
[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]


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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 http://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


