[Federal Register Volume 69, Number 24 (Thursday, February 5, 2004)]
[Notices]
[Pages 5594-5614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2328]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-26340; File No. 812-12999]


MetLife Investors Insurance Company, et al.; Notice of 
Application

January 29, 2004.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order pursuant to Section 26(c) of 
the Investment Company Act of 1940 (the ``Act'') approving certain 
substitutions of securities and an order of exemption pursuant to 
Section 17(b) of the Act.

-----------------------------------------------------------------------

    Applicants: MetLife Investors Insurance Company (``MetLife 
Investors''), MetLife Investors Variable Annuity Account One (``VA 
Account One''), MetLife Investors Variable Life Account One (``VL 
Account One''), First MetLife Investors Insurance Company (``First 
MetLife Investors''), First MetLife Investors Variable Annuity Account 
One (``First VA Account One''), MetLife Investors Insurance Company of 
California (``MetLife Investors of California''), MetLife Investors 
Variable Annuity Account Five (``VA Account Five''), MetLife Investors 
Variable Life Account Five (``VL Account Five''), MetLife Investors USA 
Insurance Company (``MetLife Investors USA''), MetLife Investors USA 
Separate Account A (``Separate Account A''), General American Life 
Insurance Company (``General American''), General American Separate 
Account Eleven (``Separate Account Eleven''), New England Life 
Insurance Company (``New England''), New England Variable Life Separate 
Account (``NEVL Separate Account''), Metropolitan Life Insurance 
Company (``MetLife'') (together with MetLife Investors, First MetLife 
Investors, MetLife Investors of California, MetLife Investors USA, 
General American and New England, the ``Insurance Companies''), 
Metropolitan Life Separate Account UL (``Separate Account UL''), 
Metropolitan Life Separate Account E (``Separate Account E''), Security 
Equity Separate Account Thirteen (``Separate Account Thirteen'') 
(together with VA Account One, VL Account One, First VA Account One, VA 
Account Five, VL Account Five, Separate Account A, Separate Account 
Eleven, NEVL Separate Account, Separate Account UL, and Separate 
Account E, the ``Separate Accounts''), Met Investors Series Trust 
(``MIST'') and Metropolitan Series Fund, Inc. (``Met Series Fund'') 
(MIST and Met Series Fund are the ``Investment Companies''). The 
Insurance Companies and the Separate Accounts are the ``Substitution 
Applicants.'' The Insurance Companies, the Separate Accounts and the 
Investment Companies are the ``Section 17 Applicants.''
    Filing Date: The application was filed on August 5, 2003, and 
amended on January 22, 2004.
    Summary of Application: The Substitution Applicants request an 
order pursuant to Section 26(c) of the Act to permit certain unit 
investment trusts to substitute shares of certain portfolios of MIST 
and Met Series Fund (collectively, the ``Replacement Funds'') for 
shares of certain portfolios of the AIM Variable Insurance Funds (``AIM 
Fund''), the Alger American Fund (``Alger Fund''), the 
AllianceBernstein Variable Products Series Fund, Inc. 
(``AllianceBernstein Fund''), the American Century Variable Portfolios, 
Inc. (``American Century Fund''), Dreyfus Variable Investment Fund 
(``Dreyfus Fund''), Federated Insurance Series (``Federated Fund''), 
Variable Insurance Products Fund (``Variable Fund''), Franklin 
Templeton Variable Insurance Products Trust (``Franklin Templeton 
Fund''), Goldman Sachs Variable Insurance Trust (``Goldman Sachs 
Fund''), INVESCO Variable Investment Funds, Inc. (``INVESCO Fund''), 
MFS Variable Insurance Trust (``MFS Fund''), Liberty Variable 
Investment Trust (``Liberty Fund''), Oppenheimer Variable Account Funds 
(``Oppenheimer Funds''), Putnam Variable Trust (``Putnam Funds''), 
Scudder Variable Series I (``Scudder I Fund''), Scudder Variable Series 
II (``Scudder II Fund''), and Van Kampen Life Investment Trust (``Van 
Kampen Fund'') (collectively, the ``Existing Funds'') currently held by 
those unit investment trusts. The shares are held by the unit 
investment trusts to fund certain group and individual variable annuity 
contracts and variable life insurance policies (collectively, the 
``Contracts'') issued by the Insurance Companies. The Section 17 
Applicants request an order of the Commission pursuant to Section 17(b) 
of the Act exempting them from Section 17(a) of the Act to the extent 
necessary to permit the Investment Companies to carry out certain 
substitutions by the in-kind purchases and sales of shares of the 
Replacement Fund.
    Hearing or Notification of Hearing: An order granting the amended 
and restated application will be issued unless the Commission orders a 
hearing. Interested persons may request a hearing by writing to the 
Secretary of the Commission and serving Applicants with a copy of the 
request personally or by mail. Hearing requests should be received by 
the Commission by 5:30 p.m. on February 23, 2004, and should be 
accompanied by proof of service on Applicants, in the form of an 
affidavit or, for lawyers, a certificate of service. Hearing requests 
should state the nature of the writer's interest, the reason for the 
request and the issues contested. Persons may request notification of a 
hearing by writing to the Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549-0609. Applicants, Richard C. Pearson, 
Esq., MetLife Investors Insurance Company, 22 Corporate Plaza Drive, 
Newport Beach, California 92660. Copy to Robert N. Hickey, Esq., 
Sullivan & Worcester LLP, 1666 K Street, NW., Washington, DC 20006.

FOR FURTHER INFORMATION CONTACT: Thu Ta, Senior Counsel, or Lorna J. 
MacLeod, Branch Chief, at 202-942-0670, Office of Insurance Products, 
Division of Investment Management.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the Public Reference Branch of the Commission, 450 Fifth Street, NW., 
Washington, DC 20549 (tel. (202) 942-8090).

Applicants' Representations

    1. MetLife Investors is a stock life insurance company organized in 
1981 under the laws of Missouri. MetLife Investors is an indirect 
wholly owned subsidiary of MetLife. MetLife Investors

[[Page 5595]]

is the depositor and sponsor of VA Account One and VL Account One. 
MetLife Investors Distribution Company, an affiliate of MetLife, is the 
distributor of contracts issued by MetLife Investors.
    2. VA Account One is a segregated asset account of MetLife 
Investors, established under Missouri law in 1987. VA Account One is 
registered under the Act as a unit investment trust. The assets of VA 
Account One support certain Contracts. Security interests in the 
Contracts have been registered under the Securities Act of 1933. VA 
Account One is currently divided into 94 sub-accounts, 30 of which 
reflect the investment performance of a corresponding series of MIST or 
Met Series Fund and 64 of which reflect the performance of registered 
investment companies managed by advisers that are not affiliated with 
VA Account One (except, that, in some instances, VA Account One may own 
more that 5% of such investment company).
    3. VA Account One is administered and accounted for as part of the 
general business of MetLife Investors. The income, gains, or losses of 
VA Account One are credited to or charged against the assets of VA 
Account One in accordance with the terms of the Contracts, without 
regard to the income, gains, or losses of MetLife Investors.
    4. VL Account One is a segregated asset account of MetLife 
Investors, established under Missouri law in 1991. VL Account One is 
registered under the Act as a unit investment trust. The assets of VL 
Account One support certain Contracts. Security interests in the 
Contracts have been registered under the Securities Act of 1933. VL 
Account One is currently divided into 64 sub-accounts, 26 of which 
reflect the investment performance of a corresponding series of MIST or 
Met Series Fund and 38 of which reflect the performance of registered 
investment companies managed by advisers that are not affiliated with 
VL Account One (except, that, in some instances, VL Account One may own 
more that 5% of such investment company).
    5. VL Account One is administered and accounted for as part of the 
general business of MetLife Investors. The income, gains, or losses of 
VL Account One are credited to or charged against the assets of VL 
Account One in accordance with the terms of the Contracts, without 
regard to the income, gains, or losses of MetLife Investors.
    6. First MetLife Investors is a stock life insurance company 
organized in 1992 under the laws of New York. First MetLife Investors 
is an indirect wholly owned subsidiary of MetLife. First MetLife 
Investors is the depositor and sponsor of First VA Account One. MetLife 
Investors Distribution Company, an affiliate of MetLife, is the 
distributor of contracts issued by First MetLife Investors.
    7. First VA Account One is a segregated asset account of First 
MetLife Investors, established under New York law in 1992. First VA 
Account One is registered under the Act as a unit investment trust. The 
assets of First VA Account One support certain Contracts. Security 
interests in the Contracts have been registered under the Securities 
Act of 1933. First VA Account One is currently divided into 82 sub-
accounts, 30 of which reflect the investment performance of a 
corresponding series of MIST or Met Series Fund and 52 of which reflect 
the performance of registered investment companies managed by advisers 
that are not affiliated with First VA Account One (except, that, in 
some instances, First VA Account One may own more that 5% of such 
investment company).
    8. First VA Account One is administered and account for as part of 
the general business of First MetLife Investors. The income, gains, or 
losses of First VA Account One are credited to or charged against the 
assets of First VA Account One in accordance with the terms of the 
Contracts, without regard to the income, gains, or losses of First 
MetLife Investors.
    9. MetLife Investors of California is a stock life insurance 
company organized in 1972 under the laws of California. MetLife 
Investors of California is an indirect wholly owned subsidiary of 
MetLife. MetLife Investors of California is the depositor and sponsor 
of VA Account Five and VL Account Five. MetLife Investors Distribution 
Company, an affiliate of MetLife, is the distributor of contracts 
issued by MetLife Investors of California.
    10. VA Account Five is a segregated asset account of MetLife 
Investors of California, established under California law in 1992. VA 
Account Five is registered under the Act as a unit investment trust. 
The assets of VA Account Five support certain Contracts. Security 
interests under the Contracts have been registered under the Securities 
Act of 1933. VA Account Five is currently divided into 77 sub-accounts, 
29 of which reflect the investment performance of a corresponding 
series of MIST or Met Series Fund and 48 of which reflect the 
performance of registered investment companies managed by advisers that 
are not affiliated with VA Account Five (except, that, in some 
instances, VA Account Five may own more that 5% of such investment 
company).
    11. VA Account Five is administered and accounted for as part of 
the general business of MetLife Investors of California. The income, 
gains, or losses of VA Account Five are credited to or charged against 
the assets of VA Account Five in accordance with the terms of the 
Contracts, without regard to the income, gains, or losses of MetLife 
Investors of California.
    12. VL Account Five is a segregated asset account of MetLife 
Investors of California, established under California law in 1992. VL 
Account Five is registered under the Act as a unit investment trust. 
The assets of VL Account Five support certain Contracts. Security 
interests in the Contracts have been registered under the Securities 
Act of 1933. VL Account Five is currently divided into 64 sub-accounts, 
26 of which reflect the investment performance of a corresponding 
series of MIST or Met Series Fund and 38 of which reflect the 
performance of registered investment companies managed by advisers that 
are not affiliated with VL Account Five (except, that, in some 
instances, VL Account Five may own more than 5% of such investment 
company).
    13. VL Account Five is administered and accounted for as part of 
the general business of MetLife Investors of California. The income, 
gains, or losses of VL Account Five are credited to or charged against 
the assets of VL Account Five in accordance with the terms of the 
Contracts, without regard to the income, gains, or losses of MetLife 
Investors of California.
    14. MetLife Investors USA is a stock life insurance company 
organized in 1960 under the laws of Delaware. MetLife Investors USA is 
an indirect wholly owned subsidiary of MetLife. MetLife Investors USA 
is the depositor and sponsor of Separate Account A. MetLife Investors 
Distribution Company, an affiliate of MetLife, is the distributor of 
contracts issued by MetLife Investors USA.
    15. Separate Account A is a segregated asset account of MetLife 
Investors USA, established under Delaware law in 1980. Separate Account 
A is registered under the Act as a unit investment trust. The assets of 
Separate Account A support certain Contracts. Security interests under 
the Contracts have been registered under the Securities Act of 1933. 
Separate Account A is currently divided into 44 sub-accounts, 18 of 
which reflect the investment performance of a corresponding series of 
MIST or Met Series Fund and 26 of which reflect the

[[Page 5596]]

performance of registered investment companies managed by advisers that 
are not affiliated with Separate Account A (except, that, in some 
instances, Separate Account A may own more than 5% of such investment 
company).
    16. Separate Account A is administered and accounted for as part of 
the general business of MetLife Investors USA. The income, gains, or 
losses of Separate Account A are credited to or charged against the 
assets of Separate Account A in accordance with the terms of the 
Contracts, without regard to the income, gains, or losses of MetLife 
Investors USA.
    17. General American is a stock life insurance company organized in 
1933 under the laws of Missouri. General American is an indirect wholly 
owned subsidiary of MetLife. General American is the depositor and 
sponsor of Separate Account Eleven. General American Distributors, 
Inc., an affiliate of MetLife, is the distributor of Contracts issued 
by New England.
    18. Separate Account Eleven is a segregated asset account of 
General American, established under Missouri law in 1985. Separate 
Account Eleven is registered under the Act as a unit investment trust. 
The assets of Separate Account Eleven support certain Contracts. 
Security interests under the Contracts have been registered under the 
Securities Act of 1933. Separate Account Eleven is currently divided 
into 47 sub-accounts, 27 of which reflect the investment performance of 
a corresponding series of MIST or Met Series Fund and 20 of which 
reflect the performance of registered investment companies managed by 
advisers that are not affiliated with Separate Account Eleven (except, 
that in some instances, Separate Account Eleven may own more than 5% of 
such investment company).
    19. Separate Account Eleven is administered and accounted for as 
part of the general business of General American. The income, gains, or 
losses of Separate Account Eleven are credited to or charged against 
the assets of Separate Account Eleven in accordance with the terms of 
the Contracts, without regard to the income, gains, or losses of 
General American.
    20. New England is a stock life insurance company organized in 1980 
under the laws of Delaware and re-domesticated in 1996 in 
Massachusetts. New England is an indirect wholly owned subsidiary of 
MetLife. New England is the depositor and sponsor of NEVL Separate 
Account. New England Securities Corporation, an affiliate of MetLife, 
is the distributor of Contracts issued by New England.
    21. NEVL Separate Account is a segregated asset account of New 
England, established under Delaware law in 1992 and re-domesticated in 
Massachusetts in 1996. NEVL Separate Account is registered under the 
Act as a unit investment trust. The assets of NEVL Separate Account 
support certain Contracts. Security interests under the Contracts have 
been registered under the Securities Act of 1933. NEVL Separate Account 
is currently divided into 43 sub-accounts, 36 of which reflect the 
investment performance of a corresponding series of MIST or Met Series 
Fund and 7 of which reflect the performance of registered investment 
companies managed by advisers that are not affiliated with NEVL 
Separate Account (except, that in some instances, NEVL Separate Account 
may own more than 5% of such investment company).
    22. NEVL Separate Account is administered and accounted for as part 
of the general business of New England. The income, gains, or losses of 
NEVL Separate Account are credited to or charged against the assets of 
NEVL Separate Account in accordance with the terms of the Contracts, 
without regard to the income, gains, or losses of New England.
    23. MetLife is a stock life insurance company organized in 1868 
under the laws of New York. MetLife is a leading provider of insurance 
and financial products and services to individual and group customers. 
MetLife is a wholly owned subsidiary of MetLife, Inc., a publicly 
traded company. MetLife is the depositor and sponsor of Separate 
Account UL, Separate Account E, and Separate Account Thirteen. MetLife 
is the distributor of contracts issued by MetLife.
    24. Separate Account UL is a segregated asset account of MetLife, 
established under New York law in 1988. Separate Account UL is 
registered under the Act as a unit investment trust. The assets of 
Separate Account UL support certain Contracts. Security interests under 
the Contracts have been registered under the Securities Act of 1933. 
Separate Account UL is currently divided into 56 sub-accounts, 41 of 
which reflect the investment performance of a corresponding series of 
MIST or Met Series Fund and 15 of which reflect the performance of 
registered investment companies managed by advisers that are not 
affiliated with Separate Account UL (except, that in some instances, 
Separate Account UL may own more than 5% of such investment company).
    25. Separate Account UL is administered and accounted for as part 
of the general business of MetLife. The income, gains, or losses of 
Separate Account UL are credited to or charged against the assets of 
Separate Account UL in accordance with the terms of the Contracts, 
without regard to the income, gains, or losses of MetLife.
    26. Separate Account E is a segregated asset account of MetLife, 
established under New York law in 1983. Separate Account E is 
registered under the Act as a unit investment trust. The assets of 
Separate Account E support certain Contracts. Security interests under 
the Contracts have been registered under the Securities Act of 1933. 
Separate Account E is currently divided into 51 sub-accounts, 40 of 
which reflect the investment performance of a corresponding series of 
MIST or Met Series Fund and 11 of which reflect the performance of 
registered investment companies managed by advisers that are not 
affiliated with Separate Account E (except that in some instances, 
Separate Account E may own more than 5% of such investment company).
    27. Separate Account E is administered and accounted for as part of 
the general business of MetLife. The income, gains, or losses of 
Separate Account E are credited to or charged against the assets of 
Separate Account E in accordance with the terms of the Contracts, 
without regard to the income, gains, or losses of MetLife.
    28. Separate Account Thirteen is a segregated asset account of 
MetLife, established under New York law in 1994. Separate Account 
Thirteen is registered under the Act as a unit investment trust. The 
assets of Separate Account Thirteen support certain Contracts. Security 
interests under the Contracts have been registered under the Securities 
Act of 1933. Separate Account Thirteen is currently divided into 18 
sub-accounts, 2 of which reflect the investment performance of a 
corresponding series of MIST or Met Series Fund and 16 of which reflect 
the performance of a registered investment companies managed by 
advisers that are not affiliated with Separate Account Thirteen (except 
that in some instances, Separate Account 13 may own more than 5% of 
such investment company).
    29. Separate Account Thirteen is administered and accounted for as 
part of the general business of MetLife. The income, gains, or losses 
of Separate Account Thirteen are credited to or charged against the 
assets of Separate Account Thirteen in accordance with the terms of the 
Contracts, without regard to the income, gains, or losses of MetLife.
    30. MIST is registered under the Act as an open-end management 
investment company of the series type, and its

[[Page 5597]]

securities are registered under the Securities Act of 1933. MIST 
currently offers 21 separate investment portfolios, nine of which would 
be involved in the proposed substitutions. Each MIST series involved in 
the proposed substitutions offers up to three classes of shares, two of 
which (Class A and Class B) are involved in the proposed substitutions. 
Some of the proposed substitutions involve only one class of shares; 
others involve both Class A and Class B shares. MIST series Class A 
Shares have not adopted a plan pursuant to Rule 12b-1 under the Act. 
Each MIST series Class B shares has adopted a Rule 12b-1 distribution 
plan whereby up to .50% of a Fund's assets attributable to the Class B 
shares may be used to finance the distribution of the Fund's shares. 
Currently, the 12b-1 fees for the Class B shares of each MIST series 
are .25%.
    31. MetLife Investors Distribution Company, an affiliate of 
MetLife, is the principal underwriter for MIST. Met Investors Advisory 
LLC, an affiliate of MetLife, serves as the investment adviser to each 
portfolio of MIST. Pursuant to an exemptive order issued to New England 
Funds Trust I, et al., Met Investors Advisory LLC is authorized to 
enter into and amend sub-advisory agreements without shareholder 
approval under certain conditions (the ``Multi-Manager Order'').
    32. The following Replacement Funds are portfolios of MIST: Lord 
Abbett Growth and Income Portfolio (sub-advised by Lord Abbett & Co. 
LLC (``Lord Abbett'')); Third Avenue Small Cap Value Portfolio (sub-
advised by Third Avenue Management, LLC); MFS Research International 
Portfolio (sub-advised by Massachusetts Financial Services Company 
(``MFS'')); Oppenheimer Capital Appreciation Portfolio (sub-advised by 
Oppenheimer Funds, Inc.); T. Rowe Price Mid-Cap Growth Portfolio (sub-
advised by T. Rowe Price Associates, Inc. (``T. Rowe Price'')); Lord 
Abbett Bond Debenture Portfolio (sub-advised by Lord Abbett); PIMCO 
Total Return Portfolio (sub-advised by Pacific Investment Management 
LLC); Lord Abbett Mid-Cap Value Portfolio (sub-advised by Lord Abbett); 
and Janus Aggressive Growth Portfolio (sub-advised by Janus Capital 
Management LLC).
    33. Met Investors Advisory LLC has entered into agreement with MIST 
whereby, for the period ended April 30, 2004 and any subsequent year in 
which the agreement is in effect, the total annual operating expenses 
of the following Replacement Funds (excluding interest, taxes, 
brokerage commissions and Rule 12b-1 fees) will not exceed the amounts 
stated. These expense caps may be extended by the investment adviser 
from year to year as follows:

Third Avenue Small Cap Value Portfolio.........................    1.00%
MFS Research International Portfolio...........................    1.10%
Oppenheimer Capital Appreciation Portfolio.....................    0.75%
Lord Abbett Bond Debenture Portfolio...........................    0.75%
T. Rowe Price Mid-Cap Growth Portfolio.........................    0.95%
Janus Aggressive Growth Portfolio..............................    0.90%
 

    34. Met Series Fund is registered under the Act as an open-end 
management investment company of the series type, and its securities 
are registered under the Securities Act of 1933. Met Series Fund 
currently offers 36 separate investment portfolios, six of which would 
be involved in the proposed substitutions. Each Met Series Fund series 
involved in the proposed substitutions has up to three classes of 
shares, two of which (Class A and Class B) are involved in the proposed 
substitutions. Some of the proposed substitutions involve only one 
class of shares; others involve both Class A and Class B shares. Met 
Series Fund series Class A Shares have not adopted a plan pursuant to 
Rule 12b-1 under the Act. Each Met Series Fund series Class B shares 
has adopted a Rule 12b-1 distribution plan whereby up to .50% of a 
Fund's assets attributable to the Class B shares may be used to finance 
the distribution of the Fund's shares. Currently, the 12b-1 fees for 
the Class B shares of each Met Series Fund series are .25%.
    35. MetLife is the principal underwriter for Met Series Fund. 
MetLife Advisers, LLC, an affiliate of MetLife, serves as the 
investment adviser to each portfolio of Met Series Fund. Pursuant to 
the Multi-Manager Order, MetLife Advisers, LLC is authorized to enter 
into and amend sub-advisory agreements without shareholder approval 
under certain conditions.
    36. The following Replacement Funds are portfolios of Met Series 
Fund: T. Rowe Price Small Cap Growth Portfolio (sub-advised by T. Rowe 
Price); MFS Total Return Portfolio (sub-advised by MFS); State Street 
Research Money Market Portfolio (sub-advised by State Street Research 
and Management Company); T. Rowe Price Large Cap Growth Portfolio (sub-
advised by T. Rowe Price); Salomon Brothers Strategic Bond 
Opportunities Portfolio (sub-advised by Salomon Brothers Asset 
Management Inc.); and State Street Research Bond Income (sub-advised by 
State Street Research & Management Company).
    37. The annuity contracts are group and individual flexible premium 
fixed and variable deferred and immediate annuity contracts. Many of 
the annuity contracts provide that a maximum of 12 transfers can be 
made every year without charge or that a $10 contractual limit charge 
will apply or that no transfer charge will apply. During the 
accumulation period, Contract owners may transfer between the variable 
account options or from the variable account options to the fixed 
account option. Some of the Contracts have no contractual limitation on 
transfers during the accumulation period. Some Contract owners may make 
transfers from the fixed account option subject to certain minimum 
transfer amounts ($500 or the total interest in the account) and 
maximum limitations. Some of the Contracts impose Contract withdrawal 
charges upon the transfer of any amounts from the fixed account to the 
variable account or have additional restrictions on transfers from the 
fixed account to the variable account. During the income period or 
under the immediate annuity, Contract owners may currently make 
unlimited transfers among investment portfolios and from investment 
portfolios to the fixed account option. No fees or other charges are 
currently imposed on transfers for most of the Contracts. Under certain 
annuity contracts, the Insurance Companies reserve the right to impose 
additional restrictions on transfers. All transfer limits will be 
suspended in connection with the substitutions.
    38. Under the life insurance policies, policy owners may allocate 
account value among the General Account and the available investment 
portfolios. All or part of the account value may be transferred from 
any investment portfolio to another investment portfolio, or to the 
General Account. The minimum amount that can be transferred is the 
lesser of the minimum transfer amount (which currently ranges from $1 
to $500), or the total value that is an investment portfolio or the 
General Account. Certain policies provide that twelve transfers in a 
policy year can be made without charge. A transfer fee of $25 is 
payable for additional transfers in a policy year, but these fees are 
not currently charged. Other policies do not currently limit the number 
of transfers; however, the Insurance Companies reserve the right to 
limit transfers to four or twelve (depending on the policy) per policy 
year and to impose a $25 charge on transfers in excess of 12 per year 
or on any transfer. Under the policies, the

[[Page 5598]]

Insurance Companies reserve the right to impose additional restrictions 
on transfers. All transfer limits will be suspended in connection with 
the substitutions.
    39. Under most of the Contracts, the Insurance Companies reserve 
the right to substitute shares of one fund with shares of another, 
including a fund of a different registered investment company. Certain 
variable annuity contracts issued by MetLife Investors USA provide, 
however, that the Insurance Company cannot substitute investment 
options without the approval of a majority in interest of owners of 
Contracts who have allocated funds to the investment option to be 
replaced. The substitutions affected by this requirement are Separate 
Account A's investments in: AIM V.I. Balanced Fund, AIM V.I. Premier 
Equity Fund, Alger American Small Capitalization Portfolio, Federated 
American Leaders Fund II, Federated Equity Income Fund II, Federated 
High Income Bond Fund II, Federated Growth Strategy Fund II, VIP Asset 
Manager Portfolio, MFS Research Series, Oppenheimer Strategic Bond 
Fund/VA, Oppenheimer Main Street Fund/VA, Oppenheimer Bond Fund/VA, 
Oppenheimer Money Fund/VA, Oppenheimer Main Street Small Cap Growth 
Fund/VA and Growth and Income Portfolio. The Substitution Applicants 
represent that they will seek the requisite approval of Contract owners 
(as described below).
     40. Each Insurance Company, on its behalf and on behalf of the 
Separate Accounts, proposes to make certain substitutions of shares of 
the Existing Funds held in sub-accounts of its respective Separate 
Accounts for shares of the Replacement Funds. The proposed 
substitutions involve only Class A shares (or their equivalent), unless 
otherwise indicated. The proposed substitutions are as follows:
    (a) Shares of MFS Total Return Portfolio for shares of AIM V.I. 
Balanced Fund; (b) shares of MFS Total Return Portfolio for shares of 
VIP Asset Manager Portfolio; (c) shares of Lord Abbett Growth and 
Income Portfolio for shares of AIM V.I. Premier Equity Fund (Class A 
and Class B shares); (d) shares of Lord Abbett Growth and Income 
Portfolio for shares of AllianceBernstein Value Portfolio (Class B 
shares only); (e) shares of Lord Abbett Growth and Income Portfolio for 
shares of VP Income and Growth Fund; (f) shares of Lord Abbett Growth 
and Income Portfolio for shares of Federated American Leaders Fund II; 
(g) shares of Lord Abbett Growth and Income Portfolio for shares of 
Federated Equity Income Fund II; (h) shares of Lord Abbett Growth and 
Income Portfolio for shares of Goldman Sachs Growth and Income Fund; 
(i) shares of Lord Abbett Growth and Income Portfolio for shares of 
Mutual Shares Securities Fund (Class A and Class B shares); (j) shares 
of Lord Abbett Growth and Income Portfolio for shares of Oppenheimer 
Main Street Fund/VA; (k) shares of Lord Abbett Growth and Income 
Portfolio for shares of Putnam VT New Value Fund (Class A and Class B 
shares); (l) shares of Lord Abbett Growth and Income Portfolio for 
shares of SVS Dreman High Return Equity Portfolio; (m) shares of Lord 
Abbett Growth and Income Portfolio for shares of Growth and Income 
Portfolio; (n) shares of T. Rowe Price Small Cap Growth Portfolio for 
shares of Alger American Small Capitalization Portfolio; (o) shares of 
T. Rowe Price Small Cap Growth Portfolio for shares of Franklin Small 
Cap Fund (Class A and Class B shares); (p) shares of T. Rowe Price 
Small Cap Growth Portfolio for shares of Oppenheimer Main Street Small 
Cap Growth Fund/VA; (q) shares of Janus Aggressive Growth Portfolio for 
shares of AllianceBernstein Premier Growth Portfolio (Class A and Class 
B shares); (r) shares of Third Avenue Small Cap Value Portfolio for 
shares of AllianceBernstein Small Cap Value Portfolio (Class B shares 
only); (s) shares of MFS Research International Portfolio for shares of 
VP International Fund; (t) shares of MFS Research International 
Portfolio for shares of Goldman Sachs International Equity Fund; (u) 
shares of MFS Research International Portfolio for shares of Newport 
Tiger Fund; (v) shares of MFS Research International Portfolio for 
shares of Putnam VT International New Opportunities Fund (Class A and 
Class B shares); (w) shares of MFS Research International Portfolio for 
shares of International Portfolio (Class A and Class B shares); (x) 
shares of Lord Abbett Mid-Cap Value Portfolio for shares of VP Value 
Fund; (y) shares of Oppenheimer Capital Appreciation Portfolio for 
shares of Appreciation Portfolio (Class A and Class B shares); (z) 
shares of Oppenheimer Capital Appreciation for shares of Disciplined 
Stock Portfolio (Class A and Class B shares); (aa) shares of 
Oppenheimer Capital Appreciation Portfolio for shares of Federated 
Growth Strategy Fund II; (bb) shares of Oppenheimer Capital 
Appreciation Portfolio for shares of MFS Research Series (Class A and 
Class B shares); (cc) shares of Lord Abbett Bond Debenture Portfolio 
for shares of Federated High Income Bond Fund II; (dd) shares of Lord 
Abbett Bond Debenture Portfolio for shares of INVESCO VIF'High Yield 
Fund; (ee) shares of Lord Abbett Bond Debenture Portfolio for shares of 
Oppenheimer High Income Fund/VA; (ff) shares of T. Rowe Price Large Cap 
Growth Portfolio for shares of Franklin Large Cap Growth Securities 
Fund (Class A and Class B shares); (gg) shares of T. Rowe Price Large 
Cap Growth Portfolio for shares of MFS Emerging Growth Series (Class A 
and Class B shares); (hh) shares of T. Rowe Price Mid-Cap Growth 
Portfolio for shares of INVESCO VIF'Dynamics Fund; (ii) shares of PIMCO 
Total Return Portfolio for shares of MFS Bond Series; (jj) shares of 
PIMCO Total Return Portfolio for shares of Oppenheimer Strategic Bond 
Fund/VA; (kk) shares of PIMCO Total Return Portfolio for shares of 
Templeton Global Income Securities Fund (Class A and Class B shares); 
(ll) shares of State Street Research Money Market Portfolio for shares 
of Oppenheimer Money Fund/VA; (mm) shares of Salomon Brothers Strategic 
Bond Opportunities Portfolio for shares of MFS Strategic Income Series 
(Class A and Class B shares); and (nn) shares of State Street Research 
Bond Income Portfolio for shares of Oppenheimer Bond Fund/VA.
     41. AIM V.I. Balanced Fund and AIM V.I. Premier Equity Fund are 
portfolios of the AIM Fund. AIM Advisors, Inc. serves as the adviser to 
each of the AIM Fund portfolios. Alger American Small Capitalization 
Portfolio is a portfolio of the Alger Fund. Fred Alger Management, Inc. 
serves as the adviser to the Alger Fund portfolio. AllianceBernstein 
Premier Growth Portfolio, AllianceBernstein Value Portfolio, and 
AllianceBernstein Small Cap Value Portfolio are portfolios of the 
AllianceBernstein Fund. Alliance Capital Management L.P. serves as the 
adviser to each of the AllianceBernstein Fund portfolios. VP Income and 
Growth Fund, VP International Fund, and VP Value Fund are portfolios of 
the American Century Fund. American Century Investment Management Inc. 
serves as the adviser to each of the American Century Fund portfolios. 
Appreciation Portfolio and Disciplined Stock Portfolio are portfolios 
of Dreyfus Fund. The Dreyfus Corporation serves as the adviser to each 
of the Dreyfus Fund portfolios. Fayez Sarofin & Co serves as the sub-
adviser to the Appreciation Portfolio. Federated American Leaders Fund 
II, Federated Equity Income Fund II, Federated High Income Bond Fund 
II, and Federated Growth Strategy Fund II are portfolios of Federated 
Fund. Federated Investment Management Company serves as the adviser to 
each of the Federated Fund portfolios. VIP Asset Manager Portfolio

[[Page 5599]]

is a portfolio of the Variable Fund. Fidelity Management & Research 
Company serves as adviser to the Variable Fund portfolio. Franklin 
Large Cap Growth Securities Fund, Franklin Small Cap Fund, Mutual 
Shares Securities Fund, and Templeton Global Income Securities Fund are 
portfolios of the Franklin Templeton Fund. Franklin Mutual Advisers, 
Inc. serves as the adviser to each of the Franklin Templeton Fund 
portfolios. Goldman Sachs Growth and Income Fund and Goldman Sachs 
International Equity Fund are portfolios of the Goldman Sachs Fund. 
Goldman Sachs Asset Management serves as the adviser to the Goldman 
Sachs Growth and Income Fund. Goldman Sachs Asset Management 
International serves as the adviser to the Goldman Sachs International 
Equity Fund. INVESCO VIF-Dynamics Fund and INVESCO VIF-High Yield Fund 
are portfolios of the INVESCO Fund. INVESCO Funds Group, Inc. serves as 
the adviser to each of the INVESCO Fund portfolios. MFS Bond Series, 
MFS Emerging Growth Series, MFS Research Series, and MFS Strategic 
Income Series are portfolios of the MFS Fund. Massachusetts Financial 
Services Company serves as the adviser to each of the MFS Fund 
portfolios. Newport Tiger Fund is a portfolio of the Liberty Fund. 
Liberty Advisory Services Corp. serves as the adviser to the Newport 
Tiger Fund. Newport Fund Management, Inc. serves as the sub-adviser to 
the Newport Tiger Fund. Oppenheimer Strategic Bond Fund/VA, Oppenheimer 
Main Street Fund/VA, Oppenheimer High Income Fund/VA, Oppenheimer Bond 
Fund/VA, Oppenheimer Main Street Small Cap Growth Fund/VA and 
Oppenheimer Money Fund/VA are portfolios of the Oppenheimer Fund. 
Oppenheimer Funds, Inc. serves as the adviser to each of the 
Oppenheimer Fund portfolios. Putnam VT New Value Fund and Putnam VT 
International New Opportunities Fund are portfolios of the Putnam Fund. 
Putnam Investment Management, LLC serves as the adviser to each of the 
Putnam Fund portfolios. International Portfolio is a portfolio of the 
Scudder I Fund. Deutsche Investment Management Americas, Inc. serves as 
adviser to the International Portfolio. Deutsche Asset Management 
Investment Services Ltd. serves as the sub-adviser to the International 
Portfolio. SVS Dreman High Return Equity Portfolio is a portfolio of 
the Scudder II Fund. Deutsche Investment Management Americas, Inc. 
serves as adviser to the SVS Dreman High Return Equity Portfolio. 
Dreman Value Management LLC serves as the sub-adviser to the SVS Dreman 
High Return Equity Portfolio. Growth and Income Portfolio is a 
portfolio of the Van Kampen Fund. Van Kampen Asset Management, Inc. 
serves as the adviser to the Van Kampen Fund portfolio.
     42. The substitutions are expected to provide significant benefits 
to Contract owners, including improved selection of portfolio managers 
and simplification of fund offerings through the elimination of 
overlapping offerings. The Substitution Applicants believe that the 
sub-advisers to the Replacement Funds overall are better positioned to 
provide consistent above-average performance for their Funds than are 
the advisers or sub-advisers of the Existing Funds. At the same time, 
Contract owners will continue to be able to select among a large number 
of funds, with a full range of investment objectives, investment 
strategies, and managers.
     43. In addition, many of the Existing Funds are smaller than their 
respective Replacement Funds. Specifically, in all but two of the 
proposed substitutions, the Replacement Fund has a greater asset base 
than the Existing Fund. Moreover, a substantial number of Existing 
Funds are no longer available as investment options under Contracts 
previously or currently offered by the Insurance Companies, or, if 
available, are available only for additional contributions and/or 
transfers from other investment options under Contracts not currently 
offered. Thus, there is little likelihood that significant additional 
assets, if any, will be allocated to those Existing Funds. (More 
detailed information regarding the amount of each Fund's assets can be 
found in the Application.)
     44. Because the Replacement Funds generally have a larger asset 
base than their corresponding Existing Funds, various costs such as 
legal, accounting, printing and trustee fees are spread over a larger 
base with each Contract owner bearing a smaller portion of the cost 
than would be the case if the Fund were smaller in size. In addition, 
there will be significant savings to Contract owners because certain 
other costs, such as the costs of printing and mailing lengthy periodic 
reports and prospectuses for the Existing Funds, will be substantially 
reduced.
     45. The Applicants believe that the Replacement Funds have 
investment objectives, policies, and risk profiles that are the same 
as, or sufficiently similar to, the corresponding Existing Funds to 
make those Replacement Funds appropriate candidates as substitutes. Set 
forth below is a description of the investment objectives and principal 
investment policies of each Existing Fund and its corresponding 
Replacement Fund.

------------------------------------------------------------------------
               Existing fund                      Replacement fund
------------------------------------------------------------------------
AIM V.I. Balanced Fund--seeks to achieve    MFS Total Return Portfolio--
 as high a total return as possible,         seeks a favorable total
 consistent with preservation of capital.    return through an
 The Fund normally invests a minimum of      investment in a diversified
 50% and a maximum of 70% of its total       portfolio. The Series
 assets in equity securities and a minimum   normally invests at least
 of 30% and a maximum of 70% of its total    40%, but not more than 75%
 assets in non-convertible debt              of net assets in common
 securities. The Fund may invest up to 25%   stocks and related
 of its total assets in convertible          securities. The Series
 securities and up to 25% of its assets in   focus on equity securities
 foreign securities.                         of large cap companies. At
                                             least 25% of the Series'
                                             net assets is normally
                                             invested in non-convertible
                                             fixed-income securities.
                                             The Series may invest up to
                                             20% of its net assets in
                                             foreign securities and up
                                             to 20% of its net assets in
                                             non-investment grade debt
                                             securities.
VIP Asset Manager Portfolio--seeks to
 obtain high total return with reduced
 risk over the long term by allocating its
 assets among stocks, bonds and short-term
 instruments. Stocks can range from 30% to
 70% of the Portfolio; bonds can range
 from 20% to 60%; and short-term money
 market instruments can range from 0% to
 50%. Normally the Portfolio's assets are
 allocated approximately 50% to stocks,
 40% to bonds and 10% to money market
 instruments. The portfolio may also
 invest foreign securities.

[[Page 5600]]

 
AIM V.I. Premier Equity Fund--seeks to      Lord Abbett Growth and
 achieve long-term growth of capital.        Income Portfolio--seeks
 Income is a secondary objective. The Fund   long-term growth of capital
 normally invests at least 80% of its net    and income without
 assets in equity securities. The Fund may   excessive fluctuation in
 also invest in preferred stocks and debt    market value. The Portfolio
 instruments that have prospects for         primarily purchases equity
 growth of capital and may invest up to      securities of large, (at
 25% of its total assets in foreign          least $5 billion of market
 securities. The portfolio managers focus    capitalization) seasoned
 on undervalued equity securities.           U.S. and multinational
                                             companies that are believed
                                             to be undervalued.
AllianceBernstein Value Portfolio--seeks
 long-term growth of capital. The
 Portfolio invests in equity of market
 securities of large market capitalization
 companies that are believed to be
 undervalued. Up to 15% of the Portfolio's
 total assets may be invested in foreign
 securities and up to 20% of its total
 assets in convertible securities.
VP Income and Growth Fund--seeks to
 achieve capital growth by investing in
 common stocks. Income is a secondary
 objective. The portfolio managers select
 stocks primarily from the largest 1,500
 publicly traded U.S. companies.
 Securities are ranked by their value as
 well as growth potential. The Fund seeks
 to provide better returns than the S&P
 500 without taking on significant
 additional risks. The portfolio managers
 attempt to create a dividend yield for
 the Fund that will be greater than that
 of the S&P 500.
Federated American Leaders Fund II--seeks
 long-term growth of capital. The Fund's
 secondary objective is to provide income.
 The Fund uses the value style of
 investing to select primarily equity
 securities of large capitalization
 companies that are in the top 25% of
 their industry sectors in terms of
 revenues, are characterized by sound
 management and have the ability to
 finance expected growth. Up to 20% of the
 Fund's assets may be invested in American
 Depository Receipts.
Federated Equity Income Fund II--seeks to
 provide above average income and capital
 appreciation. The Fund invests primarily
 in income-producing equity securities
 including securities convertible into
 common stocks. The Fund may also purchase
 securities for their superior growth
 prospects regardless of dividend. The
 Fund's holdings ordinarily will be in
 large and mid-cap companies. The Fund's
 investment adviser ordinarily uses a
 ``blend'' style of investing.
Goldman Sachs Growth and Income Fund--
 seeks long-term growth of capital and
 growth of income. Normally, the Fund
 invests at least 65% of its total assets
 in equity securities that have favorable
 prospects for capital appreciation and/or
 dividend-paying ability. Up to 25% of the
 Fund's assets may be invested in foreign
 securities including securities of issues
 in emerging market countries. The Fund
 may invest up to 35% of its total assets
 in fixed income securities.
Mutual Shares Securities Fund--seeks
 capital appreciation. Income is a
 secondary goal. The Fund invests at least
 65% of its assets in equity securities
 believed to be undervalued. The Fund
 invests primarily in medium and large
 capitalization companies. The Fund may
 invest up to 25% of its assets in foreign
 securities.
Oppenheimer Main Street Fund/VA--seeks
 high total return from equity and debt
 securities. The Fund currently invests
 mainly in common stocks of U.S. companies
 of different capitalization ranges,
 presently focusing on large
 capitalization issuers. The Fund does not
 currently emphasize investments in debt
 securities.
Putnam VT New Value Fund--seeks long-term
 capital appreciation. The Fund invests
 mainly in common stocks of U.S.
 companies, with a focus on value stocks.
 Investments are mainly on mid-sized and
 large companies.
SVS Dreman High Return Equity Portfolio--
 seeks a high rate of total return. The
 Portfolio invests at least 80% of its
 assets in equity securities. The
 Portfolio focuses on stocks of large U.S.
 companies and may at times emphasize the
 financial services sector or other
 sectors. The Portfolio's manager looks
 for companies that are undervalued. Up to
 20% of the Portfolio's assets may be
 invested in ADRs and the securities of
 companies traded outside the U.S.
Growth and Income Portfolio--seeks long-
 term growth of capital and income.
 Normally, the Portfolio invests primarily
 in income-producing equity securities
 including common stocks and convertible
 securities. Investments may also be made
 in non-convertible preferred stocks and
 debt securities. The Portfolio focuses
 primarily on the security's potential for
 capital growth and income. The
 Portfolio's adviser may focus on larger
 capitalization companies that it believes
 possesses characteristics for improved
 evaluation. Up to 25% of the Portfolio's
 total assets may be invested in foreign
 securities.

[[Page 5601]]

 
Alger American Small Capitalization         T. Rowe Price Small Cap
 Portfolio--seeks long-term capital          Growth Portfolio--seeks
 appreciation. The Portfolio invests         long-term growth. The
 primarily in equity securities of small     Portfolio invests at least
 capitalization companies that are           80% of its assets in a
 believed to be fast-growing.                diversified group of small
Franklin Small Cap Fund--seeks long-term     capitalization growth
 capital growth. The fund invests at least   companies (i.e., those
 80% of it assets in small capitalization    within the range of, or
 companies. The Fund's manager pursues a     smaller than, the market
 growth strategy. The Fund may invest        capitalization of the small
 substantially in the technology sector.     100 companies in the S&P
                                             500 Index).
Oppenheimer Main Street Small Cap Growth    ............................
 Fund/VA--seeks capital appreciation. The
 Fund invests at least 80% of its assets
 in common stock of small capitalization
 U.S. companies that the investment
 manager believes have favorable business
 trends or prospects. Investments may
 include both growth and value stocks.
AllianceBernstein Premier Growth Portfolio- Janus Aggressive Growth
 -seeks growth of capital by pursuing        Portfolio--seeks long-term
 aggressive investment policies. The         growth of capital. The
 Portfolio invests primarily in the          Portfolio invests primarily
 securities of a small number of U.S.        in common stocks selected
 companies. The Portfolio looks for          for their growth potential.
 companies with superior growth prospects.   Investments may be made in
 The Portfolio may invest up to 20% of its   companies of any size. The
 assets in foreign securities and up to      Portfolio may invest
 20% of it assets in convertible             without limit in foreign
 securities that may be below investment     securities and up to 35% of
 grade.                                      its assets in high yield/
                                             high risk debt securities.
                                             In fact, however, Janus
                                             does not invest more than
                                             10% of its assets in
                                             foreign securities, and
                                             invests only a minimal
                                             amount in high yield/high
                                             risk debt securities.
AllianceBernstein Small Cap Value           Third Avenue Small Cap Value
 Portfolio--seeks long-term growth of        Portfolio--seeks long-term
 capital. The Portfolio invests at least     capital appreciation.
 80% of its net assets in equity             Normally, the Portfolio,
 securities of small market capitalization   which is non-diversified,
 companies that are believed to be           invests at least 80% of its
 undervalued. Up to 15% of the Portfolio's   net assets in equity
 total assets may be invested in foreign     securities of small
 securities and up to 20% of its total       companies. The Portfolio
 assets in convertible securities.           seeks to acquire common
                                             stocks of well-financed
                                             companies at a substantial
                                             discount to what the
                                             investment adviser believes
                                             is their true value.
VP International Fund--seeks capital        MFS Research International
 growth. The portfolio managers look for     Portfolio--seeks capital
 companies with earnings and revenue         appreciation. Normally, at
 growth. The Fund's assets will be           least 65% of the
 primarily invested in common stocks         Portfolio's net assets are
 companies in at least three developed       invested in common stocks
 countries (excluding the U.S.).             and related securities of
Goldman Sachs International Equity Fund--    foreign companies
 seeks long-term capital appreciation.       (including up to 25% of its
 Normally, at least 80% of the Fund's net    net assets in emerging
 assets will be invested in equal            market issuers) located in
 investments of foreign companies with       at least five countries.
 market capitalizations that are larger      The Portfolio seeks
 than $1 billion. Investments will be made   companies of any size with
 in at least three foreign countries.        favorable growth prospects
 Investments may be made in the securities   and attractive valuations.
 of issuers located in developed and
 emerging market countries. Up to 20% of
 the Fund's net assets may be invested in
 fixed-income securities.
Newport Tiger Fund--seeks capital           ............................
 appreciation. Normally, the Fund invests
 at least 80% of its assets in stocks of
 companies located in the ten Tiger
 countries of Asia. In selecting
 investments, the Fund typically purchases
 stocks of quality growth companies.
Putnam VT International New Opportunities   ............................
 Fund--seeks long-term capital
 appreciation. The Fund invests mainly in
 common stocks of companies outside the
 U.S. The Fund invests in growth stocks of
 companies of any size located in
 developed and emerging market countries.
International Portfolio--seeks long-term    ............................
 growth of capital primarily through
 diversified holdings of marketable
 foreign equity securities. The Portfolio
 invests primarily in common stocks of
 established companies, listed on foreign
 exchanges, which are believed to have
 favorable growth characteristics. The
 Portfolio will invest in companies in at
 least three different countries,
 excluding the U.S.
VP Value Fund--seeks long-term capital      Lord Abbett Mid-Cap Value
 growth. Income is a secondary objective.    Portfolio--seeks capital
 Normally, at least 65% of the Fund's        appreciation through
 assets are invested in U.S. equity          investments, primarily in
 securities believed to be undervalued.      equity securities, which
 The Fund may invest a portion of its        are believed to be
 assets in convertible debt securities       undervalued in the
 (which may be rated below investment        marketplace. The Portfolio
 grade), equity equivalent securities,       invests at least 80% of its
 foreign securities and investment grade     assets in mid-sized
 debt securities of companies and            companies with
 governments. The VP Value Fund is best      capitalizations of roughly
 characterized as a multi-cap value fund     $500 million to $10
 that has historically correlated with mid-  billion. The Portfolio
 cap value indices.                          invests primarily in common
                                             stocks, including
                                             convertible securities, of
                                             companies with good
                                             prospects for improvement
                                             in earning trends or asset
                                             values that are not yet
                                             fully recognized.
Appreciation Portfolio--seeks long-term     Oppenheimer Capital
 capital growth consistent with the          Appreciation Portfolio--
 preservation of capital; current income     seeks capital appreciation.
 is a secondary objective. The Portfolio     The Portfolio mainly
 focuses on investing in the common stocks   invests in common stocks of
 of ``blue chip'' established companies      growth companies of any
 with market capitalization of more than     market capitalization. The
 $5 billion, including multinational         Portfolio currently focuses
 companies. The Portfolio looks primarily    on the securities of mid-
 for growth companies.                       cap and large-cap
                                             companies. The Portfolio
                                             may also purchase the
                                             securities of foreign
                                             issuers. Although income is
                                             not a stated objective of
                                             the Oppenheimer Capital
                                             Appreciation Portfolio,
                                             over 60% of the Portfolio's
                                             assets are invested in
                                             dividend paying securities.

[[Page 5602]]

 
Disciplined Stock Portfolio--seeks          ............................
 investment returns (consisting of capital
 appreciation and income) that are greater
 than the total return performance of
 stocks represented by the S&P 500. The
 Portfolio normally invests at least 80%
 of its assets in a blended portfolio of
 growth and value stocks. The Portfolio is
 structured so that its sector weighings
 and risk characteristics, such as growth,
 size and yield, are similar to those of
 the S&P 500.
Federated Growth Strategy Fund II--seeks    ............................
 capital appreciation. The Fund invests
 primarily in common stock (including
 American Depository Receipts) of
 companies with market capitalization
 above $100 million that offer superior
 growth prospects.
MFS Research Series--seeks to provide long- ............................
 term growth of capital and future income.
 The Series invests at least 80% of its
 net assets in common stocks and related
 securities. The Series focuses on
 companies believed to have favorable
 prospects for long-term growth,
 attractive valuations and superior
 management. The Series may invest in
 companies of any size, in debt securities
 rated below investment grade, and in
 foreign securities, including emerging
 market securities.
Federated High Income Bond Fund II--seeks   Lord Abbett Bond Debenture
 high current income. The Fund invests       Portfolio--seeks to provide
 primarily in a diversified portfolio of     high current income and the
 high yield, lower rated corporate           opportunity for capital
 securities rated below A (including junk    appreciation to produce a
 bonds) by a nationally recognized rating    high total return. The
 service. The Fund invests in dollar         Portfolio normally invests
 denominated debt securities issued by       substantially all of its
 U.S. or foreign businesses. There is no     net assets in high yield
 minimal acceptable rating for a security    and investment grade debt
 to be purchased or held by the Fund and     securities. Up to 80% of
 the Fund may purchase and hold unrated      the Portfolio's total
 securities and securities whose issuers     assets may be invested in
 are in default.                             junk bonds. At least 20% of
                                             the Portfolio's assets must
                                             be invested in any
                                             combination of investment
                                             grade debt securities, U.S.
                                             government securities and
                                             cash equivalents. Up to 20%
                                             of the Portfolio's assets
                                             may be invested in foreign
                                             securities.
INVESCO VIF--High Yield Fund--seeks to      ............................
 provide a high level of current income by
 investing in bonds and other debt
 securities. The Fund also seeks capital
 appreciation. The Fund normally invests
 at least 80% of its assets in a
 diversified portfolio of high yield
 corporate bonds and preferred stock with
 below investment grade ratings. There are
 no limitations on the maturities of the
 securities assets must be held by the
 Fund.
Oppenheimer High Income Fund/VA--seeks a    ............................
 high level of current income from
 investment in high yield fixed income
 securities. Under normal market
 conditions, the Fund invests at least
 65%, and may invest without limit, in
 junk bonds. Investments include fixed
 income securities of domestic and foreign
 issuers including issuers in emerging
 market countries.
Franklin Large Cap Growth Securities Fund-- T. Rowe Price Large Cap
 seeks capital appreciation. Normally, the   Growth Portfolio--seeks
 Fund invests at least 80% of its net        long-term growth of capital
 assets in the equity securities of large    and, secondarily, dividend
 cap companies. The Fund invests in          income. Normally, the
 companies that have above-average growth    Portfolio invests at least
 in earnings and revenues. Currently, the    80% percent of its assets
 Fund may invest between 10% and 15% of      in the common stocks and
 its assets in foreign securities and up     other securities of large
 to 20% of its net assets in investments     capitalization companies
 in small and medium capitalization          (i.e., those within the
 companies.                                  market capitalization range
                                             of the Russell 1000 Index).
                                             The investment adviser
                                             seeks companies that have
                                             the ability to pay
                                             increasing dividends
                                             through strong cash flow.
MFS Emerging Growth Series--seeks to        ............................
 provide long-term growth of capital.
 Normally the Series invests at least 65%
 of its net assets in common stocks and
 related securities of emerging growth
 companies of any size. The Series may
 invest in foreign securities including
 emerging market securities.
INVESCO VIF-Dynamics Fund--seeks long-term  T. Rowe Price Mid-Cap
 capital growth. The Fund invests at least   growth. Growth Portfolio--
 65% of its assets in common stock of mid-   seeks long-term growth of
 sized companies. The core of the Fund's     capital. The portfolio
 portfolio is invested in securities of      invests at least 80% of its
 established companies that are leaders in   net assets in the common
 attractive growth markets with a history    stocks of mid-cap companies
 of strong returns.                          whose earnings are expected
                                             to grow at a faster rate
                                             than the average company.
                                             While most of the
                                             Portfolio's assets will be
                                             invested in U.S. common
                                             stocks, the Portfolio may
                                             also purchase foreign
                                             securities.

[[Page 5603]]

 
MFS Bond Series--seeks to provide as high   PIMCO Total Return Portfolio-
 a level of current income as is believed    -seeks maximum total
 to be consistent with prudent risk. The     return, consistent with the
 Series' secondary objective is to protect   preservation of capital and
 shareholders capital. The Series invests    prudent investment
 at least 80% of its net assets in debt      management. The Portfolio
 obligations issued by U.S. and foreign      normally invests at least
 (including emerging market) corporations,   65% of its assets in a
 U.S. government securities and mortgage-    diversified portfolio of
 backed and asset-backed securities. While   fixed income instruments of
 the Series may purchase junk bonds, it      varying maturities. The
 focuses on investment grade bonds.          Portfolio invests primarily
Oppenheimer Strategic Bond Fund/VA--seeks    in investment grade debt
 a high level of current income              obligations, U.S.
 principally derived from interest on debt   government securities and
 securities. The Fund invests in debt        commercial paper and other
 securities of issuers in three market       short-term obligations. Up
 sectors: foreign governments and            to 20% of the Portfolio's
 companies (including emerging market        net assets may be invested
 issuers); U.S. government securities; and   in securities denominated
 lower-grade, high yield securities of       in foreign currencies and
 U.S. and foreign companies. The Fund may    the Portfolio may invest
 invest in securities of any maturity and    beyond that limit in U.S.
 may invest without limit in junk bonds.     dollar-denominated
                                             securities of foreign
                                             issuers.
Templeton Global Income Securities Fund--   ............................
 seeks high current income, consistent
 with the preservation of capital. Capital
 appreciation is a secondary objective.
 Normally, the Fund invests at least 65%
 of its total assets in debt securities of
 governments and their subdivisions and
 agencies, supranational organizations and
 companies located anywhere in the world.
 The Fund focuses on investment grade debt
 securities, but may invest up to 30% of
 its net assets in junk bonds (including
 emerging market issuers and up to 10% of
 its assets in debt securities that are in
 default). The average maturity of the
 Fund's debt securities ranges from
 approximately 5 to 15 years.
Oppenheimer Money Fund/VA--seeks maximum    State Street Research Money
 current income from investments in money    Market Portfolio--seeks a
 market securities consistent with low       high level of current
 capital risks and the maintenance of        income, consistent with
 liquidity. Investment include U.S.          preservation of capital.
 government securities, foreign and          The Portfolio invests in
 domestic bank obligations, commercial       the highest quality money
 paper of foreign and domestic companies     market obligations
 and short-term corporate obligations.       including commercial paper
                                             and asset-backed
                                             securities. The Portfolio
                                             may also invest in U.S.
                                             dollar-denominated
                                             securities issued by
                                             foreign companies or banks
                                             or their U.S. affiliates.
MFS Strategic Income Series--seeks high     Salomon Brothers Strategic
 current income by investment in fixed       Bond Opportunities
 income securities. Significant capital      Portfolio--seeks a high
 appreciation is the secondary objective.    level of total return
 At least 65% of its assets are invested     consistent with
 in U.S. government securities, foreign      preservation of capital.
 government securities, mortgage- and        Under normal circumstances,
 asset-backed securities, corporate bonds    at least 80% of the
 (including up to 100% of its assets in      Portfolio's assets are
 junk bonds) and emerging market             invested in U.S. investment
 securities.                                 grade securities (including
                                             U.S. government
                                             obligations), U.S. and
                                             foreign (including emerging
                                             markets) high yield debt,
                                             and foreign government
                                             securities. Up to 100% of
                                             the Portfolio's assets may
                                             be invested in high yield
                                             debt securities.
Oppenheimer Bond Fund/VA--mainly seeks a    State Street Research Bond
 high level of current income. As a          Income Portfolio--seeks a
 secondary objective, the Fund seeks         competitive total return
 capital appreciation consistent with its    primarily from investing in
 primary objective. Normally, at least 80%   fixed income securities.
 of the Fund's total assets are invested     Under normal circumstances,
 on investment grade debt securities, U.S.   the Portfolio invests at
 governmental securities and money market    least 80% of its assets in
 investments. The Fund may invest in debt    fixed income securities
 securities of any maturity and may invest   including investment grade
 up to 35% of the total assets in junk       fixed income securities,
 bonds.                                      obligations of the U.S.
                                             Treasury or any
                                             governmental agency,
                                             mortgage-backed and asset-
                                             backed securities,
                                             corporate debt securities
                                             of U.S. and foreign
                                             issuers, and cash
                                             equivalents. Up to 20% of
                                             the Portfolio's assets may
                                             be invested in high yield
                                             securities, up to 20% in
                                             foreign securities and up
                                             to 10% in the securities of
                                             emerging market issuers. No
                                             combination of investments
                                             in high yield securities,
                                             foreign securities or
                                             emerging market securities
                                             will exceed 30% of the
                                             Portfolio's assets.
------------------------------------------------------------------------

    46. The following tables compare the total operating expenses of 
the Existing Fund and the Replacement Fund for each proposed 
substitution. The comparative fund expenses are generally based on 
actual expenses, including waivers, for the year ended December 31, 
2002. In some cases, the expense caps for certain Replacement Funds 
were increased effective May 1, 2003. In such cases, the expenses of 
those Funds have been restated to reflect the expense cap in effect as 
of May 1, 2003. Where a Fund has multiple classes of shares involved in 
the proposed substitution, the expenses of each class are presented.

----------------------------------------------------------------------------------------------------------------
                                                                                                MFS total return
                                                                            AIM V.I. balanced      portfolio
                                                                             fund  (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.75               0.50
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.42               0.16
Total Expenses............................................................               1.17               0.66
Waivers...................................................................  .................  .................
Net Expenses..............................................................               1.17               0.66
----------------------------------------------------------------------------------------------------------------


[[Page 5604]]


----------------------------------------------------------------------------------------------------------------
                                                               AIM V.I. premier equity   Lord Abbett growth and
                                                                   fund (percent)           income portfolio
                                                             --------------------------         (percent)
                                                                                       -------------------------
                                                                Class I      Class II     Class A      Class B
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.61         0.61         0.58         0.58
12b-1 Fee...................................................  ...........         0.25  ...........         0.25
Other Expenses..............................................         0.24         0.24         0.09         0.10
Total Expenses..............................................         0.85         1.10         0.67         0.93
Waivers.....................................................  ...........  ...........  ...........  ...........
Net Expenses................................................         0.85         1.10         0.67         0.93
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                              Alger American
                                                                                  small          T. Rowe Price
                                                                              capitalization    small cap growth
                                                                                portfolio          portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.85               0.52
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.12               0.09
Total Expenses............................................................               0.97               0.61
Waivers...................................................................  .................  .................
Net Expenses..............................................................               0.97               0.61
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                  AllianceBernstein      Janus aggressive growth
                                                              premier growth portfolio    portfolio  (percent)
                                                                      (percent)        -------------------------
                                                             --------------------------
                                                                Class A      Class B      Class A      Class B
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         1.00         1.00         0.80         0.80
12b-1 Fee...................................................  ...........         0.25  ...........         0.25
Other Expenses..............................................         0.05         0.06         0.63         0.64
Total Expenses..............................................         1.05         1.31         1.43         1.69
Waivers.....................................................  ...........  ...........         0.53         0.54
Net Expenses................................................         1.05         1.31         0.90         1.15
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                  Lord Abbett
                                                                            AllianceBernstein  growth and income
                                                                             value portfolio       portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.75               0.58
12b-1 Fee.................................................................               0.25               0.25
Other Expenses............................................................               0.43               0.10
Total Expenses............................................................               1.43               0.93
Waivers...................................................................               0.22  .................
Net Expenses..............................................................               1.21               0.93
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                            AllianceBernstein     Third Avenue
                                                                             small cap value    small cap value
                                                                                portfolio          portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               1.00               0.75
12b-1 Fee.................................................................               0.25               0.25
OtherExpenses.............................................................               0.45               0.69
Total Expenses............................................................               1.70               1.69
Waivers...................................................................               0.37               0.44
Net Expenses..............................................................               1.43               1.25
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                  Lord Abbett
                                                                              VP income and    growth and income
                                                                               growth fund         portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.70               0.58
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................  .................               0.09
Total Expenses............................................................               0.70               0.67
Waivers...................................................................  .................  .................
Net Expenses..............................................................               0.70               0.67
----------------------------------------------------------------------------------------------------------------


[[Page 5605]]


----------------------------------------------------------------------------------------------------------------
                                                                                                  MFS research
                                                                             VP international    international
                                                                             fund  (percent)       portfolio
                                                                                                   (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               1.30               0.80
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.01               1.06
Total Expenses............................................................               1.31               1.86
Waivers...................................................................  .................               0.76
Net Expenses..............................................................               1.31               1.10
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                Lord Abbett mid-
                                                                              VP value fund        cap value
                                                                                (percent)          portfolio
                                                                                                   (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.95               0.70
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................  .................               0.20
Total Expenses............................................................               0.95               0.90
Waivers...................................................................  .................  .................
Net Expenses..............................................................               0.95               0.90
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                               Appreciation portfolio      Oppenheimer capital
                                                                      (percent)          appreciation portfolio
                                                             --------------------------         (percent)
                                                                Service      Initial   -------------------------
                                                                 class        class       Class B      Class A
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.75         0.75         0.65         0.65
12b-1 Fee...................................................         0.25  ...........         0.25  ...........
Other Expenses..............................................         0.13         0.03         0.32         0.34
Total Expenses..............................................         1.13         0.78         1.22         0.99
Waivers.....................................................         0.03  ...........         0.22         0.24
Net Expenses................................................         1.10         0.78         1.00         0.75
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                  Disciplined stock        Oppenheimer capital
                                                                 portfolio (percent)     appreciation portfolio
                                                             --------------------------         (percent)
                                                                Service      Initial   -------------------------
                                                                 class        class       Class B      Class A
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.75         0.75         0.65         0.65
12b-1 fee...................................................         0.25  ...........         0.25  ...........
Other Expenses..............................................         0.06         0.08         0.32         0.34
Total Expenses..............................................         1.06         0.83         1.22         0.99
Waivers.....................................................         0.06  ...........         0.22         0.24
Net Expenses................................................         1.00         0.83         1.00         0.75
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                Federated         Lord Abbett
                                                                             American leaders  growth and income
                                                                                 fund II           portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.75               0.58
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.38               0.09
Total Expenses............................................................               1.13               0.67
Waivers...................................................................               0.25  .................
Net Expenses..............................................................               0.88               0.67
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                  Lord Abbett
                                                                             Federated equity  growth and income
                                                                                 fund II           portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.75               0.58
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.58               0.09
Total Expenses............................................................               1.33               0.67
Waivers...................................................................               0.26  .................
Net Expenses..............................................................               1.07               0.67
----------------------------------------------------------------------------------------------------------------


[[Page 5606]]


----------------------------------------------------------------------------------------------------------------
                                                                                                Lord Abbett bond
                                                                              Federated high       debenture
                                                                             income bond fund      portfolio
                                                                               II (percent)        (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.60               0.60
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.42               0.17
Total Expenses............................................................               1.02               0.77
Waivers...................................................................               0.25               0.02
Net Expenses..............................................................               0.77               0.75
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                  Oppenheimer
                                                                             Federated growth       capital
                                                                             strategy fund II     appreciation
                                                                                (percent)          portfolio
                                                                                                   (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.75               0.65
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.58               0.34
Total Expenses............................................................               1.33               0.99
Waivers...................................................................               0.26               0.24
Net Expenses..............................................................               1.07               0.75
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                            VIP asset manager   MFS total return
                                                                                portfolio          portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.53               0.50
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.10               0.06
Total Expenses............................................................               0.63               0.56
Waivers...................................................................  .................  .................
Net Expenses..............................................................               0.63               0.56
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                 Franklin large cap      T. Rowe Price large cap
                                                               growth securities fund       growth portfolio
                                                                      (percent)                 (percent)
                                                             ---------------------------------------------------
                                                                Class 2      Class 1      Class B      Class A
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.75         0.75         0.63         0.63
12b-1 Fee...................................................         0.25  ...........         0.25  ...........
Other Expenses..............................................         0.05         0.05         0.14         0.14
Total Expenses..............................................         1.05         0.80         1.02         0.77
Waivers.....................................................  ...........  ...........  ...........  ...........
Net Expenses................................................         1.05         0.80         1.02         0.77
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                               Franklin small cap fund   T. Rowe Price small cap
                                                                      (percent)             growth portfolio
                                                             --------------------------         (percent)
                                                                                       -------------------------
                                                                Class 1      Class 2      Class A      Class B
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.53         0.53         0.52         0.52
12b-1 Fee...................................................  ...........         0.25  ...........         0.25
Other Expenses..............................................         0.31         0.31         0.09         0.09
Total Expenses..............................................         0.84         1.09         0.61         0.86
Waivers.....................................................         0.05         0.05  ...........  ...........
Net Expenses................................................         0.79         1.04         0.61         0.86
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                              Goldman Sachs       Lord Abbett
                                                                            growth and income   growth & income
                                                                             fund  (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.75               0.58
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.46               0.09
Total Expenses............................................................               1.21               0.67
Waivers...................................................................               0.17  .................
Net Expenses..............................................................               1.04               0.67
----------------------------------------------------------------------------------------------------------------


[[Page 5607]]


----------------------------------------------------------------------------------------------------------------
                                                                              Goldman Sachs       MFS research
                                                                              international      international
                                                                               equity fund         portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               1.00               0.80
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               1.77               1.06
Total Expenses............................................................               2.77               1.86
Waivers...................................................................               1.38               0.76
Net Expenses..............................................................               1.39               1.10
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                               T. Rowe Price mid-
                                                                               Invesco VIF-        cap growth
                                                                              dynamics fund        portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.75               0.75
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.37               0.45
Total Expenses............................................................               1.12               1.20
Waivers...................................................................  .................               0.25
Net Expenses..............................................................               1.12               0.95
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                Lord Abbett bond
                                                                             Invesco VIF high      debenture
                                                                                yield fund         portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.60               0.60
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.45               0.17
Total Expenses............................................................               1.05               0.77
Waivers...................................................................  .................               0.02
Net Expenses..............................................................               1.05               0.75
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                              Mutual shares securities   Lord Abbett growth and
                                                                   fund  (percent)          income portfolio
                                                             --------------------------         (percent)
                                                                                       -------------------------
                                                                Class 1      Class 2      Class A      Class B
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.60         0.60         0.58         0.58
12b-1 Fee...................................................  ...........         0.25  ...........         0.25
Other Expenses..............................................         0.21         0.21         0.09         0.10
Total Expenses..............................................         0.81         1.06         0.67         0.93
Waivers.....................................................         0.01         0.01  ...........  ...........
Net Expenses................................................         0.80         1.05         0.67         0.93
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                  PIMCO total
                                                                             MFS bond series    return portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.60               0.50
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.32               0.15
Total Expenses............................................................               0.92               0.65
Waivers...................................................................               0.17  .................
Net Expenses..............................................................               0.75               0.65
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                 MFS emerging growth     T. Rowe Price large cap
                                                                  series  (percent)         growth portfolio
                                                             --------------------------         (percent)
                                                                Initial      Service   -------------------------
                                                                 class        class       Class A      Class B
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.75         0.75         0.63         0.63
12b-1 Fee...................................................  ...........         0.25  ...........         0.25
Other Expenses..............................................         0.11         0.11         0.14         0.14
Total Expenses..............................................         0.86         1.11         0.77         1.02
Waivers.....................................................  ...........  ...........  ...........  ...........
Net Expenses................................................         0.86         1.11         0.77         1.02
----------------------------------------------------------------------------------------------------------------


[[Page 5608]]


----------------------------------------------------------------------------------------------------------------
                                                                 MFS research series       Oppenheimer capital
                                                                      (percent)          appreciation portfolio
                                                             --------------------------         (percent)
                                                                Initial      Service   -------------------------
                                                                 class        class       Class A      Class B
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.75         0.75         0.65         0.65
12b-1 Fee...................................................  ...........         0.25  ...........         0.25
Other Expenses..............................................         0.12         0.12         0.34         0.32
Total Expenses..............................................         0.87         1.12         0.99         1.22
Waivers.....................................................  ...........  ...........         0.24         0.22
Net Expenses................................................         0.87         1.12         0.75         1.00
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                MFS strategic income        Salomon brothers
                                                                  series  (percent)          strategic bond
                                                             --------------------------  opportunities portfolio
                                                                                                (percent)
                                                                Initial      Service   -------------------------
                                                                 class        class       Class A      Class B
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.75         0.75         0.65         0.65
12b-1 Fee...................................................  ...........         0.25  ...........         0.25
Other Expenses..............................................         0.35         0.35         0.20         0.20
Total Expenses..............................................         1.10         1.35         0.85         1.10
Waivers.....................................................         0.20         0.20  ...........  ...........
Net Expenses................................................         0.90         1.15         0.85         1.10
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                  MFS research
                                                                              Newport Tiger      international
                                                                             fund  (percent)       portfolio
                                                                                                   (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.90               0.80
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.37               1.06
Total Expenses............................................................               1.27               1.86
Waivers...................................................................  .................               0.76
Net Expenses..............................................................               1.27               1.10
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                               Oppenheimer
                                                                             strategic  bond      PIMCO total
                                                                                 fund/VA        return portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.74               0.50
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.05               0.15
Total Expenses............................................................               0.79               0.65
Waivers...................................................................               0.01  .................
Net Expenses..............................................................               0.78               0.65
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                  Lord Abbett
                                                                             Oppenheimer Main  growth and income
                                                                             Street  fund/VA       portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.68               0.58
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.01               0.09
Total Expenses............................................................               0.69               0.67
Waivers...................................................................  .................  .................
Net Expenses..............................................................               0.69               0.67
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                Lord Abbett bond
                                                                             Oppenheimer high      debenture
                                                                              income fund/VA       portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.74               0.60
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.03               0.17
Total Expenses............................................................               0.77               0.77
Waivers...................................................................  .................               0.02
Net Expenses..............................................................               0.77               0.75
----------------------------------------------------------------------------------------------------------------


[[Page 5609]]


----------------------------------------------------------------------------------------------------------------
                                                                                                  State Street
                                                                             Oppenheimer bond    research bond
                                                                            fund/VA (percent)   income portfolio
                                                                                                   (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.71               0.40
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.02               0.11
Total Expenses............................................................               0.73               0.51
Waivers...................................................................  .................  .................
Net Expenses..............................................................               0.73               0.51
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                  State Street
                                                                            Oppenheimer money    research money
                                                                            fund/VA (percent)   market portfolio
                                                                                                   (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.45               0.35
12b-1 fee.................................................................  .................  .................
Other Expenses............................................................               0.02               0.08
Total Expenses............................................................               0.47               0.43
Waivers...................................................................  .................  .................
Net Expenses..............................................................               0.47               0.43
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                             Oppenheimer Main    T. Rowe Price
                                                                             Street small cap   small cap growth
                                                                             growth  fund/VA       portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.75               0.52
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.25               0.09
Total Expenses............................................................               1.00               0.61
Waivers...................................................................  .................  .................
Net Expenses..............................................................               1.00               0.61
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                              Putnam VT new value fund   Lord Abbett growth and
                                                                      (percent)             income portfolio
                                                             --------------------------         (percent)
                                                                                       -------------------------
                                                                Class 1B     Class 1A     Class B      Class A
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.69         0.69         0.58         0.58
12b-1 Fee...................................................         0.25  ...........         0.25  ...........
Other Expenses..............................................         0.09         0.09         0.10         0.09
Total Expenses..............................................         1.03         0.78         0.93         0.67
Waivers.....................................................  ...........  ...........  ...........  ...........
Net Expenses................................................         1.03         0.78         0.93         0.67
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                               Putnam VT international      MFS Research fund
                                                               new opportunities fund    international portfolio
                                                                      (percent)                 (percent)
                                                             ---------------------------------------------------
                                                                Class 1B     Class 1A     Class B      Class A
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         1.00         1.00         0.80         0.80
12b-1 Fee...................................................         0.25  ...........         0.25  ...........
Other Expenses..............................................         0.27         0.27         1.02         1.06
Total Expenses..............................................         1.52         1.27         2.07         1.86
Waivers.....................................................  ...........  ...........         0.72         0.76
Net Expenses................................................         1.52         1.27         1.35         1.10
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                               International portfolio        MFS research
                                                                      (percent)          international portfolio
                                                             --------------------------         (percent)
                                                                                       -------------------------
                                                                Class B      Class A      Class B      Class A
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.87         0.87         0.80         0.80
12b-1 Fee...................................................         0.25  ...........         0.25  ...........
Other Expenses..............................................         0.31         0.16         1.02         1.06
Total Expenses..............................................         1.43         1.03         2.07         1.86
Waivers.....................................................  ...........  ...........         0.72         0.76
Net Expenses................................................         1.43         1.03         1.35         1.10
----------------------------------------------------------------------------------------------------------------


[[Page 5610]]


----------------------------------------------------------------------------------------------------------------
                                                                             SVS Dreman high      Lord Abbett
                                                                              return equity    growth and income
                                                                                portfolio          portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.73               0.58
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.06               0.09
Total Expenses 0.79.......................................................               0.67               0.67
Waivers...................................................................  .................  .................
Net Expenses..............................................................               0.79               0.67
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                               Templeton global income     PIMCO total return
                                                                   securities fund        portfolio  (percent)
                                                                      (percent)        -------------------------
                                                             --------------------------
                                                                Class 1      Class 2      Class A      Class B
----------------------------------------------------------------------------------------------------------------
Management Fee..............................................         0.63         0.63         0.50         0.50
12b-1 Fee...................................................  ...........         0.25  ...........         0.25
Other Expenses..............................................         0.10         0.10         0.15         0.15
Total Expenses..............................................         0.73         0.98         0.65         0.90
Waivers.....................................................  ...........  ...........  ...........  ...........
Net Expenses................................................         0.73         0.98         0.65         0.90
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                                                  Lord Abbett
                                                                            Growth and income  growth and income
                                                                                portfolio          portfolio
                                                                                (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee............................................................               0.60               0.58
12b-1 Fee.................................................................  .................  .................
Other Expenses............................................................               0.11               0.09
Total Expenses............................................................               0.71               0.67
Waivers...................................................................  .................  .................
Net Expenses..............................................................               0.71               0.67
----------------------------------------------------------------------------------------------------------------

    47. The share classes of the Existing Funds and the Replacement 
Funds are identical with respect to the imposition of Rule 12b-1 fees 
currently imposed. While each Replacement Fund's Class B Rule 12b-1 
fees can be raised to 0.50% of net assets by the Fund's Board of 
Trustees/Directors, the Rule 12b-1 fees of 0.25% of the Existing Funds' 
shares cannot be raised by the Fund's Board of Trustees, without 
shareholder approval, except as follows:

AllianceBernstein Premier Growth Portfolio--Can Be Raised by Board Up 
to 0.50%
AllianceBernstein Value Portfolio--Can Be Raised by Board Up to 0.50%
AllianceBernstein Small Cap Value Portfolio--Can Be Raised by Board Up 
to 0.50%
Franklin Large Cap Growth Securities Fund--Can Be Raised by Board Up to 
0.35%
Franklin Small Cap Fund--Can Be Raised by Board Up to 0.35%
Mutual Shares Securities Fund--Can Be Raised by Board Up to 0.35%
Putnam VT New Value Fund--Can Be Raised by Board Up to 0.35%
Putnam VT International New Opportunities Fund--Can Be Raised by Board 
Up to 0.35%

    Met Series Fund and MIST represent that, except as set forth in the 
following sentence, Rule 12b-1 fees for the Replacement Funds' Class B 
shares issued in connection with the proposed substitutions will not be 
raised above 0.25% of net assets without the approval of a majority in 
interest of those Contract owners whose shares were involved in the 
proposed substitutions. The foregoing representation shall apply to the 
following substitutions only if the Rule 12b-1 fees for the Replacement 
Funds' Class B shares exceed 0.35% or 0.50% of net assets as indicated: 
AllianceBernstein Premier Growth Portfolio/Janus Aggressive Growth 
Portfolio--0.50%; AllianceBernstein Value Portfolio/Lord Abbett Growth 
and Income Portfolio--0.50%; AllianceBernstein Small Cap Value 
Portfolio/Third Avenue Small Cap Value Portfolio--0.50%; Franklin Large 
Cap Growth Securities Fund/T. Rowe Price Large Cap Portfolio--0.35%; 
Franklin Small Cap Fund/T. Rowe Price Small Cap Growth Portfolio--
0.35%; Mutual Shares Securities Fund/Lord Abbett Growth and Income 
Portfolio--0.35%; Putnam VT New Value Fund/Lord Abbett Growth and 
Income Portfolio--0.35%; Putnam VT International New Opportunities 
Fund/MFS Research International Portfolio--0.35%.
    48. Further, in addition to any Rule 12b-1 fees, the investment 
advisers or distributors of the Existing Funds pay the Insurance 
Companies or one of the affiliates from 5 to 30 basis points for Class 
A shares (or their equivalent) sold to the Separate Accounts and, for 
Class B shares (or their equivalent), Rule 12b-1 fees of 25 basis 
points plus additional amounts ranging from 5 to 25 basis points. 
Following the substitutions, these payments will not be made on behalf 
of the Existing Funds. Rather, only 25 basis points in Rule 12b-1 fees 
(with respect to Class B shares) and profit distributions to members, 
if any, from the Replacement Funds' advisers will be available to the 
Insurance Companies or the Replacement Funds' distributors.
    49. The Insurance Companies considered the performance history of 
each Fund and determined that no Contract owners would be materially 
adversely affected as a result of the substitutions. More detailed 
information regarding the Funds' comparative performance histories can 
be found in the Application.

[[Page 5611]]

    50. 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.
    51. In certain other cases, it is expected that the substitutions 
will be effected by redeeming the shares of an Existing Fund in-kind; 
those assets will then be contributed in-kind to the corresponding 
Replacement Fund to purchase shares of that Fund. All in-kind 
redemptions from an Existing Fund of which any of the Substitution 
Applicants is an affiliated person will be effected in accordance with 
the conditions set forth in the Commission's no-action letter issued to 
Signature Financial Group, Inc. (available December 28, 1999).
    52. 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. 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.
    53. The Substitution Applicants agree that, to the extent that the 
annualized expenses of each Replacement Fund exceed, for each fiscal 
period (such period being less than 90 days) during the twenty-four 
months following the substitutions, the 2002 net expense level of the 
corresponding Existing Fund, the Insurance Companies will, for each 
Contract outstanding on the date of the proposed substitutions, make a 
corresponding reduction in separate account (or sub-account) expenses 
on the last day of such fiscal period, such that the amount of the 
Replacement Fund's net expenses, together with those of the 
corresponding separate account (or sub-account) will, on an annualized 
basis, be no greater than the sum of the net expenses of the Existing 
Fund and the expenses of the separate account (or sub-account) for the 
2002 fiscal year of the Insurance Companies, as applicable.
    54. The Substitution Applicants further agree that the Insurance 
Companies will not increase total separate account charges (net of any 
reimbursements or waivers) for any existing owner of the Contracts 
involved in the proposed substitution on the date of the substitutions 
for a period of two years from the date of the substitutions.
    55. By a supplement to the prospectuses for the Contracts and the 
Separate Accounts, each Insurance Company will notify all owners of the 
Contracts of its intention to take the necessary actions, including 
seeking the order requested by this application and to substitute 
shares of the funds as described herein. The supplement will advise 
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 another sub-account 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 will inform Contract 
owners that the Insurance Company will not exercise any rights reserved 
under any Contract to impose additional restrictions on transfers until 
at least 30 days after the proposed substitutions, except that the 
Insurance Company may impose restrictions on transfers to prevent or 
limit ``market timing'' activities by Contract owners or agents of 
Contract owners. The supplement will further advise Contract owners 
that for at least 30 days following the proposed substitutions, the 
Insurance Companies will permit Contract owners affected by the 
substitutions to make one transfer of Contract value (or annuity unit 
exchange) out of the Replacement Fund sub-account to another sub-
account 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.
    56. In addition, in accordance with the Contract provisions and/or 
prospectus disclosure for Contracts issued by MetLife Investors USA, 
MetLife Investors USA will seek approval of the substitutions proposed 
for Separate Account A from MetLife Investors USA contract owners. Such 
approval will be sought from the owners of each class of MetLife 
Investors USA Contracts voting as a separate group, and the 
substitutions will be carried out for each class of Contracts whose 
owners approve them. A class of Contracts refers to a Contract type 
distinguishable from other types by the product (marketing) designation 
and, in most cases, by its contract form as approved for sale in each 
jurisdiction. Contracts of the same class have the same features and 
charge structure.
    57. Approval is obtained by the affirmative vote of a majority of 
the class's outstanding interests in the Existing Fund sub-account of 
Separate Account A (measured by the dollar value of accumulation units 
or annuity unit reserves). MetLife Investors USA will solicit approval 
of MetLife Investors USA contract owners by sending them written voting 
forms accompanied by a voting information statement and other 
disclosure documents in a manner consistent with applicable 
requirements of Regulation 14A under the Securities Exchange Act of 
1934. In particular, the relevant information will disclose, in 
substance, the information required by applicable items of Form N-14. 
Any beneficial financial interest that MetLife Investors USA may have 
in Separate Account A is immaterial in relation to the interests of 
contract owners, and MetLife Investors USA will not cast any votes.
    58. Finally, within five business days after the proposed 
substitutions, 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 another 
sub-account available under their Contract at no cost and without 
regard to any limits on the frequency of transfers. The notice will 
also reiterate that 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 (other than with 
respect to ``market timing'' activities) until at least 30 days after 
the proposed substitutions. The Insurance Companies will also send each 
Contract owner current prospectuses for the Replacement Funds involved.

[[Page 5612]]

Applicants' Legal Analysis

    1. Section 26(c) of the Act requires the depositor of a registered 
unit investment trust holding the securities of a single issuer to 
obtain Commission approval before substituting the securities held by 
the trust. Specifically, Section 26(c) states:

    It shall be unlawful for any depositor or trustee of a 
registered unit investment trust holding the security of a single 
issuer to substitute another security for such security unless the 
commission shall have approved such substitution. The Commission 
shall issue an order approving such substitution if the evidence 
establishes that it is consistent with the protection of investors 
and the purposes fairly intended by the policy and provision of this 
title.

    2. The Substitution Applicants state that the proposed 
substitutions appear to involve substitutions of securities within the 
meaning of Section 26(c) of the Act. The Substitution Applicants, 
therefore, request an order from the Commission pursuant to Section 
26(c) approving the proposed substitutions.
    3. Some of the Contracts expressly reserve to the applicable 
Insurance Company the right, 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 these Contracts and the Separate Accounts contain 
appropriate disclosure of this right. Certain Contracts issued by 
MetLife Investors USA provide, however, that approval of a majority of 
Contract owners who have allocated premiums to a particular Separate 
Account must be obtained prior to any substitution.
    4. Applicants request an order of the Commission pursuant to 
Section 26(c) of the Act approving the proposed substitutions by the 
Insurance Companies. The Applicants assert that the proposed 
substitutions are consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act.
    5. The Substitution Applicants represent that the proposed 
Replacement Fund for each Existing Fund has an investment objective 
that is at least substantially similar to that of the Existing Fund. 
Moreover, the principal investment policies of the Replacement Funds 
are similar to those of the corresponding Existing Funds. The Insurance 
Companies believe that the new sub-adviser will, over the long-term, be 
positioned to provide at least comparable performance to that of the 
Existing Fund's sub-adviser.
    6. In addition, a substantial number of the Existing Funds are 
currently either not available as investment options under any Contract 
previously or currently offered by the Insurance Companies or, if 
available, are available only for additional contributions and/or 
transfers from other investment options under Contracts not currently 
offered. The Substitution Applicants submit that, with respect to those 
Existing Funds with limited or no current availability, there is little 
likelihood additional significant assets, if any, will be allocated to 
such Funds, and, therefore, because of the costs of maintaining such 
Funds as investment options under the Contracts, it is in the interest 
of shareholders to substitute the applicable Replacement Funds which 
are currently being offered as investment options by the Insurance 
Companies.
    7. The Substitution Applicants anticipate that Contract owners will 
be better off with the array of sub-accounts offered after the proposed 
substitutions than they have been with the array of sub-accounts 
offered prior to the substitutions. The proposed substitutions retain 
for Contract owners the investment flexibility that is a central 
feature of the Contracts. If the proposed substitutions are carried 
out, all Contract owners will be permitted to allocate purchase 
payments and transfer Contract values and cash values between and among 
approximately the same number of sub-accounts as they could before the 
proposed substitutions. Moreover, the elimination of the costs of 
printing and mailing prospectuses and periodic reports of the Existing 
Funds will benefit Contract owners.
    8. The Substitution Applicants assert 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 Contracts 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 that Section 26(c) was designed to prevent.
    9. The Substitution Applicants assert that the proposed 
substitutions also are unlike the type of substitution that Section 
26(c) was designed to prevent in that by purchasing a Contract, 
Contract owners select much more than a particular investment company 
in which to invest their account values. They also select the specific 
type of insurance coverage offered by an Insurance Company under their 
Contract as well as numerous other rights and privileges set forth in 
the Contract. Contract owners may also have considered each Insurance 
Company's size, financial condition, relationship with MetLife, and its 
reputation for service in selecting their Contract. These factors will 
not change as a result of the proposed substitutions.
    10. 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.
    11. Section 2(a)(3) of the Act defines the term ``affiliated person 
of another person'' in relevant part as:

(A) Any person directly or indirectly owning, controlling, or 
holding with power to vote, 5 per centum or more of the outstanding 
voting securities of such person; (B) any person 5 per centum or 
more of whose outstanding voting securities are directly or 
indirectly owned, controlled, or held with power to vote, by such 
person; (C) any person directly or indirectly controlling, 
controlled by, or under common control with, such other person; * * 
* (E) if such other person is an investment company, any investment 
adviser thereof * * *

    ?Section 2(a)(9) of the Act states that any person who 
owns beneficially, either directly or through one or more controlled 
companies, more than 25% of the voting securities of a company shall be 
presumed to control such company.
    12. Because shares held by a separate account of an insurance 
company are legally owned by the insurance company, the Insurance 
Companies and their affiliates collectively own of record substantially 
all of the shares of MIST and Met Series Fund. Therefore, MIST and Met 
Series Fund and their respective funds are arguably under the control 
of the Insurance Companies notwithstanding the fact that Contract 
owners may be considered the beneficial owners of those shares held in 
the Separate Accounts. If MIST and Met Series Fund and their respective 
funds are under the control of the Insurance Companies, then each

[[Page 5613]]

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.
    13. 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. In addition, the 
Insurance Companies, through their separate accounts own more than 5% 
of the outstanding shares of certain Existing Funds.
    14. Because the substitutions may be effected, in whole or in part, 
by means of in-kind redemptions and purchases, the substitutions may be 
deemed to involve one or more purchases or sales of securities or 
property between affiliated persons. The proposed transactions may 
involve a transfer of portfolio securities by the Existing Funds to the 
Insurance Companies; immediately thereafter, the Insurance Companies 
would purchase shares of the Replacement Funds with the portfolio 
securities received from the Existing Funds. Accordingly, as the 
Insurance Companies and the Replacement Funds could be viewed as 
affiliated persons of one another under Section 2(a)(3) of the Act, it 
is conceivable that this aspect of the substitutions could be viewed as 
being prohibited by Section 17(a). Accordingly, the Section 17 
Applicants have determined that it is prudent to seek relief from 
Section 17(a) in the context of this Application for the in-kind 
purchases and sales of the Replacement Fund shares.
    15. Section 17(b) of the Act provides that the Commission may, upon 
application, grant an order exempting any transaction from the 
prohibitions of Section 17(a) if the evidence establishes that: (1) The 
terms of the proposed transaction, including the consideration to be 
paid or received, are reasonable and fair and do not involve 
overreaching on the part of any person concerned; (2) the proposed 
transaction is consistent with the policy of each registered investment 
company concerned, as recited in its registration statement and records 
filed under the Act; and (3) the proposed transaction is consistent 
with the general purposes of the Act.
    16. The Section 17 Applicants submit 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 two of the conditions enumerated in Rule 17a-7. The 
proposed transactions will take place at relative net asset value in 
conformity with the requirements of Section 22(c) of the Act and Rule 
22c-1 thereunder with no change in the amount of any Contract owner's 
contract value or death benefit or in the dollar value of his or her 
investment in any of the Separate Accounts. Contract owners will not 
suffer any adverse tax consequences as a result of the substitutions. 
The fees and charges under the Contracts will not increase because of 
the substitutions. Even though the Separate Accounts, the Insurance 
Companies, MIST and Met Series Fund may not rely on Rule 17a-7, the 
Section 17 Applicants submit that the Rule's conditions outline the 
type of safeguards that result in transactions that are fair and 
reasonable to registered investment company participants and preclude 
overreaching in connection with an investment company by its affiliated 
persons.
    17. The boards of MIST and Met Series Fund have adopted procedures, 
as required by paragraph (e)(1) of Rule 17a-7, pursuant to which the 
series of each may purchase and sell securities to and from their 
affiliates. The Section 17 Applicants will carry out the proposed 
Insurance Company in-kind purchases in conformity with all of the 
conditions of Rule 17a-7 and each series' procedures thereunder, except 
that: (1) The consideration paid for the securities being purchased or 
sold may not be entirely cash, and (2) the boards of MIST and Met 
Series Fund will not separately review each portfolio security 
purchased by the Replacement Funds. Nevertheless, the circumstances 
surrounding the proposed substitutions will be such as to offer the 
same degree of protection to each Replacement Fund from overreaching 
that Rule 17a-7 provides 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's 
registration statement and as required by Rule 22c-1 under the Act. No 
brokerage commission, fee, or other remuneration will be paid to any 
party in connection with the proposed transactions.
    18. The Section 17 Applicants submit that the sale of shares of the 
Replacement Funds for investment securities, as contemplated by the 
proposed Insurance Company in-kind purchases, is consistent with the 
investment policy 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, Met Investors Advisory LLC, MetLife 
Advisers, LLC and the sub-adviser, as applicable, will examine the 
portfolio securities being offered to each Replacement Fund and accept 
only those securities as consideration for shares that it would have 
acquired for each such fund in a cash transaction.
    19. The Section 17 Applicants submit that the proposed Insurance 
Company in-kind purchases, as described herein, are consistent with the 
general purposes of the Act as stated in the Findings and Declaration 
of Policy in Section 1 of the Act. The proposed transactions do not 
present any of the conditions or abuses that the Act was designed to 
prevent. The Section 17 Applicants submit that the abuses described in 
Sections 1(b)(2) and (3) of the Act will not occur in connection with 
the proposed in-kind transactions.

Conclusion

    Applicants assert that for the reasons summarized above the 
proposed substitutions and related transactions meet the standards of 
Section 26(c) of the Act and are consistent with the standards of 
Section 17(b) of the Act and that the requested orders should be 
granted.


[[Page 5614]]


    For the Commission, by the Division of Investment Management 
pursuant to delegated authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 04-2328 Filed 2-4-04; 8:45 am]
BILLING CODE 8010-01-P