS®
Value
Portfolio
(Class B)
0.70%
0.25%
0.03%
0.98%
0.13%
0.85%
Replacement fund
MFS®
Emerging Markets
Equity Portfolio
(Class B)
0.91%
0.25%
0.16%
0.00%
1.32%
0.02%
1.30%
Replacement fund
Invesco Comstock
Portfolio
(Class B)
0.57%
0.25%
0.03%
0.85%
0.02%
0.83%
18941
Federal Register / Vol. 79, No. 65 / Friday, April 4, 2014 / Notices
Existing fund
Pioneer
Ibbotson Growth
Allocation
VCT Portfolio
(Class II)
Management Fee .....................................................................................................................................
12b–1 Fee ................................................................................................................................................
Other Expenses .......................................................................................................................................
Acquired Fund Fees and Expenses ........................................................................................................
Acquired Management Fees * .................................................................................................................
Total Expenses ........................................................................................................................................
Waivers ....................................................................................................................................................
Net Expenses ..........................................................................................................................................
Replacement fund
MetLife Moderate
to Aggressive
Allocation
Portfolio
(Class B)
0.17%
0.25%
0.05%
0.84%
0.63%
1.31%
0.00%
1.31%
0.06%
0.25%
0.01%
0.67%
0.63%
0.99%
0.00%
0.99%
* This amount is the estimated amount of acquired fund fees and expenses attributable to the management fees of the underlying funds.
Existing fund
Pioneer Ibbotson
Moderate
Allocation
VCT Portfolio
(Class II)
Management Fee .................................................................................................................................
12b–1 Fee ............................................................................................................................................
Other Expenses ...................................................................................................................................
Acquired Fund Fees and Expenses ....................................................................................................
Acquired Management Fees * ..............................................................................................................
Total Expenses ....................................................................................................................................
Waivers ................................................................................................................................................
Net Expenses .......................................................................................................................................
0.17%
0.25%
0.08%
0.80%
0.58%
1.30%
0.02%
1.28%
Replacement fund
MetLife Moderate
Allocation
Portfolio
(Class B)
0.06%
0.25%
0.00%
0.63%
0.58%
0.94%
0.00%
0.94%
mstockstill on DSK4VPTVN1PROD with NOTICES
* This amount is the estimated amount of acquired fund fees and expenses attributable to the management fees of the underlying funds.
11. MetLife Advisers, LLC is the
investment adviser of each of the
Replacement Funds.
12. The Substitution Applicants
believe the Substitutions will provide
significant benefits to Contract owners,
including improved selection of subadvisers and simplification of fund
offerings through the elimination of
overlapping offerings.
13. Based on generally better
performance records and lower total
expenses of the Replacement Funds, the
Substitution Applicants believe that the
sub-advisers to the Replacement Funds
overall may provide more consistent
performance for their Funds than the
advisers or sub-advisers of the Existing
Funds (other than those advisers or subadvisers that manage both the Existing
Fund and the Replacement Fund). At
the same time, Applicants assert that
Contract owners will continue to be able
to select among a similar number of
investment options, with a similar range
of investment objectives, investment
strategies, and managers.
14. As a result of the Substitutions,
the number of investment options
offered under the Contracts may change
slightly. That number, which currently
ranges from three to 122, will range
from three to 120 following the
Substitutions. For the Contracts that
will experience a reduction in the
number of available investment options,
VerDate Mar<15>2010
17:37 Apr 03, 2014
Jkt 232001
the Applicants assert that none will be
reduced by more than two investment
options and all will have at least 15
available investment options after the
Substitutions. With respect to products
with fewer than 20 open investment
options, only one product’s investment
options will be reduced, moving from
16 to 15 investment options.
15. The Substitutions will replace
investment options advised by
investment advisers that are not
affiliated with the Substitution
Applicants with funds for which
MetLife Advisers, LLC acts as
investment adviser, which will permit
MetLife Advisers, LLC, under the
exemptive orders issued to New
England Funds Trust I, et al., Inv. Co.
Rel. No. 22824 (1997) (order), Inv. Co.
Release No. 23859 (1999) (amended
order) (the ‘‘Multi-Manager Order’’) to
enter into and amend sub-advisory
agreements without shareholder
approval under certain conditions to
hire, monitor and replace sub-advisers
as necessary to achieve optimal
performance. Met Series Fund and
MIST have been subject to the MultiManager Order since 1999 and 2000,
respectively.
16. With respect to all of the proposed
Substitutions, except for the DWS
Capital Growth VIP/Jennison Growth
Portfolio and Invesco V.I. Growth and
Income Fund/Invesco Comstock
PO 00000
Frm 00065
Fmt 4703
Sfmt 4703
Portfolio, the management fees of the
Replacement Funds are the same or
lower than that of the respective
Existing Fund. With respect to the DWS
Capital Growth VIP/Jennison Growth
Portfolio substitution, the net expenses
(after waivers) of Jennison Growth
Portfolio were 0.01% lower than those
of DWS Capital Growth VIP. With
respect to the Invesco V.I. Growth and
Income Fund/Invesco Comstock
Portfolio substitution, the total expenses
(before waivers) and net expenses (after
waivers) of Invesco Comstock Portfolio
were lower than those of Invesco V.I.
Growth and Income Fund.
17. The Applicants assert the
Substitutions will result in decreased
net expense ratios, after waivers,
ranging from 0.01% to 0.66%.
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. The
Substitution Applicants believe that the
Replacement Funds have investment
objectives, policies and risk profiles, as
described in their prospectuses, that are
substantially the same as, or sufficiently
similar to, the corresponding Existing
Funds to make those Replacement
Funds appropriate candidates as
substitutes. The Insurance Companies
considered the performance history of
E:\FR\FM\04APN1.SGM
04APN1
18942
Federal Register / Vol. 79, No. 65 / Friday, April 4, 2014 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
the Existing Funds and the Replacement
Funds and determined that no Contract
owners would be materially adversely
affected as a result of the Substitutions.
18. 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 ClearBridge Variable All
Cap Value Portfolio/T. Rowe Price Large
Cap Value Portfolio (Class E) and UIF
U.S. Real Estate Portfolio/Clarion Global
Real Estate Portfolio (Class B). However,
the total expenses for the T. Rowe Price
Large Cap Value Portfolio will be seven
basis points lower than the total
expenses of the Existing Fund after the
substitution, and the total expenses for
the Clarion Global Real Estate Portfolio
will be 19 basis points less than the total
expenses of the Existing Fund after the
substitution.
19. Each MIST Replacement Fund’s
Class B shares Rule 12b–1 fees can be
increased to 0.50% and each MIST
Replacement Fund’s Class E shares Rule
12b–1 fees can be increased to 0.25% by
the Replacement Fund’s Board of
Trustees. Each Met Series Funds’
Replacement Fund’s Class B shares Rule
12b–1 fees can be increased to 0.50% 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 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. The distributors of the
Existing Funds pay to the Insurance
Companies, or their affiliates, any Rule
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.
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
VerDate Mar<15>2010
17:37 Apr 03, 2014
Jkt 232001
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 registered Contracts
and Separate Accounts and private
placement memoranda for the
unregistered Contracts and Separate
Accounts, each Insurance Company has
notified all owners of the Contracts
affected by the Substitutions of its
intention to take the necessary actions
to substitute shares of the funds as
described in this notice. 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 subaccount to one or more other subaccounts without the transfer (or
exchange) being treated as one of a
limited number of permitted transfers
(or exchanges) or a limited 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 also has 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
PO 00000
Frm 00066
Fmt 4703
Sfmt 4703
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.
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
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 among subaccounts or from the variable account
options to the fixed account options.
The written 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 are completed.
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 copies.
8. Each Insurance Company also is
seeking approval of the proposed
Substitutions from any state insurance
regulators whose approval may be
necessary or appropriate.
E:\FR\FM\04APN1.SGM
04APN1
mstockstill on DSK4VPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 65 / Friday, April 4, 2014 / Notices
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 net
operating expenses (taking into account
fee waivers and expense
reimbursements) 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)
for such period will not exceed, on an
annualized basis, the sum of the
Existing Fund’s net operating expenses
taking into account fee waivers and
expense reimbursements and subaccount expenses for fiscal year 2013,
except with respect to the ClearBridge
Variable All Cap Value Portfolio/T.
Rowe Price Large Cap Value Portfolio,
DWS Capital Growth VIP/Jennison
Growth Portfolio, Invesco V.I. American
Franchise Fund/T. Rowe Price Large
Cap Growth Portfolio, Invesco V.I.
Growth and Income Fund/Invesco
Comstock Portfolio and UIF U.S. Real
Estate Portfolio/Clarion Global Real
Estate Portfolio Substitutions.
10. With respect to the ClearBridge
Variable All Cap Value Portfolio/T.
Rowe Price Large Cap Value Portfolio,
DWS Capital Growth VIP/Jennison
Growth Portfolio, Invesco V.I. American
Franchise Fund/T. Rowe Price Large
Cap Growth Portfolio, Invesco V.I.
Growth and Income Fund/Invesco
Comstock Portfolio and UIF U.S. Real
Estate Portfolio/Clarion Global Real
Estate 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 ClearBridge Variable All Cap Value
Portfolio/T. Rowe Price Large Cap Value
Portfolio, DWS Capital Growth VIP/
Jennison Growth Portfolio, Invesco V.I.
American Franchise Fund/T. Rowe
Price Large Cap Growth Portfolio,
Invesco V.I. Growth and Income Fund/
Invesco Comstock Portfolio and UIF
U.S. Real Estate Portfolio/Clarion Global
Real Estate Portfolio Substitutions, they
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
VerDate Mar<15>2010
17:37 Apr 03, 2014
Jkt 232001
substitutions for a period of two years
from the date of the substitutions.
12. With respect to the ClearBridge
Variable All Cap Value Portfolio/T.
Rowe Price Large Cap Value Portfolio,
DWS Capital Growth VIP/Jennison
Growth Portfolio, Invesco V.I. American
Franchise Fund/T. Rowe Price Large
Cap Growth Portfolio, Invesco V.I.
Growth and Income Fund/Invesco
Comstock Portfolio and UIF U.S. Real
Estate Portfolio/Clarion Global Real
Estate Portfolio Substitutions, the
agreement not to increase the separate
account charges will extend for the life
of each Contract outstanding on the date
the proposed Substitutions are
completed.
13. 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 the
Replacement Fund’s sub-adviser, where
applicable, will, over the long term, be
positioned to provide at least
comparable performance to that of the
Existing Fund’s sub-adviser.
14. The Substitution Applicants assert
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 subaccounts offered prior to the
substitutions.
15. The Substitution Applicants
represent that none of the proposed
Substitutions is of the type that Section
26(c) was designed to prevent. Unlike
traditional unit investment trusts where
a depositor could only substitute an
investment security in a manner which
permanently affected all the investors in
the trust, the Contracts provide each
Contract owner with the right to
exercise his or her own judgment and
transfer Contract or cash values into
other sub-accounts. Moreover, the
Insurance Companies will offer Contract
owners the opportunity to transfer
amounts out of the affected subaccounts into any of the remaining subaccounts without cost or other
disadvantage. The proposed
Substitutions, therefore, will not result
in the type of costly forced redemption
which Section 26(c) was designed to
prevent.
Section 17(b) Relief
1. 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.
2. Section 17(a)(1) of the Act, in
relevant part, prohibits any affiliated
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
18943
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.
3. 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 the
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. 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. The Insurance
Companies, through their separate
accounts, in the aggregate, own more
than 5% of the outstanding shares of the
following Existing Funds: Invesco V.I.
American Value Fund, Invesco V.I.
Global Real Estate Fund, Invesco V.I.
Growth and Income Fund, ClearBridge
Variable All Cap Value Portfolio, UIF
U.S. Real Estate Portfolio, Pioneer
Disciplined Value VCT Portfolio,
Pioneer Emerging Markets VCT
Portfolio, Pioneer Equity Income VCT
Portfolio, Pioneer Ibbotson Growth
Allocation VCT Portfolio, Pioneer
Ibbotson Moderate Allocation VCT
Portfolio. Therefore, each Insurance
Company is an affiliated person of those
funds. All in-kind redemptions from an
E:\FR\FM\04APN1.SGM
04APN1
mstockstill on DSK4VPTVN1PROD with NOTICES
18944
Federal Register / Vol. 79, No. 65 / Friday, April 4, 2014 / Notices
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).
4. The Section 17 Applicants submit
that the In-Kind Transactions, as
described in the application, meet the
conditions set forth in Section 17(b) of
the 1940 Act.
5. 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 (that the consideration paid
for the securities being purchased or
sold may not be entirely cash)
enumerated in Rule 17a–7 of the 1940
Act. The proposed transactions will take
place at relative net asset value in
conformity with the requirements of
Section 22(c) of the 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. The Applicants
assert that Contract owners will not
suffer any adverse tax consequences as
a result of the substitutions, and the fees
and charges under the Contracts will not
increase because of the substitutions.
6. The Boards of Trustees 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 assert they
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
Substitution Applicants state that 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
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
VerDate Mar<15>2010
17:37 Apr 03, 2014
Jkt 232001
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.
7. 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 (1) the
shares are sold at their net asset value,
and (2) 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,
MetLife Advisers, LLC and the subadviser, as applicable, will examine the
portfolio securities being offered to each
Replacement Fund and accept only
those securities as consideration for
shares that it would have acquired for
each such Fund in a cash transaction.
8. The Section 17 Applicants
represent that the proposed in-kind
purchases meet all of the requirements
of Section 17(b) of the Act and that an
exemption should be granted, to the
extent necessary, from the provisions of
Section 17(a).
Conclusion
Applicants assert that for the reasons
summarized above 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.
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission Investor Advisory
Committee will hold a meeting on
Thursday, April 10, 2014, in MultiPurpose Room LL–006 at the
Commission’s headquarters, 100 F
Street NE., Washington, DC. The
meeting will begin at 10:00 a.m. (EST)
and will be open to the public. Seating
will be on a first-come, first-served
basis. Doors will open at 9:30 a.m.
Visitors will be subject to security
checks. The meeting will be webcast on
the Commission’s Web site at
www.sec.gov.
On March 28, 2014, the Commission
issued notice of the Committee meeting
(Release No. 33–9567), indicating that
the meeting is open to the public and
inviting the public to submit written
comments to the Committee. This
Sunshine Act notice is being issued
because a quorum of the Commission
may attend the meeting.
The agenda for the meeting includes:
Remarks from Commissioners; remarks
from the Investor Advocate; election of
Investor Advisory Committee Chair; a
recommendation from the Investor as
Purchaser Subcommittee regarding
crowdfunding regulations; and
nonpublic subcommittee meetings.
For further information, please
contact the Office of the Secretary at
(202) 551–5400.
Dated: April 2, 2014.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–07686 Filed 4–2–14; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71832; File No. SR–ISE–
2014–18]
For the Commission, by the Division of
Investment Management pursuant to
delegated authority.
Kevin M. O’Neill,
Deputy Secretary.
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Amend ISE Rule 623
(‘‘Options Communications’’) To
Conform With the Rules of the
Financial Industry Regulatory
Authority Inc.
[FR Doc. 2014–07512 Filed 4–3–14; 8:45 am]
March 31, 2014.
BILLING CODE 8011–01–P
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 20,
2014, the International Securities
Exchange, LLC (‘‘Exchange’’ or ‘‘ISE’’)
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
PO 00000
Frm 00068
Fmt 4703
Sfmt 4703
1 15
2 17
E:\FR\FM\04APN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
04APN1
]]>Agencies
[Federal Register Volume 79, Number 65 (Friday, April 4, 2014)]
[Notices]
[Pages 18937-18944]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-07512]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-31000; File No. 812-14221]
MetLife Insurance Company of Connecticut, et al.; Notice of
Application
March 31, 2014.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').
ACTION: Notice of application for an order approving the substitution
of certain securities pursuant to Section 26(c) of the Investment
Company Act of 1940, as amended (the ``1940 Act'' or ``Act'') and an
order of exemption pursuant to Section 17(b) of the Act from Section
17(a) of the Act.
-----------------------------------------------------------------------
APPLICANTS: 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 of CT
Separate Account CPPVUL1 (``Separate Account CPPVUL1''), First MetLife
Investors Variable Annuity Account One (``Separate Account One''),
MetLife Investors USA Separate Account A (``Separate Account A''),
Metropolitan Life Separate Account UL (``Separate Account UL''),
Metropolitan Life Variable Annuity Separate Account II (``Separate
Account II''), Security Equity Separate Account Twenty-Seven
(``Separate Account Twenty-Seven''), (collectively, the ``Separate
Accounts'') and MetLife Insurance Company of Connecticut (``MetLife of
CT''), First MetLife Investors Insurance Company (``First MetLife
Investors''), MetLife Investors USA Insurance Company (``MetLife
Investors USA'') and Metropolitan Life Insurance Company (``MetLife''),
(collectively the ``Insurance Companies''), Met Investors Series Trust
(``MIST'') and Metropolitan Series Fund (``Met Series Fund,'' and,
together with MIST, the ``Investment Companies'').
The Insurance Companies and the Separate Accounts are referred to
herein collectively as the ``Substitution Applicants.'' The Insurance
Companies, the Separate Accounts and the Investment Companies are
referred to in this notice as the ``Section 17 Applicants.''
SUMMARY: Summary of Application: The Substitution Applicants seek an
order pursuant to Section 26(c) of the 1940 Act, approving the
substitution of certain shares of the Trust for shares of other
registered investment companies unaffiliated with the Substitution
Applicants (the ``Substitutions'') each of which is currently used as
an underlying investment option for certain variable annuity contracts
(collectively, the ``Contracts''). The Section 17 Applicants seek an
order pursuant to Section 17(b) of the 1940 Act exempting them from
Section 17(a) of the Act to the extent necessary to permit them to
engage in certain in-kind transactions (``In-Kind Transfers'') in
connection with the Substitutions.
DATES: Filing Date: The application was filed on September 30, 2013,
and an amended and restated application was filed on February 28, 2014.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Secretary of the
Commission and serving the Applicants with a copy of the request,
personally or by mail. Hearing requests should be received by the
Commission by 5:30 p.m. on April 21, 2014, and should be accompanied by
proof of service on the Applicants in the form of an affidavit or, for
lawyers, a certificate of service. Hearing requests should state the
nature of the requester's interest, the reason for the request, and the
issues contested. Persons who wish to be notified of a hearing may
request notification by writing to the Secretary of the Commission.
ADDRESSES: Secretary, SEC, 100 F Street NE., Washington, DC 20549-1090.
Applicants: Applicants c/o Paul G. Cellupica, Chief Counsel--Securities
Regulation and Corporate Services, MetLife Group, 1095 Avenue of the
Americas, New York, NY 10036 and John Chilton, Esq., Sullivan &
Worcester LLP, 1666 K Street NW., Washington, DC 20006.
FOR FURTHER INFORMATION CONTACT: Ashley Vroman-Lee, Senior Counsel, or
Michael Kosoff, Branch Chief, Division of Investment Management, at
(202) 551-6795.
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm, or by calling (202) 551-8090.
Applicants' Representations
1. MetLife of CT is a stock life insurance company organized in
1863 under the laws of Connecticut and is a wholly-owned subsidiary of
MetLife, Inc. MetLife of CT is the depositor and
[[Page 18938]]
sponsor of Separate Account Eleven, Separate Account QPN, Fund UL, Fund
UL III and Separate Account CPPVUL1. First MetLife Investors is a stock
life insurance company organized on December 31, 1992 under the laws of
New York. First MetLife Investors is a wholly-owned subsidiary of
MetLife, Inc. First MetLife Investors is the depositor and sponsor of
Separate Account One. MetLife Investors USA is a stock life insurance
company organized on September 13, 1960 under the laws of Delaware.
MetLife Investors USA is an indirect wholly-owned subsidiary of
MetLife, Inc. MetLife Investors USA is the depositor and sponsor of
Separate Account A. MetLife is a stock life insurance company organized
in 1868 under the laws of New York. MetLife is the depositor and
sponsor of Separate Account UL, Separate Account II and Separate
Account Twenty-Seven.
2. Separate Account Eleven, Fund UL, Fund UL III, Separate Account
One, Separate Account A, Separate Account UL, Separate Account II, and
Separate Account Twenty-Seven 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. Separate Account CPPVUL1 serves as a separate account funding
vehicle for certain Contracts that are exempt from registration under
Section 4(2) of the Securities Act of 1933 and Regulation D thereunder.
5. Although Separate Account QPN and Separate Account CPPVUL1 are
exempt from registration under the Act, they would be subject to the
investment limitations of Section 12 but for the exclusion contained in
Section 12(d)(1)(E) of the Act. To rely on such exclusion, an
investment company that is not a registered investment company must,
among other things, agree to refrain from substituting a security
unless the Commission approves the substitution in the manner provided
in Section 26 of the Act.
6. 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. MetLife
Advisers, LLC serves as investment adviser to MIST and Met Series Fund.
The investment adviser is an affiliate of the Insurance Companies.
7. MetLife Investors Distribution Company, an affiliate of the
Insurance Companies, is the distributor of the Contracts and serves as
the principal underwriter of MIST and Met Series Fund.
8. 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 disclosures of this
right. File numbers for the Contracts, the Separate Accounts and the
Investment Companies are included in the application.
9. Each Insurance Company, on its behalf and on behalf of the
Separate Accounts proposes to make certain substitutions of shares of
13 funds (the ``Existing Funds'') held in sub-accounts of its
respective Separate Accounts into certain series of MIST and Met Series
Fund (the ``Replacement Funds'').
The Substitution Applicants request an order from the Commission
pursuant to Section 26(c) of the 1940 Act approving the proposed
Substitutions of shares of the following series of the Trust, the
Replacement Funds, for shares of the corresponding third party,
unaffiliated underlying mutual funds, the Existing Funds, as shown in
the following table:
------------------------------------------------------------------------
Existing fund Replacement fund
------------------------------------------------------------------------
DWS Capital Growth VIP (Class B)....... Jennison Growth Portfolio
(Class B).
DWS Global Growth VIP (Class B)........ Oppenheimer Global Equity
Portfolio (Class B).
Invesco V.I. American Franchise Fund T. Rowe Price Large Cap Growth
(Series I and Series II). Portfolio (Class A and Class
B).
Invesco V.I. American Value Fund Invesco Mid Cap Value Portfolio
(Series II). (currently known as Lord
Abbett Mid Cap Value
Portfolio) (Class B).
Invesco V.I. Global Real Estate Fund Clarion Global Real Estate
(Series I and Series II). Portfolio (Class A and Class
B).
Invesco V.I. Growth and Income Fund Invesco Comstock Portfolio
(Series I and Series II). (Class A and Class B).
ClearBridge Variable All Cap Value T. Rowe Price Large Cap Value
Portfolio (Class I). Portfolio (Class E).
UIF U.S. Real Estate Portfolio (Class Clarion Global Real Estate
I). Portfolio (Class B).
Pioneer Disciplined Value VCT Portfolio MFS[supreg] Value Portfolio
(Class II). (Class B).
Pioneer Emerging Markets VCT Portfolio MFS[supreg] Emerging Markets
(Class II). Equity Portfolio (Class A and
Class B).
Pioneer Equity Income VCT Portfolio Invesco Comstock Portfolio
(Class II). (Class B).
Pioneer Ibbotson Growth Allocation VCT MetLife Moderate to Aggressive
Portfolio (Class II). Allocation Portfolio (Class
B).
Pioneer Ibbotson Moderate Allocation MetLife Moderate Allocation
VCT Portfolio (Class II). Portfolio (Class B).
------------------------------------------------------------------------
For Existing Funds and Replacement Funds with multiple classes, the
application specifies which class of the Replacement Fund will be
substituted for each class of an Existing Fund. Comparisons of the
investment objectives, principal strategies, principal risks, and
performance of the Existing Funds and the Replacement Funds are
included in the application.
10. The following tables compare the fees and expenses of the
Existing Fund and the Replacement Fund as of December 31, 2012 (A more
detailed fee table is included in the application):
Fee and Expense Data as of December 31, 2012
------------------------------------------------------------------------
Replacement fund
Existing fund DWS Jennison Growth
Capital Growth Portfolio (Class
VIP (Class B) B)
------------------------------------------------------------------------
Management Fee.................. 0.37% 0.61%
12b-1 Fee....................... 0.25% 0.25%
Other Expenses.................. 0.21% 0.03%
[[Page 18939]]
Total Expenses.................. 0.83% 0.89%
Waivers......................... 0.00% 0.07%
Net Expenses.................... 0.83% 0.82%
------------------------------------------------------------------------
------------------------------------------------------------------------
Replacement fund
Existing fund DWS Oppenheimer
Global Growth VIP Global Equity
(Class B) Portfolio (Class
B)
------------------------------------------------------------------------
Management Fee.................. 0.92% 0.67%
12b-1 Fee....................... 0.25% 0.25%
Other Expenses.................. 0.59% 0.09%
Total Expenses.................. 1.76% 1.01%
Waivers......................... 0.37% 0.02%
Net Expenses.................... 1.39% 0.99%
------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Replacement fund Replacement fund
Existing fund Existing fund T. Rowe Price T. Rowe Price
Invesco V.I. Invesco V.I. Large Cap Growth Large Cap Growth
American Franchise American Franchise Portfolio (Class Portfolio (Class
Fund (Series I) Fund (Series II) A) B)
----------------------------------------------------------------------------------------------------------------
Management Fee.................. 0.68% 0.68% 0.60% 0.60%
12b-1 Fee....................... 0.00% 0.25% 0.00% 0.25%
Other Expenses.................. 0.30% 0.30% 0.04% 0.04%
Total Expenses.................. 0.98% 1.23% 0.64% 0.89%
Waivers......................... 0.08% 0.08% 0.01% 0.01%
Net Expenses.................... 0.90% 1.15% 0.63% 0.88%
----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
Existing fund Replacement fund
Invesco V.I. Invesco Mid Cap
American Value Value Portfolio
Fund (Series II) (Class B)[dagger]
------------------------------------------------------------------------
Management Fee.................. 0.72% 0.65%
12b-1 Fee....................... 0.25% 0.25%
Other Expenses.................. 0.28% 0.04%
Acquired Expenses............... 0.00% 0.06%
Total Expenses.................. 1.25% 1.00%
Waivers......................... 0.00% 0.02%
Net Expenses.................... 1.25% 0.98%
------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Replacement fund Replacement fund
Existing fund Existing fund Clarion Global Clarion Global
Invesco V.I. Invesco V.I. Real Estate Real Estate
Global Real Estate Global Real Estate Portfolio (Class Portfolio (Class
Fund (Series I) Fund (Series II) A) B)
----------------------------------------------------------------------------------------------------------------
Management Fee.................. 0.75% 0.75% 0.60% 0.60%
12b-1 Fee....................... 0.00% 0.25% 0.00% 0.25%
Other Expenses.................. 0.39% 0.39% 0.06% 0.06%
Total Expenses.................. 1.14% 1.39% 0.66% 0.91%
Waivers......................... 0.00% 0.00% 0.00% 0.00%
Net Expenses.................... 1.14% 1.39% 0.66% 0.91%
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Existing fund Existing fund Replacement fund Replacement fund
Invesco V.I. Invesco V.I. Invesco Comstock Invesco Comstock
Growth and Income Growth and Income Portfolio (Class Portfolio (Class
Fund (Series I) Fund (Series II) A) B)
----------------------------------------------------------------------------------------------------------------
Management Fee.................. 0.56% 0.56% 0.57% 0.57%
12b-1 Fee....................... 0.00% 0.25% 0.00% 0.25%
Other Expenses.................. 0.28% 0.28% 0.03% 0.03%
Total Expenses.................. 0.84% 1.09% 0.60% 0.85%
Waivers......................... 0.06% 0.06% 0.02% 0.02%
[[Page 18940]]
Net Expenses.................... 0.78% 1.03% 0.58% 0.83%
----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
Existing fund Replacement fund
ClearBridge T. Rowe Price
Variable All Cap Large Cap Value
Value Portfolio Portfolio (Class
(Class I) E)
------------------------------------------------------------------------
Management Fee.................. 0.75% 0.57%
12b-1 Fee....................... 0.00% 0.15%
Other Expenses.................. 0.06% 0.02%
Total Expenses.................. 0.81% 0.74%
Waivers......................... 0.00% 0.00%
Net Expenses.................... 0.81% 0.74%
------------------------------------------------------------------------
------------------------------------------------------------------------
Replacement fund
Existing fund UIF Clarion Global
U.S. Real Estate Real Estate
Portfolio (Class Portfolio (Class
I) B)
------------------------------------------------------------------------
Management Fee.................. 0.80% 0.60%
12b-1 Fee....................... 0.00% 0.25%
Other Expenses.................. 0.30% 0.06%
Total Expenses.................. 1.10% 0.91%
Waivers......................... 0.00% 0.00%
Net Expenses.................... 1.10% 0.91%
------------------------------------------------------------------------
------------------------------------------------------------------------
Existing fund
Pioneer Replacement fund
Disciplined Value MFS[supreg] Value
VCT Portfolio Portfolio (Class
(Class II) B)
------------------------------------------------------------------------
Management Fee.................. 0.70% 0.70%
12b-1 Fee....................... 0.25% 0.25%
Other Expenses.................. 0.08% 0.03%
Total Expenses.................. 1.03% 0.98%
Waivers......................... 0.03% 0.13%
Net Expenses.................... 1.00% 0.85%
------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Existing fund Replacement fund Replacement fund
Pioneer Emerging MFS[supreg] MFS[supreg]
Markets VCT Emerging Markets Emerging Markets
Portfolio (Class Equity Portfolio Equity Portfolio
II) (Class A) (Class B)
----------------------------------------------------------------------------------------------------------------
Management Fee...................................... 1.15% 0.91% 0.91%
12b-1 Fee........................................... 0.25% 0.00% 0.25%
Other Expenses...................................... 0.30% 0.16% 0.16%
Acquired Expenses................................... 0.01% 0.00% 0.00%
Total Expenses...................................... 1.71% 1.07% 1.32%
Waivers............................................. 0.00% 0.02% 0.02%
Net Expenses........................................ 1.71% 1.05% 1.30%
----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
Existing fund
Pioneer Equity Replacement fund
Income VCT Invesco Comstock
Portfolio (Class Portfolio (Class
II) B)
------------------------------------------------------------------------
Management Fee.................. 0.65% 0.57%
12b-1 Fee....................... 0.25% 0.25%
Other Expenses.................. 0.10% 0.03%
Total Expenses.................. 1.00% 0.85%
Waivers......................... 0.00% 0.02%
Net Expenses.................... 1.00% 0.83%
------------------------------------------------------------------------
[[Page 18941]]
------------------------------------------------------------------------
Replacement fund
Existing fund MetLife Moderate
Pioneer Ibbotson to Aggressive
Growth Allocation Allocation
VCT Portfolio Portfolio (Class
(Class II) B)
------------------------------------------------------------------------
Management Fee.................. 0.17% 0.06%
12b-1 Fee....................... 0.25% 0.25%
Other Expenses.................. 0.05% 0.01%
Acquired Fund Fees and Expenses. 0.84% 0.67%
Acquired Management Fees *...... 0.63% 0.63%
Total Expenses.................. 1.31% 0.99%
Waivers......................... 0.00% 0.00%
Net Expenses.................... 1.31% 0.99%
------------------------------------------------------------------------
* This amount is the estimated amount of acquired fund fees and expenses
attributable to the management fees of the underlying funds.
------------------------------------------------------------------------
Existing fund
Pioneer Ibbotson Replacement fund
Moderate MetLife Moderate
Allocation VCT Allocation
Portfolio (Class Portfolio (Class
II) B)
-----------------------------------------------------------------------
Management Fee................ 0.17% 0.06%
12b-1 Fee..................... 0.25% 0.25%
Other Expenses................ 0.08% 0.00%
Acquired Fund Fees and 0.80% 0.63%
Expenses.....................
Acquired Management Fees *.... 0.58% 0.58%
Total Expenses................ 1.30% 0.94%
Waivers....................... 0.02% 0.00%
Net Expenses.................. 1.28% 0.94%
------------------------------------------------------------------------
* This amount is the estimated amount of acquired fund fees and expenses
attributable to the management fees of the underlying funds.
11. MetLife Advisers, LLC is the investment adviser of each of the
Replacement Funds.
12. The Substitution 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. Based on generally better performance records and lower total
expenses of the Replacement Funds, the Substitution Applicants believe
that the sub-advisers to the Replacement Funds overall may provide more
consistent performance for their Funds than the advisers or sub-
advisers of the Existing Funds (other than those advisers or sub-
advisers that manage both the Existing Fund and the Replacement Fund).
At the same time, Applicants assert that Contract owners will continue
to be able to select among a similar number of investment options, with
a similar range of investment objectives, investment strategies, and
managers.
14. As a result of the Substitutions, the number of investment
options offered under the Contracts may change slightly. That number,
which currently ranges from three to 122, will range from three to 120
following the Substitutions. For the Contracts that will experience a
reduction in the number of available investment options, the Applicants
assert that none will be reduced by more than two investment options
and all will have at least 15 available investment options after the
Substitutions. With respect to products with fewer than 20 open
investment options, only one product's investment options will be
reduced, moving from 16 to 15 investment options.
15. The Substitutions will replace investment options advised by
investment advisers that are not affiliated with the Substitution
Applicants with funds for which MetLife Advisers, LLC acts as
investment adviser, which will permit MetLife Advisers, LLC, under the
exemptive orders issued to New England Funds Trust I, et al., Inv. Co.
Rel. No. 22824 (1997) (order), Inv. Co. Release No. 23859 (1999)
(amended order) (the ``Multi-Manager Order'') to enter into and amend
sub-advisory agreements without shareholder approval under certain
conditions to hire, monitor and replace sub-advisers as necessary to
achieve optimal performance. Met Series Fund and MIST have been subject
to the Multi-Manager Order since 1999 and 2000, respectively.
16. With respect to all of the proposed Substitutions, except for
the DWS Capital Growth VIP/Jennison Growth Portfolio and Invesco V.I.
Growth and Income Fund/Invesco Comstock Portfolio, the management fees
of the Replacement Funds are the same or lower than that of the
respective Existing Fund. With respect to the DWS Capital Growth VIP/
Jennison Growth Portfolio substitution, the net expenses (after
waivers) of Jennison Growth Portfolio were 0.01% lower than those of
DWS Capital Growth VIP. With respect to the Invesco V.I. Growth and
Income Fund/Invesco Comstock Portfolio substitution, the total expenses
(before waivers) and net expenses (after waivers) of Invesco Comstock
Portfolio were lower than those of Invesco V.I. Growth and Income Fund.
17. The Applicants assert the Substitutions will result in
decreased net expense ratios, after waivers, ranging from 0.01% to
0.66%. 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. The Substitution Applicants believe that the
Replacement Funds have investment objectives, policies and risk
profiles, as described in their prospectuses, that are substantially
the same as, or sufficiently similar to, the corresponding Existing
Funds to make those Replacement Funds appropriate candidates as
substitutes. The Insurance Companies considered the performance history
of
[[Page 18942]]
the Existing Funds and the Replacement Funds and determined that no
Contract owners would be materially adversely affected as a result of
the Substitutions.
18. 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 ClearBridge Variable All Cap Value
Portfolio/T. Rowe Price Large Cap Value Portfolio (Class E) and UIF
U.S. Real Estate Portfolio/Clarion Global Real Estate Portfolio (Class
B). However, the total expenses for the T. Rowe Price Large Cap Value
Portfolio will be seven basis points lower than the total expenses of
the Existing Fund after the substitution, and the total expenses for
the Clarion Global Real Estate Portfolio will be 19 basis points less
than the total expenses of the Existing Fund after the substitution.
19. Each MIST Replacement Fund's Class B shares Rule 12b-1 fees can
be increased to 0.50% and each MIST Replacement Fund's Class E shares
Rule 12b-1 fees can be increased to 0.25% by the Replacement Fund's
Board of Trustees. Each Met Series Funds' Replacement Fund's Class B
shares Rule 12b-1 fees can be increased to 0.50% 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 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. The
distributors of the Existing Funds pay to the Insurance Companies, or
their affiliates, any Rule 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.
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 registered Contracts
and Separate Accounts and private placement memoranda for the
unregistered Contracts and Separate Accounts, each Insurance Company
has notified all owners of the Contracts affected by the Substitutions
of its intention to take the necessary actions to substitute shares of
the funds as described in this notice. 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 also has 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.
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 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 among sub-accounts or from the variable account options to
the fixed account options. The written 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
are completed. 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 copies.
8. Each Insurance Company also is seeking approval of the proposed
Substitutions from any state insurance regulators whose approval may be
necessary or appropriate.
[[Page 18943]]
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 net operating expenses (taking into
account fee waivers and expense reimbursements) 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 net operating expenses taking into account
fee waivers and expense reimbursements and sub-account expenses for
fiscal year 2013, except with respect to the ClearBridge Variable All
Cap Value Portfolio/T. Rowe Price Large Cap Value Portfolio, DWS
Capital Growth VIP/Jennison Growth Portfolio, Invesco V.I. American
Franchise Fund/T. Rowe Price Large Cap Growth Portfolio, Invesco V.I.
Growth and Income Fund/Invesco Comstock Portfolio and UIF U.S. Real
Estate Portfolio/Clarion Global Real Estate Portfolio Substitutions.
10. With respect to the ClearBridge Variable All Cap Value
Portfolio/T. Rowe Price Large Cap Value Portfolio, DWS Capital Growth
VIP/Jennison Growth Portfolio, Invesco V.I. American Franchise Fund/T.
Rowe Price Large Cap Growth Portfolio, Invesco V.I. Growth and Income
Fund/Invesco Comstock Portfolio and UIF U.S. Real Estate Portfolio/
Clarion Global Real Estate 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 ClearBridge Variable All Cap Value Portfolio/T. Rowe
Price Large Cap Value Portfolio, DWS Capital Growth VIP/Jennison Growth
Portfolio, Invesco V.I. American Franchise Fund/T. Rowe Price Large Cap
Growth Portfolio, Invesco V.I. Growth and Income Fund/Invesco Comstock
Portfolio and UIF U.S. Real Estate Portfolio/Clarion Global Real Estate
Portfolio Substitutions, they 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 ClearBridge Variable All Cap Value
Portfolio/T. Rowe Price Large Cap Value Portfolio, DWS Capital Growth
VIP/Jennison Growth Portfolio, Invesco V.I. American Franchise Fund/T.
Rowe Price Large Cap Growth Portfolio, Invesco V.I. Growth and Income
Fund/Invesco Comstock Portfolio and UIF U.S. Real Estate Portfolio/
Clarion Global Real Estate Portfolio Substitutions, the agreement not
to increase the separate account charges will extend for the life of
each Contract outstanding on the date the proposed Substitutions are
completed.
13. 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 the Replacement Fund's sub-adviser, where applicable, will, over
the long term, be positioned to provide at least comparable performance
to that of the Existing Fund's sub-adviser.
14. The Substitution Applicants assert 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.
15. The Substitution Applicants represent that none of the proposed
Substitutions is of the type that Section 26(c) was designed to
prevent. Unlike traditional unit investment trusts where a depositor
could only substitute an investment security in a manner which
permanently affected all the investors in the trust, the Contracts
provide each Contract owner with the right to exercise his or her own
judgment and transfer Contract or cash values into other sub-accounts.
Moreover, the Insurance Companies will offer Contract owners the
opportunity to transfer amounts out of the affected sub-accounts into
any of the remaining sub-accounts without cost or other disadvantage.
The proposed Substitutions, therefore, will not result in the type of
costly forced redemption which Section 26(c) was designed to prevent.
Section 17(b) Relief
1. 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.
2. 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.
3. 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 the 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. 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. The Insurance Companies,
through their separate accounts, in the aggregate, own more than 5% of
the outstanding shares of the following Existing Funds: Invesco V.I.
American Value Fund, Invesco V.I. Global Real Estate Fund, Invesco V.I.
Growth and Income Fund, ClearBridge Variable All Cap Value Portfolio,
UIF U.S. Real Estate Portfolio, Pioneer Disciplined Value VCT
Portfolio, Pioneer Emerging Markets VCT Portfolio, Pioneer Equity
Income VCT Portfolio, Pioneer Ibbotson Growth Allocation VCT Portfolio,
Pioneer Ibbotson Moderate Allocation VCT Portfolio. Therefore, each
Insurance Company is an affiliated person of those funds. All in-kind
redemptions from an
[[Page 18944]]
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).
4. The Section 17 Applicants submit that the In-Kind Transactions,
as described in the application, meet the conditions set forth in
Section 17(b) of the 1940 Act.
5. 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 (that the consideration paid for the
securities being purchased or sold may not be entirely cash) enumerated
in Rule 17a-7 of the 1940 Act. The proposed transactions will take
place at relative net asset value in conformity with the requirements
of Section 22(c) of the 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. The Applicants assert that Contract owners will not suffer
any adverse tax consequences as a result of the substitutions, and the
fees and charges under the Contracts will not increase because of the
substitutions.
6. The Boards of Trustees 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 assert they 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 Substitution
Applicants state that 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 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.
7. 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 (1) the
shares are sold at their net asset value, and (2) 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, 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.
8. The Section 17 Applicants represent that the proposed in-kind
purchases meet all of the requirements of Section 17(b) of the Act and
that an exemption should be granted, to the extent necessary, from the
provisions of Section 17(a).
Conclusion
Applicants assert that for the reasons summarized above 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.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07512 Filed 4-3-14; 8:45 am]
BILLING CODE 8011-01-P
