[Federal Register Volume 70, Number 70 (Wednesday, April 13, 2005)]
[Notices]
[Pages 19510-19523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1737]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-26829; File No. 812-13158]


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

April 7, 2005.
AGENCY: The Securities and Exchange Commission (``Commission'').

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

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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''), MetLife Investors Variable Life Account Eight (``VL 
Account Eight''), 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''), General American Life 
Insurance Company (``General American''), General American Separate 
Account Seven (``Separate Account Seven''), General American Separate 
Account Eleven (``Separate Account Eleven''), General American Separate 
Account Thirty Three (``Separate Account Thirty Three''), General 
American Separate Account Fifty Eight (``Separate Account Fifty 
Eight''), General American Separate Account Fifty Nine (``Separate 
Account Fifty Nine''), New England Life Insurance Company (``New 
England''), New England Variable Life Separate Account (``NEVL Separate 
Account''), New England Variable Life Separate Account Four (``NEVL 
Separate Account Four''), New England Variable Life Separate Account 
Five (``NEVL Separate Account Five''), Metropolitan Life Insurance 
Company (``MetLife'') (together with MetLife Investors, First MetLife 
Investors, MetLife Investors of California, General American and New 
England, the ``Insurance Companies''), Metropolitan Life Separate 
Account DCVL (``Separate Account DCVL''), Security Equity Separate 
Account Thirteen (``Separate Account Thirteen''), Security Equity 
Separate Account Nineteen (``Separate Account Nineteen'') (together 
with VA Account One, VL Account One, VL Account Eight, First VA Account 
One, VA Account Five, VL Account Five, Separate Account Seven, Separate 
Account Eleven, Separate Account Thirty Three, Separate Account Fifty 
Eight, Separate Account Fifty Nine, NEVL Separate Account, NEVL 
Separate Account Four, NEVL Separate Account Five, Separate Account 
DCVL and Separate Account Thirteen, 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 January 24, 2005, and 
amended on April 5, 2005. Applicants represent that they will file an 
amendment to the application during the notice period to conform to the 
representations set forth herein.

Summary of Application:  Applicants request an order to permit certain 
unit investment trusts to substitute (a) shares of Lord Abbett Growth & 
Income Portfolio for shares of AIM V.I. Premier Equity Fund, VIP 
Contrafund, VP Income and Growth Fund, Goldman Sachs Growth and Income 
Fund; (b) shares of Neuberger Berman Real Estate Portfolio for shares 
of Alliance Bernstein Real Estate Investment Portfolio; (c) shares of 
Janus Aggressive Growth Portfolio for shares of AllianceBernstein 
Premier Growth

[[Page 19511]]

Portfolio; (d) shares of MFS Research International Portfolio for 
shares of VP International Fund, Putnam VT International Equity Fund; 
(e) shares of MetLife Stock Index Portfolio for shares of Dreyfus Stock 
Index Portfolio; (f) shares of Oppenheimer Capital Appreciation 
Portfolio for shares of MFS Investors Trust Series, Oppenheimer Capital 
Appreciation Fund/VA; (g) shares of Lord Abbett Bond Debenture 
Portfolio for shares of VIP High Income Portfolio, MFS High Income 
Fund; (h) shares of T. Rowe Price Large Cap Growth Portfolio for shares 
of MFS Research Series, MFS Emerging Growth Series; (i) shares of Met/
AIM Small Cap Growth Portfolio for shares of MFS New Discovery Series; 
(j) shares of PIMCO Total Return Portfolio for shares of Oppenheimer 
Strategic Bond Fund/VA; and (k) shares of Third Avenue Small Cap Value 
Portfolio for shares of SVS Dreman Small Cap Value Portfolio. The 
shares are held by certain of the Separate Accounts to fund certain 
group and individual variable annuity contracts and variable life 
insurance policies (collectively, the ``Contracts'') issued by the 
Insurance Companies (defined below).

Hearing or Notification of Hearing:  An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Secretary of the 
Commission and serving Applicants with a copy of the request personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on April 28, 2005 and should be accompanied by proof of 
service on Applicants, in the form of an affidavit or for lawyers a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request and the issued contested. 
Persons may request notification of a hearing by writing to the 
Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 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, and Robert N. Hickey, Esq., Sullivan & 
Worcester LLP, 1666 K Street, NW., Washington, DC 20006.

FOR FURTHER INFORMATION CONTACT: Robert Lamont, Senior Counsel at 202-
551-6758 or, Lorna MacLeod, Branch Chief, at 202-551-6795, 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 
under the laws of Missouri. MetLife Investors is a wholly-owned 
subsidiary of MetLife, Inc. MetLife Investors is the depositor and 
sponsor of VA Account One, VL Account One and VL Account Eight.
    2. 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.
    3. VA Account One is currently divided into 78 sub-accounts, 43 of 
which reflect the investment performance of a corresponding series of 
MIST or Met Series Fund, and 35 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 than 5% of such investment company).
    4. 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.
    5. VL Account One is currently divided into 47 sub-accounts, 31 of 
which reflect the investment performance of a corresponding series of 
MIST or Met Series Fund, and 16 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 than 5% of such investment company).
    6. VL Account Eight serves as a separate account funding vehicle 
for certain Contracts that are exempt from registration under Section 
4(2) of the Securities Act of 1933 and Regulation D thereunder.
    7. VL Account Eight is currently divided into 20 sub-accounts, 3 of 
which reflect the investment performance of a corresponding series of 
MIST or Met Series Fund, and 17 of which reflect the performance of 
registered investment companies managed by advisers that are not 
affiliated with VL Account Eight (except, that, in some instances, VL 
Account Eight may own more than 5% of such investment company).
    8. First MetLife Investors is a stock life insurance company 
organized under the laws of New York. First MetLife Investors is an 
indirect wholly-owned subsidiary of MetLife, Inc. First MetLife 
Investors is the depositor and sponsor of First VA Account One.
    9. 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.
    10. First VA Account One is currently divided into 72 sub-accounts, 
43 of which reflect the investment performance of a corresponding 
series of MIST or Met Series Fund, and 29 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 than 5% of such investment 
company).
    11. MetLife Investors of California is a stock life insurance 
company organized under the laws of California. MetLife Investors of 
California is an indirect wholly-owned subsidiary of MetLife, Inc. 
MetLife Investors of California is the depositor and sponsor of VA 
Account Five and VL Account Five.
    12. 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.
    13. VA Account Five is currently divided into 84 sub-accounts, 48 
of which reflect the investment performance of a corresponding series 
of MIST or Met Series Fund, and 36 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 than 5% of such investment company).
    14. 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.
    15. VL Account Five is currently divided into 47 sub-accounts, 31 
of which reflect the investment performance of a corresponding series 
of MIST or Met Series Fund, and 16 of which reflect the performance of 
registered investment companies

[[Page 19512]]

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).
    16. General American is a stock life insurance company organized 
under the laws of Missouri. General American is an indirect wholly-
owned subsidiary of MetLife, Inc. General American is the depositor and 
sponsor of Separate Account Seven and Separate Account Eleven.
    17. Separate Account Seven serves as a separate account funding 
vehicle for certain Contracts that are exempt from registration under 
Section 4(2) of the Securities Act of 1933 and Regulation D thereunder.
    18. Separate Account Seven is currently divided into 58 sub-
accounts, 20 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 Separate Account Seven (except, 
that, in some instances, Separate Account Seven may own more than 5% of 
such investment company).
    19. 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.
    20. Separate Account Eleven is currently divided into 50 sub-
accounts, 34 of which reflect the investment performance of a 
corresponding series of MIST or Met Series Fund, and 16 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).
    21. Separate Account Thirty Three serves as a separate account 
funding vehicle for certain Contracts that are exempt from registration 
under Section 4(2) of the Securities Act of 1933 and Regulation D 
thereunder.
    22. Separate Account Thirty Three is currently divided into 58 sub-
accounts, 20 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 Separate Account Thirty Three 
(except, that, in some instances, Separate Account Thirty Three may own 
more than 5% of such investment company).
    23. Separate Account Fifty Eight serves as a separate account 
funding vehicle for certain Contracts that are exempt from registration 
under Section 4(2) of the Securities Act of 1933 and Regulation D 
thereunder.
    24. Separate Account Fifty Eight is currently divided into 34 sub-
accounts, 26 of which reflect the investment performance of a 
corresponding series of MIST or Met Series Fund, and 8 of which reflect 
the performance of registered investment companies managed by advisers 
that are not affiliated with Separate Account Fifty Eight (except, 
that, in some instances, Separate Account Fifty Eight may own more than 
5% of such investment company).
    25. Separate Account Fifty Nine serves as a separate account 
funding vehicle for certain Contracts that are exempt from registration 
under Section 4(2) of the Securities Act of 1933 and Regulation D 
thereunder.
    26. Separate Account Fifty Nine is currently divided into 34 sub-
accounts, 26 of which reflect the investment performance of a 
corresponding series of MIST or Met Series Fund, and 8 of which reflect 
the performance of registered investment companies managed by advisers 
that are not affiliated with Separate Account Fifty Nine (except, that, 
in some instances, Separate Account Fifty Nine may own more than 5% of 
such investment company).
    27. New England is a stock life insurance company organized under 
the laws of Delaware and re-domesticated in Massachusetts. General 
American is an indirect wholly-owned subsidiary of MetLife, Inc. New 
England is the depositor and sponsor of NEVL Separate Account, NEVL 
Separate Account Four and NEVL Separate Account Five.
    28. 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.
    29. NEVL Separate Account is currently divided into 47 sub-
accounts, 41 of which reflect the investment performance of a 
corresponding series of MIST or Met Series Fund, and 6 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).
    30. NEVL Separate Account Four serves as a separate account funding 
vehicle for certain Contracts that are exempt from registration under 
Section 4(2) of the Securities Act of 1933 and Regulation D thereunder.
    31. NEVL Separate Account Four is currently divided into 28 sub-
accounts, 20 of which reflect the investment performance of a 
corresponding series of MIST or Met Series Fund, and 8 of which reflect 
the performance of registered investment companies managed by advisers 
that are not affiliated with NEVL Separate Account Four (except, that, 
in some instances, NEVL Separate Account Four may own more than 5% of 
such investment company).
    32. NEVL Separate Account Five serves as a separate account funding 
vehicle for certain Contracts that are exempt from registration under 
Section 4(2) of the Securities Act of 1933 and Regulation D thereunder.
    33. NEVL Separate Account Nine is currently divided into 28 sub-
accounts, 20 of which reflect the investment performance of a 
corresponding series of MIST or Met Series Fund, and 8 of which reflect 
the performance of registered investment companies managed by advisers 
that are not affiliated with NEVL Separate Account Five (except, that, 
in some instances, NEVL Separate Account Five may own more than 5% of 
such investment company).
    34. MetLife is a stock life insurance company organized under the 
laws of New York. MetLife is a wholly-owned subsidiary of MetLife, 
Inc., a publicly traded company. MetLife is the depositor and sponsor 
of MetLife Separate Account DCVL.
    35. Separate Account DCVL serves as a separate account funding 
vehicle for certain Contracts that are exempt from registration under 
Section 4(2) of the Securities Act of 1933 and Regulation D thereunder.
    36. Separate Account DCVL is currently divided into 50 sub-
accounts, 20 of which reflect the investment performance of a 
corresponding series of MIST or Met Series Fund, and 30 of which 
reflect the performance of registered investment companies managed by 
advisers that are not affiliated with Separate Account DCVL (except 
that in some instances, Separate Account DCVL may own more than 5% of 
such investment company).
    37. 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.
    38. Separate Account Thirteen is currently divided into 18 sub-
accounts,

[[Page 19513]]

3 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 Thirteen (except that in some 
instances, Separate Account Thirteen may own more than 5% of such 
investment company).
    39. Separate Account Nineteen serves as a separate account funding 
vehicle for certain Contracts that are exempt from registration under 
Section 4(2) of the Securities Act of 1933 and Regulation D thereunder.
    40. Separate Account Nineteen is currently divided into 1 sub-
account, 0 of which reflects the investment performance of a 
corresponding series of MIST or Met Series Fund, and 1 of which 
reflects the performance of a registered investment company managed by 
an adviser that is not affiliated with Separate Account Nineteen 
(except that in some instances, Separate Account Nineteen may own more 
than 5% of such investment company).
    41. MIST and Met Series Fund are each registered under the Act as 
open-end management investment companies of the series type, and their 
securities are registered under the Securities Act of 1933.
    42. Under the Contracts, the Insurance Companies reserve the right 
to substitute shares of one fund with shares of another.
    43. Each Insurance Company, on its behalf and on behalf of the 
Separate Accounts, proposes to make certain substitutions of shares of 
eighteen funds (the ``Existing Funds'') held in sub-accounts of its 
respective Separate Accounts for certain series (the ``Replacement 
Funds'') of MIST and Met Series Fund. The proposed substitutions are as 
follows: (a) Shares of Lord Abbett Growth and Income Portfolio for 
shares of AIM V.I. Premier Equity Fund, VIP Contrafund, VP Income & 
Growth Fund, Goldman Sachs Growth and Income Fund; (b) shares of 
Neuberger Berman Real Estate Portfolio for shares of AllianceBernstein 
Real Estate Investment Portfolio; (c) shares of Janus Aggressive Growth 
Portfolio for shares of AllianceBernstein Premier Growth Portfolio; (d) 
shares of MFS Research International Portfolio for shares of VP 
International Fund, Putnam VT International Equity Fund; (e) shares of 
MetLife Stock Index Portfolio for shares of Dreyfus Stock Index 
Portfolio; (f) shares of Oppenheimer Capital Appreciation Portfolio for 
shares of MFS Investors Trust Series, Oppenheimer Capital Appreciation 
Fund/VA; (g) shares of Lord Abbett Bond Debenture Portfolio for shares 
of VIP High Income Portfolio, MFS High Income Fund; (h) shares of T. 
Rowe Price Large Cap Growth Portfolio for shares of MFS Research 
Series, MFS Emerging Growth Series; (i) shares of Met/AIM Small Cap 
Growth Portfolio for shares of MFS New Discovery Series; (j) shares of 
PIMCO Total Return Portfolio for shares of Oppenheimer Strategic Bond 
Fund/VA; and (k) shares of Third Avenue Small Cap Value Portfolio for 
shares of SVS Dreman Small Cap Value Portfolio.
    44. The investment objectives, policies and restrictions of the 
Replacement Funds are in each case substantially the same as or 
sufficiently similar to the investment objectives, policies and 
restrictions of the respective Existing Funds. 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. Premier Equity Fund--seeks  Lord Abbett Growth and Income
 to achieve long-term growth of       Portfolio--seeks long-term growth
 capital. Income is a secondary       of capital and income without
 objective. The Fund normally         excessive fluctuation in market
 invests at least 80% of its net      value. The Portfolio normally
 assets in equity securities. The     invests 80% of its net assets in
 Fund may also invest in preferred    equity securities of large (at
 stocks and debt instruments that     least $5 billion of market
 have prospects for growth of         capitalization), seasoned U.S. and
 capital and may invest up to 25%     multinational companies that are
 of its total assets in foreign       believed to be undervalued. The
 securities. The portfolio managers   Portfolio may also invest in
 focus on undervalued equity          foreign securities.
 securities.
VIP Contrafund Portfolio--seeks
 long-term capital appreciation.
 The Portfolio invests primarily in
 common stocks of large companies
 believed to be undervalued. The
 Portfolio may invest in both
 domestic and foreign securities.
VP Income & 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.
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 issuers in emerging
 market countries. The Fund may
 invest up to 35% of its total
 assets in fixed income securities.
AllianceBernstein Real Estate        Neuberger Berman Real Estate
 Investment Portfolio \1\--seeks      Portfolio \1\--seeks total return
 total return from long-term growth   through investment in real estate
 of capital and from income. The      securities, emphasizing both
 Portfolio invests, normally, at      capital appreciation and current
 least 80% of its net assets in       income. The Portfolio invests,
 equity securities of real estate     normally, at least 80% of its
 investment trusts and other real     assets in equity securities of
 estate industry companies. The       real estate investment trusts and
 Portfolio seeks to invest in real    other securities issued by real
 estate companies whose underlying    estate companies. The Portfolio
 portfolios are diversified           may invest up to 20% of its assets
 geographically and by property       in investment grade or non-
 type. The Portfolio may invest up    investment grade (minimum rating
 to 20% of its net assets in          of B) debt securities.
 mortgage-backed securities.

[[Page 19514]]

 
AllianceBernstein Premier Growth     Janus Aggressive Growth Portfolio
 Portfolio \2\--seeks growth of       \2\--seeks long-term growth of
 capital by pursuing aggressive       capital. The Portfolio invests
 investment policies. The Portfolio   primarily in common stocks
 invests primarily in the             selected for their growth
 securities of a small number of      potential. Investments may be made
 U.S. companies. The Portfolio        in companies of any size. The
 looks for companies with superior    Portfolio may invest without limit
 growth prospects. The Portfolio      in foreign securities and up to
 may invest up to 20% of its assets   35% of its assets in high yield/
 in foreign securities and up to      high risk debt securities.
 20% of its assets in convertible
 securities which may be below
 investment grade.
VP International Fund \3\--seeks     MFS Research International
 capital growth. The portfolio        Portfolio3--seeks capital
 managers look for companies with     appreciation. Normally, at least
 earnings and revenue growth. The     65% of the Portfolio's net assets
 Fund's assets will be primarily      are invested in common stocks and
 invested in common stocks            related securities of foreign
 companies in at least three          companies (including up to 25% of
 developed countries (excluding the   its net assets in emerging market
 U.S.).                               issuers) located in at least five
                                      countries. The Portfolio seeks
                                      companies of any size with
                                      favorable growth prospects and
                                      attractive valuations.
Putnam VT International Equity
 Fund--seeks equity capital
 appreciation. The Fund invests
 mainly in common stocks of
 companies outside the U.S. Under
 normal circumstances, at least 80%
 of the Fund's net assets are
 invested in equity securities. The
 Fund invests mainly in mid- and
 large-sized companies, although it
 can invest in companies of any
 size. The Fund emphasizes
 investments in developed
 countries, although it can also
 invest in emerging market
 countries.
Dreyfus Stock Index Portfolio--      MetLife Stock Index Portfolio--
 seeks to match the total return of   seeks to equal the performance of
 the S&P 500 Index. The Fund          the S&P 500 Index. The Portfolio
 generally invests in all 500         purchases the common stocks of all
 securities of the S&P 500 Index      the companies in the S&P 500
 proportion to their weighting in     Index.
 the S&P 500 Index.
MFS Investors Trust Series \4\--     Oppenheimer Capital Appreciation
 seeks mainly to provide long-term    Portfolio \4\--seeks capital
 growth of capital and secondarily    appreciation. The Portfolio mainly
 reasonable current income.           invests in common stocks of growth
 Normally, the Series invests at      companies of any market
 least 65% of its net assets in       capitalization. The Portfolio
 common stocks and related equity     currently focuses on the
 securities. While the Series may     securities of mid-cap and large-
 invest in companies of any size,     cap companies. The Portfolio may
 the Series generally focuses on      also purchase the securities of
 companies with large market          foreign issuers.
 capitalizations believed to have
 substantial growth prospects and
 attractive valuations based on
 current and expected earnings and
 cash flow. The Series will also
 seek to generate gross income
 equal to approximately 90% of the
 dividend yield of the S&P 500
 Index. The Series may invest in
 foreign equity securities.
Oppenheimer Capital Appreciation
 Fund/VA--seeks capital
 appreciation. The Fund invests
 mainly in common stocks of growth
 companies of any market
 capitalization. The Fund currently
 focuses on the securities of mid-
 cap and large-cap domestic
 companies, but buys foreign stocks
 as well.
VIP High Income Portfolio--seeks a   Lord Abbett Bond Debenture
 high level of current income,        Portfolio--seeks to provide high
 while also considering growth of     current income and the opportunity
 capital. The Portfolio normally      for capital appreciation to
 invests primarily in income-         produce a high total return. The
 producing debt securities,           Portfolio normally invests
 preferred stocks and convertible     substantially all of its net
 securities, with an emphasis on      assets in high yield and
 lower-quality debt securities. The   investment grade debt securities.
 Portfolio may invest in domestic     Up to 80% of the Portfolio' total
 and foreign issuers.                 assets may be invested in 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.
MFS High Income Series--seeks high
 current income by investing
 primarily in a managed diversified
 portfolio of fixed income
 securities, some of which may
 involve equity features. Normally,
 the Series invests at least 80% of
 its net assets in high income
 fixed income securities (junk
 bonds). The Series may also invest
 in foreign securities (including
 emerging market securities.)
MFS Emerging Growth Series--seeks    T. Rowe Price Large Cap Growth
 to provide long-term growth of       Portfolio--seeks long-term growth
 capital. Normally the Series         of capital and, secondarily,
 invests at least 65% of its net      dividend income. Normally, the
 assets in common stocks and          Portfolio invests at least 80% of
 related securities of emerging       its assets in the common stocks
 growth companies of any size         and other securities of large
 (currently invests primarily in      capitalization growth companies
 large-cap companies). The Series     (i.e., those within the market
 may invest in foreign securities     capitalization range of the
 including emerging market            Russell 1000 Index). The
 securities.                          investment adviser seeks companies
                                      that have the ability to pay
                                      increasing dividends through
                                      strong cash flow.
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 large cap 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.

[[Page 19515]]

 
MFS New Discovery Series--seeks      Met/AIM Small Cap Growth Portfolio--
 capital appreciation. The Series     seeks long-term growth of capital.
 normally invests at least 65% of     The Portfolio normally invests at
 its net assets in equity             least 80% of its net assets in
 securities of emerging growth        equity related securities of small-
 companies. The Series generally      cap companies. To be a small-cap
 focuses on smaller capitalization    company it will have a market
 companies that have market           capitalization at the time of
 capitalizations within the range     purchase, no larger than the
 of companies in the Russell 2000     largest capitalized company
 Index at the time of purchase. The   included in the Russell 2000
 Series may also invest in foreign    Index. The Portfolio may invest up
 securities.                          to 20% of its net assets in equity
                                      securities of issuers whose
                                      capitalizations are outside the
                                      range of market capitalization of
                                      company included in the Russell
                                      2000 Index, in investment grade
                                      non-convertible debt securities
                                      and U.S.-government securities.
                                      The Portfolio may invest up to 25%
                                      of its total assets in foreign
                                      securities.
Oppenheimer Strategic Bond Fund/VA-- PIMCO Total Return Portfolio--seeks
 seeks a high level of current        maximum total return, consistent
 income principally derived from      with the preservation of capital
 interest on debt securities. The     and prudent investment management.
 Fund invests in debt securities of   The Portfolio normally invests at
 issuers in three market sectors:     least 65% of its assets in a
 foreign governments and companies    diversified portfolio of fixed
 (including emerging market           income instruments of varying
 issuers); U.S. government            maturities. The Portfolio invests
 securities; and lower-grade, high    primarily in investment grade debt
 yield securities of U.S. and         obligations, U.S. government
 foreign companies. The Fund may      securities and commercial paper
 invest in securities of any          and other short-term obligations.
 maturity and may invest without      Up to 20% of the Portfolio's net
 limit in junk bonds.                 assets may be invested in
                                      securities denominated in foreign
                                      currencies and the Portfolio may
                                      invest beyond that limit in U.S.
                                      dollar-denominated securities of
                                      foreign issuers.
SVS Dreman Small Cap Value           Third Avenue Small Cap Value
 Portfolio \5\--seeks long-term       Portfolio \5\--seeks long-term
 capital appreciation. Normally,      capital appreciation. Normally,
 the Portfolio invests at least 80%   the Portfolio, which is non-
 of its net assets in undervalued     diversified, invests at least 80%
 stocks of small U.S. companies,      of its net assets in equity
 which the Portfolio defines as       securities of small companies. The
 companies that are similar in        Portfolio considers a ``small
 market value to those in the         company'' to be one whose market
 Russell 2000 Value Index. The        capitalization is no greater than
 Portfolio may also invest up to      or less than the range of
 20% of its net assets in             capitalizations of companies in
 securities of foreign companies in   the Russell 2000 Index or the S&P
 the form of dollar-denominated       Small Cap 600 Index at the time of
 American Depositary Receipts.        the investment. The Portfolio
                                      seeks to acquire common stocks of
                                      well-financed companies at a
                                      substantial discount to what the
                                      investment adviser believes is
                                      their true value.
------------------------------------------------------------------------
\1\ As of December 31, 2004, neither AllianceBernstein Real Estate
  Investment Portfolio nor Neuberger Berman Real Estate Portfolio had
  any investments in mortgage-backed securities or debt securities
  including in non-investment grade debt securities. Each Portfolio had
  over 92% of its assets invested in real estate investment trusts, with
  the balance in cash or common stock equities.
\2\ With respect to AllianceBernstein Premier Growth Portfolio and Janus
  Aggressive Growth Portfolio, although there is no restriction on Janus
  Aggressive Growth Portfolio's investment in foreign securities,
  normally the Portfolio does not invest more than approximately 20% of
  its assets in foreign securities. With respect to investments in high
  yield/high risk debt securities, neither Portfolio currently invests
  more than a minimal amount in such securities.
\3\ As of December 31, 2004 MFS Research International Portfolio and VP
  International Fund had 2.8% and 0%, respectively, of their assets
  invested in emerging market issuers.
\4\ With respect to MFS Investors Trust Series and Oppenheimer Capital
  Appreciation Portfolio, the S&P 500 Index is the benchmark for both
  Portfolios. Although income is not a stated objective of Oppenheimer
  Capital Appreciation Portfolio, approximately 72% of the Portfolio's
  assets are invested in dividend paying securities. Moreover, at
  December 31, 2003, 14 of the top 25 securities held by Oppenheimer
  Capital Appreciation Portfolio are held by MFS Investors Trust Series.
  Oppenheimer Capital Appreciation Portfolio's current yield as of
  December 31, 2003 was 1.1%. MFS Investors Trust Series' current yield
  as of December 31, 2003 was 1.6%.
\5\ Although Third Avenue Small Cap Value Portfolio is classified as a
  non-diversified fund, its investments are similar to a diversified
  fund. As of December 31, 2004, Third Avenue Small Cap Portfolio's top
  ten holdings amounted to 21.32% of its portfolio with no holding in
  excess of 2.63%. SVS Dream Small Cap Value Portfolio's top ten
  holdings at December 31, 2004 amounted to 18.4% of its portfolio with
  no holding in excess of 3.1%. It is anticipated that the Third Avenue
  Small Cap Value Portfolio will continue to be managed as a diversified
  fund.

    45. The following tables compare the total operating expenses of 
the Existing Fund and the Replacement Fund for each proposed 
substitution. The comparative expenses are based on actual expenses, 
including waivers, for the year ended December 31, 2003. In some cases, 
the expense caps for certain Replacement Funds were decreased effective 
May 1, 2004, and the management fee was reduced effective January 1, 
2005. In such cases the expenses of each Fund as of December 31, 2003, 
have been restated to reflect the expense cap in effect as of May 1, 
2004, or revised management fee, as the case may be. Where a Fund has 
multiple classes of shares involved in the proposed substitution, the 
expenses of each class are presented.

------------------------------------------------------------------------
                                                            Lord Abbett
                                             AIM V.I.       Growth and
                                          Premier Equity      Income
                                          Fund (Class 1)     Portfolio
                                             (percent)       (Class A)
                                                             (percent)
------------------------------------------------------------------------
Management Fee..........................            0.61            0.56
12b-1 Fee...............................  ..............  ..............
Other Expenses..........................            0.24            0.06
Total Expenses..........................            0.85            0.62
Waivers.................................  ..............  ..............
Net Expenses............................            0.85            0.62
------------------------------------------------------------------------


[[Page 19516]]


------------------------------------------------------------------------
                                                               Janus
                                       AllianceBernstein    Aggressive
                                         Premier Growth       Growth
                                        Portfolio (Class     Portfolio
                                          A) (percent)      (Class A) *
                                                             (percent)
------------------------------------------------------------------------
Management Fee.......................              1.00             0.70
12b-1 Fee............................  .................  ..............
Other Expenses.......................              0.05             0.12
Total Expenses.......................              1.05             0.82
Waivers..............................  .................  ..............
Net Expenses.........................              1.05             0.82
------------------------------------------------------------------------
* Restated to reflect lowered management fee.


----------------------------------------------------------------------------------------------------------------
                                                   AllianceBernstein Real Estate   Neuberger Berman Real Estate
                                                       Investment Portfolio                  Portfolio
                                                 ---------------------------------------------------------------
                                                      Class A         Class B         Class A         Class B
                                                     (percent)       (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee..................................            0.90            0.90            0.70            0.70
12b-1 Fee.......................................  ..............            0.25  ..............            0.25
Other Expenses..................................            0.34            0.34            0.41            0.41
Total Expenses..................................            1.24            1.49            1.11            1.36
Waivers.........................................            0.25            0.35            0.21            0.21
Net Expenses....................................            0.89            1.14            0.90            1.15
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
                                                            Lord Abbett
                                            VP Income &     Growth and
                                            Growth Fund       Income
                                             (Class 1)       Portfolio
                                             (percent)       (Class A)
                                                             (percent)
------------------------------------------------------------------------
Management Fee..........................            0.70            0.56
12b-1 Fee...............................  ..............  ..............
Other Expenses..........................  ..............            0.06
Total Expenses..........................            0.70            0.62
Waivers.................................  ..............  ..............
Net Expenses............................            0.70            0.62
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                           MFS Research
                                                VP         International
                                           International     Portfolio
                                          Fund (Class 1)     (Class A)
                                             (percent)       (percent)
------------------------------------------------------------------------
Management Fee..........................            1.33            0.80
12b-1 Fee...............................  ..............  ..............
Other Expenses..........................            0.01            0.31
Total Expenses..........................            1.34            1.11
Waivers.................................  ..............            0.02
Net Expenses............................            1.34            1.09
------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                     Dreyfus Stock Index Fund        MetLife Stock Index Fund
                                                 ---------------------------------------------------------------
                                                      Initial         Service         Class A         Class B
                                                     (percent)       (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee..................................            0.25            0.25            0.25            0.25
12b-1 fee.......................................  ..............            0.25  ..............            0.25
Other Expenses..................................            0.02            0.02            0.06            0.06
Total Expenses..................................            0.27            0.52            0.31            0.56
Waivers.........................................  ..............  ..............  ..............  ..............
Net Expenses....................................            0.27            0.52            0.31            0.56
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                     VIP High Income Portfolio      Lord Abbett Bond Debenture
                                                 --------------------------------           Portfolio *
                                                                                 -------------------------------
                                                      Initial        Service 2        Class A         Class B
                                                     (percent)       (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee..................................            0.58            0.58            0.53            0.53
12b-1 Fee.......................................  ..............            0.25  ..............            0.25
Other Expenses..................................            0.11            0.12            0.07            0.06
Total Expenses..................................            0.69            0.95            0.60            0.84

[[Page 19517]]

 
Waivers.........................................  ..............  ..............  ..............  ..............
Net Expenses....................................            0.69            0.95            0.60            0.84
----------------------------------------------------------------------------------------------------------------
* Restated to reflect lowered management fee.


------------------------------------------------------------------------
                                          VIP Contrafund    Lord Abbett
                                             Portfolio      Growth and
                                             (Initial)     Income (Class
                                             (percent)     A) (percent)
------------------------------------------------------------------------
Management Fee..........................            0.58            0.56
12b-1 Fee...............................  ..............  ..............
Other Expenses..........................            0.09            0.06
Total Expenses..........................            0.67            0.62
Waivers.................................  ..............  ..............
Net Expenses............................            0.67            0.62
------------------------------------------------------------------------


------------------------------------------------------------------------
                                           Goldman Sachs    Lord Abbett
                                            Growth and      Growth and
                                            Income Fund    Income (Class
                                             (percent)     A) (percent)
------------------------------------------------------------------------
Management Fee..........................            0.75            0.56
12b-1 Fee...............................  ..............  ..............
Other Expenses..........................            0.45            0.06
Total Expenses..........................            1.20            0.62
Waivers.................................            0.30  ..............
Net Expenses............................            0.90            0.62
------------------------------------------------------------------------


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   MFS High Income Series                    Lord Abbett Bond Debenture Portfolio *
                                                     ---------------------------------------------------------------------------------------------------
                                                         Initial (percent)        Service (percent)        Class A (percent)        Class B (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Management Fee......................................                     0.75                     0.75                     0.53                     0.53
12b-1 Fee...........................................  .......................                     0.25  .......................                     0.25
Other Expenses......................................                     0.15                     0.15                     0.07                     0.06
Total Expenses......................................                     0.90                     1.15                     0.60                     0.84
Waivers.............................................  .......................  .......................  .......................  .......................
Net Expenses........................................                     0.90                     1.15                     0.60                     0.84
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Restated to reflect lowered management fee.


------------------------------------------------------------------------
                                                           T. Rowe Price
                                           MFS Emerging      Large Cap
                                           Growth Series      Growth
                                             (Initial)       Portfolio
                                             (percent)       (Class A)
                                                             (percent)
------------------------------------------------------------------------
Management Fee..........................            0.75            0.63
12b-1 Fee...............................  ..............  ..............
Other Expenses..........................            0.12            0.16
Total Expenses..........................            0.87            0.79
Waivers.................................  ..............  ..............
Net Expenses............................            0.87            0.79
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                           T. Rowe Price
                                           MFS Research      Large Cap
                                              Series          Growth
                                             (Initial)       Portfolio
                                             (Percent)       (Class A)
                                                             (Percent)
------------------------------------------------------------------------
Management Fee..........................            0.75            0.63
12b-1 Fee...............................  ..............  ..............
Other Expenses..........................            0.12            0.16
Total Expenses..........................            0.87            0.79
Waivers.................................  ..............  ..............
Net Expenses............................            0.87            0.79
------------------------------------------------------------------------


[[Page 19518]]


----------------------------------------------------------------------------------------------------------------
                                                     MFS New Discovery Series        Met/AIM Small Cap Growth
                                                 --------------------------------            Portfolio
                                                                                 -------------------------------
                                                      Initial         Service         Class A         Class B
                                                     (Percent)       (Percent)       (Percent)       (Percent)
----------------------------------------------------------------------------------------------------------------
Management Fee..................................            0.90            0.90            0.90            0.90
12b-1 Fee.......................................  ..............            0.25  ..............            0.25
Other Expenses..................................            0.14            0.14            0.26            0.21
Total Expenses..................................            1.04            1.29            1.16            1.36
Waivers.........................................  ..............  ..............            0.12            0.06
Net Expenses....................................            1.04            1.29            1.04            1.30
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
                                                            Oppenheimer
                                           MFS Investors      Capital
                                           Trust Series    Appreciation
                                             (Initial)       Portfolio
                                             (Percent)       (Class A)
                                                             (Percent)
------------------------------------------------------------------------
Management Fee..........................            0.75            0.63
12b-1 Fee...............................  ..............  ..............
Other Expenses..........................            0.12            0.12
Total Expenses..........................            0.87            0.75
Waivers.................................  ..............            0.03
Net Expenses............................            0.87            0.72
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                            PIMCO Total
                                            Oppenheimer       Return
                                          Strategic Bond     Portfolio
                                          Fund/VA (Class     (Class A)
                                           A) (percent)      (percent)
------------------------------------------------------------------------
Management Fee..........................            0.72            0.50
12b-1 Fee...............................  ..............  ..............
Other Expenses..........................            0.05            0.09
Total Expenses..........................            0.77            0.57
Waivers.................................            0.02  ..............
Net Expenses............................            0.75            0.59
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                            Oppenheimer
                                            Oppenheimer       Capital
                                              Capital      Appreciation
                                           Appreciation      Portfolio
                                          Fund/VA (Class     (Class A)
                                           A) (Percent)      (Percent)
------------------------------------------------------------------------
Management Fee..........................            0.65            0.63
12b-1 Fee...............................  ..............  ..............
Other Expenses..........................            0.02            0.12
Total Expenses..........................            0.67            0.75
Waivers.................................  ..............            0.03
Net Expenses............................            0.67            0.72
------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                  Putnam VT International Equity    MFS Research International
                                                               Fund                          Portfolio
                                                 ---------------------------------------------------------------
                                                      Class A         Class B         Class A         Class B
                                                     (Percent)       (Percent)       (Percent)       (Percent)
----------------------------------------------------------------------------------------------------------------
Management Fee..................................            0.80            0.80            0.80            0.80
12b-1 Fee.......................................  ..............           0.25%  ..............            0.25
Other Expenses..................................            0.22            0.22            0.31            0.34
Total Expenses..................................            1.02            1.27            1.11            1.39
Waivers.........................................  ..............  ..............            0.02            0.06
Net Expenses....................................            1.02            1.27            1.09            1.33
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                    SVS Dreman Small Cap Value     Third Avenue Small Cap Value
                                                             Portfolio                       Portfolio
                                                 ---------------------------------------------------------------
                                                      Class A         Class B         Class A         Class B
                                                     (Percent)       (Percent)       (Percent)       (Percent)
----------------------------------------------------------------------------------------------------------------
Management Fee..................................            0.75            0.75            0.75            0.75
12b-1 Fee.......................................  ..............            0.25  ..............            0.25
Other Expenses..................................            0.05            0.19            0.18            0.18
Total Expenses..................................            0.80            1.19            0.93            1.18

[[Page 19519]]

 
Waivers.........................................  ..............  ..............  ..............  ..............
Net Expenses....................................            0.80            1.19            0.93            1.18
----------------------------------------------------------------------------------------------------------------

    46. Met Advisers, LLC or Met Investors Advisory, LLC is the adviser 
of each of the Replacement Funds. Each Replacement Fund currently 
offers up to three classes of shares, two of which, Class A and Class 
B, are involved in the substitutions. No Rule 12b-1 Plan has been 
adopted for any Replacement Fund's Class A shares. Each Replacement 
Fund's Class B shares has adopted a Rule 12b-1 distribution plan 
whereby up to 0.50% of a Fund's assets attributable to its Class B 
shares may be used to finance the distribution of the Fund's shares. 
Currently, payments under the plan are limited to 0.25% for Class B 
shares.
    47. Met Investors Advisory, LLC has entered into agreement with 
MIST whereby, for the period ended April 30, 2006, 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:

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Met/AIM Small Cap Growth Portfolio...........................       1.05
Third Avenue Small Cap Value Portfolio.......................       0.95
MFS Research International Portfolio.........................       1.00
Oppenheimer Capital Appreciation Portfolio...................       0.75
Janus Aggressive Growth Portfolio............................       0.90
Neuberger Berman Real Estate Portfolio.......................       0.90
------------------------------------------------------------------------

    48. The annuity contracts are 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 without 
limitation. 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 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. Any transfer 
limits will be suspended in connection with the substitutions.
    49. 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. Generally, for Contracts that are exempt from 
registration under Section 4(2) of the Securities Act of 1933, there is 
no 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 end and to impose a $25 charge on transfers in excess of 12 per 
year or on any transfer. Under the policies, the Insurance Companies 
reserve the right to impose additional restrictions on transfers. All 
transfer limits will be suspended in connection with the substitutions.
    50. 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.
    51. In addition, there will be significant savings to Contract 
owners because certain costs, such as the costs of printing and mailing 
lengthy periodic reports and prospectuses for the Existing Funds will 
be substantially reduced. Further, many of the Existing Funds are 
smaller than their respective Replacement Funds. As a result, 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. 
(More detailed information regarding the amount of each Fund's assets 
can be found in the Application).
    52. In addition, Contract owners with sub-account balances invested 
in shares of the Replacement Funds will, except as follows, have a 
lower total expense ratios taking into account fund expenses (including 
Rule 12b-1 fees, if any) and current fee waivers. In the following 
substitutions, the total operating expense ratios of the Replacement 
Funds are higher because expenses, other than the management fee, are 
somewhat higher.
     AllianceBernstein Real Estate Investment Portfolio/
Neuberger Berman Real Estate Portfolio--total expenses of Class A and 
Class B shares are 1 basis point higher than those of AllianceBernstein 
Real Estate Investment Portfolio;
     Dreyfus Stock Index Fund/MetLife Stock Index Portfolio--
total expenses of Class A and Class B shares are 4 basis points higher 
than those of Dreyfus Stock Index Fund;

[[Page 19520]]

     MFS New Discovery Series/Met/AIM Small Cap Growth 
Portfolio--total expenses of Class B shares are 1 basis point higher 
than those of MFS New Discovery Series--Class A expenses are the same;
     Oppenheimer Capital Appreciation Portfolio/VA/Oppenheimer 
Capital Appreciation Portfolio--total expenses of Class A and Class B 
shares are 5 basis points higher than those of Oppenheimer Capital 
Appreciation Portfolio/VA;
     Putnam VT International Equity Fund/MFS Research 
International Portfolio--total expenses of Class A and Class B shares 
are 7 basis points and 6 basis points, respectively, higher than those 
of Putnam VT International Equity Fund; and
     SVS Dreman Small Cap Value Portfolio/Third Avenue Small 
Cap Value Portfolio--total expenses of Class A and Class B shares are 
13 basis points higher than those of SVS Dreman Small Cap Value 
Portfolio--Class B expenses of Third Avenue Small Cap Value are lower.
    Except as stated above for Contract owners with account balances in 
certain classes of 6 of the 18 funds involved in the substitutions, the 
substitutions will result in decreased expense ratios (ranging from 1 
basis point to 31 basis points). Moreover, there will be no increase in 
Contract fees and expenses, including mortality and expense risk fees 
and administration and distribution fees charged to the Separate 
Accounts as a result of the substitutions.
    53. 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:

    AllianceBerstein Real Estate Investment Portfolio can be raised 
by the Board 0.50%; Putnam VT International Equity Fund can be 
raised by the 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 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 Real Estate Investment Portfolio/Neuberger Berman 
Real Estate Portfolio--0.50%; Putnam VT International Equity Fund/MFS 
Research International Portfolio--0.35%.
    54. 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 (or their equivalent) shares sold to the Separate Accounts and, for 
Class B (or their equivalent) shares, 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, 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. These amounts from investment advisory fees may be more or 
less than the fees being paid by the Existing Funds.
    55. 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).
    56. 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 change. The supplement also will inform 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.
    57. 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.
    58. 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.
    59. 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). If an 
Existing Fund has not adopted the appropriate procedures set forth in 
Signature, redemptions will be in cash. In light of this fact, the 
Section 17 Applicants are not requesting relief with respect to those 
in-kind redemptions.
    60. 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

[[Page 19521]]

remaining permissible transfers in a Contract year.
    61. In addition to the prospectus supplements distributed to owners 
of Contracts, within five business days after the proposed 
substitutions are completed, Contract owners will be sent a written 
notice informing them that the substitutions were carried out and that 
they may make one transfer of all Contract value or cash value under a 
Contract invested in any one of the sub-accounts on the date of the 
notice to another sub-account available under their Contract at no cost 
and without regard to the usual limit on the frequency of transfers 
from the variable account options to the fixed account options. The 
notice will also reiterate that 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 to the extent that they have not previously received a 
copy.
    62. The Substitution Applicants agree that, to the extent that the 
annualized expenses of each Replacement Fund exceeds, for each fiscal 
period (such period being less than 90 days) during the twenty-four 
months following the substitutions, the 2003 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 
2003 fiscal year.
    63. 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 on 
the date of the substitutions for a period of two years from the date 
of the substitutions.

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. 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 the Contracts and the Separate Accounts contain 
appropriate disclosure of this right.
    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 with respect to each 
proposed substitution, the Replacement Fund will have the same or lower 
management fee and current 12b-1 fee. In addition, Contract owners with 
balances invested in the Replacement Fund will have, taking into effect 
any applicable expense waivers, a lower expense ratio in many cases 
and, for others, a similar expense ratio. However, the Substitution 
Applicants propose to limit Contract charges attributable to Contract 
value invested in the Replacement Funds following the proposed 
substitutions, to a rate that would offset the expense ratio difference 
between the Existing Funds' 2003 net expense ratios and the net expense 
ratios for the Replacement Funds. 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 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 which 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

[[Page 19522]]

substitutions, therefore, will not result in the type of costly forced 
redemption which Section 26(c) was designed to prevent.
    9. The Substitution Applicants assert that the proposed 
substitutions also are unlike the type of substitution which 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 
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

[[Page 19523]]

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 purchases.

Conclusion

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

    For the Commission, by the Division of Investment Management 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1737 Filed 4-12-05; 8:45 am]
BILLING CODE 8010-01-P