MONY Life Insurance Company of America, et al., 61086-61111 [E6-17236]

Download as PDF 61086 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices OFFICE OF PERSONNEL MANAGEMENT Census figures on State resident populations. Federal Employees Health Benefits Program:Medically Underserved Areas for 2007 Office of Personnel Management. Linda M. Springer, Director. [FR Doc. E6–17161 Filed 10–16–06; 8:45 am] Office of Personnel Management. ACTION: Notice of medically underserved areas for 2007. bajohnson on PROD1PC69 with NOTICES AGENCY: SUMMARY: The Office of Personnel Management (OPM) has completed its annual determination of the States that qualify as Medically Underserved Areas under the Federal Employees Health Benefits (FEHB) Program for calendar year 2007. This is necessary to comply with a provision of the FEHB law that mandates special consideration for enrollees of certain FEHB plans who receive covered health services in States with critical shortages of primary care physicians. Accordingly, for calendar year 2007, OPM’s calculations show that the following states are Medically Underserved Areas under the FEHB Program: Alabama, Arizona, Idaho, Kentucky, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, South Carolina, South Dakota, Texas, West Virginia, and Wyoming. For the 2007 calendar year Texas is being added and Alaska is being removed from the list. DATES: Effective Date: January 1, 2007. FOR FURTHER INFORMATION CONTACT: Ingrid Burford, 202–606–0004. SUPPLEMENTARY INFORMATION: FEHB law (5 U.S.C. 8902(m)(2)) mandates special consideration for enrollees of certain FEHB plans who receive covered health services in States with critical shortages of primary care physicians. The FEHB law also requires that a State be designated as a Medically Underserved Area if 25 percent or more of the population lives in an area designated by the Department of Health and Human Services (HHS) as a primary medical care manpower shortage area. Such States are designated as Medically Underserved Areas for purposes of the FEHB Program, and the law requires non-HMO FEHB plans to reimburse beneficiaries, subject to their contract terms, for covered services obtained from any licensed provider in these States. FEHB regulations (5 CFR 890.701) require OPM to make an annual determination of the States that qualify as Medically Underserved Areas for the next calendar year by comparing the latest HHS State-by-State population counts on primary medical care manpower shortage areas with U.S. VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 BILLING CODE 6325–39–P SECURITIES AND EXCHANGE COMMISSION [Release No. IC–27516; File No. 812–13301] MONY Life Insurance Company of America, et al. October 12, 2006. 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 ‘‘1940 Act’’) approving certain substitutions of securities and an order of exemption pursuant to Section 17(b) of the 1940 Act from Section 17(a) of the 1940 Act. AGENCY: The Section 26 Applicants (as defined below) request an order approving the proposed substitution of shares of certain series of EQ Advisors Trust (‘‘EQAT’’) and AXA Premier VIP Trust (‘‘VIP’’, together with EQAT, the ‘‘Trusts,’’ and each, a ‘‘Trust’’), by the Separate Accounts (as defined below) for shares of similar series of unaffiliated registered investment companies (the ‘‘Substitutions’’). In particular, the Section 26 Applicants request an order pursuant to Section 26(c) approving the substitution of: (1) Class IA shares of the EQ/Calvert Socially Responsible Portfolio for Initial Class shares of The Dreyfus Socially Responsible Growth Fund, Inc.; (2) Class IA shares of the EQ/ Mercury International Value Portfolio for Initial Class shares of the Dreyfus Variable Investment Fund— International Value Portfolio; (3) Class IA shares of the EQ/Lord Abbett Growth and Income Portfolio for Class VC shares of the Lord Abbett Series Fund— Growth and Income Portfolio; (4) Class IA shares of the EQ/Short Duration Bond Portfolio for shares of the T. Rowe Price Fixed Income Series, Inc.— Limited-Term Bond Portfolio; (5) Class IA shares of EQ/Money Market Portfolio for shares of the T. Rowe Price Fixed Income Series, Inc.—Prime Reserve Portfolio; (6) Class IA shares of the EQ/ Alliance International Portfolio for shares of the T. Rowe Price International Series, Inc.—International Stock Portfolio; (7) Class IA shares of the EQ/ Van Kampen Emerging Markets Equity SUMMARY OF APPLICATION: PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 Portfolio for Class I shares of The Universal Institutional Funds, Inc.— Emerging Markets Equity Portfolio; (8) Class IA shares of the EQ/FI Mid Cap Portfolio for shares of the Old Mutual Insurance Series Fund—Mid-Cap Portfolio; (9) Class IA shares of the EQ/ Lord Abbett Mid Cap Value Portfolio for Class VC shares of the Lord Abbett Series Fund—Mid-Cap Value Portfolio; (10) Class IA shares of the EQ/JPMorgan Core Bond Portfolio for Administrative Class shares of the PIMCO Variable Insurance Trust—Real Return Portfolio; and (11) Class A shares of the AXA Premier VIP High Yield Portfolio for Class VC shares of the Lord Abbett Series Fund—Bond Debenture Portfolio. Applicants also request an order of exemption to permit certain in-kind transactions in connection with the proposed Substitutions (the ‘‘In-Kind Transactions’’). Each of the portfolios involved in the Substitutions serves as an underlying investment option for certain variable annuity contracts and/ or variable life insurance policies (‘‘Contracts’’) issued by the Insurance Companies (as defined below). The portfolios receiving assets in the Substitutions are referred to in this notice as the ‘‘Replacement Portfolios.’’ The portfolios from which the assets are transferred in connection with the Substitutions are referred to in this notice as the ‘‘Removed Portfolios.’’ MONY Life Insurance Company of America (‘‘MLOA’’), MONY Life Insurance Company (‘‘MONY’’, with MLOA, each an ‘‘Insurance Company’’ and collectively, the ‘‘Insurance Companies’’), MONY America Variable Account A (‘‘MLOA Separate Account A’’), MONY America Variable Account L (‘‘MLOA Separate Account L’’ and together with MLOA Separate Account A, ‘‘MLOA Separate Accounts’’), MONY Variable Account A (‘‘MONY Separate Account A’’) and MONY Variable Account L (‘‘MONY Separate Account L’’ and together with MONY Separate Account A, ‘‘MONY Separate Accounts’’) (the MONY Separate Accounts and the MLOA Separate Accounts are referred to as the ‘‘Separate Accounts’’ and individually as a ‘‘Separate Account’’) (the Separate Accounts and the Insurance Companies are referred to as the ‘‘Section 26 Applicants’’). EQAT is also an applicant for purposes of the order pursuant to Section 17(b) together with the Insurance Companies and the Separate Accounts (the ‘‘Section 17 Applicants’’). APPLICANTS: The application was filed on June 1, 2006 and amended on October 6, 2006. FILING DATE: E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices 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 November 2, 2006 and should be accompanied by proof of service on Applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer’s interest, the reason for the request and the issues contested. Persons may request notification of a hearing by writing to the Secretary of the Commission. ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549–1090. Applicants: c/o Steven M. Joenk, Senior Vice President, AXA Equitable Life Insurance Company, 1290 Avenue of the Americas, New York, New York 10104. FOR FURTHER INFORMATION CONTACT: Ellen Sazzman, Senior Counsel, at (202) 551–6762, or Harry Eisenstein, Branch Chief, Office of Insurance Products at (202) 551–6795, Office of Insurance Products, Division of Investment Management. HEARING OR NOTIFICATION OF HEARING: 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). SUPPLEMENTARY INFORMATION: bajohnson on PROD1PC69 with NOTICES Applicants’ Representations 1. MLOA is a stock life insurance company organized in 1969 under the laws of the State of Arizona. MLOA is licensed to sell life insurance and annuities in 49 states (not including New York), the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. MONY is a stock life insurance company organized in 1998 under the laws of New York. MONY is licensed to sell life insurance and annuities in 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Each Insurance Company is a wholly owned subsidiary of AXA Financial, Inc., a diversified financial services company, which is a wholly owned subsidiary of the AXA Group, the holding company for an international group of insurance and related financial services companies. MLOA serves as depositor for each of the MLOA Separate Accounts; MONY serves as depositor for each of the MONY Separate Accounts. VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 2. MLOA Separate Account A and MLOA Separate Account L were established under Arizona law in 1987 and 1985, respectively, pursuant to authority granted by MLOA’s Board of Directors. Each MLOA Separate Account is a segregated asset account of MLOA and is registered with the Commission as a unit investment trust under the 1940 Act. The MLOA Separate Accounts fund the respective variable benefits available under the Contracts issued by MLOA. Units of interest in the MLOA Separate Accounts under the Contracts are registered under the Securities Act of 1933 (‘‘1933 Act’’).1 3. MONY Separate Account A and MONY Separate Account L were each established under New York law in 1990 pursuant to authority granted by MONY’s Board of Trustees. Each MONY Separate Account is a segregated asset account of MONY and is registered with the Commission as a unit investment trust under the 1940 Act. The MONY Separate Accounts fund the respective variable benefits available under the Contracts issued by MONY. Units of interest in the MONY Separate Accounts under the Contracts are registered under the 1933 Act.2 4. EQAT and VIP are each organized as a Delaware statutory trust and registered as an open-end management investment company under the 1940 Act. Each is an affiliate of the Section 26 Applicants. The shares of each Trust are registered under the 1933 Act. Each Trust is a series investment company. EQAT currently has 63 separate series and VIP currently has 20 separate series (each a ‘‘Portfolio’’ and collectively, the ‘‘Portfolios’’). AXA Equitable Life Insurance Company currently serves as investment manager (‘‘Manager’’) of each of the Portfolios. The Replacement Portfolios are series of the Trusts. The Removed Portfolios are series of unaffiliated registered investment companies. 5. Each Trust currently offers two classes of shares, Class IA and Class IB shares for EQAT and Class A and Class B shares for VIP, which differ only in that Class IB and Class B shares are subject to a distribution plan adopted and administered pursuant to Rule 12b1 under the 1940 Act. Under that distribution plan, up to 0.50% of the 1 See File Nos. 333–72632, 333–91776, 333– 59717, 333–92066 (MLOA Separate Account A) and 333–06071, 333–104162, 333–72596, 333–56969, 33–82570, 333–64417, 333–72578 (MLOA Separate Account L). 2 See File No. 333–72714, 333–92320, 333–92312, 333–72259 (MONY Separate Account A) and 333– 104156, 333–71417, 333–01581, 333–72590, 333– 71677, 333–72594 (MONY Separate Account L). PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 61087 average daily net assets attributable to the Class IB or Class B shares of each Portfolio may be used to pay for distribution and shareholder services. The distributors for the shares of each Portfolio are AXA Advisors, LLC (‘‘AXA Advisors’’) and AXA Distributors, LLC (‘‘AXA Distributors’’). Under the Distribution Agreements with respect to the promotion, sale and servicing of shares of each Portfolio, payments to AXA Advisors and AXA Distributors, with respect to activities under the distribution plan, are currently limited to payments at an annual rate equal to 0.25% of the average daily net assets of each Portfolio (including the Replacement Portfolios) attributable to its Class IB or Class B shares. 6. The Manager has retained investment sub-advisers (‘‘Advisers’’) to provide day-to-day investment advisory services for each of the 61 of the 63 current EQAT Portfolios and 11 of the 20 current VIP Portfolios. The Trusts have received an exemptive order from the Commission (‘‘Multi-Manager Order’’) that permits the Manager, or any entity controlling, controlled by, or under common control (within the meaning of Section 2(a)(9) of the 1940 Act) with the Manager, subject to certain conditions, including approval of the Board of Trustees of the relevant Trust, and without the approval of shareholders to: (i) Select new or additional Advisers for each Portfolio; (ii) enter into new Investment Advisory Agreements with Advisers (‘‘Advisory Agreements’’) and/or materially modify the terms of any existing Advisory Agreement; (iii) terminate any existing Adviser and replace the Adviser; and (iv) continue the employment of an existing Adviser on the same contract terms where the Advisory Agreement has been assigned because of a change of control of the Adviser. 7. The variable annuity Contracts subject to this Application include flexible premium deferred variable annuity contracts with a variety of sales charge structures. These variable annuity Contracts are issued to or on behalf of individuals. All variable annuity Contracts allow the Contract owner to allocate contributions or premium payments among the variable and any fixed investment options available under the variable annuity Contracts. The contributions or premium payments accumulate in the investment options. The variable life insurance Contracts issued by the Insurance Companies include flexible premium individual variable life, second to die and corporate variable life policies. Premium payments under the variable life insurance Contracts E:\FR\FM\17OCN1.SGM 17OCN1 61088 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices accumulate in variable and any fixed investment options. 8. The Section 26 Applicants have reserved the right under the Contracts to substitute shares of another eligible investment fund for one of the current investment funds offered as a funding option under the Contracts. The prospectuses for the Contracts and the Separate Accounts contain appropriate disclosure of this right. 9. The Contracts do not restrict transfers from a variable subaccount and there are no limits on transfers into a variable subaccount or a guaranteed account (for those Contracts that offer a guaranteed account investment option), although transfer charges may apply. For those variable annuity Contracts that offer a guaranteed account investment option, except with respect to New York variable annuity Contracts, transfers from the guaranteed account are subject to a market value adjustment if the transfer request is not received at the end of the prescribed accumulation period. In addition, for New York variable annuity Contracts, a minimum amount must be maintained in a guaranteed account for those Contracts that have investments in such accounts and a minimum number of free transfers are guaranteed. For variable life insurance Contracts that offer a guaranteed account investment option, there is a dollar limit on the amount that can be held in, and the amount that may be transferred from, the guaranteed account. Also with respect to variable life insurance Contracts, transfers from Removed portfolios bajohnson on PROD1PC69 with NOTICES VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 10. Each Insurance Company, on its own behalf and on behalf of its Separate Accounts, proposes to exercise its contractual right to substitute a different eligible investment fund for one of the current investment funds offered as a funding option under the Contracts. In particular, the Section 26 Applicants propose the following substitutions: Replacement portfolios The Dreyfus Socially Responsible Growth Fund, Inc. (Initial Class shares). Dreyfus Variable Investment Fund—International Value Portfolio (Initial Class shares). Lord Abbett Series Fund—Growth and Income Portfolio (Class VC shares). T. Rowe Price Fixed Income Series, Inc.—Limited-Term Bond Portfolio T. Rowe Price Fixed Income Series, Inc.—Prime Reserve Portfolio ...... T. Rowe Price International Series, Inc.—International Stock Portfolio .. The Universal Institutional Funds, Inc.—Emerging Markets Equity Portfolio (Class I shares). Old Mutual Insurance Series Fund—Mid-Cap Portfolio ........................... Lord Abbett Series Fund—Mid-Cap Value Portfolio (Class VC shares) PIMCO Variable Insurance Trust—Real Return Portfolio (Administrative Class shares). Lord Abbett Series Fund—Bond-Debenture Portfolio (Class VC shares) 11. The Section 26 Applicants propose the Substitutions as part of a continued and overall business plan by each of the Insurance Companies to make its Contracts more attractive to existing Contract owners or to prospective purchasers, as the case may be. Each Insurance Company has reviewed its Contracts and each investment option offered under its Contracts with the goal of providing a superior choice of investment alternatives. The Substitutions are being proposed to address the lack of Contract owner interest in the Removed Portfolios, which generally have not attracted sufficient Contract owner interest to support maintaining them as separate investment options under the Contracts, particularly where they duplicate or substantially overlap with other investment options offered through the Separate Accounts. The Substitutions also are intended to simplify the prospectuses and related materials with respect to the Contracts a guaranteed account may only be made once a year. With respect to certain variable life insurance Contracts, including New York life insurance Contracts, there are a minimum number of free transfers guaranteed. With respect to corporate-owned life insurance Contracts, transfers are not permitted between a guaranteed account and a fixed separate account. EQ/Calvert Socially Responsible Portfolio (Class IA shares). EQ/Mercury International Value Portfolio (Class IA shares). EQ/Lord Abbett Growth and Income Portfolio (Class IA shares). EQ/Short Duration Bond Portfolio (Class IA shares). EQ/Money Market Portfolio (Class IA shares). lEQ/Alliance International Portfolio (Class IA shares). EQ/Van Kampen Emerging Markets Equity Portfolio (Class IA shares). EQ/FI Mid Cap Portfolio (Class IA shares). EQ/Lord Abbett Mid Cap Value Portfolio (Class IA shares). EQ/JPMorgan Core Bond Portfolio (Class IA shares). AXA Premier VIP High Yield Portfolio (Class A shares). and the investment options available through the Separate Accounts. Additionally, each Substitution will substitute shares of the Replacement Portfolio for shares of the Removed Portfolio, which has similar investment objectives, policies and risks as the Replacement Portfolio. In addition, the Insurance Companies have agreed to impose certain expense limits with respect to the Replacement Portfolios for certain periods after the Substitutions, as described below. Furthermore, the Substitutions ultimately may enable the Insurance Companies to reduce certain of the costs that they incur in administering the Contracts by removing overlapping and unpopular Portfolios. Moreover, the proposed Substitutions would replace an unaffiliated Portfolio with a Portfolio for which AXA Equitable serves as Manager and, thus, would permit AXA Equitable to appoint, dismiss and replace Advisers and amend Advisory Agreements as necessary to seek optimal PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 performance from the Portfolio and its portfolio managers. Finally, the Substitutions are designed to provide Contract owners with an opportunity to continue their investment in a similar Portfolio without interruption and without any cost to them. 12. The Insurance Companies have agreed to bear all expenses incurred in connection with the Substitutions and related filings and notices, including legal, accounting, brokerage and other fees and expenses. On the effective date of the Substitutions (‘‘Substitution Date’’), the amount of any Contract owner’s Contract value or the dollar value of a Contract owner’s investment in the relevant Contract will not change as a result of the Substitutions. 13. The following is a description and comparison of the investment objectives, policies and risks of each Removed Portfolio and its corresponding Replacement Portfolio: E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices 61089 (1) Removed Portfolio Replacement Portfolio The Dreyfus Socially Responsible Growth Fund, Inc. (Initial Class shares): The Portfolio seeks to provide capital growth, with current income as a secondary goal. Under normal circumstances, the Portfolio invests at least 80% of its assets in common stocks of companies that the manager believes meet traditional investment standards and conduct their business in a manner that contributes to the enhancement of the quality of life in America. The Portfolio normally focuses on largecap growth stocks. The Portfolio may also invest in value-oriented stocks, mid-cap stocks and small-cap stocks. The Portfolio may invest in foreign securities. The Portfolio may invest in securities of companies in initial public offerings (‘‘IPOs’’) and derivatives. The Portfolio may invest up to 15% of the value of its net assets in illiquid securities. Principal Risks: • Market Risk • Issuer Risk • Market Sector Risk • Social Investment Risk • Small and Midsize Company Risk • Growth Stock Risk • Value Stock Risk • Foreign Investment Risk EQ/Calvert Socially Responsible Portfolio (Class IA shares): The Portfolio seeks long-term capital appreciation. Under normal circumstances, the Portfolio invests at least 80% of its net assets in large-cap companies that meet both investment and social criteria. The Adviser utilizes multiple investment styles in selecting securities including growth, growth at a reasonable price, value and momentum models. The Portfolio may invest up to 10% of its total assets in foreign securities and up to 15% of its net assets in illiquid securities. The Portfolio also may invest in derivatives and in securities issued in an IPO. Principal Risks: • Market Risk • Asset Class Risk • Equity Risk • Adviser Selection Risk • Security Selection Risk • Derivatives Risk • Foreign Securities Risk • Security Risk • Liquidity Risk • Mid-Cap Company Risk bajohnson on PROD1PC69 with NOTICES The Section 26 Applicants believe that The Dreyfus Socially Responsible Growth Fund, Inc. and the EQ/Calvert Socially Responsible Portfolio have substantially similar investment objectives, policies and risks and that the essential objectives and expectations of Contract owners will continue to be met after the Substitution. In this connection, the Section 26 Applicants VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 note that each Portfolio invests virtually all of its assets in securities of companies that satisfy both social and investment criteria. Each Portfolio invests mostly in large-cap companies, but also may invest in small- and midcap companies. In addition, the Section 26 Applicants believe that the Portfolios’ advisers use comparable investment styles in managing each PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 Portfolio’s assets and that, while the principal risks are stated somewhat differently, the Portfolios have substantially similar risk profiles. Each Portfolio is subject to general investment risks, such as market risk, asset class risk and security risk, and to very similar portfolio risks, such as equity risk, social investing risk and foreign securities risk. E:\FR\FM\17OCN1.SGM 17OCN1 61090 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices (2) Removed Portfolio Replacement Portfolio Dreyfus Variable Investment Fund—International Value Portfolio (Initial Class shares): The Portfolio seeks long term capital growth. The Portfolio normally invests at least 80% of its assets in stocks. The Portfolio invests most of its assets in securities of foreign companies which the adviser considers to be value companies. The Portfolio may invest in securities of companies of any size and may invest in companies located in emerging markets. The Portfolio also may invest in stocks issued in an IPO, it may invest in derivatives and it may make short sales. Principal Risks: • Market Risk • Issuer Risk • Market Sector Risk • Small and Midsize Company Risk • Value Stock Risk • Foreign Investment Risk • Foreign Currency Risk • Emerging Market Risk • Derivatives Risk • Short Sale Risk • IPO Risk EQ/Mercury International Value Portfolio (Class IA shares): The Portfolio seeks to provide current income and long-term growth of income, accompanied by growth of capital. Under normal circumstances, the Portfolio invests at least 80% of its net assets, plus borrowings for investment purposes, in stocks that pay dividends. Stocks may include common stocks, preferred stocks, securities convertible into common or preferred stocks and warrants. The Portfolio invests primarily in securities of companies located in developed foreign markets, but may invest in securities issued by companies located in emerging markets. In investing the Portfolio’s assets, the Adviser follows a value investment style. The Portfolio may invest in companies of any size, although it generally will invest in large cap companies. The Portfolio also may invest in derivatives and in securities issued in an IPO. Principal Risks: • Market Risk • Asset Class Risk • Equity Risk • Adviser Selection Risk • Security Selection Risk • Convertible Securities Risk • Derivatives Risk • Liquidity Risk • • • • • • • • Small-Cap and Mid-Cap Company Risk Value Investing Risk Security Risk Foreign Securities Risk Currency Risk Depositary Receipts Risk Emerging Market Risk Settlement Risk bajohnson on PROD1PC69 with NOTICES The Section 26 Applicants believe that the Dreyfus Variable Investment Fund—International Value Portfolio and the EQ/Mercury International Value Portfolio have similar investment objectives and substantially similar investment policies and risks. The Section 26 Applicants also believe that the essential objectives and expectations of Contract owners will continue to be met after the Substitution. In this VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 connection, the Section 26 Applicants note that each Portfolio invests virtually all of its assets in foreign stocks. In addition, the Section 26 Applicants believe that the Portfolios’ advisers use a value investment style in managing each Portfolio’s assets. Each Portfolio may invest in companies of any size and in companies located in emerging markets. Moreover, the Section 26 Applicants believe that while the PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 principal risks are stated somewhat differently, the Portfolios have substantially similar risk profiles. The Section 26 Applicants note that each Portfolio is subject to general investment risks, such as market risk, asset class risk and security risk, and to very similar portfolio risks, such as equity risk, foreign securities and emerging markets risk and value investing risk. E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices 61091 (3) Removed portfolio Replacement portfolio Lord Abbett Series Fund—Growth and Income Portfolio (Class VC shares): The Portfolio seeks long term growth of capital and income without excessive fluctuations in market value. Under normal circumstances, the Portfolio will invest at least 80% of its net assets in equity securities of large companies. The Portfolio primarily purchases equity securities of large, seasoned U.S. and multi-national companies that the adviser believes are undervalued. Equity securities in which the Portfolio may invest may include common stocks, preferred stocks, convertible securities, warrants, and similar instruments. The Portfolio may purchase and write national securities exchange-listed put and call options on securities or securities indices and it may use options for hedging or cross-hedging purposes or to seek to increase total return. Principal Risks: • Market Risk • Asset Class Risk • Equity Risk • Security Selection Risk • Liquidity Risk • Foreign Securities Risk • Security Risk • Value Investing Risk EQ/Lord Abbett Growth and Income Portfolio (Class IA shares): The Portfolio seeks capital appreciation and growth of income without excessive fluctuation in market value. Under normal circumstances, the Portfolio invests at least 80% of its net assets in equity securities of large companies. The Portfolio primarily purchases equity securities of large, seasoned U.S. and multi-national companies that the Adviser believes are undervalued. Equity securities in which the Portfolio may invest include common stocks, preferred stocks, convertible securities, warrants, and similar instruments. The Portfolio may purchase and write exchange-listed put and call options on securities or securities indices for hedging or cross-hedging purposes or to seek to increase total return. The Section 26 Applicants believe that the Lord Abbett Series Fund— Growth and Income Portfolio and the EQ/Lord Abbett Growth and Income Portfolio have substantially identical investment objectives, policies and risks and that the essential objectives and expectations of Contract owners will continue to be met after the Substitution. In this connection, the Section 26 Applicants note that each Principal Risks: • Convertible Securities Risk • Derivatives Risk • Futures and Options Risk • Security Selection Risk • Equity Risk • Foreign Securities Risk • Value Investing Risk • Adviser Selection Risk • Asset Class Risk • Market Risk • Security Risk Portfolio invests virtually all of its assets in equity securities of large companies. Each Portfolio also may invest in foreign securities and derivatives for hedging and non-hedging purposes to the same extent. In addition, the Section 26 Applicants believe that the adviser to each Portfolio, which is the same for both Portfolios, uses an identical investment style in managing each Portfolio’s assets and that, while the principal risks are stated somewhat differently, the Portfolios have substantially identical risk profiles. Each Portfolio is subject to general investment risks, such as market risk, asset class risk and security risk, and to substantially identical portfolio risks, such as equity risk, foreign securities risk and value investing risk. (4) bajohnson on PROD1PC69 with NOTICES Removed portfolio Replacement portfolio T. Rowe Price Fixed Income Series, Inc.—Limited-Term Bond Portfolio: The Portfolio seeks a high level of current income consistent with moderate fluctuations in principal value. Normally, the Portfolio invests at least 80% of its net assets in bonds and 65% of total assets in short- and intermediate-term bonds. There are no maturity limitations on individual securities purchased, but the Portfolio’s average effective maturity will not exceed five years. At least 90% of the Portfolio’s assets will consist of investment grade securities and up to 10% of its assets can be invested in below investment grade securities. The Portfolio’s holdings may include mortgage-backed securities, derivatives and foreign securities. There is no limit on the Portfolio’s investments in U.S. dollar-denominated debt securities issued by foreign issuers, foreign branches of U.S. banks, and U.S. branches of foreign banks, however, the Portfolio may only invest up to 10% of its total assets (excluding reserves) in non-U.S. dollar-denominated fixed-income securities. Principal Risks: • Interest Rate Risk • Credit Risk • Prepayment and Extension Risk • Derivatives Risk • Foreign Investing Risk EQ/Short Duration Bond Portfolio (Class IA shares): The Portfolio seeks current income and reduced volatility of principal. Under normal circumstances, the Portfolio invests at least 80% of its net assets, plus borrowings for investment purposes, in bonds and other debt securities. These securities include U.S. Government bonds and notes, corporate bonds, municipal bonds, asset-backed bonds, mortgage-related bonds, convertible securities and preferred stocks. The Portfolio intends to invest only in investment grade fixed income securities and seeks to maintain a minimum average credit quality rating of ‘‘A.’’ The Portfolio may invest in securities with effective or final maturities of any length at the time of purchase, but it is anticipated that the average effective maturity of the Portfolio will range from one to four years. The average duration of the overall Portfolio will be between one and three years. The Portfolio also may invest in derivatives and up to 20% of its total assets in U.S. dollar denominated fixed income securities of foreign issuers. Principal Risks: • Market Risk • Asset Class Risk • Adviser Selection Risk • Security Selection Risk • Derivatives Risk • Fixed Income Risk • Asset-Backed Securities Risk • Credit Risk • Interest Rate Risk • Investment Grade Securities Risk VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 61092 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices (4)—Continued Removed portfolio Replacement portfolio • Mortgage-Backed Securities Risk • Foreign Securities Risk • Security Risk The Section 26 Applicants believe that the T. Rowe Price Fixed Income Series, Inc.—Limited-Term Bond Portfolio and the EQ/Short Duration Bond Portfolio have substantially similar investment objectives, policies and risks and that the essential objectives and expectations of Contract owners will continue to be met after the Substitution. In this connection, the Section 26 Applicants note that each Portfolio invests virtually all of its assets in investment grade bonds and seeks to maintain an average effective maturity that is generally within the same range. Each Portfolio may invest in the same types of debt securities, such as assetbacked and mortgage-backed securities. Each Portfolio also may invest in U.S. dollar-denominated debt securities of foreign issuers and derivatives. Moreover, the Section 26 Applicants believe that while the principal risks are stated somewhat differently, the Portfolios have substantially similar risk profiles. Each Portfolio is subject to general investment risks, such as asset class risk and security risk, and to very similar portfolio risks, such as fixed income risk, including credit risk and interest rate risk, foreign securities risk and derivatives risk. (5) Removed Portfolio Replacement Portfolio T. Rowe Price Fixed Income Series, Inc.—Prime Reserve Portfolio: The Portfolio seeks to preserve capital, liquidity and, consistent with these, the highest possible current income. The Portfolio is a money market fund, which is managed to provide a stable share price of $1.00 and invests in high-quality U.S. dollar-denominated money market securities. The fund’s average weighed maturity will not exceed 90 days and it will not purchase any security with a maturity longer than 13 months. EQ/Money Market Portfolio (Class IA shares): The Portfolio seeks to obtain a high level of current income, preserve its assets and maintain liquidity. The Portfolio invests primarily in a diversified portfolio of high-quality U.S. dollar denominated money market instruments. The Portfolio will maintain a dollar-weighted average portfolio maturity of 90 days or less and will invest only in instruments with a remaining maturity of 397 calendar days or less. The Portfolio may invest in mortgaged-backed and asset-backed securities and normally invests at least 25% of its net assets in bank obligations. The Portfolio may also invest up to 20% of its total assets in U.S. dollar denominated money market instruments of foreign branches of foreign banks. Principal Risks: • Market Risk • Asset Class Risk • Adviser Selection Risk • Security Selection Risk • Banking Industry Sector Risk • Foreign Securities Risk • Security Risk • Money Market Risk • Fixed Income Risk • Credit Risk • Interest Rate Risk • Asset-Backed Securities Risk • Mortgage-Backed Securities Risk Principal Risks: • Credit Risk • Interest Rate Risk • Money Market Risk bajohnson on PROD1PC69 with NOTICES The Section 26 Applicants believe that the T. Rowe Price Fixed Income Series, Inc.—Prime Reserve Portfolio and the EQ/Money Market Portfolio have substantially identical investment objectives, policies and risks and that the essential objectives and expectations of Contract owners will continue to be met after the Substitution. In this connection, the Section 26 Applicants VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 note that each Portfolio is a money market fund and invests all of its assets in high-quality U.S. dollar denominated money market instruments permitted under Rule 2a–7 under the 1940 Act. In addition, each Portfolio is managed to maintain a stable share price of $1.00 and has an average weighted maturity that will not exceed 90 days. The Section 26 Applicants believe that the PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 Portfolios also have substantially identical risk profiles. Each Portfolio is subject to general investment risks, such as asset class risk and security risk, and to very similar portfolio risks, such as money market risk and fixed income risk, including credit risk and interest rate risk. E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices 61093 (6) Removed portfolio Replacement portfolio T. Rowe Price International Series, Inc.—International Stock Portfolio: The Portfolio seeks long-term growth of capital through investments primarily in common stocks of established, non-U.S. companies. Normally, at least 80% of the Portfolio’s net assets will be invested in stocks. The Portfolio expects to invest substantially all of its assets in stocks outside the U.S. and to diversify broadly among developed and emerging countries throughout the world. The Portfolio utilizes an investment style that incorporates growth and value investing components. The Portfolio may purchase securities of any size, but focuses on large and, to a lesser extent, medium-sized companies. The Portfolio may invest in derivatives. EQ/Alliance International Portfolio (Class IA shares): The Portfolio seeks to achieve long-term growth of capital. The Portfolio intends, under normal market conditions, to invest primarily in equity securities. The Portfolio invests in both growth-oriented and value-oriented stocks of non-U.S. companies. The growth portion of the Portfolio invests primarily in a diversified portfolio of equity securities of nonU.S. companies or foreign governmental enterprises from anywhere in the world (including in emerging markets). The value portion of the Portfolio invests primarily in equity securities of issuers in countries that comprise the MSCI EAFE Index and Canada. The Portfolio also may invest in any investment grade fixed income security and in derivatives. Principal Risks: • Market Risk • Asset Class Risk • Adviser Selection Risk • Security Selection Risk • Security Risk • Convertible Securities Risk • Derivatives Risk • Equity Risk • Fixed Income Risk • Investment Grade Securities Risk • Interest Rate Risk • Foreign Securities Risk • Currency Risk • Emerging Markets Risk • Value Investing Risk • Growth Investing Risk Principal Risks: • Currency Risk • Geographic Risk • Emerging Market Risk • Foreign Investing Risk • Futures/Options Risk The Section 26 Applicants believe that the T. Rowe Price International Series, Inc.—International Stock Portfolio and the EQ/Alliance International Portfolio have substantially similar investment objectives, policies and risks and that the essential objectives and expectations of Contract owners will continue to be met after the Substitution. In this connection, the Section 26 Applicants note that each Portfolio invests virtually all of its assets in equity securities of foreign companies. Each Portfolio may invest companies in developed and emerging markets. Each Portfolio also invests mostly in large-cap companies, but may invest in smaller companies as well. In addition, the Section 26 Applicants believe that the adviser to each Portfolio uses comparable investment styles in managing each Portfolio’s assets and that, while the principal risks are stated somewhat differently, the Portfolios have substantially similar risk profiles. Each Portfolio is subject to general investment risks, such as market risk, asset class risk and security risk, and to very similar portfolio risks, such as equity risk, foreign securities and emerging markets risk and growth investing risk. (7) Replacement Portfolio The Universal Institutional Funds, Inc.—Emerging Markets Equity Portfolio (Class I shares): The Portfolio seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of issuers in emerging market countries. Under normal circumstances, at least 80% of the Portfolio’s assets will be invested in equity securities located in emerging market countries. The Portfolio combines top-down country allocation with bottom-up stock selection. The Portfolio also may invest in derivatives and, to a limited extent, in U.S. Government securities and debt securities rated below investment grade (also known as ‘‘junk bonds’’). bajohnson on PROD1PC69 with NOTICES Removed Portfolio EQ/Van Kampen Emerging Markets Equity Portfolio (Class IA shares): The Portfolio seeks long-term capital appreciation. Under normal circumstances, the Portfolio invests at least 80% of its net assets, plus borrowings for investment purposes, in equity securities of companies located in emerging market countries or other equity investments that are tied economically to emerging market countries. Such equity securities may include common stocks, securities convertible into common stocks, preferred stocks, depositary receipts, rights and warrants. The Portfolio combines top-down country allocation with bottom-up stock selection. The Portfolio also may invest, to a limited extent, in debt securities rated below investment grade (also known as ‘‘junk bonds’’). The Portfolio currently is non-diversified, however, it is expected that the Portfolio’s subclassification will be changed from non-diversified to diversified prior to the Substitution. The Portfolio may also invest in derivatives to a limited extent. Principal Risks: • Market Risk • Asset Class Risk • Adviser Selection Risk • Security Selection Risk • Convertible Securities Risk • Derivatives Risk Principal Risks: • Market Risk • Emerging Markets Risk • Foreign Securities Risk • Currency Risk • Security Risk • Derivatives Risk VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 61094 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices (7)—Continued Removed Portfolio Replacement Portfolio • Equity Risk • • • • • • • • • • • The Section 26 Applicants believe that The Universal Institutional Funds, Inc.—Emerging Markets Equity Portfolio and the EQ/Van Kampen Emerging Markets Equity Portfolio have substantially identical investment objectives, policies and risks and that the essential objectives and expectations of Contract owners will continue to be met after the Substitution. In this Equity Risk Fixed Income Risk Junk Bonds and Lower Rated Securities Risk Foreign Securities Risk Currency Risk Emerging Markets Risk Security Risk Growth Investing Risk Liquidity Risk Portfolio Turnover Risk Focused Portfolio Risk connection, the Section 26 Applicants note that each Portfolio invests virtually all of its assets in equity securities of companies located in emerging markets countries. In addition, the Portfolios’ advisers are affiliated companies. The Section 26 Applicants believe that the Portfolios’ advisers use a substantially identical investment style in managing each Portfolio’s assets and that, while the principal risks are stated somewhat differently, the Portfolios have substantially identical risk profiles. Each Portfolio is subject to general investment risks, such as market risk, asset class risk and security risk, and to substantially identical portfolio risks, such as equity risk, foreign securities and emerging markets risk and growth investing risk. (8) Removed portfolio Replacement portfolio Old Mutual Insurance Series Fund—Mid-Cap Portfolio: The Portfolio seeks to provide above-average total return over a 3 to 5 year market cycle, consistent with reasonable risk. The Portfolio normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of mid-cap companies. The Portfolios also may invest in small-cap companies. The Portfolio invests in companies believed to have attractive valuations relative to the sector and the market, near-term business dynamics and long-term earnings growth. The Portfolio may invest up to 20% of its net assets in foreign-traded securities and derivatives.. EQ/FI Mid Cap Portfolio (Class IA shares): The Portfolio seeks longterm growth of capital. The Portfolio normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in common stocks of companies with medium market capitalizations. The Portfolio may also invest in companies with smaller or larger market capitalization and securities of foreign issuers. The Portfolio is not constrained by any particular investment style and may buy growthoriented or value-oriented stock or a combination of both. The Portfolio may invest up to 20% of its net assets in derivatives and, while the Portfolio does not have a stated limit with respect to investments in securities of foreign issuers, from January 1, 2004 through June 30, 2006, the Portfolio generally has invested between 10–20% of its net assets in such securities. Principal Risks: • Market Risk • Asset Class Risk • Adviser Selection Risk • Security Selection Risk • Equity Risk • Derivatives Risk • Foreign Securities Risk • Security Risk • Portfolio Turnover Risk • Small-Cap and Mid-Cap Company Risk • Growth Investing Risk • Value Investing Risk bajohnson on PROD1PC69 with NOTICES Principal Risks: • Market Risk • Small and Mid-Size Company Risk • Industry and Sector Risk The Section 26 Applicants believe that the Old Mutual Insurance Series Fund—Mid-Cap Portfolio and the EQ/FI Mid Cap Portfolio have very similar investment objectives and substantially similar investment policies and risks and that the essential objectives and expectations of Contract owners will continue to be met after the Substitution. The Section 26 Applicants believe that the Portfolios are substantially similar given their focus VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 on investments in equity securities of mid-cap companies. The Section 26 Applicants do not believe that the income component of the Removed Portfolio’s investment objective is a significant difference between the Portfolios given that, as a general matter, mid-cap companies do not pay significant, if any, dividends. In this connection, the Section 26 Applicants note that, for the fiscal year ended December 31, 2005, the Removed PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 Portfolio’s net investment income (including dividend income) was only approximately $122,000 on an asset base of about $55 million. The Section 26 Applicants also note that each Portfolio may also invest, to a limited extent, in securities of small-cap companies, foreign securities and derivatives. The Section 26 Applicants believe that the Portfolios’ advisers also use comparable investment styles in managing each Portfolio’s assets and E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices that, while the principal risks are stated somewhat differently, the Portfolios have substantially similar risk profiles. Each Portfolio is subject to general investment risks, such as market risk, asset class risk and security risk, and to 61095 very similar portfolio risks, such as equity risk, mid-cap company risk and foreign securities risk. (9) Removed portfolio Replacement portfolio Lord Abbett Series Fund—Mid-Cap Value Portfolio (Class VC shares): The Portfolio seeks capital appreciation through investments, primarily in equity securities, which are believed to be undervalued in the marketplace. The Portfolio normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of mid-sized companies. The Portfolio may invest in convertible bonds, convertible preferred stocks, warrants and similar instruments. The Portfolio uses a value approach. The Portfolio may invest up to 10% of its net assets in foreign securities that are primarily traded outside the United States and may also invest in ADRs (which are not included in the 10% limitation). The Portfolio may also purchase and write national securities exchange-listed put and call options on securities or securities indices and it may use options for hedging or cross-hedging purposes or to seek to increase total return. Principal Risks: • Market Risk • Security Selection Risk • Equity Risk • Value Investing Risk • Mid-Cap Company Risk • Security Risk EQ/Lord Abbett Mid Cap Value Portfolio (Class IA shares): The Portfolio seeks capital appreciation. Under normal circumstances, the Portfolio invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of mid-sized companies. The Portfolio uses a value approach that seeks to identify stocks of companies that have the potential for significant market appreciation due to growing recognitions of improvement (or anticipated improvement) in their financial results. The Portfolio may invest: (1) Without limit in ADRs and similar depositary receipts; (2) up to 10% of its assets in other foreign securities; and (3) in convertible securities. The Portfolio may also purchase and write exchange-listed put and call options on securities or securities indices for hedging or cross-hedging purposes or to seek to increase total return. The Section 26 Applicants believe that the Lord Abbett Series Fund—Mid Cap Value Portfolio and the EQ/Lord Abbett Mid Cap Value Portfolio have substantially identical investment objectives, policies and risks and that the essential objectives and expectations of Contract owners will continue to be met after the Substitution. In this connection, the Section 26 Applicants Principal Risks: • Market Risk • Asset Class Risk • Adviser Selection Risk • Security Selection Risk • Security Risk • Convertible Securities Risk • Derivatives Risk • Futures and Options Risk • Equity Risk • Mid-Cap Company Risk • Value Investing Risk note that each Portfolio invests virtually all of its assets in equity securities of mid-sized companies. Each Portfolio also may invest in foreign securities and derivatives for hedging and non-hedging purposes to the same extent. In addition, the Section 26 Applicants believe that the adviser to each Portfolio, which is the same for both Portfolios, uses an identical investment style in managing each Portfolio’s assets and that, while the principal risks are stated somewhat differently, the Portfolios have substantially identical risk profiles. Each Portfolio is subject to general investment risks, such as market risk, asset class risk and security risk, and to substantially similar portfolio risks, such as equity risk, mid-cap company risk and value investing risk. (10) bajohnson on PROD1PC69 with NOTICES Removed portfolio Replacement portfolio PIMCO Variable Insurance Trust—Real Return Portfolio (Administrative Class shares): The Portfolio seeks maximum real return consistent with preservation of real capital and prudent investment management. Under normal circumstances, the Portfolio invests at least 80% of its net assets in inflation-indexed bonds of varying maturities issued by United States and non-U.S. issuers, their agencies or government-sponsored enterprises and corporations. The Portfolio invests primarily in investment grade securities, but also may invest up to 10% in high yield bonds. The average duration varies within 3 years (plus or minus) of the Lehman Brothers U.S. TIPS Index (as of March 31, 2006, 6.9 years). The Portfolio may invest up to 30% in securities denominated in foreign currencies and beyond this limit in U.S. dollar denominated securities of foreign issuers. The Portfolio also may invest in derivatives. The Portfolio is non-diversified. Principal Risks: • Market Risk • Issuer Risk • Interest Rate Risk • Credit Risk • High Yield Risk • Liquidity Risk • Derivatives Risk EQ/JPMorgan Core Bond Portfolio (Class IA shares): The Portfolio seeks a high total return consistent with moderate risk to capital and maintenance of liquidity. Under normal circumstances, the Portfolio invests at least 80% of its net assets, plus borrowings for investment purposes, in investment grade debt securities. These securities principally include U.S. Government and agency securities, corporate securities, private placements, asset-backed securities, mortgage-related securities and direct mortgage obligations. The overall duration generally will be within one year of the Portfolio’s benchmark, the Lehman Brothers Aggregate Bond Index (as of March 31, 2006, 4.68 years). The Portfolio may invest up to 25% of assets in foreign issuers, including up to 20% in debt securities denominated in currencies of developed foreign countries. The Portfolio may invest in derivatives. Principal Risks: • Market Risk • Asset Class Risk • Adviser Selection Risk • Security Selection Risk • Derivatives Risk • Fixed Income Risk • Mortgage-Backed Securities Risk VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 61096 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices (10)—Continued Removed portfolio • • • • • • Replacement portfolio • • • • • • • • Mortgage Risk Foreign Investment Risk Currency Risk Issuer Non-Diversification Risk Leveraging Risk Management Risk The Section 26 Applicants believe that the PIMCO Variable Insurance Trust—Real Return Portfolio and the EQ/JPMorgan Core Bond Portfolio have substantially similar investment objectives, policies and risks and that the essential objectives and expectations of Contract owners will continue to be met after the Substitution. In this connection, the Section 26 Applicants Asset-Backed Securities Risk Credit Risk Interest Rate Risk Investment Grade Securities Risk Foreign Securities Risk Security Risk Liquidity Risk Portfolio Turnover Risk note that each Portfolio invests primarily in investment grade debt securities and seeks to maintain a duration that is generally within the same range. Each Portfolio also may invest, to a limited extent, in foreign securities and derivatives. Moreover, the Section 26 Applicants believe that while the principal risks are stated somewhat differently, the Portfolios have substantially similar risk profiles. Each Portfolio is subject to general investment risks, such as asset class risk and security risk, and to substantially similar portfolio risks, such as fixed income risk, including investment grade securities risk, credit risk and interest rate risk, and foreign securities risk. (11) Replacement portfolio Lord Abbett Series Fund—Bond-Debenture Portfolio (Class VC shares): The Portfolio seeks high current income and the opportunity for capital appreciation to produce a high total return. Under normal circumstances, the Portfolio invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in fixed income securities of various types. The Portfolio may invest in highyield debt securities and mortgage- and asset-backed securities. The Portfolio has found good value in high-yield securities and has invested more than half of its assets in these securities. At least 20% of the Portfolio’s net assets must be invested in any combination of investment grade debt securities, U.S. Government securities and cash equivalents. The Portfolio may also invest up to 20% of its net assets in equity securities and up to 20% of its net assets in foreign securities. Principal Risks: • Market Risk • Issuer Risk • Debt Securities Risk • Interest Rate Risk • High-Yield Debt Securities Risk • Mortgage-Related Securities Risk • Credit Risk • Equity Risk • Foreign Securities Risk bajohnson on PROD1PC69 with NOTICES Removed portfolio AXA Premier VIP High Yield Portfolio (Class A shares): The Portfolio seeks high total return through a combination of current income and capital appreciation. Under normal circumstances, the Portfolio intends to invest at least 80% of its net assets, plus borrowings for investment purposes, in a diversified mix of bonds that are rated below investment grade. The Advisers select bonds from several sectors, including commercial and residential mortgage-backed securities, asset-backed securities, corporate bonds and bonds of foreign issuers. The Portfolio also may invest in equity securities, derivatives and, to a limited extent, illiquid securities. In addition, the Portfolio may invest up to 20% of its net assets in investment grade debt securities. The Section 26 Applicants believe that the Lord Abbett Series Fund—Bond Debenture Portfolio and the AXA Premier VIP High Yield Portfolio have substantially similar investment objectives, policies and risks and that the essential objectives and expectations of Contract owners will continue to be met after the Substitution. In this connection, the Section 26 Applicants note that each Portfolio invests virtually all of its assets in fixed income securities. In addition, each Portfolio VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 Principal Risks: • Adviser Selection Risk • Credit/Default Risk • Currency Risk • Derivatives Risk • Foreign Investing and Emerging Markets Risk • Interest Rate Risk • Liquidity Risk • Lower-Rated Securities Risk • Loan Participation Risk • Mortgage-Backed and Asset-Backed Securities Risk • Portfolio Management Risk • Issuer-Specific Risk invests largely in high-yield securities and also may invest in investment grade debt securities. Applicants note that the Removed Portfolio generally invests at least 20% of its net assets in investment grade debt securities, while the Replacement Portfolio generally invests no more than 20% of its net assets in such securities. Applicants believe, however, that this is neither a significant difference in the investment policies of the Portfolios nor a difference that significantly alters the PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 overall risk profile of either Portfolio. In this connection, Applicants note that the Removed Portfolio has only invested approximately 23% of its assets in investment grade debt securities over the past three fiscal years, while the Replacement Portfolio has invested approximately 8% of its assets in such securities over the same period. Thus, each Portfolio has invested the substantial majority (indeed, more than three quarters of the Portfolio) in highyield debt securities over the last three E:\FR\FM\17OCN1.SGM 17OCN1 61097 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices fiscal years. Each Portfolio also may invest, to a limited extent, in equity securities and foreign securities. Moreover, the Section 26 Applicants believe that while the principal risks are stated somewhat differently, as noted above, the Portfolios have substantially similar risk profiles. Each Portfolio is subject to general investment risks, such as asset class risk and security risk, and to substantially similar portfolio risks, such as fixed income risk, including high-yield securities risk, investment grade securities risk, credit risk and interest rate risk, and foreign securities risk. 14. The following chart compares the fees paid for advisory services and the total annual operating expenses (before and after any waivers and reimbursements) for the fiscal year ended December 31, 2005, expressed as an annual percentage of average daily net assets, of the Initial Class shares of The Dreyfus Socially Responsible Growth Fund, Inc. (the ‘‘Removed Portfolio’’ for purposes of this discussion) and the Class IA shares of the EQ/Calvert Socially Responsible Portfolio (the ‘‘Replacement Portfolio’’ for purposes of this discussion). The total annual operating expenses of the Replacement Portfolio have been restated to reflect recent changes to the administration fees charged with respect to that Portfolio.3 Class IA shares of the Replacement Portfolio and the Initial Class shares of the Removed Portfolio have not adopted plans pursuant to Rule 12b–1 under the 1940 Act. The Dreyfus Socially Responsible Growth Fund, Inc. (percent) EQ/Calvert Socially Responsible Portfolio (percent) 0.75 None 0.06 0.81 N/A 0.81 0.65 None 0.27 0.92 (0.12) 0.80 Management Fee 4 ................................................................................................................................................ Rule 12b–1 Fee ..................................................................................................................................................... Other Expenses ..................................................................................................................................................... Total Annual Operating Expenses ......................................................................................................................... Less Fee Waiver/Expense Reimbursement 5 ........................................................................................................ Net Annual Operating Expenses ........................................................................................................................... For the fiscal year ended December 31, 2005, the net annual operating expense ratio of the Replacement Portfolio was lower than the Removed Portfolio’s net annual operating expense ratio due primarily to the Replacement Portfolio’s lower management fee rate and an expense limitation arrangement in effect for the Replacement Portfolio. As of December 31, 2005, the assets of the Replacement Portfolio were approximately $72.5 million, while the assets of the Removed Portfolio were approximately $431.2 million. Although the Replacement Portfolio is smaller than the Removed Portfolio, it is anticipated that the Replacement Portfolio’s net annual operating expense ratio will be lower than the Removed Portfolio’s annual operating expense ratio immediately after the Substitution due to the expense limitation arrangement in effect. The Section 26 Applicants assert that the proposed Substitution of the Replacement Portfolio for the Removed Portfolio will therefore benefit the Contract owners by lowering the annual operating expense ratio. To ensure that Contract owners with amounts allocated to the Removed Portfolio on the date of the Substitution do not incur higher expenses with respect to such amounts for a period of two years after the Substitution, MLOA and MONY also have agreed to impose a two-year expense limitation with respect to such amounts, as summarized below. 15. The following chart compares the fees paid for advisory services and the total annual operating expenses (before and after any waivers and reimbursements) for the fiscal year ended December 31, 2005, expressed as an annual percentage of average daily net assets, of the Initial Class shares of the Dreyfus Variable Investment Fund— International Value Portfolio (the ‘‘Removed Portfolio’’ for purposes of this discussion) and the Class IA shares of the EQ/Mercury International Value Portfolio (the ‘‘Replacement Portfolio’’ for purposes of this discussion). The total annual operating expenses of the Replacement Portfolio have been restated to reflect recent changes to the administration fees charged with respect to that Portfolio (as described above). Class IA shares of the Replacement Portfolio and the Initial Class shares of the Removed Portfolio have not adopted plans pursuant to Rule 12b–1 under the 1940 Act. Dreyfus Variable Investment Fund— International Value Portfolio (percent) EQ/Mercury International Value Portfolio (percent) 1.00 0.85 bajohnson on PROD1PC69 with NOTICES Management Fee 6 ................................................................................................................................................ 3 Effective May 1, 2006, each EQAT Portfolio pays an administration fee equal to $30,000 per year, plus its pro rata portion of the Trust’s asset-based administration fee, which is equal to an annual rate of 0.12% of the first $3 billion of total EQAT average daily net assets, 0.11% of the next $3 billion, 0.105% of the next $4 billion, 0.10% of the next $20 billion of total EQAT average daily net assets and 0.975% of the total EQAT average daily net assets in excess of $30 billion. Prior to that date, the administration fee for each EQAT Portfolio was equal to $30,000 per year, plus its pro rata portion VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 of the Trust’s asset-based administration fee, which was equal to an annual rate of 0.04% of the first $3 billion of total EQAT average daily net assets, 0.03% of the next $3 billion, 0.025% of the next $4 billion, and 0.0225% of the total EQAT average daily net assets in excess of $10 billion. 4 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.650% of the first $1 billion; 0.600% on the next $1 billion; 0.575% on the next $3 billion; 0.550% on the next $5 billion; and 0.525% thereafter. The management fee schedule for the Removed PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 Portfolio, as well as the management fee schedule for each Removed Portfolio in Substitutions 2, 4, 5, 6 and 10 discussed herein, does not include breakpoints. 5 The Manager of the Replacement Portfolio has agreed to make payments or waive its management, administrative and other fees to limit the expenses of the Portfolio through April 30, 2007, pursuant to an expense limitation agreement, so that the Total Annual Operating Expenses of the Class IA shares of the Portfolio do not exceed 0.80%. E:\FR\FM\17OCN1.SGM 17OCN1 61098 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices Dreyfus Variable Investment Fund— International Value Portfolio (percent) EQ/Mercury International Value Portfolio (percent) None 0.20 1.20 N/A 1.20 None 0.23 1.08 (0.08) 1.00 Rule 12b-1 Fee ...................................................................................................................................................... Other Expenses ..................................................................................................................................................... Total Annual Operating Expenses ......................................................................................................................... Less Fee Waiver/Expense Reimbursement 7 ........................................................................................................ Net Annual Operating Expenses ........................................................................................................................... For the fiscal year ended December 31, 2005, the annual operating expense ratio of the Replacement Portfolio (before and after waivers and reimbursements) was lower than the annual operating expense ratio of the Removed Portfolio due primarily to the Replacement Portfolio’s lower management fee rate and an expense limitation arrangement in effect for the Replacement Portfolio. In addition, as of December 31, 2005, the assets of the Replacement Portfolio were approximately $1.4 billion, while the assets of the Removed Portfolio were approximately $149.2 million. It is anticipated that the Replacement Portfolio’s net annual operating expense ratio will be lower than the Removed Portfolio’s net annual operating expense ratio immediately after the Substitution due primarily to the lower management fee rate and economies of scale from the substantially larger asset base as well as the expense limitation arrangement in effect. The Section 26 Applicants assert that the proposed Substitution of the Replacement Portfolio for the Removed Portfolio will therefore benefit the Contract owners by lowering the annual operating expense ratio. To ensure that Contract owners with amounts allocated to the Removed Portfolio on the date of the Substitution do not incur higher expenses with respect to such amounts for a period of two years after the Substitution, MLOA and MONY also have agreed to impose a two year expense limitation with respect to such amounts, as summarized below. 16. The following chart compares the fees paid for advisory services and the total annual operating expenses (before and after any waivers and reimbursements) for the fiscal year ended December 31, 2005, expressed as an annual percentage of average daily net assets, of the Class VC shares of the Lord Abbett Series Fund—Growth and Income Portfolio (the ‘‘Removed Portfolio’’ for purposes of this discussion) and the Class IA shares of the EQ/Lord Abbett Growth and Income Portfolio (the ‘‘Replacement Portfolio’’ for purposes of this discussion). The total annual operating expenses of the Replacement Portfolio have been restated to reflect recent changes to the administration fees charged with respect to that Portfolio (as described above). Class IA shares of the Replacement Portfolio and the Class VC shares of the Removed Portfolio have not adopted plans pursuant to Rule 12b-1 under the 1940 Act. Lord Abbett Series Fund— Growth and Income Portfolio (percent) EQ/Lord Abbett Growth and Income Portfolio (percent) 0.48 None 0.41 0.89 N/A 0.89 0.65 None 0.93 .58 (0.83) 0.75 Management Fee 8 ................................................................................................................................................ Rule 12b–1 Fee ..................................................................................................................................................... Other Expenses ..................................................................................................................................................... Total Annual Operating Expenses ......................................................................................................................... Less Fee Waiver/Expense Reimbursement 9 ........................................................................................................ Net Annual Operating Expenses ........................................................................................................................... bajohnson on PROD1PC69 with NOTICES For the fiscal year ended December 31, 2005, the net annual operating expense ratio of the Replacement Portfolio was lower than the net annual operating expense ratio of the Removed Portfolio due primarily to an expense limitation arrangement in effect for the Replacement Portfolio. This arrangement more than offset the Replacement Portfolio’s higher management fee rate and the higher rate of ‘‘other expenses.’’ The Class VC shares of the Removed Portfolio are not subject to any expense limit. As of December 31, 2005, the assets of the Replacement Portfolio were approximately $38.3 million, while the assets in the Removed Portfolio were approximately $1.6 billion. Although the Replacement Portfolio is smaller than the Removed Portfolio, it is anticipated that the Replacement Portfolio’s net annual operating expense ratio will be lower than the Removed Portfolio’s net annual operating expense ratio immediately after the Substitution due to the expense limitation arrangement in effect. In addition, after the Substitution, the Replacement Portfolio will be substantially larger, 6 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.850% of the first $1 billion; 0.800% on the next $1 billion; 0.775% on the next $3 billion; 0.750% on the next $5 billion; and 0.725% thereafter. 7 The Manager of the Replacement Portfolio has agreed to make payments or waive its management, administrative and other fees to limit the expenses of the Portfolio through April 30, 2007, pursuant to an expense limitation agreement, so that the Total Annual Operating Expenses of the Class IA shares of the Portfolio do not exceed 1.00%. With respect to the Removed Portfolio, the investment adviser has agreed to waive its fees and/or assume expenses of the Portfolio to the extent that the Total Annual Operating Expenses exceed 1.40% for the fiscal year ended December 31, 2006. 8 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.650% of the first $1 billion; 0.600% on the next $1 billion; 0.575% on the next $3 billion; 0.550% on the next $5 billion; and 0.525% thereafter. The management fee schedule for the Removed Portfolio on an annual basis is equal to 0.50% on the first $1 billion and 0.45% over $1 billion. 9 The Manager of the Replacement Portfolio has agreed to make payments or waive its management, administrative and other fees to limit the expenses of the Portfolio through April 30, 2007, pursuant to an expense limitation agreement, so that the Total Annual Operating Expenses of the Class IA shares of the Portfolio do not exceed 0.75%. VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 61099 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices which should enable the Portfolio to realize greater economies of scale. The Section 26 Applicants assert that the proposed Substitution of the Replacement Portfolio for the Removed Portfolio will therefore benefit the Contract owners by lowering the annual operating expense ratio. To ensure that Contract owners with amounts allocated to the Removed Portfolio on the date of the Substitution do not incur higher expenses with respect to such amounts after the Substitution, MLOA and MONY also have agreed to impose a permanent expense limitation with respect to such amounts, as summarized below. 17. The following chart compares the fees paid for advisory services and the total annual operating expenses (before and after any waivers and reimbursements) for the fiscal year ended December 31, 2005, expressed as an annual percentage of average daily net assets, of the shares of the T. Rowe Price Fixed Income Series, Inc.— Limited-Term Bond Portfolio (the ‘‘Removed Portfolio’’ for purposes of this discussion) and the Class IA shares of the EQ/Short Duration Bond Portfolio (the ‘‘Replacement Portfolio’’ for purposes of this discussion). The total annual operating expenses of the Replacement Portfolio have been restated to reflect recent changes to the administration fees charged with respect to that Portfolio (as described above). Class IA shares of the Replacement Portfolio and the shares of the Removed Portfolio have not adopted plans pursuant to Rule 12b–1 under the 1940 Act. T. Rowe Price Fixed Income Series, Inc.— Limited-Term Bond Portfolio (percent) Management Fee 10 ................................................................................................................................................. Rule 12b–1 Fee ....................................................................................................................................................... Other Expenses ....................................................................................................................................................... Total Annual Operating Expenses ........................................................................................................................... Less Fee Waiver/Expense Reimbursement 11 ........................................................................................................ Net Annual Operating Expenses ............................................................................................................................. For the fiscal year ended December 31, 2005, the annual operating expense ratio of the Replacement Portfolio (before and after waivers and reimbursements) was lower than the annual operating expense ratio of the Removed Portfolio due primarily to the Replacement Portfolio’s lower management fee rate. In addition, the Class IA shares of the Replacement Portfolio are subject to a 0.60% annual expense limit, while the shares of the Removed Portfolio are not subject to any expense limit. Moreover, as of December 31, 2005, the assets of the Replacement Portfolio were approximately $1.3 billion, while the assets in the Removed Portfolio were approximately $86.5 million. It is anticipated that the Replacement Portfolio’s net annual operating expense ratio will be lower than the Removed Portfolio’s net annual operating expense ratio immediately after the Substitution due to the lower management fee rate and economies of scale from the substantially larger asset base. The Section 26 Applicants assert that the proposed Substitution of the Replacement Portfolio for the Removed Portfolio will therefore benefit the Contract owners by lowering the annual operating expense ratio. To ensure that Contract owners with amounts allocated to the Removed Portfolio on the date of the Substitution do not incur higher expenses with respect to such amounts for a period of two years after the Substitution, MLOA and MONY also have agreed to impose a two-year expense limitation with respect to such amounts, as summarized below. 18. The following chart compares the fees paid for advisory services and the EQ/Short Duration Bond Portfolio (percent) 0.70 None None 0.70 N/A 0.70 0.45 None 0.14 0.59 N/A 0.59 total annual operating expenses (before and after any waivers and reimbursements) for the fiscal year ended December 31, 2005, expressed as an annual percentage of average daily net assets, of the shares of the T. Rowe Price Fixed Income Series, Inc.—Prime Reserve Portfolio (the ‘‘Removed Portfolio’’ for purposes of this discussion) and the Class IA shares of the EQ/Money Market Portfolio (the ‘‘Replacement Portfolio’’ for purposes of this discussion). The total annual operating expenses of the Replacement Portfolio have been restated to reflect recent changes to the administration fees charged with respect to that Portfolio (as described above). Class IA shares of the Replacement Portfolio and the shares of the Removed Portfolio have not adopted plans pursuant to Rule 12b–1 under the 1940 Act. T. Rowe Price Fixed Income Series, Inc.— Prime Reserve Portfolio (percent) bajohnson on PROD1PC69 with NOTICES Management Fee 12 ................................................................................................................................................. Rule 12b–1 Fee ....................................................................................................................................................... Other Expenses ....................................................................................................................................................... Total Annual Operating Expenses ........................................................................................................................... Less Fee Waiver/Expense Reimbursement ............................................................................................................ 10 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.450% of the first $750 million; 0.425% on the next $750 million; 0.400% on the next $1 billion; 0.380% on the next $2.5 billion; and 0.370% thereafter. VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 11 The Manager of the Replacement Portfolio has agreed to make payments or waive its management, administrative and other fees to limit the expenses of the Portfolio through April 30, 2007, pursuant to an expense limitation agreement, so that the Total Annual Operating Expenses of the Class IA shares of the Portfolio do not exceed 0.60%. PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 0.55 None None 0.55 N/A EQ/Money Market Portfolio (percent) 0.34 None 0.13 0.47 N/A 12 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.350% of the first $750 million; 0.325% on the next $750 million; 0.280% on the next $1 billion; 0.270% on the next $2.5 billion; and 0.250% thereafter. E:\FR\FM\17OCN1.SGM 17OCN1 61100 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices T. Rowe Price Fixed Income Series, Inc.— Prime Reserve Portfolio (percent) Net Annual Operating Expenses ............................................................................................................................. For the fiscal year ended December 31, 2005, the annual operating expense ratio of the Replacement Portfolio (before and after waivers and reimbursements) was lower than the annual operating expense ratio of the Removed Portfolio due primarily to the Replacement Portfolio’s lower management fee rate. In addition, as of December 31, 2005, the assets of the Replacement Portfolio were approximately $1.5 billion, while the assets in the Removed Portfolio were approximately $24.1 million. It is anticipated that the Replacement Portfolio’s net annual operating expense ratio will be lower than the Removed Portfolio’s net annual operating expense ratio immediately after the Substitution due to the lower management fee rate and economies of scale from the substantially larger asset base. The Section 26 Applicants assert that the proposed Substitution of the Replacement Portfolio for the Removed Portfolio will therefore benefit the Contract owners by lowering the annual operating expense ratio. To ensure that Contract owners with amounts allocated to the Removed Portfolio on the date of the Substitution do not incur higher expenses with respect to such amounts for a period of two years after the Substitution, MLOA and MONY also have agreed to impose a two-year expense limitation with respect to such amounts, as summarized below. 19. The following chart compares the fees paid for advisory services and the total annual operating expenses (before and after any waivers and reimbursements) for the fiscal year 0.55 Management Fee 13 ................................................................................................................................................. Rule 12b–1 Fee ....................................................................................................................................................... Other Expenses ....................................................................................................................................................... Total Annual Operating Expenses ........................................................................................................................... Less Fee Waiver/Expense Reimbursement 14 ........................................................................................................ Net Annual Operating Expenses ............................................................................................................................. bajohnson on PROD1PC69 with NOTICES 13 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.750% of the first $1 billion; 0.700% on the next $1 billion; 0.675% on the next $3 billion; 0.650% on the next $5 billion; and 0.625% thereafter. 14 The Manager of the Replacement Portfolio has agreed to make payments or waive its management, administrative and other fees to limit the expenses of the Portfolio through April 30, 2007, pursuant to an expense limitation agreement, so that the Total Annual Operating Expenses of the Class IA shares of the Portfolio do not exceed 0.85%. VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 of December 31, 2005, the assets of the Replacement Portfolio were approximately $2.3 billion, while the assets in the Removed Portfolio were approximately $467.5 million. It is anticipated that the Replacement Portfolio’s net annual operating expense ratio will be lower than the Removed Portfolio’s net annual operating expense ratio immediately after the Substitution due to the lower management fee rate, economies of scale from the substantially larger asset base and the expense limitation arrangement in effect. The Section 26 Applicants assert that the proposed Substitution of the Replacement Portfolio for the Removed Portfolio will therefore benefit the Contract owners by lowering the annual operating expense ratio. To ensure that Contract owners with amounts allocated to the Removed Portfolio on the date of the Substitution do not incur higher expenses with respect to such amounts PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 0.47 ended December 31, 2005, expressed as an annual percentage of average daily net assets, of the shares of the T. Rowe Price International Series, Inc.— International Stock Portfolio (the ‘‘Removed Portfolio’’ for purposes of this discussion) and the Class IA shares of the EQ/Alliance International Portfolio (the ‘‘Replacement Portfolio’’ for purposes of this discussion). The total annual operating expenses of the Replacement Portfolio have been restated to reflect recent changes to the administration fees charged with respect to that Portfolio (as described above). Class IA shares of the Replacement Portfolio and the shares of the Removed Portfolio have not adopted plans pursuant to Rule 12b–1 under the 1940 Act. T. Rowe Price International Series, Inc.— International Stock Portfolio (percent) For the fiscal year ended December 31, 2005, the annual operating expense ratio of the Replacement Portfolio (before and after waivers and reimbursements) was lower than the annual operating expense ratio of the Removed Portfolio due primarily to the Replacement Portfolio’s lower management fee rate and an expense limitation arrangement in effect for the Replacement Portfolio. The Removed Portfolio is not subject to any expense limitation arrangement. In addition, as EQ/Money Market Portfolio (percent) 1.05 None None 1.05 N/A 1.05 EQ/Alliance International Portfolio (percent) 0.72 None 0.21 0.93 (0.08) 0.85 for a period of two years after the Substitution, MLOA and MONY also have agreed to impose a two-year expense limitation with respect to such amounts, as summarized below. 20. The following chart compares the fees paid for advisory services and the total annual operating expenses (before and after any waivers and reimbursements) for the fiscal year ended December 31, 2005, expressed as an annual percentage of average daily net assets, of the Class I shares of The Universal Institutional Funds, Inc.— Emerging Markets Equity Portfolio (the ‘‘Removed Portfolio’’ for purposes of this discussion) and the Class IA shares of the EQ/Van Kampen Emerging Markets Equity Portfolio (the ‘‘Replacement Portfolio’’ for purposes of this discussion). The total annual operating expenses of the Replacement Portfolio have been restated to reflect recent changes to the administration E:\FR\FM\17OCN1.SGM 17OCN1 61101 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices fees charged with respect to that Portfolio (as described above). Class IA shares of the Replacement Portfolio and the Class I shares of the Removed Portfolio have not adopted plans pursuant to Rule 12b–1 under the 1940 Act. The Universal Institutional Funds, Inc.— Emerging Markets Equity Portfolio (percent) EQ/Van Kampen Emerging Markets Equity Portfolio (percent) 1.25 None 0.41 1.66 (0.01) 1.65 1.15 None 0.48 1.63 (0.08) 1.55 Management Fee 15 ............................................................................................................................................. Rule 12b–1 Fee ................................................................................................................................................... Other Expenses ................................................................................................................................................... Total Annual Operating Expenses ....................................................................................................................... Less Fee Waiver/Expense Reimbursement 16 .................................................................................................... Net Annual Operating Expenses ......................................................................................................................... For the fiscal year ended December 31, 2005, the annual operating expense ratio of the Replacement Portfolio (before and after waivers and reimbursements) was lower than the annual operating expense ratio of the Removed Portfolio due primarily to the Replacement Portfolio’s lower management fee rate and an expense limitation arrangement in effect for the Replacement Portfolio. In addition, as of December 31, 2005, the assets of the Replacement Portfolio were approximately $1.3 billion, while the assets in the Removed Portfolio were approximately $740.0 million. It is anticipated that the Replacement Portfolio’s net annual operating expense ratio will be lower than the Removed Portfolio’s net annual operating expense ratio immediately after the Substitution due to the lower management fee rate, economies of scale from the substantially larger asset base and the expense limitation arrangement in effect. The Section 26 Applicants assert that the proposed Substitution of the Replacement Portfolio for the Removed Portfolio will therefore benefit the Contract owners by lowering the annual operating expense ratio. To ensure that Contract owners with amounts allocated to the Removed Portfolio on the date of the Substitution do not incur higher expenses with respect to such amounts for a period of two years after the Substitution, MLOA and MONY also have agreed to impose a two-year expense limitation with respect to such amounts, as summarized below. 21. The following chart compares the fees paid for advisory services and the total annual operating expenses (before and after any waivers and reimbursements) for the fiscal year ended December 31, 2005, expressed as an annual percentage of average daily net assets, of the shares of the Old Mutual Insurance Series FundlMidCap Portfolio (the ‘‘Removed Portfolio’’ for purposes of this discussion) and the Class IA shares of the EQ/FI Mid Cap Portfolio (the ‘‘Replacement Portfolio’’ for purposes of this discussion). The total annual operating expenses of the Replacement Portfolio have been restated to reflect recent changes to the administration fees charged with respect to that Portfolio (as described above). Class IA shares of the Replacement Portfolio and the shares of the Removed Portfolio have not adopted plans pursuant to Rule 12b–1 under the 1940 Act. Old Mutual Insurance Series Fund—Mid-Cap Portfolio (percent) EQ/FI Mid Cap Portfolio (percent) 0.95 None 0.22 1.17 (0.18) 0.99 0.69 None 0.14 0.83 (0.08) 0.75 Management Fee 17 ............................................................................................................................................. Rule 12b–1 Fee ................................................................................................................................................... Other Expenses ................................................................................................................................................... Total Annual Operating Expenses ....................................................................................................................... Less Fee Waiver/Expense Reimbursement 18 .................................................................................................... Net Annual Operating Expenses ......................................................................................................................... bajohnson on PROD1PC69 with NOTICES For the fiscal year ended December 31, 2005, the annual operating expense 15 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 1.150% of the first $1 billion; 1.100% on the next $1 billion; 1.075% on the next $3 billion; 1.050% on the next $5 billion; and 1.025% thereafter. The management fee schedule for the Removed Portfolio on an annual basis is equal to 1.25% of the first $500 million; 1.20% from $500 million to $1 billion; 1.15% from $1 billion to $2.5 billion; and 1.00% thereafter. 16 The Manager of the Replacement Portfolio has agreed to make payments or waive its management, administrative and other fees to limit the expenses of the Portfolio through April 30, 2007, pursuant to an expense limitation agreement, so that the Total Annual Operating Expenses of the Class IA shares of the Portfolio do not exceed 1.55%. With respect to the Removed Portfolio, the investment adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio to the extent that the Total Annual Operating Expenses exceed 1.65% for the fiscal year ended December 31, 2006. 17 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.700% of the first $1 billion; 0.65% on the next $1 billion; 0.625% on the next $3 billion; 0.600% on the next $5 billion; and 0.575% thereafter. The management fee schedule for the Removed Portfolio on an annual basis is equal to 0.950% of the first $300 million; 0.900% from $300 million to $500 million; 0.850% from $500 million to $750 million; 0.800% from $750 million to $1 billion; 0.750% from $1 billion to $1.5 billion; 0.700% from $1.5 billion to $2.0 billion; and 0.65% thereafter. 18 The Manager of the Replacement Portfolio has agreed to make payments or waive its management, administrative and other fees to limit the expenses of the Portfolio through April 30, 2007, pursuant to an expense limitation agreement, so that the Total Annual Operating Expenses of the Class IA shares of the Portfolio do not exceed 0.75%. With respect to the Removed Portfolio, the investment adviser Continued VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 61102 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices ratio for the Replacement Portfolio (before and after waivers and reimbursements) was lower than the annual operating expense ratio for the Removed Portfolio due to a lower management fee rate and a lower rate of ‘‘other expenses.’’ In addition, the Class IA shares of the Replacement Portfolio are subject to a 0.75 annual expense limit, while the shares of the Removed Portfolio are subject to a 0.99 fee cap. Moreover, as of December 31, 2005, the assets of the Replacement Portfolio were approximately $1.4 billion, while the assets in the Removed Portfolio were approximately $54.8 million. It is anticipated that the Replacement Portfolio’s net annual operating expense ratio will be lower than the Removed Portfolio’s net annual operating expense ratio immediately after the Substitution due to the lower management fee rate, the lower rate of other expenses, economies of scale from the substantially larger asset base and the expense limitation arrangement in effect. The Section 26 Applicants assert that the proposed Substitution of the Replacement Portfolio for the Removed Portfolio will therefore benefit the Contract owners by lowering the annual operating expense ratio. To ensure that Contract owners with amounts allocated to the Removed Portfolio on the date of the Substitution do not incur higher expenses with respect to such amounts for a period of two years after the Substitution, MLOA and MONY also have agreed to impose a two-year expense limitation with respect to such amounts, as summarized below. 22. The following chart compares the fees paid for advisory services and the total annual operating expenses (before and after any waivers and reimbursements) for the fiscal year ended December 31, 2005, expressed as an annual percentage of average daily net assets, of the Class VC shares of the Lord Abbett Series Fund—Mid-Cap Value Portfolio (the ‘‘Removed Portfolio’’ for purposes of this discussion) and the Class IA shares of the EQ/Lord Abbett Mid Cap Value Portfolio (the ‘‘Replacement Portfolio’’ for purposes of this discussion). The total annual operating expenses of the Replacement Portfolio have been restated to reflect recent changes to the administration fees charged with respect to that Portfolio (as described above). Class IA shares of the Replacement Portfolio and the Class VC shares of the Removed Portfolio have not adopted plans pursuant to Rule 12b–1 under the 1940 Act. Lord Abbett Series Fund— Mid-Cap Value Portfolio (percent) EQ/Lord Abbett Mid Cap Value Portfolio (percent) 0.74 None 0.38 1.12 N/A 1.12 0.70 None 0.40 1.10 (0.30) 0.80 Management Fee 19 ............................................................................................................................................... Rule 12b–1 Fee ..................................................................................................................................................... Other Expenses ..................................................................................................................................................... Total Annual Operating Expenses ......................................................................................................................... Less Fee Waiver/Expense Reimbursement 20 ...................................................................................................... Net Annual Operating Expenses ........................................................................................................................... bajohnson on PROD1PC69 with NOTICES For the fiscal year ended December 31, 2005, the annual operating expense ratio of the Replacement Portfolio (before and after waivers and reimbursements) was lower than the annual operating expense ratio for the Removed Portfolio due primarily to the lower management fee rate for the Replacement Portfolio and an expense limitation arrangement in effect for the Replacement Portfolio. As of December 31, 2005, the assets of the Replacement Portfolio were approximately $123.6 million, while the assets in the Removed Portfolio were approximately $1.2 billion. Although the Replacement Portfolio is smaller than the Removed Portfolio, it is anticipated that the Replacement Portfolio’s net annual operating expense ratio will be lower than the Removed Portfolio’s net annual operating expense ratio immediately after the Substitution due to the lower management fee rate and the expense limitation arrangement in effect. The Section 26 Applicants assert that the proposed Substitution of the Replacement Portfolio for the Removed Portfolio will therefore benefit the Contract owners by lowering the annual operating expense ratio. To ensure that Contract owners with amounts allocated to the Removed Portfolio on the date of the Substitution do not incur higher expenses with respect to such amounts for a period of two years after the Substitution, MLOA and MONY also have agreed to impose a two-year expense limitation with respect to such amounts, as summarized below. 23. The following chart compares the fees paid for advisory services and the total annual operating expenses (before and after any waivers and reimbursements) for the fiscal year ended December 31, 2005, expressed as an annual percentage of average daily net assets, of the Administrative Class shares of the PIMCO Variable Insurance Trust—Real Return Portfolio (the ‘‘Removed Portfolio’’ for purposes of this discussion) and the Class IA shares of the EQ/JPMorgan Core Bond Portfolio (the ‘‘Replacement Portfolio’’ for purposes of this discussion). The total annual operating expenses of the Replacement Portfolio have been restated to reflect recent changes to the administration fees charged with respect to that Portfolio (as described above). Class IA shares of the Replacement Portfolio and the Administrative Class shares of the Removed Portfolio have not adopted plans pursuant to Rule 12b–1 under the 1940 Act. has contractually agreed to waive a portion of its management fee or to pay certain expenses of the Portfolio to the extent that the Total Annual Operating Expenses exceed 0.99% for the fiscal year ended December 31, 2006. 19 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.700% of the first $1 billion; 0.650% on the next $1 billion; 0.625% on the next $3 billion; 0.600% on the next $5 billion; and 0.575% thereafter. The management fee schedule for the Removed Portfolio on an annual basis is equal to 0.75% of the $1 billion; 0.70% on the next $1 billion; and 0.65% over $2 billion. 20 The Manager of the Replacement Portfolio has agreed to make payments or waive its management, administrative and other fees to limit the expenses of the Portfolio through April 30, 2007, pursuant to an expense limitation agreement, so that the Total Annual Operating Expenses of the Class IA shares of the Portfolio do not exceed 0.80%. VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 61103 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices PIMCO Variable Insurance Trust—Real Return Portfolio (percent) EQ/JPMorgan Core Bond Portfolio (percent) 0.25 None 0.41 0.66 N/A 0.66 0.44 None 0.13 0.57 N/A 0.57 Management Fee 21 ............................................................................................................................................... Rule 12b–1 Fee ..................................................................................................................................................... Other Expenses ..................................................................................................................................................... Total Annual Operating Expenses ......................................................................................................................... Less Fee Waiver/Expense Reimbursement 22 ...................................................................................................... Net Annual Operating Expenses ........................................................................................................................... For the fiscal year ended December 31, 2005, the annual operating expense ratio of the Replacement Portfolio was lower than the annual operating expense ratio of the Removed Portfolio, even though the management fee rate for the Replacement Portfolio was higher than the Removed Portfolio’s management fee rate. The lower total annual operating expense ratio of the Replacement Portfolio was due primarily to the Portfolio’s lower rate of ‘‘other expenses.’’ In addition, the Class IA shares of the Replacement Portfolio are subject to a 0.60% annual expense limit, while the Administrative Class shares of the Removed Portfolio are not subject to any expense limit. Moreover, as of December 31, 2005, the assets of the Replacement Portfolio were approximately $1.4 billion, while the assets in the Removed Portfolio were approximately $1.1 billion. It is anticipated that the Replacement Portfolio’s net annual operating expense ratio will be lower than the Removed Portfolio’s net annual operating expense ratio immediately after the Substitution due primarily to the lower rate of ‘‘other expenses’’ due to economies of scale as well as the expense limitation arrangement in effect. The Section 26 Applicants assert that the proposed Substitution of the Replacement Portfolio for the Removed Portfolio will therefore benefit the Contract owners by lowering the annual operating expense ratio. To ensure that Contract owners with amounts allocated to the Removed Portfolio on the date of the Substitution do not incur higher expenses with respect to such amounts after the Substitution, MLOA and MONY also have agreed to impose a permanent expense limitation with respect to such amounts, as summarized below. 24. The following chart compares the fees paid for advisory services and the total annual operating expenses (before and after any waivers and reimbursements) for the fiscal year ended December 31, 2005, expressed as an annual percentage of average daily net assets, of the Class VC shares of the Lord Abbett Series Fund—BondDebenture Portfolio (the ‘‘Removed Portfolio’’ for purposes of this discussion) and the Class A shares of the AXA Premier VIP High Yield Portfolio (the ‘‘Replacement Portfolio’’ for purposes of this discussion). Class A shares of the Replacement Portfolio and the Class VC shares of the Removed Portfolio have not adopted plans pursuant to Rule 12b–1 under the 1940 Act. Lord Abbett Series Fund— Bond-Debenture Portfolio (percent) AXA Premier VIP High Yield Portfolio (percent) 0.50 None 0.44 0.94 (0.04) 0.90 0.58 None 0.18 0.76 N/A 0.76 Management Fee 23 ............................................................................................................................................... Rule 12b–1 Fee ..................................................................................................................................................... Other Expenses 24 ................................................................................................................................................. Total Annual Operating Expenses ......................................................................................................................... Less Fee Waiver/Expense Reimbursement .......................................................................................................... Net Annual Operating Expenses ........................................................................................................................... bajohnson on PROD1PC69 with NOTICES For the fiscal year ended December 31, 2005, the annual operating expense ratio of the Replacement Portfolio was lower than the annual operating expense ratio of the Removed Portfolio (before and after waivers and reimbursements), even though the management fee rate for the Replacement Portfolio was higher than the Removed Portfolio’s management fee rate. The lower annual operating expense ratio was due primarily to the Replacement Portfolio’s lower rate of ‘‘other expenses.’’ In addition, as of December 31, 2005, the assets of the Replacement Portfolio were approximately $1.8 billion, while the assets in the Removed Portfolio were approximately $212.3 million. It is anticipated that the Replacement Portfolio’s total annual operating expense ratio will be lower than the Removed Portfolio’s total annual operating expense ratio immediately 21 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.450% of the first $750 million; 0.425% on the next $750 million; 0.400% on the next $1 billion; 0.380% on the next $2.5 billion; and 0.370% thereafter. 22 The Manager of the Replacement Portfolio has agreed to make payments or waive its management, administrative and other fees to limit the expenses of the Portfolio through April 30, 2007, pursuant to an expense limitation agreement, so that the Total Annual Operating Expenses of the Class IA shares of the Portfolio do not exceed 0.60%. 23 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.600% of the first $750 million; 0.575% on the next $750 million; 0.550% on the next $1 billion; 0.530% on the next $2.5 billion; and 0.520% thereafter. The management fee schedule for the Removed Portfolio on an annual basis, as of January 1, 2006, is equal to 0.50% of the first $1 billion; and 0.45% thereafter. However, the management fee rate for the fiscal year ended December 31, 2005, as reflected in the total annual operating expenses table above, was 0.50% and did not include breakpoints. 24 With respect to the Removed Portfolio, the investment adviser has contractually agreed through April 30, 2007 to reimburse a portion of the Portfolio’s expenses to maintain its ‘‘Other Expenses’’ at an annualized rate of 0.40%. VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 bajohnson on PROD1PC69 with NOTICES 61104 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices after the Substitution, notwithstanding the difference in the management fee rates, due primarily to the lower rate of other expenses as a result of economies of scale attributable to the Replacement Portfolio’s substantially larger asset base. The Section 26 Applicants assert that the proposed Substitution of the Replacement Portfolio for the Removed Portfolio will therefore benefit the Contract owners by lowering the annual operating expense ratio. To ensure that Contract owners with amounts allocated to the Removed Portfolio on the date of the Substitution do not incur higher expenses with respect to such amounts after the Substitution, MLOA and MONY also have agreed to impose a permanent expense limitation with respect to such amounts, as summarized below. 25. Appendix A describes each proposed substitution with respect to each portfolio’s comparative performance history. Information regarding the average annual total returns of each Replacement and Removed Portfolio for the one-, fiveand ten-year periods (or since inception, if shorter) ended December 31, 2005 is included in the Appendix. 26. By supplements to the prospectuses for the Contracts and Separate Accounts which will be delivered to Contract owners at least thirty (30) days before the Substitutions, each Insurance Company will notify all Contract owners of its intention to take the necessary actions, including seeking the order requested by the Application, to substitute shares of the Replacement Portfolios for the Removed Portfolios as described in this notice. The supplements will advise Contract owners that from the date of the supplement until the date of the proposed Substitutions, owners are permitted to make transfers of Contract value (or annuity unit value) out of each Removed Portfolio subaccount to one or more other subaccounts without the transfers (or exchanges) being treated as one of a limited number of permitted transfers (or exchanges) or a limited number of transfers (or exchanges) permitted without a transfer charge. The supplements also will inform Contract owners that the Insurance Companies will not exercise any rights reserved under any Contract to impose additional restrictions on transfers until at least 30 days after each proposed Substitution (other than with respect to implementing policies and procedures designed to prevent disruptive transfer and other market timing activity). The supplements also will advise Contract owners how to provide instructions on reallocating Contract value in light of VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 the proposed Substitutions. In addition, the supplements will advise Contract owners that any Contract value remaining in a Removed Portfolio subaccount on the Substitution Date will be transferred to the corresponding Replacement Portfolio subaccount and that the Substitutions will take place at relative net asset value. The supplements will also advise Contract owners that for at least 30 days following each proposed Substitution, the Insurance Companies will permit Contract owners to make transfers of Contract value (or annuity unit value) out of each Replacement Portfolio subaccount to one or more other subaccounts without the transfers (or exchanges) 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, as applicable. 27. Each Insurance Company also will send affected Contract owners prospectuses for the Replacement Portfolio prior to the Substitutions. Also the Section 26 Applicants will send the appropriate prospectus supplement (or other notice, in the case of Contracts no longer actively marketed and for which there are a relatively small number of existing Contract owners (‘‘Inactive Contracts’’)), containing this disclosure to all existing Contract owners. Prospective purchasers and new purchasers of Contracts will be provided with a Contract prospectus and the supplement containing disclosure regarding the Substitutions, as well as a prospectus and/or supplement for the Replacement Portfolios. Applicants represent that the Contract prospectus and the supplement and the prospectus and/or supplement for the Replacement Portfolios will be delivered to purchasers of new Contracts in accordance with all applicable legal requirements. 28. In addition to the prospectus supplements distributed to Contract owners, within five business days after the proposed Substitutions are completed, Contract owners will be sent a written notice of the Substitutions informing them that each Substitution was carried out and that they may transfer all Contract value or cash value under a Contract invested in any one of the subaccounts on the date of the notice to one or more other subaccounts available under their Contract at no cost and without regard to the usual limit on the frequency of transfers among the variable account options. The notice will also reiterate that (other than with respect to implementing policies and procedures designed to prevent disruptive transfers and other market PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 timing activity) each 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 each proposed Substitution. The Insurance Companies will also send each Contract owner a current prospectus for each of the relevant Replacement Portfolios to the extent they have not previously received a current version. Each Insurance Company also is seeking approval of the proposed Substitutions from any state insurance regulators whose approval may be necessary or appropriate. 29. The proposed Substitutions will take place at relative net asset value determined on the date of the Substitutions pursuant to Section 22 of the 1940 Act and Rule 22c–1 thereunder, 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. Each Substitution will be effected by redeeming shares of the Removed Portfolio in cash and/or inkind on the Substitution Date at their net asset value and using the proceeds of those redemptions to purchase shares of the Replacement Portfolio at their net asset value on the same date. All in-kind redemptions from a Removed Portfolio of which any of the Applicants is an affiliated person will be effected in accordance with the conditions set forth in the no-action letter issued by the staff of the Commission to Signature Financial Group, Inc. (Dec. 28, 1999). 30. Contract owners will not incur any fees or charges as a result of the proposed Substitutions, nor will their rights or insurance benefits or the Insurance Companies’ obligations under the Contracts be altered in any way. All expenses incurred in connection with the proposed Substitutions, including any 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 Contract owners to be greater after the proposed Substitutions than before the proposed Substitutions. All Contract-level fees will remain the same after the proposed Substitutions. No fees will be charged on the transfers made at the time of the proposed Substitutions because each proposed Substitution will not be treated as a transfer for purposes of assessing transfer charges or computing E:\FR\FM\17OCN1.SGM 17OCN1 bajohnson on PROD1PC69 with NOTICES Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices the number of permissible transfers under the Contracts. 31. With respect to 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 two years following the date of the proposed Substitutions, the subaccounts investing in the Replacement Portfolios such that the sum of each Replacements Portfolio’s net operating expense ratio (taking into account any expense waivers or reimbursements) and subaccount expense ratio (asset-based fees and charges deducted on a daily basis from subaccount assets and reflected in the calculations of subaccount unit value) for such period will not exceed, on an annualized basis, the sum of the corresponding Removed Portfolio’s net operating expense ratio (taking into account any expense waivers or reimbursements) and subaccount expense ratio for fiscal year 2005, except for the Substitutions involving the Lord Abbett Series Fund— Growth and Income Portfolio, PIMCO Variable Insurance Trust—Real Return Portfolio and Lord Abbett Series Fund— Bond-Debenture Portfolio. With respect to the Lord Abbett Series Fund—Growth and Income Portfolio, PIMCO Variable Insurance Trust—Real Return Portfolio and Lord Abbett Series Fund—BondDebenture Portfolio, the Insurance Companies will reimburse, on the last business day of each fiscal period (not to exceed a fiscal quarter) for the life of each Contract outstanding on the date of the proposed Substitutions, the subaccounts investing in the Replacement Portfolios such that the sum of each Replacement Portfolio’s net operating expense ratio (taking into account any expense waivers or reimbursements) and subaccount expense ratio (asset-based fees and charges deducted on a daily basis from subaccount assets and reflected in the calculations of subaccount unit value) for such period will not exceed, on an annualized basis, the sum of the corresponding Removed Portfolio’s net operating expense ratio (taking into account any expense waivers or reimbursements) and subaccount expense ratio for fiscal year 2005. 32. For a period of two years from the date of each proposed Substitution, except the Substitutions involving the Lord Abbett Series Fund—Growth and Income Portfolio, PIMCO Variable Insurance Trust—Real Return Portfolio and Lord Abbett Series Fund—BondDebenture Portfolio, the Insurance Companies will not increase total Separate Account charges (net of any VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 waivers or reimbursements) for any existing owner of the Contracts on the date of the proposed Substitutions. With respect to the Lord Abbett Series Fund—Growth and Income Portfolio, PIMCO Variable Insurance Trust—Real Return Portfolio and Lord Abbett Series Fund—Bond-Debenture Portfolio, at no time after the date of the proposed Substitutions will the Insurance Companies increase the total Separate Account charges (net of any waiver or reimbursements) of each Contract outstanding on the date of the proposed Substitutions. Applicants’ Legal Analysis 1. Section 26(c) of the 1940 Act prohibits the depositor of a registered unit investment trust that invests in the securities of a single issuer from substituting the securities of another issuer without Commission approval. Section 26(c) provides that ‘‘[t]he 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 provisions of this title.’’ Section 26(c) protects the expectation of investors that the unit investment trust will accumulate shares of a particular issuer and is intended to ensure that unnecessary or burdensome sales loads, additional reinvestment costs and other charges will not be incurred due to unapproved substitutions of securities. 2. The proposed Substitutions involve a substitution of securities within the meaning of Section 26(c) of the 1940 Act. The Section 26 Applicants, therefore, request an order from the Commission pursuant to Section 26(c) approving the proposed Substitutions. 3. The Section 26 Applicants have reserved the right under the Contracts to substitute shares of another eligible investment fund for one of the current investment funds offered as a funding option under the Contracts. The prospectuses for the Contracts and the Separate Accounts contain appropriate disclosure of this right. The Section 26 Applicants have reserved this right of substitution both to protect themselves and their Contract owners in situations where either might be harmed or disadvantaged by events affecting the issuer of the securities held by a Separate Account and to preserve the opportunity to replace such shares in situations where a substitution could benefit the Insurance Companies and their respective Contract owners. 4. Applicants assert that each Replacement Portfolio and its corresponding Removed Portfolio have similar, and in some cases substantially PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 61105 similar or identical, investment objectives, policies and risks. In addition, the proposed Substitutions retain for Contract owners the investment flexibility that is a central feature of the Contracts. According to the Applicants, any impact on the investment programs of affected Contract owners, including the appropriateness of the available investment options, should therefore be negligible. 5. Applicants maintain that the ultimate effect of each Substitution would be to remove overlapping and duplicative investment options and that each Substitution will permit each Insurance Company to present information to its Contract owners in a simpler and more concise manner. Applicants anticipate that after each proposed Substitution, Contract owners will be provided with disclosure documents that contain a simpler presentation of the available investment options under their Contracts. 6. Applicants also state that, as a result of each proposed Substitution, Contract owners with subaccount balances invested in each Replacement Portfolio will have lower net operating expenses. Each Insurance Company has agreed to impose a two year expense limit, except with respect to the proposed Substitutions involving the Lord Abbett Series Fund—Growth and Income Portfolio, PIMCO Variable Insurance Trust—Real Return Portfolio and Lord Abbett Series Fund—BondDebenture Portfolio for which each Insurance Company has agreed to impose an expense limit for the life of each Contract, so that the sum of each Replacement Portfolio’s net operating expense ratio (taking into account any expense waivers and reimbursements) and subaccount expense ratio (assetbased charges deducted on a daily basis from subaccount assets and reflected in the calculation of subaccount unit values) for each fiscal period (not to exceed a fiscal quarter) will not exceed, on an annualized basis, the sum of the corresponding Removed Portfolio’s net operating expense ratio and subaccount expense ratio for fiscal year 2005. 7. Applicants contend that, therefore, each Substitution protects the Contract owners who have allocated Contract value to each Removed Portfolio by: (i) Providing an underlying investment option for subaccounts invested in the Removed Portfolio that is similar to the Removed Portfolio; (ii) providing such Contract owners with simpler disclosure documents; and (iii) providing such Contract owners with an investment option that would have net operating E:\FR\FM\17OCN1.SGM 17OCN1 bajohnson on PROD1PC69 with NOTICES 61106 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices expenses that are lower than the current investment option. 8. Applicants assert that the proposed Substitutions are not of the type that Section 26(c) was designed to prevent. Unlike traditional unit investment trusts where a depositor could only substitute investment securities 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 values and cash values into and among other investment options available to Contract owners under their Contracts. Additionally, the Section 26 Applicants claim that the Substitutions will not, in any manner, reduce the nature or quality of the available investment options. Moreover, the Section 26 Applicants will offer Contract owners the opportunity to transfer amounts out of the affected subaccounts without any cost or other penalty that may otherwise have been imposed for a period beginning on the date of the supplement notifying Contract owners of the proposed Substitutions (which supplement will be delivered to Contract owners at least thirty (30) days before the Substitutions) and ending no earlier than thirty (30) days after the Substitution Date. The Substitutions, therefore, will not result in the type of costly forced redemption that Section 26(c) was designed to prevent. 9. Applicants maintain that the proposed Substitutions are also unlike the type of substitution that Section 26(c) was designed to prevent in that by purchasing a Contract, Contract owners select much more than a particular underlying fund in which to invest their Contract values. They also select the specific type of insurance coverage offered by the Section 26 Applicants under the applicable Contract, as well as numerous other rights and privileges set forth in the Contract. Contract owners also may have considered the Insurance Company’s size, financial condition, and its reputation for service in selecting their Contract. These factors will not change as a result of the proposed Substitution. 10. Section 17(a)(1) of the 1940 Act prohibits any affiliated person (as defined in Section 2(a)(3) of the 1940 Act) of a registered investment company, or any affiliated person of such a person, acting as principal, from knowingly selling any security or other property to that company. Section 17(a)(2) of the 1940 Act generally prohibits the same persons, acting as principals, from knowingly purchasing any security or other property from the registered investment company. VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 11. The Section 17 Applicants state that shares held by a separate account of an insurance company are legally owned by the insurance company and that, the Insurance Companies and their affiliates collectively own substantially all of the shares of EQAT. Accordingly, EQAT and its respective Portfolios are arguably under the control of the Insurance Companies, notwithstanding the fact that the Contract owners may be considered the beneficial owners of those shares held in the Separate Accounts. If EQAT is under the common control of the Insurance Companies, then each Insurance Company is an affiliated person or an affiliated person of an affiliated person of EQAT and its respective Portfolios. If EQAT and its respective Portfolios are under the control of the Insurance Companies, then EQAT and its respective affiliates are affiliated persons of the Insurance Companies. 12. The Section 17 Applicants note that, regardless of whether or not the Insurance Companies can be considered to control EQAT and its respective Portfolios, because the Insurance Companies and their affiliates own of record more than 5% of the shares of each of them and are under common control with each Replacement Portfolio’s investment adviser, the Insurance Companies are affiliated persons of EQAT and its respective Portfolios. Likewise, EQAT’s respective Portfolios are each an affiliated person of the Insurance Companies. 13. In addition to the above, the Insurance Companies, through their respective Separate Accounts, in the aggregate own more than 5% of the outstanding shares of certain of the Removed Portfolios, including the Dreyfus Variable Investment Fund— International Value Portfolio, Lord Abbett Series Fund—Bond-Debenture Portfolio, T. Rowe Price Fixed Income Series, Inc.—Prime Reserve Portfolio, Old Mutual Insurance Series Fund— Mid-Cap Portfolio and PIMCO Variable Insurance Trust—Real Return Portfolio. Therefore, each Insurance Company is an affiliated person of those portfolios. 14. The Section 17 Applicants state that the proposed In-Kind Transactions could be seen as the indirect purchase of shares of certain Replacement Portfolios with portfolio securities of certain Removed Portfolios and the indirect sale of portfolio securities of certain Removed Portfolios for shares of certain Replacement Portfolios. Pursuant to this analysis, the proposed In-Kind Transactions also could be categorized as a purchase of shares of certain Replacement Portfolios by certain Removed Portfolios, acting as PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 principal, and a sale of portfolio securities by certain Removed Portfolios, acting as principal, to certain Replacement Portfolios. In addition, the proposed In-Kind Transactions could be viewed as a purchase of securities from certain Removed Portfolios, and a sale of securities to certain Replacement Portfolios, by MONY or MLOA (or their Separate Accounts), acting as principal. If categorized in this manner, the proposed In-Kind Transactions may be deemed to contravene Section 17(a) due to the affiliated status of these participants. 15. Rule 17a–7 under the 1940 Act exempts from the prohibitions of Section 17(a), subject to certain enumerated conditions, a purchase or sale transaction between registered investment companies or separate series of registered investment companies, which are affiliated persons, or affiliated persons of affiliated persons, of each other, between separate series of a registered investment company, or between a registered investment company or a separate series of a registered investment company and a person which is an affiliated person of such registered investment company (or affiliated person of such person) solely by reason of having a common investment adviser or investment advisers which are affiliated persons of each other, common directors, and/or common officers. 16. MONY, MLOA, their Separate Accounts, certain Removed Portfolios, and certain Replacement Portfolios, in connection with their participation in the proposed In-Kind Transactions, must rely on that portion of Rule 17a– 7 that requires that they be affiliated persons of each other solely by reason of having a common investment adviser or affiliated investment advisers, common directors, and/or common officers. That is not the case as detailed above. Moreover, one of the conditions enumerated in Rule 17a–7 requires that the transaction be a purchase or sale, for no consideration other than cash payment against prompt delivery of a security for which market quotations are readily available. If the proposed InKind Transactions are viewed as purchases and sales of securities, the consideration in the proposed redemptions of shares of certain Removed Portfolios and the proposed purchases of shares of certain Replacement Portfolios would not be cash, but would be the portfolio securities received from the Removed Portfolio. 17. Section 17(b) of the 1940 Act provides that the Commission may, upon application, issue an order E:\FR\FM\17OCN1.SGM 17OCN1 bajohnson on PROD1PC69 with NOTICES Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices exempting any proposed transaction from Section 17(a) if: (i) The terms of the proposed transactions are reasonable and fair and do not involve overreaching on the part of any person concerned; (ii) the proposed transactions are consistent with the policy of each registered investment company concerned; and (iii) the proposed transactions are consistent with the general purposes of the 1940 Act. 18. The Section 17 Applicants request an order pursuant to Section 17(b) of the 1940 Act exempting them from the provisions of Section 17(a) to the extent necessary to permit them to carry out the In-Kind Transactions in connection with the proposed Substitutions. 19. The Section 17 Applicants submit that the terms of the proposed In-Kind Transactions, 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 Section 17 Applicants also submit that the proposed In-Kind Transactions are consistent with the policies of the relevant Removed Portfolios and the relevant corresponding Replacement Portfolios, as recited in the current registration statement and reports of the relevant investment company filed with the Commission under the federal securities laws. Finally, the Section 17 Applicants submit that the proposed InKind Transactions are consistent with the general purposes of the 1940 Act. 20. The Section 17 Applicants state that they will assure themselves that the investment companies will carry out the proposed In-Kind Transactions in conformity with the conditions of Rule 17a–7 (or, as applicable, a Removed Portfolio’s and a Replacement Portfolio’s normal valuation procedures, as set forth in the relevant investment company’s registration statement), except that the consideration paid for the securities being purchased or sold will not be cash. The In-Kind Transactions will be effected at the respective net asset values of each Removed Portfolio and the corresponding Replacement Portfolio, as determined in accordance with the procedures disclosed in the Portfolios’ registration statements and as required by Rule 22c–1 under the 1940 Act. The In-Kind Transactions will not change the dollar value of any Contract owner’s investment in any of the Separate Accounts, the value of any Contract, the accumulation value or other value credited to any Contract, or the death benefit payable under any Contract. After the proposed In-Kind Transactions, the value of a Separate VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 Account’s investment in a Replacement Portfolio will equal the value of its investments in the Removed Portfolio (together with the value of any preexisting investments in the Replacement Portfolio) before the In-Kind Transactions. 21. When the Commission initially proposed and adopted Rule 17a–7, it noted that the purpose of the rule was to eliminate the filing and processing of applications ‘‘in circumstances where there appears to be no likelihood that the statutory finding for a specific exemption under Section 17(b) could not be made’’ by establishing ‘‘conditions as to the availability of the exemption to those situations where the Commission, upon the basis of its experience, considers that there is no likelihood of overreaching of the investment companies participating in the transaction.’’ When the Commission amended Rule 17a–7 in 1981 to cover transactions involving non-investment company affiliates, it indicated that such transactions could be reasonable and fair and not involve overreaching if appropriate conditions were imposed on the transaction. In this regard, the Section 17 Applicants state they will assure themselves that the In-Kind Transactions will be in substantial compliance with the conditions of Rule 17a–7 under the 1940 Act. The Section 17 Applicants assert that because the proposed In-Kind Transactions would comply in substance with the principal conditions of Rule 17a–7, the Commission should consider the extent to which the In-Kind Transactions would meet these or other similar conditions and issue an order if such conditions would provide the substance of the protections embodied in Rule 17a–7. 22. The Section 17 Applicants state that the proposed In-Kind Transactions will be effected based upon the independent current market price of the portfolio securities as specified in paragraph (b) of Rule 17a–7. The proposed In-Kind Transactions will comply with paragraph (d) of Rule 17a– 7 because no brokerage commission, fee or other remuneration (except for any customary transfer fees) will be paid to any party in connection with the proposed In-Kind Transactions. Furthermore, a written record of the proposed In-Kind Transactions will be maintained and preserved in accordance with paragraph (g) of Rule 17a–7. With respect to those securities for which market quotations are not readily available, the Substitutions will be effected in accordance with the relevant Removed Portfolios’ and the relevant corresponding Replacement Portfolios’ PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 61107 normal valuation procedures, as set forth in the registration statement for the relevant investment company. 23. Even though the proposed In-Kind Transactions will not comply with the cash consideration requirement of paragraph (a) of Rule 17a–7, the Section 17 Applicants state that the terms of the proposed In-Kind Transactions will offer to each of the relevant Removed Portfolios and each of the relevant Replacement Portfolios the same degree of protection from overreaching that Rule 17a–7 generally provides in connection with the purchase and sale of securities under that Rule in the ordinary course of business. In particular, the Insurance Companies and their affiliates cannot effect the proposed In-Kind Transactions at a price that is disadvantageous to any Replacement Portfolio. 24. The Section 17 Applicants represent that the proposed redemption of shares of each of the relevant Removed Portfolios will be consistent with the investment policies of each Removed Portfolio and the corresponding Replacement Portfolio, as recited in their respective current registration statements, provided that the shares are redeemed at their net asset value in conformity with Rule 22c–1 under the 1940 Act. Likewise, the proposed sale of shares of each of the relevant Replacement Portfolios for investment securities is consistent with the investment policies of the relevant Replacement Portfolio, as recited in the relevant Trust’s registration statement, provided that: (i) The shares are sold at their net asset value; and (ii) the investment securities are of the type and quality that a Replacement Portfolio could have acquired with the proceeds from the sale of its shares had the shares been sold for cash. To assure the second of these conditions is met, the Manager and relevant Adviser will examine the portfolio securities being offered to each Replacement Portfolio and accept only those securities as consideration for shares that it would have acquired for each such Portfolio in a cash transaction. 25. Applicants also assert that the proposed In-Kind Transactions are consistent with the general purposes of the 1940 Act and that the proposed InKind Transactions do not present any conditions or abuses that the 1940 Act was designed to prevent. In particular, Sections 1(b)(2) and 1(b)(3) of the 1940 Act state, among other things, that the national public interest and the interest of investors are adversely affected ‘‘when investment companies are organized, operated, managed, or their portfolio securities are selected in the E:\FR\FM\17OCN1.SGM 17OCN1 61108 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices interest of directors, officers, investment advisers, depositors, or other affiliated persons thereof, * * * or in the interest of other investment companies or persons engaged in other lines of business, rather than in the interest of all classes of such companies’ security holders; * * * when investment companies issue securities containing inequitable or discriminatory provisions, or fail to protect the preferences and privileges of holders in their outstanding securities.’’ As explained above, the terms of the proposed In-Kind Transactions are designed to prevent the abuses described in Sections 1(b)(2) and 1(b)(3) of the 1940 Act. 26. The Section 17 Applicants submit that, for all the reasons stated above, the terms of the proposed In-Kind Transactions as set forth in the Application, including the consideration to be paid and received, are reasonable and fair to: (i) Each of the relevant Replacement Portfolios and each of the relevant Removed Portfolios; and (ii) Contract owners. The Section 17 Applicants also assert that the proposed In-Kind Transactions do not involve overreaching on the part of any person concerned. Furthermore, the Section 17 Applicants represent that the proposed In-Kind Transactions are, or will be, consistent with all relevant policies of (i) the relevant Replacement Portfolios and the relevant Removed Portfolios as stated in the relevant investment company’s registration statement and reports filed under the 1940 Act, and (ii) the general purposes of the 1940 Act. Conclusion For the reasons set forth in the Application, the Section 26 Applicants and the Section 17 Applicants respectively state that the proposed Substitutions and the related In-Kind Transactions meet the standards of Section 26(c) of the 1940 Act and of Section 17(b) of the 1940 Act, and request that the Commission issue an order of approval pursuant to Section 26(c) of the 1940 Act and an order of exemption pursuant to Section 17(b) of the 1940 Act. For the Commission, by the Division of Investment Management, under delegated authority. J. Lynn Taylor, Assistant Secretary. Appendix A The charts below compare the average annual total returns of the Class IA shares of each Replacement Portfolio and relevant class of shares (as indicated below) of each Removed Portfolio for the one-, five- and tenyear or since inception periods ended December 31, 2005. 1.—THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. (INITIAL CLASS SHARES) (‘‘REMOVED PORTFOLIO’’) REPLACED BY EQ/CALVERT SOCIALLY RESPONSIBLE PORTFOLIO (CLASS IA SHARES) (‘‘REPLACEMENT PORTFOLIO’’) Portfolio Periods Ended 12/31/2005 1 year (percent) Replacement Portfolio ............................................................................................................. Russell 1000 Growth Index ..................................................................................................... Russell 3000 Index25 ............................................................................................................... Removed Portfolio ................................................................................................................... S&P 500 ................................................................................................................................... 5 years (percent) 8.92 5.26 6.12 3.62 4.91 Since inception* (percent) (2.00) (3.58) 1.58 (5.27) 0.54 (0.87) (3.74) 1.86 5.93 9.07 * The Replacement Portfolio commenced operations on September 1, 1999. The Removed Portfolio commenced operations on December 31, 2000. 2.—DREYFUS VARIABLE INVESTMENT FUND—INTERNATIONAL VALUE PORTFOLIO (INITIAL CLASS SHARES) (‘‘REMOVED PORTFOLIO’’) REPLACED BY EQ/MERCURY INTERNATIONAL VALUE PORTFOLIO (CLASS IA SHARES) (‘‘REPLACEMENT PORTFOLIO’’) Portfolio periods ended 12/31/2005 1 year (percent) Replacement Portfolio ................................................................................................................. MSCI EAFE Index ....................................................................................................................... Removed Portfolio ....................................................................................................................... MSCI EAFE Index ....................................................................................................................... 11.07 13.54 11.89 13.54 5 years (percent) Since inception* (percent) 2.46 4.55 6.88 4.55 8.80 6.17 7.97 5.42 * The Replacement Portfolio commenced operations on March 25, 2002. The Removed Portfolio commenced operations on May 1, 1996. 3.—LORD ABBETT SERIES FUND—GROWTH AND INCOME PORTFOLIO (CLASS VC SHARES) (‘‘REMOVED PORTFOLIO’’) REPLACED BY EQ/LORD ABBETT GROWTH AND INCOME PORTFOLIO (CLASS IA SHARES) (‘‘REPLACEMENT PORTFOLIO’’)** Portfolio periods ended 12/31/2005 1 year (percent) Removed Portfolio ....................................................................................................................... bajohnson on PROD1PC69 with NOTICES 25 Replaced 3.25 November 30, 2005. VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 5 years (percent) 3.10 10 years* (percent) 10.22 61109 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices 3.—LORD ABBETT SERIES FUND—GROWTH AND INCOME PORTFOLIO (CLASS VC SHARES) (‘‘REMOVED PORTFOLIO’’) REPLACED BY EQ/LORD ABBETT GROWTH AND INCOME PORTFOLIO (CLASS IA SHARES) (‘‘REPLACEMENT PORTFOLIO’’)**—Continued Portfolio periods ended 12/31/2005 1 year (percent) S&P 500 ....................................................................................................................................... 4.91 5 years (percent) 10 years* (percent) 0.54 9.07 * The Removed Portfolio commenced operations on December 11, 1989. ** The inception date for the Replacement Portfolio is April 29, 2005 and, therefore, the Portfolio does not have performance information for a full fiscal year. 4.—T. ROWE PRICE FIXED INCOME SERIES, INC.—LIMITED-TERM BOND PORTFOLIO (‘‘REMOVED PORTFOLIO’’) REPLACED BY EQ/SHORT DURATION BOND PORTFOLIO (CLASS IA SHARES) (‘‘REPLACEMENT PORTFOLIO’’) Portfolio periods ended 12/31/2005 1 year (percent) Replacement Portfolio ................................................................................................................. Lehman 1–3 Year Government Credit Index .............................................................................. Removed Portfolio ....................................................................................................................... Merrill Lynch 1–5 Year U.S. Corporate and Government Index ................................................. 1.38 1.77 1.74 1.44 5 years (percent) 10 years or since inception* (percent) N/A N/A 4.17 4.63 1.58 1.72 4.80 5.35 * The predecessor of the Replacement Portfolio, the Enterprise Short Duration Portfolio, commenced operations on May 1, 2003. The assets of the Enterprise Short Duration Portfolio were transferred to the Replacement Portfolio on July 9, 2004. The Removed Portfolio commenced operations on May 13, 1994. 5.—T. ROWE PRICE FIXED INCOME SERIES, INC.—PRIME RESERVE PORTFOLIO (‘‘REMOVED PORTFOLIO’’) REPLACED BY EQ/MONEY MARKET PORTFOLIO (CLASS IA SHARES) (‘‘REPLACEMENT PORTFOLIO’’) Portfolio periods ended 12/31/2005 1 year (percent) Replacement Portfolio ................................................................................................................. 3-Month Treasury Bill .................................................................................................................. Removed Portfolio ....................................................................................................................... Lipper Variable Annuity Underlying Money Market Funds Average ........................................... 2.85 3.07 2.79 2.69 5 years (percent) 10 years or since inception* (percent 2.00 2.34 1.96 1.85 3.72 3.85 3.48 3.38 *The predecessor of the Replacement Portfolio, the HRT/Alliance Money Market Portfolio, commenced operations on July 13, 1981. The assets of the HRT/Alliance Money Market Portfolio were transferred to the Replacement Portfolio on October 18, 1999. The Removed Portfolio commenced operations on December 31, 1996. 6.—T. ROWE PRICE INTERNATIONAL SERIES, INC.—INTERNATIONAL STOCK PORTFOLIO (‘‘REMOVED PORTFOLIO’’) REPLACED BY EQ/ALLIANCE INTERNATIONAL PORTFOLIO (CLASS IA SHARES) (‘‘REPLACEMENT PORTFOLIO’’) Portfolio periods ended 12/31/2005 1 year (percent) Replacement Portfolio ................................................................................................................. MSCI EAFE Index ....................................................................................................................... Removed Portfolio ....................................................................................................................... MSCI EAFE Index ....................................................................................................................... 15.61 13.54 16.03 14.02 5 years (percent) 5.20 4.55 1.84 4.94 10 years* (percent) 4.87 5.84 5.09 6.18 *The predecessor of the Replacement Portfolio, the HRT/Alliance International Portfolio, commenced operations on April 3, 1995. The assets of the HRT/Alliance International Portfolio were transferred to the Replacement Portfolio on October 18, 1999. The Removed Portfolio commenced operations on March 31, 1994. 7.—THE UNIVERSAL INSTITUTIONAL FUNDS, INC.—EMERGING MARKETS EQUITY PORTFOLIO (CLASS I SHARES) (‘‘REMOVED PORTFOLIO’’) REPLACED BY EQ/VAN KAMPEN EMERGING MARKETS EQUITY PORTFOLIO (CLASS IA SHARES) (‘‘REPLACEMENT PORTFOLIO’’) bajohnson on PROD1PC69 with NOTICES Portfolio periods ended 12/31/2005 1 year (percent) Replacement Portfolio ................................................................................................................. MSCI EMF Gross Dividend Index ............................................................................................... Removed Portfolio ....................................................................................................................... MSCI Emerging Markets Free Net Index .................................................................................... 33.04 34.54 33.85 34.00 5 years (percent) 17.97 19.44 16.01 19.09 Since inception* (percent) 5.48 7.13 6.95 6.62 * The Replacement Portfolio commenced operations on August 20, 1997. The Removed Portfolio commenced operations on October 1, 1996. VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 61110 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices 8.—OLD MUTUAL INSURANCE SERIES FUND—MID-CAP PORTFOLIO (‘‘REMOVED PORTFOLIO’’) REPLACED BY EQ/FI MID CAP PORTFOLIO (CLASS IA SHARES) (‘‘REPLACEMENT PORTFOLIO’’) Portfolio periods ended 12/31/2005 1 year (percent) Replacement Portfolio ................................................................................................................. S&P MidCap 400 Index ............................................................................................................... Removed Portfolio ....................................................................................................................... S&P MidCap 400 Index ............................................................................................................... 6.63 12.56 5.71 10.26 5 years (percent) 4.58 8.60 8.18 6.52 Since inception* (percent) 4.38 6.91 14.78 11.35 * The Replacement Portfolio commenced operations on September 1, 2000. The Removed Portfolio commenced operations on November 30, 1998. 9.—LORD ABBETT SERIES FUND—MID-CAP VALUE PORTFOLIO (CLASS VC SHARES) (‘‘REMOVED PORTFOLIO’’) REPLACED BY EQ/LORD ABBETT MID CAP VALUE PORTFOLIO (CLASS IA SHARES) (‘‘REPLACEMENT PORTFOLIO’’)** Portfolio periods ended 12/31/2005 1 year (percent) Removed Portfolio ....................................................................................................................... Russell MidCap Value Index ....................................................................................................... 8.22 12.65 5 years (percent) 10.30 12.21 Since inception* (percent) 15.34 12.50 * The Removed Portfolio commenced operations on September 15, 1999. ** The inception date for the Replacement Portfolio is April 29, 2005 and, therefore, the Portfolio does not have performance information for a full fiscal year. 10.—PIMCO VARIABLE INSURANCE TRUST—REAL RETURN PORTFOLIO (ADMINISTRATIVE CLASS SHARES) (‘‘REMOVED PORTFOLIO’’) REPLACED BY EQ/JPMORGAN CORE BOND PORTFOLIO (CLASS IA SHARES) (‘‘REPLACEMENT PORTFOLIO’’) Portfolio periods ended 12/31/2005 1 year (percent) Replacement Portfolio ................................................................................................................. Lehman Brothers Aggregate Bond Index .................................................................................... Removed Portfolio ....................................................................................................................... Lehman Brothers U.S. TIPS Index .............................................................................................. 2.50 2.43 2.09 2.84 5 years (percent) Since inception* (percent) 5.41 5.87 9.34 8.74 5.69 6.06 9.68 9.07 * The Replacement Portfolio commenced operations on January 1, 1998. The Removed Portfolio commenced operations on September 30, 1999. 11.—LORD ABBETT SERIES FUND—BOND-DEBENTURE PORTFOLIO (CLASS VC SHARES) (‘‘REMOVED PORTFOLIO’’) REPLACED BY AXA PREMIER VIP HIGH YIELD PORTFOLIO (CLASS A SHARES) (‘‘REPLACEMENT PORTFOLIO’’) Portfolio periods ended 12/31/2005 1 year (percent) Replacement Portfolio ................................................................................................................. Merrill Lynch High Yield Master Cash Pay Only Index ............................................................... Credit Suisse First Boston Global High Yield Index26 ................................................................ Removed Portfolio ....................................................................................................................... Lehman Brothers Aggregate Bond Index .................................................................................... CSFB High Yield Bond Index ...................................................................................................... 3.26 2.83 2.25 1.31 2.43 2.26 5 years (percent) 6.32 8.76 9.82 N/A N/A N/A 10 years or since inception* (percent) 5.17 6.80 7.13 8.53 4.97 10.64 bajohnson on PROD1PC69 with NOTICES * The predecessor of the Replacement Portfolio, the EQ/High Yield Portfolio, merged with the AXA Premier VIP High Yield Portfolio on August 15, 2003. The assets of the HRT Alliance High Yield Portfolio were transferred to the EQ/High Yield Portfolio on October 19, 1999. The HRT Alliance High Yield Portfolio commenced operations on January 2, 1987. The Removed Portfolio commenced operations on December 3, 2001. VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 71, No. 200 / Tuesday, October 17, 2006 / Notices [FR Doc. E6–17236 Filed 10–16–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54584; File No. SR–Amex– 2006–57] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing of a Proposed Rule Change Relating to Stop Orders for Exchange Traded Funds and Trust Issued Receipts October 6, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on August 18, 2006, the American Stock Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by Amex. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the rules applicable to stop orders for exchange traded funds and trust issued receipts. The text of the proposed rule change is available on the Amex’s Web site at (https://www.amex.com), the Amex Office of the Secretary, and at the Commission’s Public Reference Room. Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletionsare in [brackets]. bajohnson on PROD1PC69 with NOTICES General and Floor Rules Rule 154. Orders Left with Specialist No member or member organization shall place with a specialist, acting as broker, any order to effect on the Exchange any transaction except at the market or at a limited price. * * * Commentary .01 No Change. .02 No Change. .03 No Change. .04 (a) A specialist shall accept both stop orders and stop limit orders in securities in which he is so registered. (b) When a specialist elects a stop order on his book by selling stock to the 26 Replaced December 31, 2005. U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Aug<31>2005 04:06 Oct 18, 2006 Jkt 211001 existing bid or buying stock at the existing offer for his own account, he must first obtain a Floor Official’s approval (except in the case of Exchange-Traded Fund Shares and Trust Issued Receipts if the transaction is 0.10 point or less away from the prior transaction).[, and] A[a]ll stop orders so elected must be executed at the same price as his electing transaction. (c) No Change. .05—.15 No Change. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Amex included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Amex has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Commentary .04(b) to Amex Rule 154 to provide that a specialist who elects a stop order on his book by selling stock to the existing bid or buying stock at the existing offer for his own account is not required to obtain floor official approval if the transaction is 0.10 point or less away from the prior transaction. This exception would only apply to transactions in Exchange-Traded Fund Shares and Trust Issued Receipts (collectively, ‘‘ETFs’’). Currently, Exchange rules provide that when a specialist elects a stop order on the specialist’s book by selling to the existing bid or buying from the existing offer, floor official approval must first be obtained. This current rule causes time delays and other impediments to an efficient and orderly marketplace and overly burdens floor officials when their time could be used more efficiently and effectively elsewhere. With the increasing use of technology and the increased competition in the marketplace, specifically auto-quoting and multiple market centers, timing in the market has become much faster and the ability to be fast has become much more important. The current Rule does not adequately account for these market structure changes thereby placing the specialist at a competitive disadvantage PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 61111 because of the requirement to first obtain floor official approval. Floor officials are also over burdened and this proposal could help to alleviate some of their administrative burdens and permit the reallocation of their time to the oversight and administration of other rules. In addition, the requirement to obtain floor official approval is absolute without taking into account how large or small the price variation of the stop order is from the last trading price. The New York Stock Exchange LLC (the ‘‘NYSE’’) has adopted a threshold so that a minimum price variation of 0.10 point or less from the last trading price does not require floor official approval; 3 therefore, in order to remain competitive, the Exchange proposes to match the NYSE threshold whereby floor official approval would not be required if the price variation from the last trading price is 0.10 point or less. Similar to the NYSE’s rules, the proposed rule change retains the requirement that the specialist guarantees that stop orders be executed at the same price as the electing sale. The Exchange believes that eliminating the requirement for such transactions could help foster a more efficient and orderly marketplace, alleviate the administrative burden for floor officials and enable the Exchange to more effectively compete, while maintaining the requirement of floor official approval for the specialist stop order elections that are most likely to warrant floor official scrutiny (i.e., where the electing transaction is more than 0.10 point away from the previous sale). The Exchange acknowledges that the elimination of the floor official approval pursuant to this proposal may increase the frequency of specialists electing stop orders by selling to the existing bid or buying from the existing offer. Accordingly, the Exchange will continue to conduct its existing surveillances to monitor specialists’ compliance with the specific requirements of Commentary .04 to Amex Rule 154 (i.e., obtaining floor official approval when required and executing the stop order at the same price as the electing trade) as well as their agency obligations to the impacted stop orders. The Exchange seeks approval of this proposal to amend Commentary .04(b) to Amex Rule 154 to provide that floor official approval is not required for a stop order in ETFs if the transaction is 0.10 point or less from the last trading price. 3 See E:\FR\FM\17OCN1.SGM NYSE Rule 123A.40. 17OCN1

Agencies

[Federal Register Volume 71, Number 200 (Tuesday, October 17, 2006)]
[Notices]
[Pages 61086-61111]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-17236]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-27516; File No. 812-13301]


MONY Life Insurance Company of America, et al.

October 12, 2006.
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 ``1940 Act'') approving certain 
substitutions of securities and an order of exemption pursuant to 
Section 17(b) of the 1940 Act from Section 17(a) of the 1940 Act.

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

Summary of Application: The Section 26 Applicants (as defined below) 
request an order approving the proposed substitution of shares of 
certain series of EQ Advisors Trust (``EQAT'') and AXA Premier VIP 
Trust (``VIP'', together with EQAT, the ``Trusts,'' and each, a 
``Trust''), by the Separate Accounts (as defined below) for shares of 
similar series of unaffiliated registered investment companies (the 
``Substitutions''). In particular, the Section 26 Applicants request an 
order pursuant to Section 26(c) approving the substitution of: (1) 
Class IA shares of the EQ/Calvert Socially Responsible Portfolio for 
Initial Class shares of The Dreyfus Socially Responsible Growth Fund, 
Inc.; (2) Class IA shares of the EQ/Mercury International Value 
Portfolio for Initial Class shares of the Dreyfus Variable Investment 
Fund--International Value Portfolio; (3) Class IA shares of the EQ/Lord 
Abbett Growth and Income Portfolio for Class VC shares of the Lord 
Abbett Series Fund--Growth and Income Portfolio; (4) Class IA shares of 
the EQ/Short Duration Bond Portfolio for shares of the T. Rowe Price 
Fixed Income Series, Inc.--Limited-Term Bond Portfolio; (5) Class IA 
shares of EQ/Money Market Portfolio for shares of the T. Rowe Price 
Fixed Income Series, Inc.--Prime Reserve Portfolio; (6) Class IA shares 
of the EQ/Alliance International Portfolio for shares of the T. Rowe 
Price International Series, Inc.--International Stock Portfolio; (7) 
Class IA shares of the EQ/Van Kampen Emerging Markets Equity Portfolio 
for Class I shares of The Universal Institutional Funds, Inc.--Emerging 
Markets Equity Portfolio; (8) Class IA shares of the EQ/FI Mid Cap 
Portfolio for shares of the Old Mutual Insurance Series Fund--Mid-Cap 
Portfolio; (9) Class IA shares of the EQ/Lord Abbett Mid Cap Value 
Portfolio for Class VC shares of the Lord Abbett Series Fund--Mid-Cap 
Value Portfolio; (10) Class IA shares of the EQ/JPMorgan Core Bond 
Portfolio for Administrative Class shares of the PIMCO Variable 
Insurance Trust--Real Return Portfolio; and (11) Class A shares of the 
AXA Premier VIP High Yield Portfolio for Class VC shares of the Lord 
Abbett Series Fund--Bond Debenture Portfolio. Applicants also request 
an order of exemption to permit certain in-kind transactions in 
connection with the proposed Substitutions (the ``In-Kind 
Transactions''). Each of the portfolios involved in the Substitutions 
serves as an underlying investment option for certain variable annuity 
contracts and/or variable life insurance policies (``Contracts'') 
issued by the Insurance Companies (as defined below). The portfolios 
receiving assets in the Substitutions are referred to in this notice as 
the ``Replacement Portfolios.'' The portfolios from which the assets 
are transferred in connection with the Substitutions are referred to in 
this notice as the ``Removed Portfolios.''

Applicants: MONY Life Insurance Company of America (``MLOA''), MONY 
Life Insurance Company (``MONY'', with MLOA, each an ``Insurance 
Company'' and collectively, the ``Insurance Companies''), MONY America 
Variable Account A (``MLOA Separate Account A''), MONY America Variable 
Account L (``MLOA Separate Account L'' and together with MLOA Separate 
Account A, ``MLOA Separate Accounts''), MONY Variable Account A (``MONY 
Separate Account A'') and MONY Variable Account L (``MONY Separate 
Account L'' and together with MONY Separate Account A, ``MONY Separate 
Accounts'') (the MONY Separate Accounts and the MLOA Separate Accounts 
are referred to as the ``Separate Accounts'' and individually as a 
``Separate Account'') (the Separate Accounts and the Insurance 
Companies are referred to as the ``Section 26 Applicants''). EQAT is 
also an applicant for purposes of the order pursuant to Section 17(b) 
together with the Insurance Companies and the Separate Accounts (the 
``Section 17 Applicants'').

Filing Date: The application was filed on June 1, 2006 and amended on 
October 6, 2006.

[[Page 61087]]


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 November 2, 2006 and should be accompanied by proof of 
service on Applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request and the issues contested. 
Persons may request notification of a hearing by writing to the 
Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, 
NE, Washington, DC 20549-1090. Applicants: c/o Steven M. Joenk, Senior 
Vice President, AXA Equitable Life Insurance Company, 1290 Avenue of 
the Americas, New York, New York 10104.

FOR FURTHER INFORMATION CONTACT: Ellen Sazzman, Senior Counsel, at 
(202) 551-6762, or Harry Eisenstein, Branch Chief, Office of Insurance 
Products 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, 100 F Street, NE., 
Washington, DC 20549 (tel. (202) 551-8090).

Applicants' Representations

    1. MLOA is a stock life insurance company organized in 1969 under 
the laws of the State of Arizona. MLOA is licensed to sell life 
insurance and annuities in 49 states (not including New York), the 
District of Columbia, Puerto Rico, and the U.S. Virgin Islands. MONY is 
a stock life insurance company organized in 1998 under the laws of New 
York. MONY is licensed to sell life insurance and annuities in 50 
states, the District of Columbia, Puerto Rico, and the U.S. Virgin 
Islands. Each Insurance Company is a wholly owned subsidiary of AXA 
Financial, Inc., a diversified financial services company, which is a 
wholly owned subsidiary of the AXA Group, the holding company for an 
international group of insurance and related financial services 
companies. MLOA serves as depositor for each of the MLOA Separate 
Accounts; MONY serves as depositor for each of the MONY Separate 
Accounts.
    2. MLOA Separate Account A and MLOA Separate Account L were 
established under Arizona law in 1987 and 1985, respectively, pursuant 
to authority granted by MLOA's Board of Directors. Each MLOA Separate 
Account is a segregated asset account of MLOA and is registered with 
the Commission as a unit investment trust under the 1940 Act. The MLOA 
Separate Accounts fund the respective variable benefits available under 
the Contracts issued by MLOA. Units of interest in the MLOA Separate 
Accounts under the Contracts are registered under the Securities Act of 
1933 (``1933 Act'').\1\
---------------------------------------------------------------------------

    \1\ See File Nos. 333-72632, 333-91776, 333-59717, 333-92066 
(MLOA Separate Account A) and 333-06071, 333-104162, 333-72596, 333-
56969, 33-82570, 333-64417, 333-72578 (MLOA Separate Account L).
---------------------------------------------------------------------------

    3. MONY Separate Account A and MONY Separate Account L were each 
established under New York law in 1990 pursuant to authority granted by 
MONY's Board of Trustees. Each MONY Separate Account is a segregated 
asset account of MONY and is registered with the Commission as a unit 
investment trust under the 1940 Act. The MONY Separate Accounts fund 
the respective variable benefits available under the Contracts issued 
by MONY. Units of interest in the MONY Separate Accounts under the 
Contracts are registered under the 1933 Act.\2\
---------------------------------------------------------------------------

    \2\ See File No. 333-72714, 333-92320, 333-92312, 333-72259 
(MONY Separate Account A) and 333-104156, 333-71417, 333-01581, 333-
72590, 333-71677, 333-72594 (MONY Separate Account L).
---------------------------------------------------------------------------

    4. EQAT and VIP are each organized as a Delaware statutory trust 
and registered as an open-end management investment company under the 
1940 Act. Each is an affiliate of the Section 26 Applicants. The shares 
of each Trust are registered under the 1933 Act. Each Trust is a series 
investment company. EQAT currently has 63 separate series and VIP 
currently has 20 separate series (each a ``Portfolio'' and 
collectively, the ``Portfolios''). AXA Equitable Life Insurance Company 
currently serves as investment manager (``Manager'') of each of the 
Portfolios. The Replacement Portfolios are series of the Trusts. The 
Removed Portfolios are series of unaffiliated registered investment 
companies.
    5. Each Trust currently offers two classes of shares, Class IA and 
Class IB shares for EQAT and Class A and Class B shares for VIP, which 
differ only in that Class IB and Class B shares are subject to a 
distribution plan adopted and administered pursuant to Rule 12b-1 under 
the 1940 Act. Under that distribution plan, up to 0.50% of the average 
daily net assets attributable to the Class IB or Class B shares of each 
Portfolio may be used to pay for distribution and shareholder services. 
The distributors for the shares of each Portfolio are AXA Advisors, LLC 
(``AXA Advisors'') and AXA Distributors, LLC (``AXA Distributors''). 
Under the Distribution Agreements with respect to the promotion, sale 
and servicing of shares of each Portfolio, payments to AXA Advisors and 
AXA Distributors, with respect to activities under the distribution 
plan, are currently limited to payments at an annual rate equal to 
0.25% of the average daily net assets of each Portfolio (including the 
Replacement Portfolios) attributable to its Class IB or Class B shares.
    6. The Manager has retained investment sub-advisers (``Advisers'') 
to provide day-to-day investment advisory services for each of the 61 
of the 63 current EQAT Portfolios and 11 of the 20 current VIP 
Portfolios. The Trusts have received an exemptive order from the 
Commission (``Multi-Manager Order'') that permits the Manager, or any 
entity controlling, controlled by, or under common control (within the 
meaning of Section 2(a)(9) of the 1940 Act) with the Manager, subject 
to certain conditions, including approval of the Board of Trustees of 
the relevant Trust, and without the approval of shareholders to: (i) 
Select new or additional Advisers for each Portfolio; (ii) enter into 
new Investment Advisory Agreements with Advisers (``Advisory 
Agreements'') and/or materially modify the terms of any existing 
Advisory Agreement; (iii) terminate any existing Adviser and replace 
the Adviser; and (iv) continue the employment of an existing Adviser on 
the same contract terms where the Advisory Agreement has been assigned 
because of a change of control of the Adviser.
    7. The variable annuity Contracts subject to this Application 
include flexible premium deferred variable annuity contracts with a 
variety of sales charge structures. These variable annuity Contracts 
are issued to or on behalf of individuals. All variable annuity 
Contracts allow the Contract owner to allocate contributions or premium 
payments among the variable and any fixed investment options available 
under the variable annuity Contracts. The contributions or premium 
payments accumulate in the investment options. The variable life 
insurance Contracts issued by the Insurance Companies include flexible 
premium individual variable life, second to die and corporate variable 
life policies. Premium payments under the variable life insurance 
Contracts

[[Page 61088]]

accumulate in variable and any fixed investment options.
    8. The Section 26 Applicants have reserved the right under the 
Contracts to substitute shares of another eligible investment fund for 
one of the current investment funds offered as a funding option under 
the Contracts. The prospectuses for the Contracts and the Separate 
Accounts contain appropriate disclosure of this right.
    9. The Contracts do not restrict transfers from a variable 
subaccount and there are no limits on transfers into a variable 
subaccount or a guaranteed account (for those Contracts that offer a 
guaranteed account investment option), although transfer charges may 
apply. For those variable annuity Contracts that offer a guaranteed 
account investment option, except with respect to New York variable 
annuity Contracts, transfers from the guaranteed account are subject to 
a market value adjustment if the transfer request is not received at 
the end of the prescribed accumulation period. In addition, for New 
York variable annuity Contracts, a minimum amount must be maintained in 
a guaranteed account for those Contracts that have investments in such 
accounts and a minimum number of free transfers are guaranteed. For 
variable life insurance Contracts that offer a guaranteed account 
investment option, there is a dollar limit on the amount that can be 
held in, and the amount that may be transferred from, the guaranteed 
account. Also with respect to variable life insurance Contracts, 
transfers from a guaranteed account may only be made once a year. With 
respect to certain variable life insurance Contracts, including New 
York life insurance Contracts, there are a minimum number of free 
transfers guaranteed. With respect to corporate-owned life insurance 
Contracts, transfers are not permitted between a guaranteed account and 
a fixed separate account.
    10. Each Insurance Company, on its own behalf and on behalf of its 
Separate Accounts, proposes to exercise its contractual right to 
substitute a different eligible investment fund for one of the current 
investment funds offered as a funding option under the Contracts. In 
particular, the Section 26 Applicants propose the following 
substitutions:

------------------------------------------------------------------------
           Removed portfolios                 Replacement portfolios
------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth  EQ/Calvert Socially Responsible
 Fund, Inc. (Initial Class shares).       Portfolio (Class IA shares).
Dreyfus Variable Investment Fund--       EQ/Mercury International Value
 International Value Portfolio (Initial   Portfolio (Class IA shares).
 Class shares).
Lord Abbett Series Fund--Growth and      EQ/Lord Abbett Growth and
 Income Portfolio (Class VC shares).      Income Portfolio (Class IA
                                          shares).
T. Rowe Price Fixed Income Series,       EQ/Short Duration Bond
 Inc.--Limited-Term Bond Portfolio.       Portfolio (Class IA shares).
T. Rowe Price Fixed Income Series,       EQ/Money Market Portfolio
 Inc.--Prime Reserve Portfolio.           (Class IA shares).
T. Rowe Price International Series,      lEQ/Alliance International
 Inc.--International Stock Portfolio.     Portfolio (Class IA shares).
The Universal Institutional Funds,       EQ/Van Kampen Emerging Markets
 Inc.--Emerging Markets Equity            Equity Portfolio (Class IA
 Portfolio (Class I shares).              shares).
Old Mutual Insurance Series Fund--Mid-   EQ/FI Mid Cap Portfolio (Class
 Cap Portfolio.                           IA shares).
Lord Abbett Series Fund--Mid-Cap Value   EQ/Lord Abbett Mid Cap Value
 Portfolio (Class VC shares).             Portfolio (Class IA shares).
PIMCO Variable Insurance Trust--Real     EQ/JPMorgan Core Bond Portfolio
 Return Portfolio (Administrative Class   (Class IA shares).
 shares).
Lord Abbett Series Fund--Bond-Debenture  AXA Premier VIP High Yield
 Portfolio (Class VC shares).             Portfolio (Class A shares).
------------------------------------------------------------------------

    11. The Section 26 Applicants propose the Substitutions as part of 
a continued and overall business plan by each of the Insurance 
Companies to make its Contracts more attractive to existing Contract 
owners or to prospective purchasers, as the case may be. Each Insurance 
Company has reviewed its Contracts and each investment option offered 
under its Contracts with the goal of providing a superior choice of 
investment alternatives. The Substitutions are being proposed to 
address the lack of Contract owner interest in the Removed Portfolios, 
which generally have not attracted sufficient Contract owner interest 
to support maintaining them as separate investment options under the 
Contracts, particularly where they duplicate or substantially overlap 
with other investment options offered through the Separate Accounts. 
The Substitutions also are intended to simplify the prospectuses and 
related materials with respect to the Contracts and the investment 
options available through the Separate Accounts. Additionally, each 
Substitution will substitute shares of the Replacement Portfolio for 
shares of the Removed Portfolio, which has similar investment 
objectives, policies and risks as the Replacement Portfolio. In 
addition, the Insurance Companies have agreed to impose certain expense 
limits with respect to the Replacement Portfolios for certain periods 
after the Substitutions, as described below. Furthermore, the 
Substitutions ultimately may enable the Insurance Companies to reduce 
certain of the costs that they incur in administering the Contracts by 
removing overlapping and unpopular Portfolios. Moreover, the proposed 
Substitutions would replace an unaffiliated Portfolio with a Portfolio 
for which AXA Equitable serves as Manager and, thus, would permit AXA 
Equitable to appoint, dismiss and replace Advisers and amend Advisory 
Agreements as necessary to seek optimal performance from the Portfolio 
and its portfolio managers. Finally, the Substitutions are designed to 
provide Contract owners with an opportunity to continue their 
investment in a similar Portfolio without interruption and without any 
cost to them.
    12. The Insurance Companies have agreed to bear all expenses 
incurred in connection with the Substitutions and related filings and 
notices, including legal, accounting, brokerage and other fees and 
expenses. On the effective date of the Substitutions (``Substitution 
Date''), the amount of any Contract owner's Contract value or the 
dollar value of a Contract owner's investment in the relevant Contract 
will not change as a result of the Substitutions.
    13. The following is a description and comparison of the investment 
objectives, policies and risks of each Removed Portfolio and its 
corresponding Replacement Portfolio:

[[Page 61089]]



                                   (1)
------------------------------------------------------------------------
             Removed Portfolio                  Replacement Portfolio
------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth     EQ/Calvert Socially
 Fund, Inc. (Initial Class shares): The      Responsible Portfolio
 Portfolio seeks to provide capital          (Class IA shares): The
 growth, with current income as a            Portfolio seeks long-term
 secondary goal. Under normal                capital appreciation. Under
 circumstances, the Portfolio invests at     normal circumstances, the
 least 80% of its assets in common stocks    Portfolio invests at least
 of companies that the manager believes      80% of its net assets in
 meet traditional investment standards and   large-cap companies that
 conduct their business in a manner that     meet both investment and
 contributes to the enhancement of the       social criteria. The
 quality of life in America. The Portfolio   Adviser utilizes multiple
 normally focuses on large-cap growth        investment styles in
 stocks. The Portfolio may also invest in    selecting securities
 value-oriented stocks, mid-cap stocks and   including growth, growth at
 small-cap stocks. The Portfolio may         a reasonable price, value
 invest in foreign securities. The           and momentum models. The
 Portfolio may invest in securities of       Portfolio may invest up to
 companies in initial public offerings       10% of its total assets in
 (``IPOs'') and derivatives. The Portfolio   foreign securities and up
 may invest up to 15% of the value of its    to 15% of its net assets in
 net assets in illiquid securities.          illiquid securities. The
                                             Portfolio also may invest
                                             in derivatives and in
                                             securities issued in an
                                             IPO.
Principal Risks:                            Principal Risks:
     Market Risk                        Market Risk
     Issuer Risk                        Asset Class Risk
     Market Sector Risk                 Equity Risk
     Social Investment Risk             Adviser
                                                Selection Risk
     Small and Midsize Company          Security
     Risk                                       Selection Risk
     Growth Stock Risk                  Derivatives Risk
     Value Stock Risk               3 Foreign Securities
                                             Risk
     Foreign Investment Risk        3 Security Risk
                                                Liquidity Risk
                                                Mid-Cap Company
                                                Risk
------------------------------------------------------------------------

    The Section 26 Applicants believe that The Dreyfus Socially 
Responsible Growth Fund, Inc. and the EQ/Calvert Socially Responsible 
Portfolio have substantially similar investment objectives, policies 
and risks and that the essential objectives and expectations of 
Contract owners will continue to be met after the Substitution. In this 
connection, the Section 26 Applicants note that each Portfolio invests 
virtually all of its assets in securities of companies that satisfy 
both social and investment criteria. Each Portfolio invests mostly in 
large-cap companies, but also may invest in small- and mid-cap 
companies. In addition, the Section 26 Applicants believe that the 
Portfolios' advisers use comparable investment styles in managing each 
Portfolio's assets and that, while the principal risks are stated 
somewhat differently, the Portfolios have substantially similar risk 
profiles. Each Portfolio is subject to general investment risks, such 
as market risk, asset class risk and security risk, and to very similar 
portfolio risks, such as equity risk, social investing risk and foreign 
securities risk.

[[Page 61090]]



                                   (2)
------------------------------------------------------------------------
             Removed Portfolio                  Replacement Portfolio
------------------------------------------------------------------------
Dreyfus Variable Investment Fund--          EQ/Mercury International
 International Value Portfolio (Initial      Value Portfolio (Class IA
 Class shares): The Portfolio seeks long     shares): The Portfolio
 term capital growth. The Portfolio          seeks to provide current
 normally invests at least 80% of its        income and long-term growth
 assets in stocks. The Portfolio invests     of income, accompanied by
 most of its assets in securities of         growth of capital. Under
 foreign companies which the adviser         normal circumstances, the
 considers to be value companies. The        Portfolio invests at least
 Portfolio may invest in securities of       80% of its net assets, plus
 companies of any size and may invest in     borrowings for investment
 companies located in emerging markets.      purposes, in stocks that
 The Portfolio also may invest in stocks     pay dividends. Stocks may
 issued in an IPO, it may invest in          include common stocks,
 derivatives and it may make short sales.    preferred stocks,
                                             securities convertible into
                                             common or preferred stocks
                                             and warrants. The Portfolio
                                             invests primarily in
                                             securities of companies
                                             located in developed
                                             foreign markets, but may
                                             invest in securities issued
                                             by companies located in
                                             emerging markets. In
                                             investing the Portfolio's
                                             assets, the Adviser follows
                                             a value investment style.
                                             The Portfolio may invest in
                                             companies of any size,
                                             although it generally will
                                             invest in large cap
                                             companies. The Portfolio
                                             also may invest in
                                             derivatives and in
                                             securities issued in an
                                             IPO.
Principal Risks:                            Principal Risks:
     Market Risk                        Market Risk
     Issuer Risk                        Asset Class Risk
     Market Sector Risk                 Equity Risk
     Small and Midsize Company          Adviser
     Risk                                       Selection Risk
     Value Stock Risk                   Security
                                                Selection Risk
     Foreign Investment Risk            Convertible
                                                Securities Risk
     Foreign Currency Risk              Derivatives Risk
     Emerging Market Risk               Liquidity Risk
     Derivatives Risk                   Small-Cap and
                                                Mid-Cap Company Risk
     Short Sale Risk                    Value Investing
                                                Risk
     IPO Risk                           Security Risk
                                                Foreign
                                                Securities Risk
                                                Currency Risk
                                                Depositary
                                                Receipts Risk
                                                Emerging Market
                                                Risk
                                                Settlement Risk
------------------------------------------------------------------------

    The Section 26 Applicants believe that the Dreyfus Variable 
Investment Fund--International Value Portfolio and the EQ/Mercury 
International Value Portfolio have similar investment objectives and 
substantially similar investment policies and risks. The Section 26 
Applicants also believe that the essential objectives and expectations 
of Contract owners will continue to be met after the Substitution. In 
this connection, the Section 26 Applicants note that each Portfolio 
invests virtually all of its assets in foreign stocks. In addition, the 
Section 26 Applicants believe that the Portfolios' advisers use a value 
investment style in managing each Portfolio's assets. Each Portfolio 
may invest in companies of any size and in companies located in 
emerging markets. Moreover, the Section 26 Applicants believe that 
while the principal risks are stated somewhat differently, the 
Portfolios have substantially similar risk profiles. The Section 26 
Applicants note that each Portfolio is subject to general investment 
risks, such as market risk, asset class risk and security risk, and to 
very similar portfolio risks, such as equity risk, foreign securities 
and emerging markets risk and value investing risk.

[[Page 61091]]



                                   (3)
------------------------------------------------------------------------
           Removed portfolio                  Replacement portfolio
------------------------------------------------------------------------
Lord Abbett Series Fund--Growth and      EQ/Lord Abbett Growth and
 Income Portfolio (Class VC shares):      Income Portfolio (Class IA
 The Portfolio seeks long term growth     shares): The Portfolio seeks
 of capital and income without            capital appreciation and
 excessive fluctuations in market         growth of income without
 value. Under normal circumstances, the   excessive fluctuation in
 Portfolio will invest at least 80% of    market value. Under normal
 its net assets in equity securities of   circumstances, the Portfolio
 large companies. The Portfolio           invests at least 80% of its
 primarily purchases equity securities    net assets in equity
 of large, seasoned U.S. and multi-       securities of large companies.
 national companies that the adviser      The Portfolio primarily
 believes are undervalued. Equity         purchases equity securities of
 securities in which the Portfolio may    large, seasoned U.S. and multi-
 invest may include common stocks,        national companies that the
 preferred stocks, convertible            Adviser believes are
 securities, warrants, and similar        undervalued. Equity securities
 instruments. The Portfolio may           in which the Portfolio may
 purchase and write national securities   invest include common stocks,
 exchange-listed put and call options     preferred stocks, convertible
 on securities or securities indices      securities, warrants, and
 and it may use options for hedging or    similar instruments. The
 cross-hedging purposes or to seek to     Portfolio may purchase and
 increase total return.                   write exchange-listed put and
                                          call options on securities or
                                          securities indices for hedging
                                          or cross-hedging purposes or
                                          to seek to increase total
                                          return.
Principal Risks:                         Principal Risks:
 Market Risk                      Convertible Securities
 Asset Class Risk                 Risk
 Equity Risk                      Derivatives Risk
 Security Selection Risk          Futures and Options
 Liquidity Risk                   Risk
 Foreign Securities Risk          Security Selection
 Security Risk                    Risk
 Value Investing Risk             Equity Risk
                                          Foreign Securities
                                          Risk
                                          Value Investing Risk
                                          Adviser Selection Risk
                                          Asset Class Risk
                                          Market Risk
                                          Security Risk
------------------------------------------------------------------------

    The Section 26 Applicants believe that the Lord Abbett Series 
Fund--Growth and Income Portfolio and the EQ/Lord Abbett Growth and 
Income Portfolio have substantially identical investment objectives, 
policies and risks and that the essential objectives and expectations 
of Contract owners will continue to be met after the Substitution. In 
this connection, the Section 26 Applicants note that each Portfolio 
invests virtually all of its assets in equity securities of large 
companies. Each Portfolio also may invest in foreign securities and 
derivatives for hedging and non-hedging purposes to the same extent. In 
addition, the Section 26 Applicants believe that the adviser to each 
Portfolio, which is the same for both Portfolios, uses an identical 
investment style in managing each Portfolio's assets and that, while 
the principal risks are stated somewhat differently, the Portfolios 
have substantially identical risk profiles. Each Portfolio is subject 
to general investment risks, such as market risk, asset class risk and 
security risk, and to substantially identical portfolio risks, such as 
equity risk, foreign securities risk and value investing risk.

                                   (4)
------------------------------------------------------------------------
           Removed portfolio                  Replacement portfolio
------------------------------------------------------------------------
T. Rowe Price Fixed Income Series,       EQ/Short Duration Bond
 Inc.--Limited-Term Bond Portfolio: The   Portfolio (Class IA shares):
 Portfolio seeks a high level of          The Portfolio seeks current
 current income consistent with           income and reduced volatility
 moderate fluctuations in principal       of principal. Under normal
 value. Normally, the Portfolio invests   circumstances, the Portfolio
 at least 80% of its net assets in        invests at least 80% of its
 bonds and 65% of total assets in short-  net assets, plus borrowings
  and intermediate-term bonds. There      for investment purposes, in
 are no maturity limitations on           bonds and other debt
 individual securities purchased, but     securities. These securities
 the Portfolio's average effective        include U.S. Government bonds
 maturity will not exceed five years.     and notes, corporate bonds,
 At least 90% of the Portfolio's assets   municipal bonds, asset-backed
 will consist of investment grade         bonds, mortgage-related bonds,
 securities and up to 10% of its assets   convertible securities and
 can be invested in below investment      preferred stocks. The
 grade securities. The Portfolio's        Portfolio intends to invest
 holdings may include mortgage-backed     only in investment grade fixed
 securities, derivatives and foreign      income securities and seeks to
 securities. There is no limit on the     maintain a minimum average
 Portfolio's investments in U.S. dollar-  credit quality rating of
 denominated debt securities issued by    ``A.'' The Portfolio may
 foreign issuers, foreign branches of     invest in securities with
 U.S. banks, and U.S. branches of         effective or final maturities
 foreign banks, however, the Portfolio    of any length at the time of
 may only invest up to 10% of its total   purchase, but it is
 assets (excluding reserves) in non-      anticipated that the average
 U.S. dollar-denominated fixed-income     effective maturity of the
 securities.                              Portfolio will range from one
                                          to four years. The average
                                          duration of the overall
                                          Portfolio will be between one
                                          and three years. The Portfolio
                                          also may invest in derivatives
                                          and up to 20% of its total
                                          assets in U.S. dollar
                                          denominated fixed income
                                          securities of foreign issuers.
Principal Risks:                         Principal Risks:
     Interest Rate Risk           Market Risk
     Credit Risk                  Asset Class Risk
     Prepayment and Extension     Adviser Selection Risk
     Risk
     Derivatives Risk             Security Selection
                                          Risk
     Foreign Investing Risk       Derivatives Risk
                                          Fixed Income Risk
                                          Asset-Backed
                                          Securities Risk
                                          Credit Risk
                                          Interest Rate Risk
                                          Investment Grade
                                          Securities Risk

[[Page 61092]]

 
                                          Mortgage-Backed
                                          Securities Risk
                                          Foreign Securities
                                          Risk
                                          Security Risk
------------------------------------------------------------------------

    The Section 26 Applicants believe that the T. Rowe Price Fixed 
Income Series, Inc.--Limited-Term Bond Portfolio and the EQ/Short 
Duration Bond Portfolio have substantially similar investment 
objectives, policies and risks and that the essential objectives and 
expectations of Contract owners will continue to be met after the 
Substitution. In this connection, the Section 26 Applicants note that 
each Portfolio invests virtually all of its assets in investment grade 
bonds and seeks to maintain an average effective maturity that is 
generally within the same range. Each Portfolio may invest in the same 
types of debt securities, such as asset-backed and mortgage-backed 
securities. Each Portfolio also may invest in U.S. dollar-denominated 
debt securities of foreign issuers and derivatives. Moreover, the 
Section 26 Applicants believe that while the principal risks are stated 
somewhat differently, the Portfolios have substantially similar risk 
profiles. Each Portfolio is subject to general investment risks, such 
as asset class risk and security risk, and to very similar portfolio 
risks, such as fixed income risk, including credit risk and interest 
rate risk, foreign securities risk and derivatives risk.

                                   (5)
------------------------------------------------------------------------
           Removed Portfolio                  Replacement Portfolio
------------------------------------------------------------------------
T. Rowe Price Fixed Income Series,       EQ/Money Market Portfolio
 Inc.--Prime Reserve Portfolio: The       (Class IA shares): The
 Portfolio seeks to preserve capital,     Portfolio seeks to obtain a
 liquidity and, consistent with these,    high level of current income,
 the highest possible current income.     preserve its assets and
 The Portfolio is a money market fund,    maintain liquidity. The
 which is managed to provide a stable     Portfolio invests primarily in
 share price of $1.00 and invests in      a diversified portfolio of
 high-quality U.S. dollar-denominated     high-quality U.S. dollar
 money market securities. The fund's      denominated money market
 average weighed maturity will not        instruments. The Portfolio
 exceed 90 days and it will not           will maintain a dollar-
 purchase any security with a maturity    weighted average portfolio
 longer than 13 months.                   maturity of 90 days or less
                                          and will invest only in
                                          instruments with a remaining
                                          maturity of 397 calendar days
                                          or less. The Portfolio may
                                          invest in mortgaged-backed and
                                          asset-backed securities and
                                          normally invests at least 25%
                                          of its net assets in bank
                                          obligations. The Portfolio may
                                          also invest up to 20% of its
                                          total assets in U.S. dollar
                                          denominated money market
                                          instruments of foreign
                                          branches of foreign banks.
Principal Risks:                         Principal Risks:
     Credit Risk                  Market Risk
     Interest Rate Risk           Asset Class Risk
     Money Market Risk            Adviser Selection Risk
                                          Security Selection
                                          Risk
                                          Banking Industry
                                          Sector Risk
                                          Foreign Securities
                                          Risk
                                          Security Risk
                                          Money Market Risk
                                          Fixed Income Risk
                                          Credit Risk
                                          Interest Rate Risk
                                          Asset-Backed
                                          Securities Risk
                                          Mortgage-Backed
                                          Securities Risk
------------------------------------------------------------------------

    The Section 26 Applicants believe that the T. Rowe Price Fixed 
Income Series, Inc.--Prime Reserve Portfolio and the EQ/Money Market 
Portfolio have substantially identical investment objectives, policies 
and risks and that the essential objectives and expectations of 
Contract owners will continue to be met after the Substitution. In this 
connection, the Section 26 Applicants note that each Portfolio is a 
money market fund and invests all of its assets in high-quality U.S. 
dollar denominated money market instruments permitted under Rule 2a-7 
under the 1940 Act. In addition, each Portfolio is managed to maintain 
a stable share price of $1.00 and has an average weighted maturity that 
will not exceed 90 days. The Section 26 Applicants believe that the 
Portfolios also have substantially identical risk profiles. Each 
Portfolio is subject to general investment risks, such as asset class 
risk and security risk, and to very similar portfolio risks, such as 
money market risk and fixed income risk, including credit risk and 
interest rate risk.

[[Page 61093]]



                                   (6)
------------------------------------------------------------------------
           Removed portfolio                  Replacement portfolio
------------------------------------------------------------------------
T. Rowe Price International Series,      EQ/Alliance International
 Inc.--International Stock Portfolio:     Portfolio (Class IA shares):
 The Portfolio seeks long-term growth     The Portfolio seeks to achieve
 of capital through investments           long-term growth of capital.
 primarily in common stocks of            The Portfolio intends, under
 established, non-U.S. companies.         normal market conditions, to
 Normally, at least 80% of the            invest primarily in equity
 Portfolio's net assets will be           securities. The Portfolio
 invested in stocks. The Portfolio        invests in both growth-
 expects to invest substantially all of   oriented and value-oriented
 its assets in stocks outside the U.S.    stocks of non-U.S. companies.
 and to diversify broadly among           The growth portion of the
 developed and emerging countries         Portfolio invests primarily in
 throughout the world. The Portfolio      a diversified portfolio of
 utilizes an investment style that        equity securities of non-U.S.
 incorporates growth and value            companies or foreign
 investing components. The Portfolio      governmental enterprises from
 may purchase securities of any size,     anywhere in the world
 but focuses on large and, to a lesser    (including in emerging
 extent, medium-sized companies. The      markets). The value portion of
 Portfolio may invest in derivatives.     the Portfolio invests
                                          primarily in equity securities
                                          of issuers in countries that
                                          comprise the MSCI EAFE Index
                                          and Canada. The Portfolio also
                                          may invest in any investment
                                          grade fixed income security
                                          and in derivatives.
Principal Risks:                         Principal Risks:
     Currency Risk                Market Risk
     Geographic Risk              Asset Class Risk
     Emerging Market Risk         Adviser Selection Risk
     Foreign Investing Risk       Security Selection
                                          Risk
     Futures/Options Risk         Security Risk
                                          Convertible Securities
                                          Risk
                                          Derivatives Risk
                                          Equity Risk
                                          Fixed Income Risk
                                          Investment Grade
                                          Securities Risk
                                          Interest Rate Risk
                                          Foreign Securities
                                          Risk
                                          Currency Risk
                                          Emerging Markets Risk
                                          Value Investing Risk
                                          Growth Investing Risk
------------------------------------------------------------------------

    The Section 26 Applicants believe that the T. Rowe Price 
International Series, Inc.--International Stock Portfolio and the EQ/
Alliance International Portfolio have substantially similar investment 
objectives, policies and risks and that the essential objectives and 
expectations of Contract owners will continue to be met after the 
Substitution. In this connection, the Section 26 Applicants note that 
each Portfolio invests virtually all of its assets in equity securities 
of foreign companies. Each Portfolio may invest companies in developed 
and emerging markets. Each Portfolio also invests mostly in large-cap 
companies, but may invest in smaller companies as well. In addition, 
the Section 26 Applicants believe that the adviser to each Portfolio 
uses comparable investment styles in managing each Portfolio's assets 
and that, while the principal risks are stated somewhat differently, 
the Portfolios have substantially similar risk profiles. Each Portfolio 
is subject to general investment risks, such as market risk, asset 
class risk and security risk, and to very similar portfolio risks, such 
as equity risk, foreign securities and emerging markets risk and growth 
investing risk.

                                   (7)
------------------------------------------------------------------------
           Removed Portfolio                  Replacement Portfolio
------------------------------------------------------------------------
The Universal Institutional Funds,       EQ/Van Kampen Emerging Markets
 Inc.--Emerging Markets Equity            Equity Portfolio (Class IA
 Portfolio (Class I shares): The          shares): The Portfolio seeks
 Portfolio seeks long-term capital        long-term capital
 appreciation by investing primarily in   appreciation. Under normal
 growth-oriented equity securities of     circumstances, the Portfolio
 issuers in emerging market countries.    invests at least 80% of its
 Under normal circumstances, at least     net assets, plus borrowings
 80% of the Portfolio's assets will be    for investment purposes, in
 invested in equity securities located    equity securities of companies
 in emerging market countries. The        located in emerging market
 Portfolio combines top-down country      countries or other equity
 allocation with bottom-up stock          investments that are tied
 selection. The Portfolio also may        economically to emerging
 invest in derivatives and, to a          market countries. Such equity
 limited extent, in U.S. Government       securities may include common
 securities and debt securities rated     stocks, securities convertible
 below investment grade (also known as    into common stocks, preferred
 ``junk bonds'').                         stocks, depositary receipts,
                                          rights and warrants. The
                                          Portfolio combines top-down
                                          country allocation with bottom-
                                          up stock selection. The
                                          Portfolio also may invest, to
                                          a limited extent, in debt
                                          securities rated below
                                          investment grade (also known
                                          as ``junk bonds''). The
                                          Portfolio currently is non-
                                          diversified, however, it is
                                          expected that the Portfolio's
                                          subclassification will be
                                          changed from non-diversified
                                          to diversified prior to the
                                          Substitution. The Portfolio
                                          may also invest in derivatives
                                          to a limited extent.
Principal Risks:                         Principal Risks:
     Market Risk                  Market Risk
     Emerging Markets Risk        Asset Class Risk
     Foreign Securities Risk      Adviser Selection Risk
     Currency Risk                Security Selection
                                          Risk
     Security Risk                Convertible Securities
                                          Risk
     Derivatives Risk             Derivatives Risk

[[Page 61094]]

 
     Equity Risk                  Equity Risk
                                          Fixed Income Risk
                                          Junk Bonds and Lower
                                          Rated Securities Risk
                                          Foreign Securities
                                          Risk
                                          Currency Risk
                                          Emerging Markets Risk
                                          Security Risk
                                          Growth Investing Risk
                                          Liquidity Risk
                                          Portfolio Turnover
                                          Risk
                                          Focused Portfolio Risk
------------------------------------------------------------------------

    The Section 26 Applicants believe that The Universal Institutional 
Funds, Inc.--Emerging Markets Equity Portfolio and the EQ/Van Kampen 
Emerging Markets Equity Portfolio have substantially identical 
investment objectives, policies and risks and that the essential 
objectives and expectations of Contract owners will continue to be met 
after the Substitution. In this connection, the Section 26 Applicants 
note that each Portfolio invests virtually all of its assets in equity 
securities of companies located in emerging markets countries. In 
addition, the Portfolios' advisers are affiliated companies. The 
Section 26 Applicants believe that the Portfolios' advisers use a 
substantially identical investment style in managing each Portfolio's 
assets and that, while the principal risks are stated somewhat 
differently, the Portfolios have substantially identical risk profiles. 
Each Portfolio is subject to general investment risks, such as market 
risk, asset class risk and security risk, and to substantially 
identical portfolio risks, such as equity risk, foreign securities and 
emerging markets risk and growth investing risk.

                                   (8)
------------------------------------------------------------------------
           Removed portfolio                  Replacement portfolio
------------------------------------------------------------------------
Old Mutual Insurance Series Fund--Mid-   EQ/FI Mid Cap Portfolio (Class
 Cap Portfolio: The Portfolio seeks to    IA shares): The Portfolio
 provide above-average total return       seeks long-term growth of
 over a 3 to 5 year market cycle,         capital. The Portfolio
 consistent with reasonable risk. The     normally invests at least 80%
 Portfolio normally invests at least      of its net assets, plus any
 80% of its net assets, plus any          borrowings for investment
 borrowings for investment purposes, in   purposes, in common stocks of
 equity securities of mid-cap             companies with medium market
 companies. The Portfolios also may       capitalizations. The Portfolio
 invest in small-cap companies. The       may also invest in companies
 Portfolio invests in companies           with smaller or larger market
 believed to have attractive valuations   capitalization and securities
 relative to the sector and the market,   of foreign issuers. The
 near-term business dynamics and long-    Portfolio is not constrained
 term earnings growth. The Portfolio      by any particular investment
 may invest up to 20% of its net assets   style and may buy growth-
 in foreign-traded securities and         oriented or value-oriented
 derivatives..                            stock or a combination of
                                          both. The Portfolio may invest
                                          up to 20% of its net assets in
                                          derivatives and, while the
                                          Portfolio does not have a
                                          stated limit with respect to
                                          investments in securities of
                                          foreign issuers, from January
                                          1, 2004 through June 30, 2006,
                                          the Portfolio generally has
                                          invested between 10-20% of its
                                          net assets in such securities.
Principal Risks:                         Principal Risks:
     Market Risk                  Market Risk
     Small and Mid-Size Company   Asset Class Risk
     Risk
     Industry and Sector Risk     Adviser Selection Risk
                                          Security Selection
                                          Risk
                                          Equity Risk
                                          Derivatives Risk
                                          Foreign Securities
                                          Risk
                                          Security Risk
                                          Portfolio Turnover
                                          Risk
                                          Small-Cap and Mid-Cap
                                          Company Risk
                                          Growth Investing Risk
                                          Value Investing Risk
------------------------------------------------------------------------

    The Section 26 Applicants believe that the Old Mutual Insurance 
Series Fund--Mid-Cap Portfolio and the EQ/FI Mid Cap Portfolio have 
very similar investment objectives and substantially similar investment 
policies and risks and that the essential objectives and expectations 
of Contract owners will continue to be met after the Substitution. The 
Section 26 Applicants believe that the Portfolios are substantially 
similar given their focus on investments in equity securities of mid-
cap companies. The Section 26 Applicants do not believe that the income 
component of the Removed Portfolio's investment objective is a 
significant difference between the Portfolios given that, as a general 
matter, mid-cap companies do not pay significant, if any, dividends. In 
this connection, the Section 26 Applicants note that, for the fiscal 
year ended December 31, 2005, the Removed Portfolio's net investment 
income (including dividend income) was only approximately $122,000 on 
an asset base of about $55 million. The Section 26 Applicants also note 
that each Portfolio may also invest, to a limited extent, in securities 
of small-cap companies, foreign securities and derivatives. The Section 
26 Applicants believe that the Portfolios' advisers also use comparable 
investment styles in managing each Portfolio's assets and

[[Page 61095]]

that, while the principal risks are stated somewhat differently, the 
Portfolios have substantially similar risk profiles. Each Portfolio is 
subject to general investment risks, such as market risk, asset class 
risk and security risk, and to very similar portfolio risks, such as 
equity risk, mid-cap company risk and foreign securities risk.

                                   (9)
------------------------------------------------------------------------
           Removed portfolio                  Replacement portfolio
------------------------------------------------------------------------
Lord Abbett Series Fund--Mid-Cap Value   EQ/Lord Abbett Mid Cap Value
 Portfolio (Class VC shares): The         Portfolio (Class IA shares):
 Portfolio seeks capital appreciation     The Portfolio seeks capital
 through investments, primarily in        appreciation. Under normal
 equity securities, which are believed    circumstances, the Portfolio
 to be undervalued in the marketplace.    invests at least 80% of its
 The Portfolio normally invests at        net assets, plus any
 least 80% of its net assets, plus any    borrowings for investment
 borrowings for investment purposes, in   purposes, in equity securities
 equity securities of mid-sized           of mid-sized companies. The
 companies. The Portfolio may invest in   Portfolio uses a value
 convertible bonds, convertible           approach that seeks to
 preferred stocks, warrants and similar   identify stocks of companies
 instruments. The Portfolio uses a        that have the potential for
 value approach. The Portfolio may        significant market
 invest up to 10% of its net assets in    appreciation due to growing
 foreign securities that are primarily    recognitions of improvement
 traded outside the United States and     (or anticipated improvement)
 may also invest in ADRs (which are not   in their financial results.
 included in the 10% limitation). The     The Portfolio may invest: (1)
 Portfolio may also purchase and write    Without limit in ADRs and
 national securities exchange-listed      similar depositary receipts;
 put and call options on securities or    (2) up to 10% of its assets in
 securities indices and it may use        other foreign securities; and
 options for hedging or cross-hedging     (3) in convertible securities.
 purposes or to seek to increase total    The Portfolio may also
 return.                                  purchase and write exchange-
                                          listed put and call options on
                                          securities or securities
                                          indices for hedging or cross-
                                          hedging purposes or to seek to
                                          increase total return.
Principal Risks:                         Principal Risks:
     Market Risk                  Market Risk
     Security Selection Risk      Asset Class Risk
     Equity Risk                  Adviser Selection Risk
     Value Investing Risk         Security Selection
                                          Risk
     Mid-Cap Company Risk         Security Risk
     Security Risk                Convertible Securities
                                          Risk
                                          Derivatives Risk
                                          Futures and Options
                                          Risk
                                          Equity Risk
                                          Mid-Cap Company Risk
                                          Value Investing Risk
------------------------------------------------------------------------

    The Section 26 Applicants believe that the Lord Abbett Series 
Fund--Mid Cap Value Portfolio and the EQ/Lord Abbett Mid Cap Value 
Portfolio have substantially identical investment objectives, policies 
and risks and that the essential objectives and expectations of 
Contract owners will continue to be met after the Substitution. In this 
connection, the Section 26 Applicants note that each Portfolio invests 
virtually all of its assets in equity securities of mid-sized 
companies. Each Portfolio also may invest in foreign securities and 
derivatives for hedging and non-hedging purposes to the same extent. In 
addition, the Section 26 Applicants believe that the adviser to each 
Portfolio, which is the same for both Portfolios, uses an identical 
investment style in managing each Portfolio's assets and that, while 
the principal risks are stated somewhat differently, the Portfolios 
have substantially identical risk profiles. Each Portfolio is subject 
to general investment risks, such as market risk, asset class risk and 
security risk, and to substantially similar portfolio risks, such as 
equity risk, mid-cap company risk and value investing risk.

                                  (10)
------------------------------------------------------------------------
           Removed portfolio                  Replacement portfolio
------------------------------------------------------------------------
PIMCO Variable Insurance Trust--Real     EQ/JPMorgan Core Bond Portfolio
 Return Portfolio (Administrative Class   (Class IA shares): The
 shares): The Portfolio seeks maximum     Portfolio seeks a high total
 real return consistent with              return consistent with
 preservation of real capital and         moderate risk to capital and
 prudent investment management. Under     maintenance of liquidity.
 normal circumstances, the Portfolio      Under normal circumstances,
 invests at least 80% o