[Federal Register Volume 72, Number 201 (Thursday, October 18, 2007)]
[Notices]
[Pages 59118-59123]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-20542]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-28013; File No. 812-13380]


MetLife Insurance Company of Connecticut, et al.

October 12, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').

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

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Summary of Application: The Substitution Applicants (defined below) 
request an order to permit certain unit investment trusts to 
substitute: (a) Shares of MetLife Investment Large Company Stock Fund 
for shares of MetLife Stock Index Portfolio; (b) shares of MetLife 
Investment Small Company Stock Fund for shares of Russell 2000 Index 
Portfolio; (c) shares of MetLife Investments International Stock Fund 
for shares of Morgan Stanley EAFE Index Portfolio; and (d) shares of 
MetLife Investment Diversified Bond Fund for shares of Lehman Brothers 
Aggregate Bond Index Portfolio. The shares are currently held by 
certain unit investment trusts to fund certain group and individual 
variable annuity contracts and variable life insurance policies 
(collectively, the ``Contracts'') issued by the Insurance Companies 
(defined below). The Applicants also hereby apply for an order of 
exemption pursuant to section 17(b) of the Act from section 17(a) of 
the Act to permit the Insurance Companies to carry out certain 
substitutions.

Applicants: The MetLife Insurance Company of Connecticut (``MetLife of 
CT''), MetLife Life and Annuity Company of Connecticut (``MetLife 
LAN''), MetLife Investment Funds, Inc. (``MLIF'') and Metropolitan 
Series Fund, Inc. (``Met Series Fund'') (MLIF and Met Series Fund are 
referred to as the ``Investment Companies'' and Metlife of CT and 
Metlife LAN are referred to as the ``Insurance Companies''), and 
MetLife of CT Separate Account Five for Variable Annuities (``Separate 
Account Five''), MetLife of CT Separate Account Six for Variable 
Annuities (``Separate Account Six''), MetLife of CT Fund U for Variable 
Annuities (``Fund U''), MetLife of CT Separate Account QP for Variable 
Annuities (``Separate Account QP''), MetLife of CT Separate Account QPN 
for Variable Annuities (``Separate Account QPN''), MetLife of CT Fund 
UL

[[Page 59119]]

II for Variable Life Insurance (``Fund UL II''), and MetLife of CT Fund 
UL for Variable Life Insurance (``Fund UL ``), (together with Separate 
Account Five, Separate Account Six, Fund U, Separate Account QP, 
Separate Account QPN, Fund UL II, and Fund UL, the ``Separate 
Accounts''). The Insurance Companies and the Separate Accounts are 
referred to herein collectively as the ``Substitution Applicants.'' The 
Insurance Companies, the Separate Accounts and the Investment Companies 
are referred to herein collectively as the ``Applicants.''

Filing Date: The application was filed on April 26, 2007 and amended 
and restated on October 11, 2007.

Hearing of 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 the Secretary of the 
Commission and serving Applicants with a copy of the request personally 
by mail. Hearing requests should be received by the Commission by 5:30 
p.m. on November 6, 2007 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 reasons for the request and the issue contested. Persons 
may request notification of a hearing by writing to the Secretary of 
the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549. Applicants: Curtis A. Young, Senior 
Counsel--Securities Products and Regulation, MetLife Group, One MetLife 
Plaza, 27-01 Queens Plaza North, Long Island City, NY 11101.

FOR FURTHER INFORMATION CONTACT: Alison White, Senior Counsel, or Joyce 
M. Pickholz, Branch Chief, Office of Insurance Products, Division of 
Investment Management, at (202) 551-6795.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the Public Reference Branch of the Commission, 100 F Street, NE., 
Washington, DC 20549, (tel. (202-551-8090).

Applicant's Representations

    1. MetLife of CT, formerly known as The Travelers Insurance 
Company, is a stock life insurance company organized in 1863 under the 
laws of Connecticut. MetLife of CT is a wholly-owned subsidiary of 
MetLife, Inc. (``MetLife'') MetLife of CT's principal place of business 
is located at One Cityplace, Hartford, Connecticut 06103. For purposes 
of the Act, MetLife of CT is the depositor and sponsor of Separate 
Account Five, Fund U, Separate Account QP, Separate Account QPN and 
Fund UL.
    2. MetLife LAN, formerly known as The Travelers Life and Annuity 
Company, is a stock life insurance company organized in 1973 under the 
laws of Connecticut. MetLife LAN is an indirect wholly-owned subsidiary 
of MetLife, Inc. MetLife LAN's principal place of business is located 
at One Cityplace, Hartford, Connecticut 06103. For purposes of the Act, 
MetLife LAN is the depositor and sponsor of Separate Account Six and 
Fund UL II.
    3. Separate Account Five, Separate Account Six, Fund U, Separate 
Account QP, Fund UL II, and Fund UL are registered under the Act as 
unit investment trusts for the purpose of funding the Contracts. 
Security interests under the Contracts have been registered under the 
Securities Act of 1933.
    4. Separate Account QPN is exempt from registration under the Act. 
Security interests under the Contracts have been registered under the 
Securities Act of 1933.
    5. MLIF and Met Series Fund are each registered under the Act as 
open-end management investment companies of the series type, and their 
securities are registered under the Securities Act of 1933. MetLife 
Investment Funds Management LLC, an affiliate of MetLife, serves as 
investment adviser to MLIF. MetLife Advisers, LLC, an affiliate of 
MetLife, serves as investment adviser to the Met Series Fund.
    6. The Contracts permit the Insurance Companies to substitute 
shares of one fund with shares of another, including a fund of a 
different registered investment company.
    7. Each Insurance Company, on its behalf and on behalf of the 
Separate Accounts, proposes to make certain substitutions of shares of 
four funds of MLIF (the ``Existing Funds'') held in sub-accounts of its 
respective Separate Accounts for certain series (the ``Replacement 
Funds'') of the Met Series Fund.
    8. Set forth below are the fees and expenses of each Existing Fund 
and its corresponding Replacement Fund, as well as a description of 
each fund's investment objectives and principal investment policies. 
Additional information including asset sizes, risk factors, and 
comparable performance history for each Existing Fund and Replacement 
Fund can be found in the application.
    9. MetLife Investment Large Company Stock Fund--MetLife Stock Index 
Portfolio: The MetLife Investment Large Company Stock Fund seeks 
maximum long-term total return by investing primarily in common stocks 
of well-established companies. The MetLife Stock Index Portfolio seeks 
to equal the performance of the S&P 500 Index. The Fund purchases the 
common stocks of all the companies in the S&P Index.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Acquired fund
                                                        Management     Distribution     Other        fees and      Total annual    Expense    Net annual
                                                           fees        (12b-1) fees    expenses      expenses        expenses      waivers     expenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Existing Fund--MetLife Investment Large Company                 .52%  ..............       .11%  ...............            .63%  .........         .63%
 Stock Fund.........................................
Replacement Fund--MetLife Stock Index Portfolio.....            .25%  ..............       .05%  ...............            .30%       .01%         .29%
--------------------------------------------------------------------------------------------------------------------------------------------------------

    10. MetLife Investment Small Company Stock Fund--Russell 
2000[supreg] Index Portfolio: The MetLife Investment Small Company 
Stock Fund seeks maximum long-term total return by investing primarily 
in common stocks of small companies. The Russell 2000[supreg] Index 
Portfolio seeks to equal the return of the Russell 2000 Index. The Fund 
invests in a statistically selected sample of the 2000 stocks included 
in the Index.

[[Page 59120]]



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                                                                                                  Acquired fund
                                                        Management     Distribution     Other        fees and      Total annual    Expense    Net annual
                                                           fees        (12b-1) fees    expenses      expenses        expenses      waivers     expenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Existing Fund--MetLife Investment Small Company                 .64%  ..............       .14%  ...............            .78%  .........         .78%
 Stock Fund.........................................
Replacement Fund--Russell 2000 Index Portfolio......            .25%  ..............       .09%             .02%            .36%       .01%         .35%
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    11. MetLife Investment International Stock Fund--Morgan Stanley 
EAFE Index Portfolio: The MetLife Investment International Stock Fund 
seeks maximum long-term total return by investing primarily in common 
stocks of established non-U.S. companies. The Morgan Stanley EAFE Index 
Portfolio seeks to equal the performance of the MSCI EAFE Index. The 
Fund invests in a statistically selected sample of the 1000 stocks 
included in the Index.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Acquired fund
                                                        Management     Distribution     Other        fees and      Total annual    Expense    Net annual
                                                           fees        (12b-1) fees    expenses      expenses        expenses      waivers     expenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Existing Fund--MetLife Investment International                 .73%  ..............       .20%  ...............            .93%  .........         .93%
 Stock Fund.........................................
Replacement Fund--Morgan Stanley EAFE Index                     .30%  ..............       .13%             .02%             .01  .........         .44%
 Portfolio..........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    12. MetLife Investment Diversified Bond Fund--Lehman 
Brothers[supreg] Aggregate Bond Index Portfolio: The MetLife Investment 
Diversified Bond Fund seeks maximum long-term total return by investing 
primarily in fixed income securities. The Lehman Brothers[reg] 
Aggregate Bond Index Portfolio seeks to equal the performance of the 
Lehman Brothers Aggregate Bond Index and invests in a sampling of bonds 
included in the Index.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Acquired fund
                                                        Management     Distribution     Other        fees and      Total annual    Expense    Net annual
                                                           fees        (12b-1) fees    expenses      expenses        expenses      waivers     expenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Existing Fund--MetLife Investment Diversified Bond              .41%  ..............       .09%  ...............            .50%  .........         .50%
 Fund...............................................
Replacement Fund--Lehman Brothers[supreg] Aggregate             .25%  ..............       .06%  ...............            .31%        .01         .30%
 Bond Index Portfolio...............................
--------------------------------------------------------------------------------------------------------------------------------------------------------

Applicant's Legal Analysis

    1. The Substitution Applicants request that the Commission issue an 
order pursuant to section 26(c) of the Act approving the proposed 
substitutions.
    2. The Contracts permit the applicable Insurance Company, subject 
to compliance with applicable law, to substitute shares of another 
investment company for shares of an investment company held by a sub-
account of the Separate Accounts. The prospectuses for the Contracts 
and the Separate Accounts contain appropriate disclosure of this right.
    3. 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. In addition, the Existing Funds are not being offered for new 
sales, and are not available as new investment options under Contracts 
previously or currently offered by the Insurance Companies or, if 
available, are not available for additional contributions and/or 
transfers from other investment options under Contracts.
    4. The Substitution Applicants submit there is little likelihood 
that significant additional assets, if any, will be allocated to the 
Existing Funds and, therefore, because of the cost of maintaining such 
Funds as investment options under the Contracts, it is in the interest 
of shareholders to substitute the applicable Replacement Funds which 
are currently being offered as investment options by the Insurance 
Companies.
    5. Applicants submit that because the Replacement Funds are managed 
as index funds or managed to replicate the return of an index, each 
Replacement Fund has lower management fees and lower total operating 
expenses than the corresponding Existing Fund. Contract owners with 
balances invested in the Replacement Fund will therefore have a lower 
expense ratio. However, the Substitution Applicants 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.
    6. The substitution will not negatively impact the ability of 
contract owners to choose from a variety of funds available in the 
products. Of all the variable products affected by this substitution, 
the minimum number of funds currently available in any product before 
the substitution is 23, and after the substitution the minimum number 
available will be 22 funds (of the four Replacement Funds, one is 
already available in this product, leading to a decrease of one in the 
number of available funds).
    7. The Substitution Applicants assert that the replacement of the 
Existing Funds with the Replacement Funds is consistent with the 
protection of Contract owners and the purposes fairly intended by the 
policies and provisions of the Act.
    8. The Substitution Applicants represent that by disclosure in the 
prospectuses for the variable annuity

[[Page 59121]]

Contracts, and supplements to the prospectuses for the life insurance 
Contracts, 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, to substitute shares 
of the funds as described herein.
    9. The disclosure in the prospectuses and the prospectus 
supplements will advise Contract owners that from the date of the 
prospectuses and the supplements until the date of the proposed 
substitution, owners are permitted to make one transfer of Contract 
value (or annuity unit exchange) out of the Existing Fund sub-account 
to one or more other sub-accounts without the transfer (or exchange) 
being treated as one of a limited number of permitted transfers (or 
exchanges) or a limited numbers of transfers (or exchanges) permitted 
without a transfer charge.
    10. The disclosure in the prospectuses and the prospectus 
supplements also will inform Contract owners that the Insurance Company 
will not exercise any rights reserved under any Contract to impose 
additional restrictions on transfers until at least 30 days after the 
proposed substitutions.
    11. The disclosure in the prospectuses and the prospectus 
supplements will also advise Contract owners that for at least 30 days 
following the proposed substitutions, the Insurance Companies will 
permit Contract owners affected by the substitutions to make one 
transfer of Contract value (or annuity unit exchange) out of the 
Replacement Fund sub-account to one or more other sub-accounts without 
the transfer (or exchange) being treated as one of a limited number of 
permitted transfers (or exchanges) or a limited number of transfers (or 
exchanges) permitted without a transfer charge. Other than the 
restrictions concerning market timing/excessive trading, as disclosed 
in the prospectuses, the Contracts currently permit transfers of all or 
part of contract value between the variable funding options at any 
time.
    12. 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.
    13. The process for accomplishing the transfer of assets from each 
Existing Fund to its corresponding Replacement Fund will be determined 
on a case-by-case basis. In most cases, it is expected that the 
substitutions will be effected by redeeming shares of an Existing Fund 
for cash and using the cash to purchase shares of the Replacement Fund. 
In certain other cases, it is expected that the substitutions will be 
effected by redeeming the shares of an Existing Fund in-kind; those 
assets will then be contributed in-kind to the corresponding 
Replacement Fund to purchase shares of that Fund.
    14. Contract owners will not incur any fees or charges as a result 
of the proposed substitutions, nor will their rights or an Insurance 
Company's obligations under the Contracts be altered in any way. All 
expenses incurred in connection with the proposed substitutions, 
including brokerage, legal, accounting, and other fees and expenses, 
will be paid by the Insurance Companies. In addition, the proposed 
substitutions will not impose any tax liability on Contract owners. The 
proposed substitutions will not cause the Contract fees and charges 
currently being paid by existing Contract owners to be greater after 
the proposed substitutions than before the proposed substitutions. No 
fees will be charged on the transfers made at the time of the proposed 
substitutions because the proposed substitutions will not be treated as 
a transfer for the purpose of assessing transfer charges or for 
determining the number of remaining permissible transfers in a Contract 
year.
    15. In addition to the prospectuses and prospectus supplements 
distributed to owners of Contracts, within five business days after the 
proposed substitutions are completed, Contract owners will be sent a 
written notice informing them that the substitutions were carried out 
and that they may make one transfer of all Contract value or cash value 
under a Contract invested in any one of the sub-accounts on the date of 
the notice to one or more other sub-accounts available under their 
Contract at no cost and without regard to the usual limit on the 
frequency of transfers from the variable account options to the fixed 
account options. The notice will also reiterate that (other than with 
respect to ``market timing'' activity) the Insurance Company will not 
exercise any rights reserved by it under the Contracts to impose 
additional restrictions on transfers or to impose any charges on 
transfers until at least 30 days after the proposed substitutions.
    16. 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.
    17. Each Insurance Company also is seeking approval of the proposed 
substitutions from any state insurance regulators whose approval may be 
necessary or appropriate.
    18. The Substitution Applicants agree that for those who were 
Contract owners on the date of the proposed substitutions, the 
Insurance Companies will reimburse, on the last business day of each 
fiscal period (not to exceed a fiscal quarter) during the twenty-four 
months following the date of the proposed substitutions, those Contract 
Owners whose subaccount invests in the Replacement Fund such that the 
sum of the Replacement Fund's operating expenses (taking into account 
fee waivers and expense reimbursements) and subaccount expenses (asset-
based fees and charges deducted on a daily basis from subaccount assets 
and reflected in the calculation of subaccount unit values) for such 
period will not exceed, on an annualized basis, the sum of the Existing 
Fund's operating expenses (taking into account fee waivers and expense 
reimbursements) and subaccount expenses for fiscal year 2006.
    19. The Applicants request an order under section 17(b) exempting 
them from the provisions of section 17(a) to the extent necessary to 
permit the Insurance Companies to carry out each of the proposed 
substitutions.
    20. 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.
    21. 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 MLIF and Met Series Fund. Therefore, MLIF 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 MLIF 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 MLIF and Met Series Fund and their respective 
funds. If MLIF and Met Series Fund and their respective funds are under 
the control of

[[Page 59122]]

the Insurance Companies, then MLIF and Met Series Fund and their 
respective funds are affiliated persons of the Insurance Companies.
    22. Regardless of whether or not the Insurance Companies can be 
considered to control MLIF 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 
Existing Fund's and Replacement Fund's investment adviser, the 
Insurance Companies are affiliated persons of both MLIF and Met Series 
Fund and their respective funds. Likewise, their respective funds are 
each an affiliated person of the Insurance Companies.
    23. 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 certain of the Existing Funds listed above, and 
the Insurance Companies and the Replacement Funds, could be viewed as 
affiliated persons of one another under section 2(a)(3) of the Act, it 
is conceivable that this aspect of the substitutions could be viewed as 
being prohibited by section 17(a).
    24. Section 17(b) of the Act provides that the Commission may, upon 
application, grant an order exempting any transaction from the 
prohibitions of section 17(a) if the evidence establishes that:
    (a) The terms of the proposed transaction, including the 
consideration to be paid or received, are reasonable and fair and do 
not involve overreaching on the part of any person concerned;
    (b) the proposed transaction is consistent with the policy of each 
registered investment company concerned, as recited in its registration 
statement and records filed under the Act; and (c) the proposed 
transaction is consistent with the general purposes of the Act.
    25. The Applicants submit that for all the reasons described herein 
the terms of the proposed in-kind redemptions of shares of the Existing 
Funds and in-kind purchases of shares of the Replacement Funds by the 
Insurance Companies, including the consideration to be paid and 
received, are reasonable and fair and do not involve overreaching on 
the part of any person concerned. The Applicants also submit that the 
proposed in-kind redemptions and purchases by the Insurance Companies 
are consistent with the policies of MLIF and the Met Series Fund. 
Finally, the Applicants submit that the proposed substitutions are 
consistent with the general purposes of the Act.
    26. To the extent that the in-kind redemptions by the Insurance 
Companies of the Existing Funds' shares and in-kind purchases by the 
Insurance Companies of the Replacement Funds' shares are deemed to 
involve principal transactions among affiliated persons, the procedures 
described below should be sufficient to assure that the terms of the 
proposed transactions are reasonable and fair to all participants. The 
Applicants maintain that the terms of the proposed in-kind redemption 
and purchase transactions, including the consideration to be paid and 
received by each fund involved, are reasonable, fair and do not involve 
overreaching principally because the transactions will conform with all 
but one of the conditions enumerated in Rule 17a-7. The proposed 
transactions will take place at relative net asset value in conformity 
with the requirements of section 22(c) of the Act and Rule 22c-1 
thereunder with no change in the amount of any Contract owner's 
contract value or death benefit or in the dollar value of his or her 
investment in any of the Separate Accounts. Contract owners will not 
suffer any adverse tax consequences as a result of the substitutions. 
The fees and charges under the Contracts will not increase because of 
the substitutions. Even though the Separate Accounts, the Insurance 
Companies, MLIF and Met Series Fund may not rely on Rule 17a-7, the 
Applicants believe that the Rule's conditions outline the type of 
safeguards that result in transactions that are fair and reasonable to 
registered investment company participants and preclude overreaching in 
connection with an investment company by its affiliated persons. In 
addition, any in-kind redemptions will only be made in accordance with 
the conditions set out in the Signature Financial Group no-action 
letter (December 29, 1999).
    27. The boards of MLIF 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 Applicants will carry out the proposed Insurance 
Company in-kind redemptions and purchases in conformity with all of the 
conditions of Rule 17a-7 and each series' procedures thereunder, except 
that the consideration paid for the securities being purchased or sold 
may not be entirely cash. Nevertheless, the circumstances surrounding 
the proposed substitutions will be such as to offer the same degree of 
protection to each Existing Fund and Replacement Fund from overreaching 
that Rule 17a-7 provides to them generally in connection with their 
purchase and sale of securities under that Rule in the ordinary course 
of their business. In particular, the Insurance Companies (or any of 
their affiliates) cannot effect the proposed transactions at a price 
that is disadvantageous to any of the Existing Funds or 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 Existing Fund and 
corresponding Replacement Fund 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 in kind purchase transactions.
    28. The sale of shares of Replacement Funds for portfolio 
securities, as contemplated by the proposed Insurance Company in-kind 
purchases, will be consistent with the investment policies and 
restrictions of the Replacement Funds because (1) the shares will be 
sold at their net asset value, and (2) the portfolio securities will be 
of the type and quality that the Replacement Funds would each have 
acquired with the proceeds from share sales had the shares been sold 
for cash. To assure that the second of these conditions is met, MetLife 
Advisers, LLC and the subadviser, as applicable, will examine the 
portfolio securities being offered to each Replacement Fund and accept 
only those securities as consideration for shares that it would have 
acquired for each such fund in a cash transaction.
    29. The Applicants submit that the proposed Insurance Company in-
kind redemptions and 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.

[[Page 59123]]

    30. The Applicants request that the Commission issue an order 
pursuant to section 17(b) of the Act exempting the Separate Accounts, 
the Insurance Companies, MLIF, Met Series Fund and each Replacement 
Fund from the provisions of section 17(a) of the Act to the extent 
necessary to permit the Insurance Companies on behalf of the Separate 
Accounts to carry out, as part of the substitutions, the in-kind 
redemption and purchase of shares of the Existing Fund and Replacement 
Funds which may be deemed to be prohibited by section 17(a) of the Act.
    31. The Applicants represent that the proposed in-kind redemptions 
and purchases meet all of the requirements of section 17(b) of the Act 
and that an exemption should be granted, to the extent necessary, from 
the provisions of section 17(a).

Conclusion

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

    For the Commission, by the Division of Investment Management 
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-20542 Filed 10-17-07; 8:45 am]
BILLING CODE 8011-01-P