MONY Life Insurance Company of America, et al.; Notice of Application, 41534-41561 [E7-14663]
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Federal Register / Vol. 72, No. 145 / Monday, July 30, 2007 / Notices
investment advisers, affiliated persons
of registered investment advisers, and
entities seeking to avoid investment
adviser status, among others.
Commission staff estimates that it
receives approximately 9 applications
per year submitted under rule 0–4 of the
Act. Although each application
typically is submitted on behalf of
multiple applicants, the applicants in
the vast majority of cases are related
entities and are treated as a single
respondent for purposes of this analysis.
Most of the work of preparing an
application is performed by outside
counsel and, therefore, imposes no
hourly burden on respondents. The cost
outside counsel charges applicants
depends on the complexity of the issues
covered by the application and the time
required. Based on conversations with
applicants and attorneys, the cost ranges
from approximately $7,000 for
preparing a well-precedented, routine
application to approximately $80,000 to
prepare a complex or novel application.
We estimate that the Commission
receives 2 of the most time-consuming
applications annually, 4 applications of
medium difficulty, and 3 of the least
difficult applications subject to rule 0–
4. This distribution gives a total
estimated annual cost burden to
applicants of filing all applications of
$355,000 [(2 × $80,000) + (4 × $43,500)
+ (3 × $7,000)]. The estimates of annual
burden hours and costs are made solely
for the purposes of the Paperwork
Reduction Act, and are not derived from
a comprehensive or even representative
survey or study of the costs of
Commission rules and forms.
The requirements of this collection of
information are required to obtain or
retain benefits. Responses will not be
kept confidential. An agency may not
conduct or sponsor, and a person is not
required to respond to a collection of
information unless it displays a
currently valid control number.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
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Please direct your written comments
to R. Corey Booth, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Shirley
Martinson, 6432 General Green Way,
Alexandria, VA, 22312 or send an email to: PRA_Mailbox@sec.gov.
Dated: July 23, 2007.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–14630 Filed 7–27–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–27909; File No. 812–13346]
MONY Life Insurance Company of
America, et al.; Notice of Application
July 24, 2007.
Securities and Exchange
Commission (‘‘SEC’’ or the
‘‘Commission’’).
ACTION: Notice of application for an
order pursuant to section 26(c) of the
Investment Company Act of 1940
(‘‘1940 Act’’), approving certain
substitutions of securities and for an
order of exemption pursuant to section
17(b) of the 1940 Act.
AGENCY:
MONY Life Insurance
Company of America (‘‘MLOA’’), MONY
Life Insurance Company (‘‘MONY’’),
MONY America Variable Account A
(‘‘MLOA Separate Account A’’), MONY
America Variable Account L (‘‘MLOA
Separate Account L’’) (together, ‘‘MLOA
Separate Accounts’’), MONY Variable
Account A (‘‘MONY Separate Account
A’’), MONY Variable Account L
(‘‘MONY Separate Account L’’)
(together, ‘‘MONY Separate Accounts’’),
AXA Equitable Life Insurance Company
(‘‘AXA Equitable’’), Separate Account A
of AXA Equitable (‘‘Separate Account
A’’), Separate Account FP of AXA
Equitable (‘‘Separate Account FP’’),
Separate Account I of AXA Equitable
(‘‘Separate Account I’’), Separate
Account No. 45 of AXA Equitable
(‘‘Separate Account 45’’), Separate
Account No. 49 of AXA Equitable
(‘‘Separate Account 49’’) and Separate
Account No. 301+ of AXA Equitable
(‘‘Separate Account 301+’’) (each, an
‘‘AXA Equitable Separate Account’’ and
together, ‘‘AXA Equitable Separate
Accounts’’) (collectively, the ‘‘Section
26 Applicants’’), Separate Account No.
66 of AXA Equitable (‘‘Separate
Account 66’’) and EQ Advisors Trust
(the ‘‘Trust’’) (together with the section
26 Applicants, the ‘‘section 17
Applicants’’).
APPLICANTS:
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The Section
26 Applicants request an order pursuant
to section 26(c) of the 1940 Act,
approving the proposed substitution of
shares of certain series of the Trust
(which is a registered investment
company that is an affiliate of the
Section 26 Applicants), Franklin
Templeton Variable Insurance Products
Trust (‘‘Franklin VIT’’) and Variable
Insurance Products Fund II (‘‘Fidelity
VIT’’) (together, Franklin VIT and
Fidelity VIT, the ‘‘Outside VITs’’) for
shares of other registered investment
companies unaffiliated with the section
26 Applicants (the ‘‘Substitutions’’),
each of which is currently used as an
underlying investment option for
certain variable annuity contracts and/
or variable life insurance policies issued
by the Insurance Companies
(‘‘Contracts’’).1 The section 17
Applicants also request an order
pursuant to section 17(b) of the 1940
Act exempting them from section 17(a)
of the 1940 Act to the extent necessary
to permit partly in-kind redemptions of
securities issued by certain Removed
Portfolios (as defined herein) and
purchases of securities issued by certain
Replacement Portfolios (as defined
herein) (the ‘‘In-Kind Transactions’’) in
connection with the Substitutions.
FILING DATE: The application was filed
on November 22, 2006, and amended on
July 20, 2007. Applicants have agreed to
file an amendment during the notice
period, the substance of which is
contained in this notice.
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 August 16,
2007, and should be accompanied by
proof of service on Applicants in the
form of an affidavit or, for lawyers, a
certificate of service. Hearing requests
should state the nature of the requester’s
interest, the reason for the request, and
the issues contested. Persons who wish
to be notified of a hearing may request
notification by writing to the Secretary
of the Commission.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street,
SUMMARY OF APPLICATION:
1 AXA Equitable, MLOA and MONY are
sometimes referred to herein collectively as the
‘‘Insurance Companies’’ and individually as an
‘‘Insurance Company.’’ The MLOA Separate
Accounts, MONY Separate Accounts and AXA
Equitable Separate Accounts are sometimes referred
to herein collectively as the ‘‘Separate Accounts’’
and individually as a ‘‘Separate Account.’’
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Federal Register / Vol. 72, No. 145 / Monday, July 30, 2007 / Notices
NE., Washington, DC 20549–1090.
Applicants, c/o AXA Financial, Inc.,
1290 Avenue of the Americas, New
York, NY 10104, Attn: Steven M. Joenk,
Senior Vice President.
FOR FURTHER INFORMATION CONTACT:
Sonny Oh, Staff Attorney, or Zandra
Bailes, Branch Chief, Office of Insurance
Products, Division of Investment
Management at (202) 551–6795.
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained for a fee from the SEC’s
Public Reference Branch, 100 F Street,
NE., Room 1580, Washington, DC 20549
(tel. (202) 551–8090).
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Applicants’ Representations
1. MLOA is a stock life insurance
company organized in 1969 under the
laws of the State of Arizona. The
principal office of MLOA is located at
1290 Avenue of the Americas, New
York, NY 10104. 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. AXA Financial,
Inc. (‘‘AXA Financial’’) is the parent
company of MLOA.
2. MONY is a stock life insurance
company organized in 1998 under the
laws of the State of New York. Prior to
1998, MONY operated as The Mutual
Life Insurance Company of New York, a
mutual life insurance company. The
principal office of MONY is located at
1290 Avenue of the Americas, New
York, NY 10104. MONY is licensed to
sell life insurance and annuities in 50
states, the District of Columbia, Puerto
Rico, and the U.S. Virgin Islands. AXA
Financial is the parent company of
MONY.
3. AXA Equitable is a New York stock
life insurance company that has been in
business since 1859 (including the
operations of its predecessors). Its home
office is located at 1290 Avenue of the
Americas, New York, New York 10104.
AXA Equitable is authorized to sell life
insurance and annuities in all fifty
states, the District of Columbia, Puerto
Rico and the Virgin Islands. It maintains
local offices throughout the United
States. AXA Equitable is an investment
adviser registered under the Investment
Advisers Act of 1940, as amended, and
is a wholly owned subsidiary of AXA
Financial.
4. MLOA serves as depositor for
MLOA Separate Account A and MLOA
Separate Account L, which fund certain
Contracts. MLOA Separate Account A
and MLOA Separate Account L were
established under Arizona law in 1987
and 1985, respectively, pursuant to
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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. Units of interest in
the MLOA Separate Accounts under the
Contracts are registered under the
Securities Act of 1933, as amended
(‘‘1933 Act’’).
5. MONY serves as depositor for
MONY Separate Account A and MONY
Separate Account L, which fund certain
Contracts. 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. Units of
interest in the MONY Separate
Accounts under the Contracts are
registered under the 1933 Act.
6. AXA Equitable serves as sponsor
and depositor for Separate Account A,
Separate Account I, Separate Account
45, Separate Account 49, Separate
Account 301+, Separate Account 66,
and Separate Account FP, which fund
certain Contracts. Separate Account A,
Separate Account I, Separate Account
45, Separate Account 49, Separate
Account 301+, and Separate Account 66
were established in 1968, 1996, 1994,
1996, 1981, and 1997, respectively,
pursuant to authority granted by AXA
Equitable’s Board of Directors. Separate
Account FP was established in 1995
pursuant to authority granted by the
Board of Directors of AXA Equitable in
connection with the merger of Equitable
Variable Life Insurance Company with
and into AXA Equitable. Each AXA
Equitable Separate Account is a
segregated asset account of AXA
Equitable and, except for Separate
Account 66, is registered with the
Commission as a unit investment trust
under the 1940 Act. Separate Account
66 is excluded from registration under
the 1940 Act pursuant to section
3(c)(11) of the 1940 Act. Units of
interest in each AXA Equitable Separate
Account are registered under the 1933
Act.
7. The Trust is organized as a
Delaware statutory trust. It is registered
as an open-end management investment
company under the 1940 Act, and its
shares are registered under the 1933 Act
on Form N–1A. It commenced
operations on May 1, 1997. The Trust is
a series investment company and
currently offers 65 separate series (each
a ‘‘Portfolio’’ and collectively, the
‘‘Portfolios’’). AXA Equitable currently
serves as investment manager
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(‘‘Manager’’) of each of the Portfolios.
The Trust has received an exemptive
order from the Commission (‘‘MultiManager 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
Trust, and without the approval of
shareholders to appoint, dismiss, or
replace investment sub-advisers
(‘‘Advisers’’) and to amend Investment
Advisory Agreements (‘‘Advisory
Agreements’’).2 If a new Adviser is
retained for a Portfolio, Contract owners
would receive notice of any such action.
8. The Franklin VIT is organized as a
Massachusetts business trust. It is
registered as an open-end management
investment company under the 1940
Act, and its shares are registered under
the 1933 Act on Form N–1A. It was
organized on April 26, 1988. The
Franklin VIT is a series investment
company and currently offers 20
separate series. Each Franklin VIT
portfolio is managed by an affiliate of
Franklin Templeton Investments. The
Franklin VIT employs Advisers for
certain of its portfolios, but, to the
Applicants’ knowledge, has not been
granted a Multi-Manager Order by the
Commission.
9. The Fidelity VIT is organized as a
Massachusetts business trust. It is
registered as an open-end management
investment company under the 1940
Act, and its shares are registered under
the 1933 Act on Form N–1A. It was
organized on March 21, 1988. The
Fidelity VIT is a series investment
company and currently offers 6 separate
series. Each Fidelity VIT portfolio is
managed by Fidelity Management &
Research Company. The Fidelity VIT
employs Advisers for certain of its
portfolios and has received a MultiManager Order granted by the
Commission.
10. All Contracts allow the Contract
owners or, in the case of group annuity
Contracts, the participants, to allocate
premium payments by Contract owners
or contributions by participants among
the variable and any fixed investment
options available under the Contracts
where contributions by Contract owners
or premium payments by participants
allocated to variable funding options are
held in corresponding divisions of the
appropriate Separate Accounts.
2 See EQ Advisors Trust and EQ Financial
Consultants, Inc., 1940 Act Rel. Nos. 23093 (March
30, 1998) (notice) and 23128 (April 24, 1998)
(order).
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11. 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
request an order from the SEC pursuant
to section 26(c) of the 1940 Act
Substitution Number—Removed Portfolios
approving the proposed substitutions of
shares of the following Replacement
Portfolios for shares of the
corresponding Removed Portfolios
listed opposite their names:
Replacement Portfolios
1. Old Mutual Insurance Series Fund—Old Mutual Select Value Portfolio.
2. The Universal Institutional Funds, Inc.—Value Portfolio (Class I
shares) (‘‘Universal Value Portfolio’’).
3. Premier VIT—OpCap Managed Portfolio .............................................
4. Davis Variable Account Fund, Inc.—Davis Value Portfolio .................
5. T. Rowe Price Equity Series, Inc.—T. Rowe Price Equity Income
Portfolio.
6. AIM Variable Insurance Funds—AIM V. I. Basic Value Fund (Series I
shares).
7. Dreyfus Variable Investment Fund—Appreciation Portfolio (Initial
shares) (‘‘Dreyfus Appreciation Portfolio’’).
8. Variable Insurance Products III—VIP Growth Opportunities Portfolio
(Initial Class shares and Service Class shares) (‘‘Fidelity Growth Opportunities Portfolio’’).
9. Premier VIT—OpCap Equity Portfolio ..................................................
10. Oppenheimer Variable Account Funds—Oppenheimer Main Street
Fund/VA (Service shares)..
11. AIM Variable Insurance Funds—AIM V. I. Mid Cap Core Equity
Fund (Series I shares).
12. Alger American Fund—Alger American MidCap Growth Portfolio
(Class O shares).
13. MFS Variable Insurance Trust—MFS Mid Cap Growth Series (Initial
Class shares)..
14. Dreyfus Investment Portfolios—Small Cap Stock Index Portfolio
(Service shares) (‘‘Dreyfus Small Cap Stock Index Portfolio’’).
15. Premier VIT—OpCap Small Cap Portfolio .........................................
16. MFS Variable Insurance Trust—MFS New Discovery Series (Initial
Class shares).
17. Janus Aspen Series—Flexible Bond Portfolio (Institutional and
Service shares) (‘‘Janus Flexible Bond Portfolio’’).
18. PIMCO Variable Insurance Trust—PIMCO Total Return Portfolio
(Administrative shares).
19. The Universal Institutional Funds, Inc.—Core Plus Fixed Income
Portfolio (Class I shares) (‘‘Universal Core Plus Fixed Income Portfolio’’).
20. Premier VIT—OpCap Renaissance Portfolio .....................................
21. T. Rowe Price Equity Series, Inc.—T. Rowe Price New America
Growth Portfolio.
22. The Universal Institutional Funds, Inc.—U.S. Real Estate Portfolio
(Class I and Class II shares) (‘‘Universal U.S. Real Estate Portfolio’’).
23. Alger American Fund—Alger American Balanced Portfolio (Class O
shares).
24. MFS Variable Insurance Trust—MFS Total Return Series (Initial
Class Shares).
25. T. Rowe Price Equity Series, Inc.—T. Rowe Price Personal Strategy Balanced Portfolio.
26. Variable Insurance Products Fund—Growth Portfolio (Initial Class
shares and Service Class shares) (‘‘Fidelity Growth Portfolio’’).
EQ/AllianceBernstein Value Portfolio (Class IA shares).
EQ/Boston Advisors Equity Income Portfolio (Class IA shares).
EQ/BlackRock Basic Value Equity Portfolio (Class IB shares).
EQ/AllianceBernstein Common Stock Portfolio (Class IA shares).
EQ/Capital Guardian Research Portfolio (Class IA shares).
EQ/FI Mid Cap Portfolio (Class IA shares).
EQ/Van Kampen Mid Cap Growth Portfolio (Class IA shares).
EQ/Small Company Index Portfolio (Class IA shares).
EQ/AllianceBernstein Small Cap Growth Portfolio (Class IA shares).
EQ/JPMorgan Core Bond Portfolio (Class IA shares).
EQ/Lord Abbett Mid Cap Value Portfolio (Class IA shares).
EQ/Capital Guardian Growth Portfolio (Class IA shares).
EQ/Van Kampen Real Estate Portfolio (Class IA and Class IB shares).
Franklin Templeton Variable Insurance Products Trust—Franklin Income Securities Fund (Class 2 shares).
Variable Insurance Products Fund II—Contrafund Portfolio (Initial Class
shares and Service Class shares, as applicable) (‘‘Fidelity
Contrafund Portfolio’’).
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27. The Universal Institutional Funds, Inc.—Equity Growth Portfolio
(Class I shares) (‘‘Universal Equity Growth Portfolio’’).
12. The section 26 Applicants propose
the Substitutions as part of a continued
and overall business plan by each
Insurance Company to make its
Contracts more attractive to existing
Contract owners, participants or
prospective purchasers, as the case may
be, and more efficient to administer and
oversee. Each Insurance Company
represents that it has carefully reviewed
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its Contracts and each investment
option offered under its Contracts with
the goal of providing a superior choice
of investment options.
13. Among the principal purposes of
the Substitutions, the section 26
Applicants assert that the Removed
Portfolios generally have not attracted
sufficient Contract owner or participant
interest to support maintaining them as
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separate investment options under the
Contracts, particularly where they
duplicate or substantially overlap with
other investment options offered
through the Separate Accounts. As of
December 31, 2006, the Separate
Accounts had allocated approximately
the following amounts to the Removed
and Replacement Portfolios:
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Substitution number—Removed portfolios
(in millions)
Replacement portfolios
(in millions)
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1. Old Mutual Select Value Portfolio ($8.0) .............................................
2. Universal Value Portfolio ($13.2).
3. OpCap Managed Portfolio ($9.9).
4. Davis Value Portfolio ($1.3).
5. T. Rowe Price Equity Income Portfolio ($26.8) ...................................
6. AIM V.I. Basic Value Equity Fund ($19.5) ...........................................
7. Dreyfus Appreciation Portfolio ($1.0) ...................................................
8. Fidelity Growth Opportunities Portfolio ($9.6) ......................................
9. OpCap Equity Portfolio ($1.5).
10. Oppenheimer Main Street Fund/VA ($11.5).
11. AIM V.I. Mid Cap Core Equity Fund ($9.7) ........................................
12. Alger American MidCap Growth Portfolio ($37.7) .............................
13. MFS Mid Cap Growth Series ($6.4).
14. Dreyfus Small Cap Stock Index Portfolio ($10.3) ..............................
15. OpCap Small Cap Portfolio ($1.2).
16. MFS New Discovery Series ($6.6) .....................................................
17. Janus Flexible Bond Portfolio ($23.8) ................................................
18. PIMCO Total Return Portfolio ($0.6).
19. Universal Core Plus Fixed Income Portfolio ($14.5).
20. OpCap Renaissance Portfolio ($20.2) ...............................................
21. T. Rowe Price New America Growth Portfolio ($7.3) ........................
22. Universal U.S. Real Estate Portfolio (Class I and Class II shares)
(Not Provided).
23. Alger American Balanced Portfolio ($14.9) ........................................
24. MFS Total Return Series ($30.5).
25. T. Rowe Price Personal Strategy Balanced Portfolio ($2.7).
26. Fidelity Growth Portfolio ($38.3) ........................................................
27. Universal Equity Growth Portfolio ($0.1).
14. The section 26 Applicants also
maintain that substituting the
Replacement Portfolios for the Removed
Portfolios would lead to greater
efficiencies in administering the
Contracts and potentially enable the
Insurance Companies to offer a wider
range of investment options in the
future that would be more attractive to
Contract owners and participants. In
this connection, the section 26
Applicants note that the deletion of
unpopular investment options would
create additional capacity on their
systems and platforms to offer new
investment options.
15. The section 26 Applicants further
assert that the Substitutions also are
designed and intended to simplify the
prospectuses and related materials with
respect to the Contracts and the
investment options available through
the Separate Accounts. In certain cases,
the Insurance Companies offer several
investment alternatives that overlap one
another by having similar investment
objectives, policies and risks. The
proposed Substitutions would eliminate
these overlapping investment
alternatives. The section 26 Applicants
believe that the deletion of overlapping
investment options should not
adversely affect Contract owners and
participants given that other similar
investment options will remain
available under the Contracts and that
the Contracts will either offer the same
number of investment options or, in
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EQ/AllianceBernstein Value Portfolio ($4,279.0).
EQ/Boston Advisors Equity Income Portfolio ($357.0).
EQ/BlackRock Basic Value Equity Portfolio ($3,600.0).
EQ/AllianceBernstein Common Stock Portfolio ($9,279.0).
EQ/Capital Guardian Research Portfolio ($1,056.0).
EQ/FI Mid Cap Portfolio ($1,552.0).
EQ/Van Kampen Mid Cap Growth Portfolio ($138.0).
EQ/Small Company Index Portfolio ($1,056.0).
EQ/AllianceBernstein Small Cap Growth Portfolio ($1,201.0).
EQ/JPMorgan Core Bond Portfolio ($1,557.0).
EQ/Lord Abbett Mid Cap Value Portfolio ($320.0).
EQ/Capital Guardian Growth Portfolio ($402.0).
EQ/Van Kampen Real Estate Portfolio (Class IA and Class IB shares)
(Not Provided).
Franklin Income Securities Fund ($39.3).
Fidelity Contrafund Portfolio ($73.2).
those cases where the number of
investment options is being reduced,
continue to offer a significant number of
alternative investment options
(currently expected to range in number
from 27 to 51 after the Substitutions
versus 28 to 57 before the
Substitutions).
16. In addition, some Contracts offer
investment alternatives from multiple
fund complexes, each with its own
prospectus and disclosure format,
which significantly increases the
volume and complexity of information
that is received by Contract owners and
participants. The Insurance Companies
believe that this situation may be
confusing to Contract owners and
participants. By substituting the
Replacement Portfolios for the Removed
Portfolios, the respective Insurance
Company anticipates that it would
simplify the Contract prospectuses and
related materials provided to Contract
owners and participants and thereby
reduce the potential for Contract owner
and participant confusion. The section
26 Applicants also assert that the
Substitutions will enable an Insurance
Company to reduce certain costs that it
incurs in administering the Contracts by
removing overlapping and unpopular
Portfolios and thereby allowing an
Insurance Company to offer more
competitively priced products in the
future.
17. The section 26 Applicants note
that Contract owners and participants
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with subaccount balances invested in
shares of the Replacement Portfolios
will have the same or lower net
operating expenses immediately after
the Substitutions. In addition, the
Insurance Companies have agreed to
impose certain expense limits on
Replacement Portfolios to ensure that
Contract owners and participants on the
Substitution Date incur the same or
lower expense ratios for certain periods
after the Substitutions. In addition,
many of the Replacement Portfolios are
larger than their corresponding
Removed Portfolios. Generally speaking,
larger funds tend to have lower
expenses than comparable funds that
are smaller. This is because, with a
larger asset size, fixed fund expenses are
spread over a larger base, lowering the
expense ratios. Therefore, as a result of
certain Substitutions, various costs such
as legal, accounting, printing and trustee
fees will be spread over a larger base
with each Contract owner and
participant bearing a smaller portion of
the cost than would be the case if the
Replacement Portfolios and/or the Trust
(as applicable) were smaller in size.
Larger funds also may have lower
trading expenses, potentially resulting
in higher returns.
18. The section 26 Applicants also
argue that certain of the proposed
Substitutions would replace an outside
Portfolio with a Portfolio for which
AXA Equitable serves as Manager and,
thus, would permit AXA Equitable,
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under the Multi-Manager Order, to
appoint, dismiss and replace Advisers
and amend Advisory Agreements as
necessary to seek optimal performance
from the Portfolio and its portfolio
managers. Notwithstanding the MultiManager Order, with respect to the
Substitution involving the EQ/Van
Kampen Real Estate Portfolio, after the
Substitution Date (as defined herein),
the Section 26 Applicants agree not to
change the Adviser to the EQ/Van
Kampen Real Estate Portfolio without
first obtaining shareholder approval of
either (a) the Adviser change or (b) AXA
Equitable’s continued ability to rely on
the Multi-Manager Order. Even with
respect to this Substitution, the section
26 Applicants believe that the
Substitution would provide AXA
Equitable, as the investment manager of
the Trust, with greater oversight
capabilities with respect to portfolios
offered through its Contracts.
19. Moreover, certain of the
Substitutions will replace an outside
Portfolio with a Portfolio that is
managed by AXA Equitable. In this
regard, the relevant Replacement
Portfolios generally are only available
through the variable insurance and
annuity products offered by AXA
Equitable and its affiliates.
Consequently, the Board of Trustees of
the relevant Replacement Portfolios has
greater sensitivity to the needs of
Contract owners and participants. The
relevant Substitutions also will provide
AXA Equitable with more influence
over the administrative aspects of the
Portfolios, while providing Contract
owners and participants with the benefit
of third party asset management.
Influence is important because changes
to Removed Portfolios can result in
costly, off-cycle communications and
mailings to Contract owners and
participants. Conversely, for the
relevant Replacement Portfolios, AXA
Equitable has greater influence over the
pace and timing of such changes. AXA
Equitable believes that the relevant
Substitutions will enable it to exercise
more influence over the management
and administration of the Portfolios,
thereby reducing costs and customer
confusion. The added influence will
give AXA Equitable the ability to react
more quickly to changes and problems
it encounters in its oversight of the
relevant Replacement Portfolios.
20. The section 26 Applicants also
maintain that the Substitutions will
substitute shares of a Replacement
Portfolio for shares of a Removed
Portfolio, which has very similar, and in
some cases substantially similar,
investment objectives, investment
policies and risks as those of the
corresponding Removed Portfolio. This
fact is expected to simplify the process
of explaining the Substitutions to
Contract owners and participants,
including an explanation of the relevant
differences in the policies of the
Replacement and Removed Portfolios,
and should facilitate their
understanding of the effect of the
Substitutions on them. A summary
description of the investment objectives,
investment policies and principal risks
of each Removed Portfolio and its
corresponding proposed Replacement
Portfolio is set forth below.
Substitution Number—Removed Portfolios
Replacement
Portfolio
2. Universal Value Portfolio (Class I shares)
3. OpCap Managed Portfolio
4. Davis Value Portfolio
EQ/AllianceBernstein Value
Portfolio (Class IA shares)
Investment Objective and
Principal Strategies: The
Portfolio seeks to provide investors with longterm growth of capital
and income; current income is a secondary objective. The Portfolio normally invests at least
65% of its net assets in
equity securities of large
cap companies with
value characteristics.
The Portfolio may invest
in common and preferred
stock. The Portfolio also
may invest in investment
grade fixed income securities, American Depositary Receipts (‘‘ADRs’’)
and up to 20% of its net
assets in foreign-traded
securities. In addition,
the Portfolio may invest
in derivatives, U.S. government securities and
convertible securities.
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1. Old Mutual Select Value
Portfolio
Investment Objective and
Principal Strategies:
The Portfolio seeks
above-average total return over a market
cycle of three to five
years. The Portfolio invests primarily in common stocks of companies with larger capitalizations. The Portfolio
emphasizes a value
style of investing seeking well established
companies that appear
undervalued. The Portfolio also may invest, to
a limited extent, in foreign equity securities
and, without limit, in securities of foreign companies listed on a U.S.
national exchange. In
addition, the Portfolio
may invest in investment grade debt securities, U.S. government
securities, convertible
securities and derivatives.
Investment Objective and
Principal Strategies:
The Portfolio seeks
growth of capital over
time. The Portfolio invests in common
stocks, bonds, derivatives and cash equivalents in varying percentages based on the advisers’ views of relative
values. The Portfolio
also may invest in foreign securities and government and corporate
bonds. The Portfolio
may invest up to 100%
of its assets in debt securities, but will only do
so if, in the judgment of
the adviser, equity securities are not attractive investments.
Investment Objective and
Principal Strategies:
The Portfolio seeks
long-term growth of
capital. The Portfolio invests the majority of its
assets in equity securities issued by large
companies. The Portfolio may invest in companies of any size and
also may invest in foreign securities, debt securities, including government securities, and
derivatives. In addition,
the Portfolio may invest
in preferred securities
and convertible securities. The adviser seeks
to acquire companies
with durable business
models that can be purchased at attractive
valuations in relation to
their intrinsic value.
Investment Objective and
Principal Strategies: The
Portfolio seeks capital appreciation. Under normal
circumstances, the Portfolio invests a least 80% of
its total assets in equity securities that are trading at
a discount to their long
term earnings power. The
Portfolio generally invests
in large-cap companies.
The Portfolio may invest in
common stock, preferred
stock and securities convertible into common stock.
The Portfolio also may invest up to 20% of its assets in U.S. Government
securities and investment
grade securities of domestic corporations and up to
10% of its assets in foreign
equity or debt securities. In
addition, the Portfolio may
invest in derivatives.
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Substitution Number—Removed Portfolios
41539
Replacement
Portfolio
1. Old Mutual Select Value
Portfolio
2. Universal Value Portfolio (Class I shares)
3. OpCap Managed Portfolio
4. Davis Value Portfolio
EQ/AllianceBernstein Value
Portfolio (Class IA shares)
Principal Risks: Equity
Risk, Industry and Sector
Risk, Investment Style
Risk, Market Risk, Security Risk, Security Selection Risk.
Principal Risks: Asset
Class Risk, Equity Risk,
Market Risk, Security
Risk, Small-Cap Company Risk, Value Investing Risk.
Principal Risks: Asset Allocation Risk, Credit
Risk, Currency Risk,
Derivatives Risk,
Emerging Markets Risk,
Fixed Income Risk,
Issuer Risk, Leveraging
Risk, Liquidity Risk,
Management Risk, Market Risk, Mortgage
Risk, Value Securities
Risk.
Principal Risks: Company
Risk, Financial Service
Risk, Foreign Country
Risk, Headline Risk,
Market Risk, Selection
Risk.
Principal Risks: Adviser Selection Risk, Asset Class
Risk, Convertible Securities Risk, Derivatives Risk,
Equity Risk, Fixed Income
Risk, Foreign Securities
Risk (also known as currency risk and emerging
markets risk, or foreign
country risk), Investment
Grade Securities Risk, Interest Rate Risk,
Leveraging Risk, Market
Risk, Security Selection
Risk (also known as selection risk), Security Risk
(also known as issuer risk
or company risk), Value Investing Risk (also known
as investment style risk or
value securities risk).
Replacement Portfolio
5. T. Rowe Price Equity Income Portfolio
EQ/Boston Advisors Equity Income Portfolio (Class IA shares)
Investment Objective and Principal Strategies: The Portfolio seeks to
provide substantial dividend income as well as long-term growth of
capital. The Portfolio will normally invest at least 80% of its net assets in common stocks, with 65% in common stocks of well-established companies paying above average dividends. The Portfolio also
may invest in convertible securities, foreign securities and derivatives. The Portfolio typically employs a value approach in selecting
investments.
Principal Risks: Derivatives Risk, Equity Risk, Fixed Income Risk, Foreign Securities Risk, Interest Rate Risk, Market Risk, Security Risk,
Security Selection Risk, Value Investing Risk.
Investment Objective and Principal Strategies: The Portfolio seeks a
combination of growth and income to achieve an above-average and
consistent total return. Under normal circumstances, the Portfolio invests as least 80% of its net assets, plus borrowings for investment
purposes, in equity securities. The Portfolio primarily invests in dividend-paying common stocks of U.S. large capitalization companies,
but also may invest in small- and mid-cap companies. The Portfolio
also may invest in convertible securities, foreign securities and derivatives. The Adviser focuses primarily on companies that offer the
potential for capital appreciation combined with an above market
level of dividend income.
Principal Risks: Adviser Selection Risk, Asset Class Risk, Convertible
Securities Risk, Equity Risk, Market Risk, Security Risk, Security Selection Risk, Small-Cap and Mid-Cap Company Risk.
Substitution Number—Removed Portfolio
Replacement Portfolio
6. AIM V.I. Basic Value Fund (Series I shares)
EQ/BlackRock Basic Value Equity Portfolio (Class IB shares)
Investment Objective and Principal Strategies: The Portfolio seeks
long-term growth of capital. The Portfolio normally invests at least
65% of its total assets in equity securities of large- and mid-cap U.S.
issuers and that the portfolio managers believe to be undervalued in
relation to long-term earning power or other factors. The Portfolio
also may invest up to 30% of its total assets in equity securities of
small-cap U.S. issuers and may invest in investment grade non-convertible debt securities, U.S. government securities and high-quality
money market issuers, all of which are issued by U.S. issuers. In addition, the Portfolio may invest up to 25% of its total assets in foreign
securities.
Principal Risks: Equity Risk, Foreign Securities Risk, Market Risk, Security Risk, Security Selection Risk, Small-Cap Company Risk, Value
Investing Risk.
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Substitution Number—Removed Portfolios
Investment Objective and Principal Strategies: The Portfolio seeks capital appreciation and, secondarily, income. Under normal circumstances, the Portfolio invests at least 80% of its net assets, plus
borrowings for investment purposes, in equity securities. The Portfolio invests primarily in equity securities the Adviser believes are undervalued. The Portfolio focuses its investments on large-cap companies, but also may invest in small- and mid-capitalization companies. The Portfolio also may invest, to a limited extent, in investment
grade debt securities and U.S. government securities and up to 25%
of its total assets in foreign securities.
Principal Risks: Adviser Selection Risk, Asset Class Risk, Derivatives
Risk, Equity Risk, Foreign Securities Risk, Market Risk, Security Selection Risk, Security Risk, Small-Cap and Mid-Cap Company Risk,
Value Investing Risk.
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Substitution Number—Removed Portfolio
Replacement Portfolio
7. Dreyfus Appreciation Portfolio (Initial shares)
EQ/AllianceBernstein Common Stock Portfolio (Class IA shares)
Investment Objective and Principal Strategies: The Portfolio seeks
long-term capital growth consistent with preservation of capital. The
Portfolio normally invests at least 80% of its assets in common
stocks. The Portfolio focuses on blue chip companies, including multinational companies. The adviser may utilize both growth and value
investing styles.
Principal Risks: Blue Chip Risk, Foreign Investment Risk, Issuer Risk,
Market Risk, Market Sector Risk.
Investment Objective and Principal Strategies: The Portfolio seeks to
achieve long-term growth of capital. The Portfolio generally invests at
least 80% of its net assets, plus borrowing for investment purposes,
in common stocks. The Portfolio invests primarily in common stocks
listed on national securities exchanges, but smaller amounts may be
invested in stocks that are traded over-the-counter. The Portfolio
generally will not invest more than 20% of its total assets in foreign
securities. The adviser may utilize both growth and value investing
styles.
Principal Risks: Adviser Selection Risk, Asset Class Risk (also known
as market risk or market sector risk), Convertible Securities Risk, Equity Risk (also known as issuer risk), Foreign Securities Risk (also
known as foreign investment risk), Growth Investing Risk, Market
Risk, Security Risk (also known as issuer risk), Security Selection
Risk, Small-Cap and Mid-Cap Company Risk, Value Investing Risk.
Substitution Number—Removed Portfolios
Replacement Portfolio
9. OpCap Equity
Portfolio
10. Oppenheimer Main Street
Fund/VA (Service shares)
EQ/Capital Guardian Research
Portfolio (Class IA shares)
Investment Objective and Principal
Strategies: The Portfolio seeks
to provide capital growth. The
Portfolio normally invests primarily in common stocks. The
Portfolio may invest in securities
of foreign issuers in addition to
domestic issuers. The adviser is
not constrained by any particular
investment style and may utilize
both growth and value investing
styles.
Principal Risks: Foreign Exposure
Risk, Issuer-Specific Changes,
Stock Market Volatility Risk.
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8. Fidelity Growth Opportunities
Portfolio (Initial Class shares and
Service Class shares)
Investment Objective and Principal Strategies: The Portfolio
seeks long term capital appreciation. Under normal conditions, the Portfolio invests at
least 80% of its net assets, plus
borrowings for investment purposes, in equity securities of
companies that the manager
believes are undervalued in the
marketplace. The Portfolio may
invest in foreign securities and
invests in equity securities listed on U.S. or foreign securities
exchanges or traded in overthe-counter markets.
Principal Risks: Credit Risk, Equity
Risk,
Issuer
Risk,
Leveraging Risk, Liquidity Risk,
Management Risk, Market Risk,
Value Securities Risk.
Investment Objective and Principal Strategies: The Portfolio
seeks high total return from equity and debt securities. The
Portfolio currently invests mainly in common stocks of U.S.
companies of different capitalization ranges, presently focusing
on
large-capitalization
issuers. The Portfolio may also
buy debt securities such as
bonds and debentures, but
does not currently emphasize
these investments. In addition,
the Portfolio may invest in foreign securities without limit,
however, the Portfolio does not
currently expect to have substantial investments in such securities.
Principal Risks: Asset Class Risk,
Equity Risk, Fixed Income Risk,
Interest Rate Risk, Market Risk,
Security Risk, Security Selection Risk, Small-Cap and MidCap Company Risk.
Investment Objective and Principal Strategies: The Portfolio
seeks to achieve long-term
growth of capital. The Portfolio
invests primarily (generally at
least 65% of its assets) in equity securities of U.S issuers
and securities whose principal
markets are in the United
States. The Portfolio invests primarily in common stocks of
large-cap companies. The Portfolio may invest up to 15% of its
total assets in securities of
issuers outside of the U.S. and
not included in the S&P 500.
The Adviser seeks to invest in
stocks whose prices are not excessive relative to book value
or in companies whose asset
values are understated.
Principal Risks: Adviser Selection
Risk, Asset Class Risk, Equity
Risk (also known as issuer-specific changes risk), Foreign Securities Risk (also known as foreign exposure risk), Market
Risk (also known as stock-market volatility risk), Security Selection Risk (also known as
management risk), Security
Risk (also known as issuer-specific changes risk or issuer risk),
Small-Cap and Mid-Cap Company Risk.
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41541
Substitution Number—Removed Portfolio
Replacement Portfolio
11. AIM V.I. Mid Cap Core Equity Fund
(Series I shares)
EQ/FI Mid Cap Portfolio (Class IA shares)
Investment Objective and Principal Strategies: The Portfolio seeks
long-term growth of capital. Normally, the Portfolio invests at least
80% of its net assets, plus the amount of any borrowing for investment purposes, in equity securities, including convertible securities,
of mid-capitalization companies. In selecting investments, the adviser
seeks to identify those companies that are, in its view, undervalued
relative to current or projected earnings. The Portfolio may invest up
to 20% of its assets in equity securities of companies in other market
capitalization ranges. The Portfolio may also invest up to 20% of its
assets in investment grade debt securities, U.S. Government securities and high quality money market instruments and 25% of its total
assets in foreign securities. In addition, the Portfolio may invest in
derivatives.
Principal Risks: Equity Risk, Foreign Securities Risk, Market Risk, Security Risk, Security Selection Risk.
Investment Objective and Principal Strategies: The Portfolio seeks
long-term 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
growth-oriented or value-oriented stock or a combination of both.
While the Portfolio does not have a stated limit with respect to investments in securities of foreign issuers, from January 1, 2004
through December 31, 2006, the Portfolio generally has invested between 10–20% of its net assets in such securities. In addition, the
Portfolio may invest in derivatives and up to 20% of its net assets in
investment grade debt securities and U.S. Government securities.
Principal Risks: Adviser Selection Risk, Asset Class Risk, Derivatives
Risk, Equity Risk, Foreign Securities Risk, Growth Investing Risk,
Market Risk, Portfolio Turnover Risk, Security Risk, Security Selection Risk, Small-Cap and Mid-Cap Company Risk, Value Investing
Risk.
Substitution Number—Removed Portfolios
Replacement Portfolio
13. MFS Mid Cap Growth
Series (Initial Class shares)
EQ/Van Kampen Mid Cap Growth Portfolio
(Class IA shares)
Investment Objective and Principal Strategies:
The Portfolio seeks long-term capital appreciation. Under normal circumstances, the
portfolio invests at least 80% of its net assets in the equity securities of mid-cap companies at the time of investment. The Portfolio also may invest in equity securities of
small- and large-cap companies. The Portfolio focuses on mid-sized companies the
adviser believes demonstrate promising
growth potential. The Portfolio may invest in
derivatives, convertible securities and up to
20% of its total assets in foreign securities.
Principal Risks: Derivatives Risk, Equity Risk,
Growth Investing Risk, Liquidity Risk, Market
Risk, Mid-Cap Company Risk, Security Risk,
Security Selection Risk.
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12. Alger American MidCap Growth Portfolio
(Class O shares)
Investment Objective and Principal Strategies:
The Portfolio seeks long-term growth of
capital. Under normal circumstances, the
Portfolio invests at least 80% of its net assets in common stocks and related securities, of companies with medium market capitalization which the Portfolio’s adviser believes have above-average growth potential.
The Portfolio also may invest, to a limited
extent, in investment grade debt securities,
up to 10% in lower rated bonds and up to
20% in foreign securities, including emerging markets securities. In addition, the Portfolio may invest in convertible securities and
derivatives.
Principal Risks: Emerging Markets Risk, Foreign Securities Risk, Market Risk, Mid-Cap
Growth Company Risk, Over-the-Counter
Risk, Short Sales Risk.
Investment Objective and Principal Strategies:
The Portfolio seeks capital growth. Under
normal circumstances, the Portfolio invests
at least 80% of its net assets, plus borrowings for investment purposes, in securities of medium-sized companies at the time
of investment. The Portfolio primarily invests
(generally at least 65% of its assets) in equity securities and may also invest in equity
securities of small- and large-cap companies. The Adviser seeks to invest in high
quality companies it believes have sustainable competitive advantages and the ability
to redeploy capital at high rates of return.
The Portfolio also may invest in debt securities of various maturities considered investment grade and up to 5% of its net assets
in convertible securities below investment
grade. In addition, the Portfolio may invest
in derivatives and up to 25% of its total assets in foreign issuers, including issuers in
emerging markets.
Principal Risks: Adviser Selection Risk, Asset
Class Risk, Convertible Securities Risk,
Currency Risk, Derivatives Risk, Emerging
Markets Risk, Equity Risk, Foreign Securities Risk, Fixed Income Risk, Investment
Grade Securities risk, Junk Bond or Lower
Rated Securities Risk, Growth Investing
Risk (also known as mid-cap growth company risk), Market Risk, Security Risk, Security Selection Risk, Small-Cap and MidCap Company Risk (also known as mid-cap
growth company risk).
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Substitution Number—Removed Portfolios
Replacement Portfolio
14. Dreyfus Small Cap Stock Index Portfolio
(Service shares)
15. OpCap Small Cap Portfolio
EQ/Small Company Index Portfolio (Class IA
shares)
Investment Objective and Principal Strategies:
The Portfolio seeks to match the performance of the S&P SmallCap 600 Index. The
Portfolio invests in a representative sample
of stocks included in the S&P SmallCap 600
Index. The Portfolio may also invest in derivatives and, to a limited extent, in shortterm debt securities.
Principal Risks: Derivatives Risk, Indexing
Strategy Risk, Issuer Risk, Market Risk,
Small and Midsize Company Risk
Investment Objective and Principal Strategies:
The Portfolio seeks capital appreciation.
Under normal circumstances, the Portfolio
invests at least 80% of its net assets, plus
borrowings for investment purposes, in equity securities of small-cap companies that
the adviser believes are undervalued in the
marketplace. The Portfolio’s benchmark is
the Russell 2000 Index (‘‘Russell 2000’’).
The Portfolio also may invest in securities
issued in an IPO, foreign securities, derivatives and, to a limited extent, in short-term
debt securities.
Principal Risks: Credit Risk, Issuer Risk,
Leveraging Risk, Liquidity Risk, Management Risk, Market Risk, Small Company
Risk, Value Securities Risk.
Investment Objective and Principal Strategies:
The Portfolio seeks to replicate as closely
as possible the total return of the Russell
2000. Under normal circumstances, the
Portfolio invests at least 80% of its net assets, plus borrowing for investment purposes, in equity securities of small-cap
companies included in the Russell 2000.
The Portfolio may also invest in derivatives
and, to a limited extent, in short-term debt
securities.
Principal Risks: Adviser Selection Risk, Asset
Class Risk, Derivatives Risk, Equity Risk,
Index-Fund Risk (also known as indexing
strategy risk), Liquidity Risk, Market Risk
(also known as issuer risk), Security Risk
(also known as issuer risk), Small-Cap
Company Risk (also known as small company risk).
Replacement Portfolio
16. MFS New Discovery Series
(Initial Class shares)
EQ/AllianceBernstein Small Cap Growth Portfolio
(Class IA shares)
Investment Objective and Principal Strategies: The Portfolio seeks capital appreciation. Under normal market conditions, the Portfolio invests at least 65% of its net assets in equity securities of emerging
growth companies. While emerging growth companies may be of any
size, the Portfolio generally focuses on small capitalization companies. The Portfolio invests in common stocks and other equity securities, such as convertible securities. The adviser looks to invest in
companies that offer superior growth prospects. The Portfolio also
may invest in investment grade corporate fixed income securities and
up to 20% of its assets in foreign securities
Principal Risks: Active and Frequent Trading Risk, Company Risk,
Emerging Growth Companies Risk, Foreign Securities Risk, Market
Risk, Over-the-Counter Risk, Small Capitalization Companies Risk,
Short Sales Risk
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Substitution Number—Removed Portfolios
Investment Objective and Principal Strategies: The Portfolio seeks to
achieve long-term growth of capital. Under normal circumstances,
the Portfolio invests at least 80% of its net assets, plus borrowing for
investment purposes, in securities of small capitalization companies.
The Portfolio invests primarily in U.S. common stocks and other equity-type securities issued by smaller companies with favorable
growth prospects. The Portfolio may also invest in convertible securities, investment grade corporate fixed income securities and up to
20% of its assets in foreign securities.
Principal Risks: Adviser Selection Risk, Asset Class Risk, Convertible
Securities Risk, Equity Risk, Growth Investing Risk, Liquidity Risk,
Market Risk, Portfolio Turnover Risk (also known as active and frequent trading risk), Securities Risk (also known as company risk),
Security Selection Risk, Small-Cap Company Risk (also known as
small capitalization companies risk).
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Substitution Number—Removed Portfolios
Replacement Portfolio
17. Janus Flexible Bond Portfolio
(Institutional and Service shares)
18. PIMCO Total Return Portfolio
(Administrative shares)
19. Universal Core Plus Fixed Income Portfolio (Class I shares)
EQ/JPMorgan Core Bond Portfolio (Class IA shares)
Investment Objective and Principal
Strategies: The Portfolio seeks
to obtain maximum total return,
consistent with preservation of
capital. Under normal circumstances, the Portfolio invests
at least 80% of its assets, plus
the amount of any borrowings
for investment purposes, in
bonds. The Portfolio will invest
at least 65% of its assets in investment grade debt securities.
The types of bonds the Portfolio
invests in include government
bonds, corporate bonds and
mortgage-backed bonds. Within
the parameters of its specific investment policies, the Portfolio
also may invest, without limit, in
foreign debt and equity securities. In addition, the Portfolio
may invest in derivatives.
Principal Risks: Credit Risk, Fixed
Income Risk, Foreign Securities
Risk, Interest Rate Risk HighYield Securities Risk.
Investment Objective and Principal Strategies: The Portfolio
seeks maximum total return,
consistent with preservation of
capital and prudent investment
management. Under normal circumstances, the Portfolio invests at least 65% of its total
assets in a diversified portfolio
of fixed income instruments of
varying maturities. The Portfolio
invests primarily in investment
grade debt securities. The Portfolio may invest up to 30% of its
total assets in securities denominated in foreign currencies,
and may invest beyond this limit
in U.S. dollar-denominated securities of foreign issuers. The
Portfolio may also invest in derivatives.
Principal Risks: Credit Risk, Currency Risk, Derivatives Risk,
Foreign (Non-U.S.) Investment
Risk, High Yield Risk, Interest
Rate
Risk,
Issuer
Risk,
Leveraging Risk, Liquidity Risk,
Management Risk, Market Risk,
Mortgage Risk.
Investment Objective and Principal Strategies: The Portfolio
seeks above average total return over a market cycle of
three to five years. Under normal circumstances, at least
80% of the Portfolio’s assets
are invested in fixed income securities. The Portfolio invests
primarily in a diversified mix of
dollar denominated investment
grade fixed income securities,
including U.S. government, corporate and mortgage securities.
The Portfolio also may invest in
foreign securities and derivatives.
Principal Risks: Credit Risk, Fixed
Income Risk, High-Yield Securities Risk, Interest Rate Risk,
Market Risk, Mortgage-Backed
Securities Risk.
Investment Objective and Principal Strategies: The Portfolio
seeks to provide a high total return consistent with moderate
risk to capital and maintenance
of liquidity. Under normal circumstances, the Portfolio invest
at least 80% of its net assets,
plus borrowings for investment
purposes, in investment grade
debt securities. The Portfolio invests in broad sectors of fixed
income securities, including
U.S. Government and agency
securities, corporate securities
and mortgage-backed securities. The Portfolio also may invest in derivatives and up to
25% of its assets in securities
of foreign issuers.
Principal Risks: Adviser Selection
Risk, Asset-Backed Securities
Risk, Asset Class Risk, Credit
Risk, Derivatives Risk, Fixed Income Risk, Foreign Securities
Risk, Interest Rate Risk, Investment Grade Securities Risk, Liquidity Risk, Market Risk, Mortgage-Backed Securities Risk,
Portfolio Turnover Risk, Security Risk, Security Selection
Risk.
Replacement Portfolio
20. OpCap Renaissance Portfolio
EQ/Lord Abbett Mid Cap Value Portfolio (Class IA shares)
Investment Objective and Principal Strategies: The Portfolio seeks long
term capital appreciation and income. Under normal market conditions, the Portfolio invests at least 65% of its assets in common
stocks of companies that the adviser believes are trading below their
intrinsic values and whose business fundamentals are expected to
improve. The Portfolio typically invests in mid-cap companies. The
Portfolio also may invest in derivatives and up to 15% in foreign securities, except that the Portfolio may invest without limit in securities
of foreign issuers that are traded in U.S. markets, including ADRs).
Principal Risks: Credit Risk Derivatives Risk Issuer Risk, Leveraging
Risk, Liquidity Risk, Management Risk, Market Risk, Value Securities
Risk.
Investment Objective and Principal Strategies: The Portfolio seeks capital appreciation. Under normal circumstances, the Portfolio invests
at least 80% of its net assets, plus borrowings for investment purposes, in equity securities of mid-sized companies. In selecting investments, the Adviser uses a value approach. The Portfolio also
may invest up to 10% of its net assets in foreign securities, except
that the Portfolio may invest without limit in ADRs and similar depositary receipts. In addition, the Portfolio may invest in derivatives.
Principal Risks: Adviser Selection Risk, Asset Class Risk, Convertible
Securities Risk, Derivatives Risk, Equity Risk (also known as issuer
risk), Futures and Options Risk, Market Risk, Mid-Cap Company
Risk, Security Risk (also known as issuer risk), Security Selection
Risk (also known as management risk), Value Investing Risk (also
known as value securities risk).
Substitution Number—Removed Portfolio
Replacement Portfolio
21. T. Rowe Price New America Growth Portfolio
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Substitution Number—Removed Portfolio
EQ/Capital Guardian Growth Portfolio (Class IA shares)
Investment Objective and Principal Strategies: The Portfolio seeks
long-term capital growth. The Portfolio invests at least 65% of its
total assets in common stocks of U.S. companies operating in those
sectors of the economy that the adviser believes are the fastest
growing or have the greatest growth potential. The Portfolio may invest in companies of any market capitalization and may also invest
in convertible securities and foreign securities.
Principal Risks: Asset Class Risk, Equity Risk, Foreign Securities Risk,
Growth Investing Risk, Market Risk, Security Risk, Security Selection
Risk, Small-Cap Company Risk.
Investment Objective and Principal Strategies: The Portfolio seeks
long-term growth of capital. The Portfolio normally will be invested
primarily in common stocks, or securities convertible or exchangeable into common stocks, of large-cap companies. The Portfolio invests primarily in equity securities of U.S. issuers and securities
whose principal markets are in the U.S., including ADRs. The Adviser seeks to invest in securities that exhibit one or more growth
characteristics relative to the U.S. market.
Principal Risks: Adviser Selection Risk, Asset Class Risk, Convertible
Securities Risk, Equity Risk, Foreign Securities Risk, Growth Investing Risk, Market Risk, Security Selection Risk, Security Risk, SmallCap and Mid-Cap Company Risk.
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Substitution Number—Removed Portfolio
Replacement Portfolio
22. Universal U.S. Real Estate Portfolio (Class I and Class II shares)
EQ/Van Kampen Real Estate Portfolio (Class IA and Class IB shares)
Investment Objective and Principal Strategies: The Portfolio seeks to
provide above average current income and long-term capital appreciation by investing primarily in equity securities of companies in the
U.S. real estate industry, including real estate investment trusts
(‘‘REITs’’). Under normal circumstances, at least 80% of the Portfolio’s assets will be invested in equity securities of companies in the
U.S. real estate industry. The Portfolio also has the flexibility to invest up to 20% of its net assets in foreign securities. The Portfolio focuses on REITs as well as real estate operating companies that invest in a variety of property types and regions. The adviser’s approach emphasizes bottom-up stock selection with a top-down asset
allocation overlay.
Principal Risks: Equity Risk, Focused Portfolio Risk, Market Risk, NonDiversification Risk, Real Estate Risk, Security Risk.
Investment Objective and Principal Strategies: The Portfolio seeks to
provide above average current income and long-term capital appreciation. Under normal circumstances, the Portfolio will invest at least
80% of its net assets, plus borrowings for investment purposes, in
equity securities of companies in the real estate industry, including
REITs. The Portfolio also may invest in foreign securities. The Portfolio focuses on REITs, as well as real estate operating companies
that invest in a variety of property types and regions. The Adviser’s
approach emphasizes bottom-up stock selection with a top-down
asset allocation overlay.
Principal Risks: Adviser Selection Risk, Asset Class Risk, Convertible
Securities Risk, Derivatives Risk, Equity Risk, Focused Portfolio
Risk, Foreign Securities Risk, Market Risk, Non-Diversification Risk,
Real Estate Investing Risk (also known as real estate risk), Security
Risk, Security Selection Risk, Value Investing Risk.
Substitution Number—Removed Portfolios
Replacement Portfolio
23. Alger American Balanced Portfolio (Class O shares)
24. MFS Total Return Series (Initial Class shares)
25. T. Rowe Price Personal Strategy Balanced Portfolio
Franklin Income Securities Fund
(Class 2 shares)
Investment Objective and Principal
Strategies: The Portfolio seeks
current income and long-term
capital appreciation. Under normal circumstances, the Portfolio
invests at least 25% of its net
assets in fixed-income securities
and at least 25% of its net assets in equity securities. Most of
the Portfolio’s fixed income investments are concentrated in
investment grade securities. The
Portfolio may also invest up to
10% of its net assets in lowerrated securities. In addition, the
Portfolio invests primarily in
growth stocks. The Portfolio may
also invest in derivatives, convertible securities and up to 20%
of its assets in foreign securities.
Principal Risks: Credit Risk, Derivatives Risk, Fixed Income Securities Risk, Growth Stock Risk,
Interest Rate Risk, Lower Rate
Securities Risk, Market Risk,
Mortgage-Backed and AssetBacked Securities Risk, Stock
Risk.
Investment Objective and Principal Strategies: The Portfolio
seeks above-average income
consistent with prudent employment of capital. Under normal
market conditions, the Portfolio
invests at least 40% of its net
assets in common stocks and
related securities and at least
25% of its net assets in nonconvertible fixed income securities. The Portfolio may invest
up to 20% of its assets in lower
rated debt securities and up to
20% of its assets in foreign securities. In addition, the Portfolio may invest in convertible
securities and derivatives.
Principal Risks: Allocation Risk,
Convertible Securities Risk,
Credit Risk, Foreign Securities
Risk, Interest Rate Risk, Junk
Bond Risk, Liquidity Risk, Market Risk, Maturity Risk, Mortgage-Backed and Asset-Backed
Securities Risk, Undervalued
Securities Risk.
Investment Objective and Principal Strategies: The Portfolio
seeks the highest total return
over time consistent with an
emphasis on both capital appreciation and income. The
Portfolio invests in a diversified
portfolio typically consisting of
approximately 60% stocks, 30%
bonds and 10% money market
instruments. The Portfolio also
invests at least 25% of its total
assets in senior fixed-income
securities. In addition, the Portfolio invests in both growth and
value stocks. The Portfolio also
may invest in lower rated debt
securities, foreign securities
and derivatives.
Principal Risks: Bond Risk, Credit
Risk, Derivatives Risk, Foreign
Securities Risk, Interest Rate
Risk, Stock Risk.
Investment Objective and Principal Strategies: The Portfolio
seeks to maximize income
while maintaining prospects for
capital appreciation. Under normal market conditions, the Portfolio invests in both debt and
equity securities. The Portfolio
may invest a significant amount
of its total assets in debt securities that are either rated below
investment grade, or if unrated,
determined to be of comparable
quality by the Portfolio’s adviser
(also known as junk bonds).
The Portfolio may also invest in
convertible securities. The adviser seeks to invest in undervalued or out-of-favor securities
it believes offer opportunities for
income today and growth tomorrow. In addition, the Portfolio may invest in derivatives
and a small portion of its assets
in foreign securities.
Principal Risks: Convertible Securities Risk, Credit Risk, Foreign
Securities Risk, Income Risk,
Interest Rate Risk, Stocks Risk,
Value Style Investing Risk.
Replacement Portfolio
mstockstill on PROD1PC66 with NOTICES
Substitution Number—Removed Portfolios
26. Fidelity Growth Portfolio (Initial Class
shares and Service Class shares)
27. Universal Equity Growth Portfolio (Class I
shares)
Investment Objective and Principal Strategies:
The Portfolio seeks capital appreciation. The
Portfolio normally invests primarily in common stocks. The adviser invests the Portfolio’s assets in companies it believes have
above-average growth potential. The Portfolio may invest up to 50% of its assets in
foreign securities. The Portfolio may also invest in derivatives.
Principal Risks: Foreign Exposure Risk, IssuerSpecific Risk, Growth Investing Risk, Stock
Market Volatility Risk.
Investment Objective and Principal Strategies:
The Portfolio seeks long-term capital appreciation. Under normal circumstances, at
least 80% of the Portfolio’s assets will be invested in equity securities. The Portfolio invests primarily in growth-oriented equity securities of U.S. and foreign companies. The
Portfolio invests primarily in large-cap companies. The Portfolio may also invest up to
25% of its assets in foreign securities and
may invest in derivatives.
Principal Risks: Equity Risk, Foreign Securities Risk, Market Risk, Security Risk.
Investment Objective and Principal Strategies:
The Portfolio seeks long-term capital appreciation. The Portfolio normally invests primarily in common stocks. The Portfolio may
invest in growth or value stocks or a combination of both. The Portfolio also may invest in foreign securities and derivatives.
Principal Risks: Foreign Exposure Risk (also
known as foreign securities risk), Issuer
Specific Changes Risk (also known as security risk), Stock Market Volatility Risk
(also known as equity risk and market risk).
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Federal Register / Vol. 72, No. 145 / Monday, July 30, 2007 / Notices
21. The section 26 Applicants also
contend that the Substitutions are
designed to provide Contract owners
and participants with an opportunity to
continue their investment in similar
Portfolios without interruption and
without any cost to them. In this regard,
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, the amount of any
Contract owner’s or participant’s
Contract value or the dollar value of a
Contract owner’s or participant’s
investment in the relevant Contract will
not change as a result of the
Substitutions. In addition, the section
26 Applicants represent that the net
expense ratios of the Replacement
Portfolios are expected to be the same as
or lower than those of the Removed
Portfolios. A summary comparison of
the fees and expenses, and asset size of
the Portfolios involved in the
Substitutions for fiscal year ended
December 31, 2006, is set forth below.
1. Old Mutual Select Value Portfolio
Replaced by EQ/AllianceBernstein
Value Portfolio (Class IA Shares)
As provided in the chart below, the
Section 26 Applicants anticipate that
41545
the EQ/AllianceBernstein Value
Portfolio’s (the ‘‘Replacement Portfolio’’
for purposes of this discussion) net
annual operating expense ratio will be
lower than that of the Old Mutual Select
Value Portfolio (the ‘‘Removed
Portfolio’’ for purposes of this
discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit Contract
owners and participants by lowering the
annual operating expense ratio.
Old Mutual Select Value
Portfolio
(percent)
Management Fee 3 ..............................................................................................................
Rule 12b–1 Fee ...................................................................................................................
Other Expenses ...................................................................................................................
Total Annual Operating Expenses .......................................................................................
Less Fee Waiver/Expense Reimbursement 5 ......................................................................
Net Annual Operating Expenses .........................................................................................
0.75
None
0.21
0.96
(0.02)
0.94
EQ/AllianceBernstein
Value Portfolio
(percent)
0.60
None
0.13
4 0.73
(0.03)
0.70
3 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 0.75% on less than $300 million; 0.70% on $300 million to less than $500 million; 0.65% on $500 million
to less than $750 million; 0.60% on $750 million to less than $1.0 billion; 0.55% on $1.0 billion to less than $1.5 billion; 0.50% on $1.5 billion to
less than $2.0 billion; and 0.45% thereafter.
4 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. Effective May 1, 2006, each Portfolio of the Trust involved in the Substitutions 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 Trust average daily net assets (excluding certain series), 0.11% of the next $3 billion, 0.105% of the next $4 billion, 0.10%
of the next $20 billion and 0.0975% thereafter. Prior to that date, the administration fee for each Portfolio of the Trust was equal to $30,000 per
year, plus its pro rata portion 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 Trust average daily net assets (exclusive of certain series), 0.03% of the next $3 billion, 0.025% of the next $4 billion, and 0.0225% thereafter.
5 The Manager of the Replacement Portfolio has agreed to make payments or waive its management, administrative and other fees to limit the
Portfolio’s expenses through April 30, 2008 pursuant to an expense limitation agreement so that the Net Annual Operating Expenses of the Portfolio’s Class IA shares do not exceed 0.70%. The manager of the Removed Portfolio has agreed to make payments or waive a portion of its
management fee to limit Annual Operating Expenses of the Portfolio to 0.94%.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $4.4 billion, while the
assets of the Removed Portfolio were
approximately $46.6 million.
2. Universal Value Portfolio (Class I
Shares) Replaced by EQ/
AllianceBernstein Value Portfolio (Class
IA Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/AllianceBernstein Value Portfolio’s
(the ‘‘Replacement Portfolio’’ for
purposes of this discussion) net annual
operating expense ratio will be lower
than that of the Universal Value
Portfolio (the ‘‘Removed Portfolio’’ for
purposes of this discussion)
immediately after the Substitution.
Accordingly, the section 26 Applicants
represent that the Substitution will
benefit Contract owners and
participants by lowering the annual
operating expense ratio.
mstockstill on PROD1PC66 with NOTICES
Universal Value
Portfolio
(percent)
Management Fee 6 ..............................................................................................................
Rule 12b–1 Fee ...................................................................................................................
Other Expenses ...................................................................................................................
Total Annual Operating Expenses .......................................................................................
Less Fee Waiver/Expense Reimbursement 8 ......................................................................
Net Annual Operating Expenses .........................................................................................
0.55
None
0.38
0.93
(0.08)
0.85
EQ/AllianceBernstein
Value Portfolio
(percent)
0.60
None
0.13
7 0.73
(0.03)
0.70
6 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 0.55% of the first $500 million in assets; 0.50% from $500 million to $1 billion; 0.45% over $1 billion.
7 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 in footnote 5.
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41546
Federal Register / Vol. 72, No. 145 / Monday, July 30, 2007 / Notices
8 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of the
Class IA shares of the Portfolio do not exceed 0.70%. The adviser of the Removed Portfolio has voluntarily agreed to reduce its advisory fee
and/or reimburse the Portfolio so that annual operating expenses, excluding certain investment related expenses, will not exceed 0.85%.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $4.4 billion, while the
assets of the Removed Portfolio were
approximately $70 million.
3. OpCap Managed Portfolio Replaced
by EQ/AllianceBernstein Value Portfolio
(Class IA Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/AllianceBernstein Value Portfolio’s
(the ‘‘Replacement Portfolio’’ for
purposes of this discussion) net annual
operating expense ratio will be lower
than that of the OpCap Managed
Portfolio (the ‘‘Removed Portfolio’’ for
purposes of this discussion)
immediately after the Substitution.
Accordingly, the section 26 Applicants
represent that the Substitution will
benefit the Contract owners and
participants by lowering the annual
operating expense ratio.
OpCap Managed
Portfolio
(percent)
Management Fee 9 ................................................................................................................
Rule 12b–1 Fee .....................................................................................................................
Other Expenses .....................................................................................................................
Total Annual Operating Expenses .........................................................................................
Less Fee Waiver/Expense Reimbursement 11 ......................................................................
Net Annual Operating Expenses ...........................................................................................
0.80
None
0.15
0.95
0.00
0.95
EQ/AllianceBernstein
Value Portfolio
(percent)
0.60
None
0.13
10 0.73
(0.03)
0.70
9 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 Removed Portfolio’s management fee schedule does not include breakpoints.
10 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 in footnote 5.
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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.70%. With respect to the Removed Portfolio, the investment adviser has agreed through December 31, 2015 reduce Annual Operating Expenses of the Removed Portfolio to the extent they would exceed 1.00% (net of any expenses offset by earnings credits from the custodian bank). Net Annual Operating Expenses do not reflect a reduction of custody expenses offset by custody credits earned on cash balances at the custodian bank.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $4.4 billion, while the
assets of the Removed Portfolio were
approximately $258 million.
4. Davis Value Portfolio Replaced by
EQ/AllianceBernstein Value Portfolio
(Class IA Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/AllianceBernstein Value Portfolio’s
(the ‘‘Replacement Portfolio’’ for
purposes of this discussion) net annual
operating expense ratio will be lower
than that of the Davis Value Portfolio
(the ‘‘Removed Portfolio’’ for purposes
of this discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by lowering the
annual operating expense ratio.
Davis Value Portfolio
(percent)
mstockstill on PROD1PC66 with NOTICES
Management Fee 12 ...............................................................................................................
Rule 12b–1 Fee 13 .................................................................................................................
Other Expenses .....................................................................................................................
Total Annual Operating Expenses .........................................................................................
Less Fee Waiver/Expense Reimbursement 15 ......................................................................
Net Annual Operating Expenses ...........................................................................................
0.75
None
0.06
0.81
N/A
0.81
EQ/AllianceBernstein
Value Portfolio
(percent)
0.60
None
0.13
14 0.73
(0.03)
0.70
12 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 Removed Portfolio’s management fee
schedule does not include breakpoints.
13 Class IA shares of the Replacement Portfolio are not subject to a Rule 12b–1 plan. The shares of the Removed Portfolio are subject to such
a plan, but the Portfolio currently does not make any payments under the plan.
14 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 in footnote 5.
15 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.70%.
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As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $4.4 billion, while the
assets of the Removed Portfolio were
approximately $772 million.
5. T. Rowe Price Equity Income Portfolio
Replaced by EQ/Boston Advisors Equity
Income Portfolio (Class IA Shares)
As provided in the chart below and
although the EQ/Boston Advisors Equity
Income Portfolio (the ‘‘Replacement
Portfolio’’ for purposes of this
discussion) is smaller than the T. Rowe
Price Equity Income Portfolio (the
‘‘Removed Portfolio’’ for purposes of
this discussion), the section 26
Applicants anticipate that the
Replacement Portfolio’s net annual
operating expense ratio will be lower
than that of the Removed Portfolio
41547
immediately after the Substitution.
Accordingly, the section 26 Applicants
represent that the Substitution will
benefit the Contract owners and
participants by lowering the annual
operating expense ratio.
T. Rowe Price Equity
Income Portfolio
(percent)
Management Fee16 ...............................................................................................................
Rule 12b–1 Fee .....................................................................................................................
Other Expenses .....................................................................................................................
Total Annual Operating Expenses .........................................................................................
Less Fee Waiver/Expense Reimbursement 18 ......................................................................
Net Annual Operating Expenses ...........................................................................................
0.85
None
None
0.85
N/A
0.85
EQ/Boston Advisors
Equity Income Portfolio
(percent)
0.75
None
0.15
17 0.9010
(0.10)
0.80
16 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. The management fee schedule of the Removed Portfolio does not include breakpoints.
17 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 in footnote 5.
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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.80%.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $449 million, while the
assets of the Removed Portfolio were
approximately $2.0 billion.
6. AIM V.I. Basic Value Fund (Series I
Shares) Replaced by EQ/BlackRock
Basic Value Equity Portfolio (Class IB
Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/BlackRock Basic Value Equity
Portfolio’s (the ‘‘Replacement Portfolio’’
for purposes of this discussion) net
annual operating expense ratio will be
lower than that of the AIM V.I. Basic
Value Fund (the ‘‘Removed Portfolio’’
for purposes of this discussion)
immediately after the Substitution. The
section 26 Applicants note that the
Class IB shares of the Replacement
Portfolio have adopted a plan pursuant
to Rule 12b–1 under the 1940 Act, while
Series I shares of the Removed Portfolio
are not subject to such a plan. However,
the section 26 Applicants contend that
the Substitution will benefit the
Contract owners and participants by
lowering the annual operating expense
ratio.
AIM V.I. Basic
Value Fund
(percent)
mstockstill on PROD1PC66 with NOTICES
Management Fee 19 ...............................................................................................................
Rule 12b–1 Fee 20 .................................................................................................................
Other Expenses .....................................................................................................................
Total Annual Operating Expenses .........................................................................................
Less Fee Waiver/Expense Reimbursement 22 ......................................................................
Net Annual Operating Expenses ...........................................................................................
0.72
None
0.30
1.02
(0.05)
0.97
EQ/BlackRockBasic
Value Equity Portfolio
(percent)
0.55
0.25
0.14
21 0.94
0.00
0.94
19 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.600% of the first $1 billion; 0.550% on the
next $1 billion; 0.525% on the next $3 billion; 0.500% on the next $5 billion; and 0.475% thereafter. The management fee schedule for the Removed Portfolio on an annual basis is equal to 0.725% of the first $500 million in assets; 0.700% on the next $500 million in assets; 0.675% on
the next $500 million in; 0.65% on assets over $1.5 billion.
20 Class IB shares of the Replacement Portfolio have adopted a plan pursuant to Rule 12b–1 under the 1940 Act while the Series I shares of
the Removed Portfolio are not subject to such a plan. The maximum Rule 12b–1 fee for the Replacement Portfolio’s Class IB shares is 0.50%,
however, under an arrangement approved by the Trust’s Board of Trustees, the Rule 12b–1 fee currently is limited to 0.25% of the average daily
net assets attributable to the Portfolio’s Class IB shares. This arrangement will be in effect at least until April 30, 2008.
21 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 in footnote 5.
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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IB shares of the Portfolio do not exceed 0.95%. The manager of the Removed Portfolio has contractually agreed to waive advisory
fees and/or reimburse expenses of the Portfolio through April 30, 2008 to the extent necessary to limit Annual Operating Expenses of Series I
shares to 1.30%. The amount shown above in ‘‘Less Fee Waiver/Expense Reimbursement’’ for the Removed Portfolio reflects a voluntary management fee waiver by the Portfolio’s adviser.
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As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $3.6 billion, while the
assets of the Removed Portfolio were
approximately $829 million.
7. Dreyfus Appreciation Portfolio (Initial
Shares) Replaced by EQ/
AllianceBernstein Common Stock
Portfolio (Class IA Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/AllianceBernstein Common Stock
Portfolio’s (the ‘‘Replacement Portfolio’’
for purposes of this discussion) net
annual operating expense ratio will be
lower than that of the Dreyfus
Appreciation Portfolio (the ‘‘Removed
Portfolio’’ for purposes of this
discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by lowering the
annual operating expense ratio.
Dreyfus Appreciation
Portfolio
(percent)
Management Fee 23 .................................................................................................................
Rule 12b–1 Fee .......................................................................................................................
Other Expenses .......................................................................................................................
Total Annual Operating Expenses ...........................................................................................
0.75
None
0.07
0.82
EQ/AllianceBernstein
Common Stock Portfolio
(percent)
0.47
None
0.13
24 0.60
23 The management fee schedule for the Replacement Portfolio on an annual basis is equal to 0.550% of the first $1 billion; 0.500% on the
next $1 billion; 0.475% on the next $3 billion; 0.450% on the next $5 billion; and 0.425% 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.
24 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 in footnote 5.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $9.5 billion, while the
assets of the Removed Portfolio were
approximately $796 million.
8. Fidelity Growth Opportunities
Portfolio (Initial Class and Service Class
Shares) Replaced by EQ/Capital
Guardian Research Portfolio (Class IA
Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/Capital Guardian Research
Portfolio’s (‘‘Replacement Portfolio’’ for
purposes of this discussion) net annual
operating expense ratio will be lower,
Fidelity Growth
Opportunities Portfolio
(Initial Class shares)
(percent)
Management Fee 25 ...............................................................
Rule 12b–1 Fee 26 .................................................................
Other Expenses .....................................................................
Total Annual Operating Expenses .........................................
Less Fee Waiver/Expense Reimbursement 28 ......................
Net Annual Operating Expenses ...........................................
respectively, than that of the Initial
Class and Service Class shares of the
Fidelity Growth Opportunities Portfolio
(the ‘‘Removed Portfolio’’ for purposes
of this discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by increasing
Portfolio assets and lowering annual
operating expense ratios.
Fidelity Growth
Opportunities Portfolio
(Service Class shares)
(percent)
0.57
None
0.15
0.72
(0.00)
0.72
0.57
0.10
0.15
0.82
(0.00)
0.82
EQ/Capital Guardian
Research Portfolio
(percent)
0.65
None
0.78
27 0.78
(0.08)
0.70
mstockstill on PROD1PC66 with NOTICES
25 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 rate for the Removed
Portfolio is the sum of a group fee rate and an individual rate (0.30%). The group fee rate is based on the average net assets of all mutual funds
advised by the Removed Portfolio’s manager and includes breakpoints as total assets under management increase. The group fee rate cannot
rise above 0.52%. The individual fee rate does not include breakpoints. The total management fee is calculated by adding the group fee rate to
the individual fund fee rate, dividing by twelve, and multiplying the result by the Portfolio’s average net assets throughout the month.
26 Class IA shares of the Replacement Portfolio are not subject to a Rule 12b–1 plan. Initial Class and Service Class shares of the Removed
Portfolio are subject to such a plan. The Rule 12b–1 plan for the Initial Class shares of the Removed Portfolio provides that the manager of the
Portfolio may use its management fee revenues, as well as past profits or its resources from any other source, to pay the distributor for expenses incurred in connection with providing services intended to result in the sale of Initial Class shares.
27 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 in footnote 5.
28 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.70%. The Manager of the Removed Portfolio has voluntarily agreed to reimburse the Portfolio to the extent that the operating expenses of Initial Class and Service Class shares exceed 0.85% and 0.95%, respectively.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $1.1 billion, while the
assets of the Removed Portfolio
(including all share classes) were
approximately $561 million.
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9. OpCap Equity Portfolio Replaced by
EQ/Capital Guardian Research Portfolio
(Class IA Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/Capital Guardian Research
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Fmt 4703
Sfmt 4703
Portfolio’s (the ‘‘Replacement Portfolio’’
for purposes of this discussion) net
annual operating expense ratio will be
lower than that of the OpCap Equity
Portfolio (the ‘‘Removed Portfolio’’ for
purposes of this discussion)
E:\FR\FM\30JYN1.SGM
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Federal Register / Vol. 72, No. 145 / Monday, July 30, 2007 / Notices
immediately after the Substitution.
Accordingly, the section 26 Applicants
represent that the Substitution will
benefit the Contract owners and
41549
participants by lowering the annual
operating expense ratio.
OpCap Equity Portfolio
(percent)
Management Fee 29 .............................................................................................................
Rule 12b–1 Fee ...................................................................................................................
Other Expenses ...................................................................................................................
Total Annual Operating Expenses .......................................................................................
Less Fee Waiver/Expense Reimbursement 31 ....................................................................
Net Annual Operating Expenses .........................................................................................
0.80
None
0.36
1.16
(0.15)
1.01
EQ/Capital Guardian
Research Portfolio
(percent)
0.65
None
0.13
30 0.78
(0.08)
0.70
29 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 does not include breakpoints.
30 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 in footnote 5.
31 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.70%. With respect to the Removed Portfolio, the investment adviser has contractually
agreed through December 31, 2017 to reduce Total Annual Operating Expenses of the Removed Portfolio to the extent they would exceed
1.00% (net of any expenses offset by earnings credits from the custodian bank). Net Annual Operating Expenses do not reflect a reduction of
custody expenses offset by custody credits earned on cash balances at the custodian bank. Thus, the number shown above in Net Annual Operating Expenses includes such custody expenses.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $1.1 billion, while the
assets of the Removed Portfolio were
approximately $20 million.
10. Oppenheimer Main Street Fund/VA
(Service Sares) Replaced by EQ/Capital
Guardian Research Portfolio (Class IA
Shares)
As provided in the chart below and
although the EQ/Capital Guardian
Research Portfolio (the ‘‘Replacement
Portfolio’’ for purposes of this
discussion) is smaller than the
Oppenheimer Main Street Fund/VA (the
‘‘Removed Portfolio’’ for purposes of
this discussion), the Section 26
Applicants anticipate that the
Replacement Portfolio’s net annual
operating expense ratio will be lower
than that of the Removed Portfolio
immediately after the Substitution.
Accordingly, the section 26 Applicants
represent that the Substitution will
benefit the Contract owners and
participants by lowering the annual
operating expense ratio.
Oppenheimer Main
Street Fund/VA
(percent)
Management Fee 32 ...............................................................................................................
Rule 12b–1 Fee 33 .................................................................................................................
Other Expenses .....................................................................................................................
Total Annual Operating Expenses .........................................................................................
Less Fee Waiver/Expense Reimbursement 35 ......................................................................
Net Annual Operating Expenses ...........................................................................................
0.64
0.25
0.02
0.91
0.00
0.91
EQ/Capital Guardian
Research Portfolio
(percent)
0.65
None
0.13
34 0.78
(0.08)
0.70
mstockstill on PROD1PC66 with NOTICES
32 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 0.75% of the first $200 million; 0.72% of the next $200 million; 0.69% of the next $200 million;
0.66% of the next $200 million; and 0.60% of average annual net assets in excess of $800 million.
33 Class IA shares of the Replacement Portfolio are not subject to a Rule 12b-1 plan. Service shares of the Removed Portfolio are subject to
such a plan.
34 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 in footnote 5.
35 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.70%. The Removed Portfolio’s transfer agent has voluntarily agreed to limit transfer and
shareholder servicing agent fees (as reflected in ‘‘other expenses’’) to 0.35% per fiscal year. For the fiscal year ended December 31, 2006, the
transfer agent fees did not exceed the expense limit.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $1.1 billion, while the
assets of the Removed Portfolio were
approximately $2.1 billion.
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11. AIM V.I. Mid Cap Core Equity
Portfolio (Series I Shares) Replaced by
EQ/FI Mid Cap Portfolio (Class IA
Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/FI Mid Cap Portfolio’s (the
‘‘Replacement Portfolio’’ for purposes of
this discussion) net annual operating
PO 00000
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Fmt 4703
Sfmt 4703
expense ratio will be lower than that of
the AIM V.I. Mid Cap Core Equity
Portfolio (the ‘‘Removed Portfolio’’ for
purposes of this discussion)
immediately after the Substitution.
Accordingly, the section 26 Applicants
represent that the Substitution will
benefit the Contract owners and
participants by lowering the annual
operating expense ratio.
E:\FR\FM\30JYN1.SGM
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Federal Register / Vol. 72, No. 145 / Monday, July 30, 2007 / Notices
AIM V.I. Mid Cap Core
Equity Fund
(percent)
Management Fee 36 ...............................................................................................................
Rule 12b–1 Fee .....................................................................................................................
Other Expenses .....................................................................................................................
Acquired Fund Fees and Expenses ......................................................................................
Total Annual Operating Expenses (including Acquired Fund Fees and Expenses) .............
Less Fee Waiver/Expense Reimbursement 38 ......................................................................
Net Annual Operating Expenses (including Acquired Fund Fees and Expenses) ...............
0.72
None
0.32
0.02
1.06
0.00
1.06
EQ/FI Mid Cap Portfolio
(percent)
0.68
None
0.15
N/A
37 0.83
(0.08)
0.75
36 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 0.725% of the first $500 million in assets; 0.700% on the next $500 million in assets; 0.675% on
the next $500 million in assets; 0.65% on assets over $1.5 billion.
37 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 in footnote 5.
38 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.75%. The manager of the Removed Portfolio has contractually agreed to waive its advisory
fees and/or reimburse expenses of the Portfolio, through April 30, 2008, to the extent necessary to limit Total Annual Operating Expenses of Series I shares to 1.30%.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $1.6 billion, while the
assets of the Removed Portfolio were
approximately $638 million.
12. Alger American MidCap Growth
Portfolio (Class O shares) Replaced by
EQ/Van Kampen Mid Cap Growth
Portfolio (Class IA Shares)
As provided in the chart below and
although the EQ/Van Kampen Mid Cap
Growth Portfolio (the ‘‘Replacement
Portfolio’’ for purposes of this
discussion) is smaller than the Alger
American MidCap Growth Portfolio (the
‘‘Removed Portfolio’’ for purposes of
this discussion), the section 26
Applicants anticipate that the
Replacement Portfolio’s net annual
operating expense ratio will be lower
than that of the Removed Portfolio
immediately after the Substitution.
Accordingly, the Section 26 Applicants
represent that the Substitution will
benefit the Contract owners and
participants by lowering the annual
operating expense ratio.
Alger American MidCap
Growth Portfolio
(percent)
Management Fee 39 ...........................................................................................................
Rule 12b–1 Fee .................................................................................................................
Other Expenses .................................................................................................................
Total Annual Operating Expenses .....................................................................................
Less Fee Waiver/Expense Reimbursement 41 ..................................................................
Net Annual Operating Expenses .......................................................................................
0.76
None
0.15
0.91
N/A
0.91
EQ/Van Kampen Mid Cap
Growth Portfolio
(percent)
0.70
None
0.23
40 0.93
(0.13)
0.80
39 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 does not include breakpoints.
40 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 in footnote 5.
41 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.80%.
mstockstill on PROD1PC66 with NOTICES
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $139 million, while the
assets of the Removed Portfolio were
approximately $333 million.
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13. MFS Mid Cap Growth Series (Initial
Class Shares) Replaced by EQ/Van
Kampen Mid Cap Growth Portfolio
(Class IA Shares)
As provided in the chart below and
although the EQ/Van Kampen Mid Cap
Growth Portfolio (the ‘‘Replacement
Portfolio’’ for purposes of this
discussion) is smaller than the MFS Mid
Cap Growth Series (the ‘‘Removed
Portfolio’’ for purposes of this
PO 00000
Frm 00059
Fmt 4703
Sfmt 4703
discussion), the section 26 Applicants
anticipate that the Replacement
Portfolio’s net annual operating expense
ratio will be lower than that of the
Removed Portfolio immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by lowering the
annual operating expense ratio.
E:\FR\FM\30JYN1.SGM
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Federal Register / Vol. 72, No. 145 / Monday, July 30, 2007 / Notices
MFS Mid Cap Growth
Series
(percent)
Management Fee 42 .............................................................................................................
Rule 12b–1 Fee ...................................................................................................................
Other Expenses ...................................................................................................................
Total Annual Operating Expenses .......................................................................................
Less Fee Waiver/Expense Reimbursement 44 ....................................................................
Net Annual Operating Expenses .........................................................................................
0.75
None
0.15
0.90
N/A
0.90
41551
EQ/Van Kampen Mid Cap
Growth Portfolio
(percent)
0.70
None
0.23
43 0.93
(0.13)
0.80
42 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.
43 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 in footnote 5.
44 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.80%.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $139 million, while the
assets of the Removed Portfolio were
approximately $233 million.
14. Dreyfus Small Cap Stock Index
Portfolio (Service Shares) Replaced by
EQ/Small Company Index Portfolio
(Class IA Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/Small Company Index Portfolio’s
(the ‘‘Replacement Portfolio’’ for
purposes of this discussion) net annual
operating expense ratio will be lower
than that of the Dreyfus Small Cap Stock
Index Portfolio (the ‘‘Removed
Portfolio’’ for purposes of this
discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by lowering the
annual operating expense ratio.
Dreyfus Small Cap
Stock Index Portfolio
(percent)
Management Fee 45 .................................................................................................................
Rule 12b–1 Fee 46 ...................................................................................................................
Other Expenses .......................................................................................................................
Acquired Fund Fees and Expenses ........................................................................................
Total Annual Operating Expenses ...........................................................................................
Less Fee Waiver/Expense Reimbursement 48 ........................................................................
Net Annual Operating Expenses .............................................................................................
0.35
0.25
0.01
0.02
0.63
N/A
0.63
EQ/Small Company
Index Portfolio
(percent)
0.25
None
0.16
0.01
47 0.42
0.00
0.42
45 The
management fee schedules for the Replacement Portfolio and Removed Portfolio do not include breakpoints.
IA shares of the Replacement Portfolio are not subject to a Rule 12b–1 plan. The Service shares of the Removed Portfolio are subject
to such a plan.
47 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 in footnote 5.
48 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.60%.
46 Class
mstockstill on PROD1PC66 with NOTICES
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $1.1 billion, while the
assets in the Removed Portfolio were
approximately $466 million.
VerDate Aug<31>2005
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15. OpCap Small Cap Portfolio
Replaced by EQ/Small Company Index
Portfolio (Class IA Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/Small Company Index Portfolio’s
(the ‘‘Replacement Portfolio’’ for
purposes of this discussion) net annual
operating expense ratio will be lower
PO 00000
Frm 00060
Fmt 4703
Sfmt 4703
than that of the OpCap Small Cap
Portfolio (the ‘‘Removed Portfolio’’ for
purposes of this discussion)
immediately after the Substitution.
Accordingly, the Section 26 Applicants
represent that the Substitution will
benefit the Contract owners and
participants by lowering the annual
operating expense ratio.
E:\FR\FM\30JYN1.SGM
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Federal Register / Vol. 72, No. 145 / Monday, July 30, 2007 / Notices
OpCap Small Cap
Portfolio
(percent)
Management Fee 49 .................................................................................................................
Rule 12b–1 Fee .......................................................................................................................
Other Expenses .......................................................................................................................
Acquired Fund Fees and Expenses ........................................................................................
Total Annual Operating Expenses ...........................................................................................
Less Fee Waiver/Expense Reimbursement 51 ........................................................................
Net Annual Operating Expenses .............................................................................................
0.80
None
0.13
N/A
0.93
0.00
0.93
EQ/Small Company
Index Portfolio
(percent)
0.25
None
0.16
0.01
50 0.42
0.00
0.42
49 The
management fee schedules for the Replacement Portfolio and Removed Portfolio do not include breakpoints.
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 in footnote 5.
51 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.60%. With respect to the Removed Portfolio, the investment adviser has agreed through December 31, 2015 to reduce Annual Operating Expenses of the Removed Portfolio to the extent they would exceed 1.00% (net of any expenses
offset by earnings credits from the custodian bank). Net Annual Operating Expenses do not reflect a reduction of custody expenses offset by
custody credits earned on cash balances at the custodian bank.
50 The
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $1.1 billion, while the
assets of the Removed Portfolio were
approximately $175 million.
16. MFS New Discovery Series (Initial
Class Shares) Replaced by EQ/
AllianceBernstein Small Cap Growth
Portfolio (Class IA Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/AllianceBernstein Small Cap
Growth Portfolio’s (the ‘‘Replacement
Portfolio’’ for purposes of this
discussion) net annual operating
expense ratio will be lower than that of
the MFS New Discovery Series (the
‘‘Removed Portfolio’’ for purposes of
this discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by lowering the
annual operating expense ratio.
MFS New Discovery
Series (Initial shares)
(percent)
Management Fee 52 .................................................................................................................
Rule 12b–1 Fee .......................................................................................................................
Other Expenses .......................................................................................................................
Total Annual Operating Expenses ...........................................................................................
0.90
None
0.13
1.03
EQ/Alliance Bernstein
Cap Growth Portfolio
(percent)
0.74
None
0.13
53 0.87
52 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.
53 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 in footnote 5.
mstockstill on PROD1PC66 with NOTICES
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $1.2 billion, while the
assets of the Removed Portfolio were
approximately $819 million.
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17. Janus Flexible Bond Portfolio
(Institutional and Service Shares)
Replaced by EQ/JPMorgan Core Bond
Portfolio (Class IA Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
Class IA shares of the EQ/JPMorgan
Core Bond Portfolio’s (the ‘‘Replacement
Portfolio’’ for purposes of this
discussion) net annual operating
expense ratio will be lower,
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Fmt 4703
Sfmt 4703
respectively, than that of the
Institutional and Service shares of the
Janus Flexible Bond Portfolio (the
‘‘Removed Portfolio’’ for purposes of
this discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by lowering
annual operating expense ratios.
E:\FR\FM\30JYN1.SGM
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Federal Register / Vol. 72, No. 145 / Monday, July 30, 2007 / Notices
Janus Flexible Bond
Portfolio
(Institutional shares)
(percent)
Management Fee 54 .................................................................
Rule 12b–1 Fee 55 ...................................................................
Other Expenses .......................................................................
Total Annual Operating Expenses ...........................................
Less Fee Waiver/Expense Reimbursement 57 ........................
Net Annual Operating Expenses .............................................
Janus Flexible Bond
Portfolio
(Service shares)
(percent)
0.55
None
0.10
0.65
0.00
0.65
0.55
0.25
0.10
0.90
0.00
0.90
41553
EQ/JPMorgan Core
Bond Portfolio
(Class IA shares)
(percent)
0.44
None
0.15
56 0.59
0.00
0.59
54 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. The management fee schedule for the
Removed Portfolio does not include breakpoints.
55 Class IA shares of the Replacement Portfolio and Institutional shares of the Removed Portfolio are not subject to Rule 12b–1 plans. The
Service shares of the Removed Portfolio are subject to such a plan.
56 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 in footnote 5.
57 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, 2008 pursuant to an expense limitation agreement so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.60%. The manager of the Removed Portfolio has contractually agreed to waive the Portfolio’s total operating expenses through May 1, 2008 such that they do not exceed 0.90% for Institutional and Service shares.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $1.6 billion, while the
assets of the Removed Portfolio
(including all share classes) were
approximately $292 million.
18. PIMCO Total Return Portfolio
(Administrative Shares) Replaced by
EQ/JPMorgan Core Bond Portfolio (Class
IA Shares)
As provided in the chart below and
although the Class IA shares of the EQ/
JPMorgan Core Bond Portfolio (the
‘‘Replacement Portfolio’’ for purposes of
this discussion) is smaller than the
PIMCO Total Return Portfolio (the
‘‘Removed Portfolio’’ for purposes of
this discussion), the section 26
Applicants anticipate that the
Replacement Portfolio’s net annual
operating expense ratio will be lower
than that of the Removed Portfolio
immediately after the Substitution.
Accordingly, the Section 26 Applicants
represent that the Substitution will
benefit the Contract owners and
participants by lowering the annual
operating expense ratio.
PIMCO Total Return
Portfolio
(percent)
Management Fee 58 .................................................................................................................
Rule 12b–1 Fee .......................................................................................................................
Other Expenses .......................................................................................................................
Total Annual Operating Expenses ...........................................................................................
Less Fee Waiver/Expense Reimbursement 60 ........................................................................
Net Annual Operating Expenses .............................................................................................
0.25
None
0.40%
0.65
N/A
0.65
EQ/JPMorgan Core
Bond
Portfolio
(percent)
0.44
None
0.15%
59 0.59
0.00
0.59
58 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. The management fee schedule for the
Removed Portfolio does not include breakpoints.
59 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 in footnote 5.
60 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.60%.
mstockstill on PROD1PC66 with NOTICES
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $1.6 billion, while the
assets of the Removed Portfolio were
approximately $3.3 billion.
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19. Universal Core Plus Fixed Income
Portfolio (Class I shares) Replaced by
EQ/JPMorgan Core Bond Portfolio (Class
IA Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/JPMorgan Core Bond Portfolio’s (the
‘‘Replacement Portfolio’’ for purposes of
this discussion) net annual operating
expense ratio will be lower than that of
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the Universal Core Plus Fixed Income
Portfolio (the ‘‘Removed Portfolio’’ for
purposes of this discussion)
immediately after the Substitution.
Accordingly, the section 26 Applicants
represent that the Substitution will
benefit the Contract owners and
participants by lowering the annual
operating expense ratio.
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Universal Core Plus
Fixed Income
Portfolio
(percent)
Management Fee 61 .................................................................................................................
Rule 12b–1 Fee .......................................................................................................................
Other Expenses .......................................................................................................................
Total Annual Operating Expenses ...........................................................................................
Less Fee Waiver/Expense Reimbursement 63 ........................................................................
Net Annual Operating Expenses .............................................................................................
0.38
None
0.30
0.68
0.00
0.68
EQ/JPMorgan Core
Bond
Portfolio
(percent)
0.44
None
0.15
62 0.59
0.00
0.59
61 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. The management fee schedule for the
Removed Portfolio on an annual basis is equal to 0.375% up to $1 billion; 0.30% over $1 billion.
62 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 in footnote 5.
63 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.60%. The manager of the Removed Portfolio has voluntarily agreed to reduce its advisory
fee and/or reimburse the Portfolio so that annual operating expenses will not exceed 0.70%.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $1.6 billion, while the
assets of the Removed Portfolio were
approximately $424 million.
20. OpCap Renaissance Portfolio
Replaced by EQ/Lord Abbett Mid Cap
Value Portfolio (Class IA Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/Lord Abbett Mid Cap Value
Portfolio’s (the ‘‘Replacement Portfolio’’
for purposes of this discussion) net
annual operating expense ratio will be
lower than that of the OpCap
Renaissance Portfolio (the ‘‘Removed
Portfolio’’ for purposes of this
discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by lowering the
annual operating expense ratio.
OpCap Renaissance
Portfolio
(percent)
Management Fee 64 .................................................................................................................
Rule 12b–1 Fee .......................................................................................................................
Other Expenses .......................................................................................................................
Total Annual Operating Expenses ...........................................................................................
Less Fee Waiver/Expense Reimbursement 66 ........................................................................
Net Annual Operating Expenses .............................................................................................
0.80
None
0.29
1.09
(0.07)
1.02
EQ/Lord Abbett Mid Cap
Value
Portfolio
(percent)
0.70
None
0.18
65 0.88
(0.08)
0.80
64 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 does not include breakpoints.
65 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 in footnote 5.
66 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, 2008 pursuant to an expense limitation agreement so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.80%. With respect to the Removed Portfolio, the investment adviser has contractually
agreed through December 31, 2017 to reduce Total Annual Operating Expenses of the Removed Portfolio to the extent they would exceed
1.00% (net of any expenses offset by earnings credits from the custodian bank).
mstockstill on PROD1PC66 with NOTICES
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $322 million, while the
assets of the Removed Portfolio were
approximately $35 million.
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21. T. Rowe Price New America Growth
Portfolio Replaced by EQ/Capital
Guardian Growth Portfolio (Class IA
Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
EQ/Capital Guardian Growth Portfolio’s
(the ‘‘Replacement Portfolio’’ for
purposes of this discussion) net annual
operating expense ratio will be lower
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than that of the T. Rowe Price New
America Growth Portfolio (the
‘‘Removed Portfolio’’ for purposes of
this discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by lowering the
annual operating expense ratio.
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T. Rowe Price New America
Growth Portfolio
(percent)
Management Fee 67 .....................................................................................................
Rule 12b–1 Fee ...........................................................................................................
Other Expenses ...........................................................................................................
Total Annual Operating Expenses ...............................................................................
Less Fee Waiver/Expense Reimbursement 69 ............................................................
Net Annual Operating Expenses .................................................................................
0.85
None
0.00
0.85
N/A
0.85
41555
EQ/Capital Guardian
Growth Portfolio
(percent)
0.65
None
0.16
68 0.81
(0.11)
0.70
67 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 does not include breakpoints.
68 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 in footnote 5.
69 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA shares of the Portfolio do not exceed 0.70%.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $402 million, while the
assets of the Removed Portfolio were
approximately $91 million.
22. Universal U.S. Real Estate Portfolio
(Class I and Class II Shares) Replaced by
EQ/Van Kampen Real Estate Portfolio
(Class IA and Class IB Shares)
Under the proposed Substitutions, the
Insurance Companies would substitute
Class IA and Class IB shares of the EQ/
Van Kampen Real Estate Portfolio (the
‘‘Replacement Portfolio’’ for purposes of
this discussion) for Class I and Class II
shares, respectively, of the Universal
U.S. Real Estate Portfolio (the ‘‘Removed
Portfolio’’ for purposes of this
discussion). As provided in the chart
below, the Section 26 Applicants
anticipate that the net annual operating
expense ratios of the Class IA and Class
IB shares of the Replacement Portfolio
will be the same as those of the
corresponding class of shares of the
Removed Portfolio immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by maintaining
annual operating expense ratios.
Universal U.S.
Real Estate Portfolio
(Class I shares)
(percent)
Management Fee 70 .............................................................................................................
Rule 12b–1 Fee ...................................................................................................................
Other Expenses ...................................................................................................................
Total Annual Operating Expenses .......................................................................................
Less Fee Waiver/Expense Reimbursement 71 ....................................................................
Net Annual Operating Expenses .........................................................................................
0.74%
None
0.27
1.01
(0.00)
1.01
Universal U.S.
Real Estate Portfolio
(Class II shares)
(percent)
mstockstill on PROD1PC66 with NOTICES
Management Fee 70 .............................................................................................................
Rule 12b–1 Fee 72 ...............................................................................................................
Other Expenses ...................................................................................................................
Total Annual Operating Expenses .......................................................................................
Less Fee Waiver/Expense Reimbursement 71 ....................................................................
Net Annual Operating Expenses .........................................................................................
0.74
0.35
0.27
1.36
(0.10)
1.26
EQ/Van Kampen
Real Estate Portfolio
(Class IA shares)*
(percent)
0.90%
None
0.13
1.03
(0.02)
1.01
EQ/Van Kampen
Real Estate Portfolio
(Class IB shares)*
(percent)
0.90
0.25
0.13
1.28
(0.02)
1.26
* The EQ/Van Kampen Real Estate Portfolio is a newly created Portfolio, therefore, the fees and expenses presented in the table above are
estimates for the current fiscal period.
70 The annual management fee rate for the Replacement Portfolio as a percentage of the Portfolio’s average daily net assets is equal to 0.90%
on the first $1 billion; 0.85% on the next $1 billion; 0.825% on the next $3 billion; 0.80% on the next $5 billion; and 0.775% thereafter. The annual management fee rate for the Removed Portfolio as a percentage of the Portfolio’s average daily net assets is equal to 0.80% on the first
$500 million; 0.75% from $500 million to $1 billion; and 0.70% thereafter.
71 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, 2008, pursuant to an expense limitation agreement, so that the Net Annual Operating Expenses of
the Class IA and Class IB shares of the Portfolio do not exceed an annual rate of 1.01% and 1.26%, respectively. The adviser of the Removed
Portfolio has voluntarily agreed to reduce its advisory fee and/or reimburse the Portfolio so that the Annual Operating Expenses of the Class I
and Class II shares of the Portfolio do not exceed an annual rate of 1.10% and 1.35%, respectively. The amount show above in ‘‘Less Fee Waiver/Expense Reimbursement’’ for the Class II shares of the Removed Portfolio includes a voluntary fee waiver by the Portfolio’s distributor.
72 Class II shares of the Removed Portfolio and Class IB shares of the Replacement Portfolio are subject to a Rule 12b–1 plan. The maximum
Rule 12b–1 fee for the Removed Portfolio’s Class II shares is 0.35%. The maximum Rule 12b–1 fee for the Replacement Portfolio’s Class IB
shares is 0.50%, however, under an arrangement approved by the Trust’s Board of Trustees, the Rule 12b–1 fee currently is limited to 0.25% of
the average daily net assets attributable to the Portfolio’s Class IB shares. This arrangement will be in effect at least until April 30, 2008.
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As of December 31, 2006, the Assets
of the Removed Portfolio (including all
share classes) were approximately $2.6
billion.
23. Alger American Balanced Portfolio
(Class O Shares) Replaced by Franklin
Income Securities Fund (Class 2 Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
Franklin Income Securities Fund’s (the
‘‘Replacement Portfolio’’ for purposes of
this discussion) net annual operating
expense ratio will be lower than that of
the Alger American Balanced Portfolio
(the ‘‘Removed Portfolio’’ for purposes
of this discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by lowering the
annual operating expense ratio.
Alger American Balanced
Portfolio
(percent)
Franklin Income Securities Fund
(percent)
0.71
None
0.15
0.86
(0.04)
0.82
0.46
0.25
0.01
0.72
N/A
0.72
Management Fee 73 ...............................................................................................................
Rule 12b–1 Fee 74 .................................................................................................................
Other Expenses .....................................................................................................................
Total Annual Operating Expenses .........................................................................................
Less Fee Waiver/Expense Reimbursement 75 ......................................................................
Net Annual Operating Expenses ...........................................................................................
73 The management fee schedule for the Replacement Portfolio is equal to 0.625% of the value of net assets up to and including $100 million;
plus 0.50% of the value of net assets over $100 million up to and including $250 million; plus 0.45% of the value of net assets over $250 million
up to and including $10 billion; plus 0.44% of the value of net assets over $10 billion up to and including $12.5 billion; plus 0.42% of the value of
net assets over $12.5 billion up to and including $15 billion; plus 0.40% of the value of net assets over $15 billion. The management fee schedule for the Removed Portfolio does not include breakpoints.
74 The Removed Portfolio is not subject to a Rule 12b–1 plan, but the Replacement Portfolio is subject to such a plan. The maximum Rule
12b–1 fee for the Replacement Portfolio’s Class 2 shares is 0.35%, however, the Portfolio’s board of trustees has set the current rate at 0.25%
per year until through May 1, 2008.
75 Effective December 1, 2006 through November 30, 2011, the manager of the Removed Portfolio has contractually agreed to waive 0.04% of
its advisory fees.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $5.6 billion, while the
assets of the Removed Portfolio were
approximately $286 million.
24. MFS Total Return Series (Initial
Class Shares) Replaced by Franklin
Income Securities Fund (Class 2 Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
Franklin Income Securities Fund’s (the
‘‘Replacement Portfolio’’ for purposes of
this discussion) net annual operating
expense ratio will be lower than that of
the MFS Total Return Series (the
‘‘Removed Portfolio’’ for purposes of
this discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
owners and participants by lowering the
annual operating expense ratio.
MFS Total
Return Series
(percent)
Management Fee76 ...............................................................................................................
Rule 12b–1 Fee 77 .................................................................................................................
Other Expenses .....................................................................................................................
Total Annual Operating Expenses .........................................................................................
Less Fee Waiver/Expense Reimbursement 78 ......................................................................
Net Annual Operating Expenses ...........................................................................................
0.75
None
0.10
0.85
(0.02)
0.83
Franklin Income Securities Fund
(percent)
0.46
0.25
0.01
0.72
N/A
0.72
mstockstill on PROD1PC66 with NOTICES
76 The management fee schedule for the Replacement Portfolio is equal to 0.625% of the value of net assets up to and including $100 million;
plus 0.50% of the value of net assets over $100 million up to and including $250 million; plus 0.45% of the value of net value over $250 million
up to and including $10 billion; plus 0.44% of the value of net assets over $10 billion up to and including $12.5 billion; plus 0.42% of the value of
net assets over $12.5 billion up to and including $15 billion; plus 0.40% of the value of net assets over $15 billion.
77 The Removed Portfolio is not subject to a Rule 12b–1 plan, but the Replacement Portfolio is subject to such a plan. The maximum Rule
12b–1 fee for the Replacement Portfolio’s Class 2 shares is 0.35%, however, the Portfolio’s board of trustees has set the current rate at 0.25%
per year until through May 1, 2008.
78 The Removed Portfolio’s management fee as set forth in its advisory agreement is 0.75% of average daily net assets annually. The Removed Portfolio’s adviser has agreed in writing to reduce its management fee to 0.65% on average daily net assets in excess of $3 billion. For
the Removed Portfolio’s most recent fiscal year, the effective management fee was 0.73% of average daily net assets. This written agreement
will remain in effect until modified by the Removed Portfolio’s board of trustees.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $5.6 billion, while the
assets of the Removed Portfolio were
approximately $3.9 billion.
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25. T. Rowe Price Personal Strategy
Balanced Portfolio Replaced by Franklin
Income Securities Fund (Class 2 Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
Franklin Income Securities Fund’s (the
‘‘Replacement Portfolio’’ for purposes of
this discussion) net annual operating
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expense ratio will be lower than that of
the T. Rowe Price Personal Strategy
Balanced Portfolio (the ‘‘Removed
Portfolio’’ for purposes of this
discussion) immediately after the
Substitution. Accordingly, the section
26 Applicants represent that the
Substitution will benefit the Contract
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41557
owners and participants by lowering the
annual operating expense ratio.
T. Rowe Price
Personal Strategy
Balanced Portfolio
(percent)
Management Fee 79 ...............................................................................................................
Rule 12b–1 Fee 80 .................................................................................................................
Other Expenses .....................................................................................................................
Total Annual Operating Expenses .........................................................................................
Less Fee Waiver/Expense Reimbursement 81 ......................................................................
Net Annual Operating Expenses ...........................................................................................
0.90
None
None
0.90
(0.02)
0.88
Franklin Income
Securities Fund
(percent)
0.46
0.25
0.01
0.72
N/A
0.72
79 The management fee schedule for the Replacement Portfolio is equal to 0.625% of the value of net assets up to and including $100 million;
plus 0.50% of the value of net assets over $100 million up to and including $250 million; plus 0.45% of the value of net assets over $250 million
up to and including $10 billion; plus 0.44% of the value of net assets over $10 billion up to and including $12.5 billion; plus 0.42% of the value of
net assets over $12.5 billion up to and including $15 billion; plus 0.40% of the value of net assets over $15 billion. The management fee schedule for the Removed Portfolio does not include breakpoints.
80 The Removed Portfolio is not subject to a Rule 12b–1 plan, but the Replacement Portfolio is subject to such a plan. The maximum Rule
12b–1 fee for the Replacement Portfolio’s Class 2 shares is 0.35%, however, the Portfolio’s board of trustees has set the current rate at 0.25%
per year until through May 1, 2008.
81 Reflects a credit received from investing in another T. Rowe Price Fund.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $5.6 billion, while the
assets of the Removed Portfolio were
approximately $178 million.
26. Fidelity Growth Portfolio (Initial
Class and Service Class Shares)
Replaced by Fidelity Contrafund
Portfolio (Initial Class and Service Class
Shares)
Under the proposed Substitution, the
Insurance Companies would substitute
Initial Class and Service Class shares of
the Fidelity Contrafund Portfolio (the
‘‘Replacement Portfolio’’ for purposes of
this discussion) for Initial Class and
Service Class shares, respectively, of the
Fidelity Growth Portfolio (the
‘‘Removed Portfolio’’ for purposes of
this discussion). As provided in the
chart below, the section 26 Applicants
anticipate that the net annual operating
expense ratio of each of the Initial Class
shares and Service Class shares of the
Replacement Portfolio will be lower
than that of the corresponding class of
shares of the Removed Portfolio
immediately after the Substitution.
Accordingly, the Section 26 Applicants
represent that the Substitution will
benefit the Contract owners and
participants by lowering annual
operating expense ratios.
Fidelity Growth Portfolio
(Initial Class shares)
(percent)
Management Fee 82 .............................................................................................................
Rule 12b–1 Fee 83 ...............................................................................................................
Other Expenses ...................................................................................................................
Total Annual Operating Expenses .......................................................................................
Less Fee Waiver/Expense Reimbursement 84 ....................................................................
Net Annual Operating Expenses .........................................................................................
0.57
None
0.11
0.68
(0.00)
0.68
Fidelity Growth Portfolio
(Service Class shares)
(percent)
mstockstill on PROD1PC66 with NOTICES
Management Fee 82 .............................................................................................................
Rule 12b–1 Fee 83 ...............................................................................................................
Other Expenses ...................................................................................................................
Total Annual Operating Expenses .......................................................................................
Less Fee Waiver/Expense Reimbursement 84 ....................................................................
Net Annual Operating Expenses .........................................................................................
0.57
0.10
0.11
0.78
(0.00)
0.78
Fidelity Contrafund
Portfolio
(Initial Class shares)
(percent)
0.57
None
0.09
0.66
(0.00)
0.66
Fidelity Contrafund
Portfolio
(Service Class shares)
(percent)
0.57
0.10
0.09
0.76
(0.00)
0.76
82 The management fee rate for the Replacement and Removed Portfolios is the sum of a group fee rate and an individual rate (0.30%). The
group fee rate is based on the average net assets of all mutual funds advised by the Replacement and Removed Portfolios’ manager and includes breakpoints as total assets under management increase. The group fee rate cannot rise above 0.52%. The individual fee rate does not include breakpoints. The total management fee is calculated by adding the group fee rate to the individual fund fee rate, dividing by twelve, and
multiplying the result by the Portfolio’s average net assets throughout the month.
83 Initial Class shares and Service Class shares of the Replacement and Removed Portfolios are subject to Rule 12b–1 plans. The Rule 12b–1
plan for the Initial Class shares of the Removed and Replacement Portfolios provides that the manager of the Portfolios may use its management fee revenues, as well as past profits or its resources from any other source, to pay the distributor for expenses incurred in connection with
providing services intended to result in the sale of Initial Class shares. Such payments have also been authorized by the trust’s board of trustees
for the Service Class shares of the Removed and Replacement Portfolios. In addition, the maximum Rule 12b–1 fee for the Removed and Replacement Portfolios’ Service Class shares is 0.25%; however, each Portfolio currently pays a fee at an annual rate of 0.10%.
84 The Manager of the Replacement and Removed Portfolios has voluntarily agreed to reimburse each Portfolio to the extent that the operating
expenses of Initial Class and Service Class shares exceed 0.85% and 0.95%, respectively.
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As of December 31, 2006, the assets of
the Replacement Portfolio (including all
share classes) were approximately $21
billion, while the assets of the Removed
Portfolio (including all share classes)
were approximately $7.2 billion.
27. Universal Equity Growth Portfolio
(Class I Shares) Replaced by Fidelity
Contrafund Portfolio (Initial Class
Shares)
As provided in the chart below, the
section 26 Applicants anticipate that the
Fidelity Contrafund Portfolio’s (the
‘‘Replacement Portfolio’’ for purposes of
this discussion) net annual operating
expense ratio will be lower than that of
the Universal Equity Growth Portfolio
(the ‘‘Removed Portfolio’’ for purposes
of this discussion) immediately after the
Substitution. The section 26 Applicants
note that the Initial Class shares of the
Replacement Portfolio have adopted a
plan pursuant to Rule 12b–1 under the
1940 Act, while Class I shares of the
Removed Portfolio are not subject to
such a plan. However, the section 26
Applicants contend that the
Substitution will benefit the Contract
owners and participants by lowering the
annual operating expense ratio.
Universal Equity Growth
Portfolio
(percent)
Management Fee 85 .......................................................................................................
Rule 12b–1 Fee 86 .........................................................................................................
Other Expenses .............................................................................................................
Total Annual Operating Expenses .................................................................................
Less Fee Waiver/Expense Reimbursement 87 ..............................................................
Net Annual Operating Expenses ...................................................................................
0.50
None
0.34
0.84
0.00
0.84
Fidelity Contrafund
Portfolio
(Initial Class shares)
(percent)
0.57
None
0.09
0.66
(0.00)
0.66
mstockstill on PROD1PC66 with NOTICES
85 The management fee rate for the Replacement Portfolio is the sum of a group fee rate and an individual rate (0.30%). The group fee rate is
based on the average net assets of all mutual funds advised by the Replacement Portfolio’s manager and includes breakpoints as total assets
under management increase. The group fee rate cannot rise above 0.52%. The individual fee rate does not include breakpoints. The total management fee is calculated by adding the group fee rate to the individual fund fee rate, dividing by twelve, and multiplying the result by the Portfolio’s average net assets throughout the month. The management fee schedule for the Removed Portfolio on an annual basis is equal to 0.50%
on the first $1 billion in assets; 0.45% on assets from $1 billion to $2 billion; 0.40% on assets from $2 billion to $3 billion; and 0.35% on assets
over $3 billion.
86 The Removed Portfolio is not subject to a Rule 12b–1 plan, but the Replacement Portfolio is subject to such a plan. The Rule 12b–1 plan for
the Initial Class shares of the Removed Portfolio provides that the manager of the Portfolio may use its management fee revenues, as well as
past profits or its resources from any other source, to pay the distributor for expenses incurred in connection with providing services intended to
result in the sale of Initial shares.
87 The Manager of the Replacement Portfolio has voluntarily agreed to reimburse the Portfolio to the extent that the total operating expenses of
Initial shares exceed 0.85%. The manager of the Removed Portfolio has voluntarily agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual operating expenses, excluding certain investment-related expenses, will not exceed 0.85%.
As of December 31, 2006, the assets of
the Replacement Portfolio were
approximately $21 billion, while the
assets of the Removed Portfolio were
approximately $150 million.
22. The section 26 Applicants
currently expect that the proposed
Substitutions will be carried out on or
about August 17, 2007 or as soon as
reasonably practical thereafter
(‘‘Substitution Date’’) and by
supplements to the prospectuses for the
Contracts and Separate Accounts, which
were delivered to Contract owners and
participants at least thirty (30) days
before the Substitutions, each Insurance
Company has notified all Contract
owners and participants 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 herein. The
supplements advised Contract owners
and participants that from the date of
the supplement until the date of the
proposed Substitutions, Contract
owners and participants 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
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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. The supplements also
informed Contract owners and
participants 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.88 The supplements also
advised Contract owners and
participants how to provide instructions
on reallocating Contract value in light of
the proposed Substitutions.
23. In addition, the supplements
advised Contract owners and
participants 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
88 One exception to this is that the Insurance
Companies may impose restrictions on transfers to
prevent or limit disruptive transfer and other
‘‘market timing’’ activities by Contract owners,
participants or agents of Contract owners or
participants as described in the prospectuses for the
Separate Accounts and the Portfolios.
PO 00000
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Fmt 4703
Sfmt 4703
relative net asset value. The
supplements also advised Contract
owners and participants that for at least
30 days following each proposed
Substitution, the Insurance Companies
will permit Contract owners and
participants 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.
24. Each Insurance Company has sent
or will send Contract owners and
participants prospectuses for the
relevant Replacement Portfolios prior to
the Substitutions. 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 or participants),
containing this disclosure to all existing
Contract owners and participants.
Prospective purchasers and new
purchasers of Contracts will be provided
with a Contract prospectus and the
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supplement containing disclosure
regarding the Substitutions, as well as a
prospectus and/or supplement for the
Replacement Portfolios. 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.
25. In addition to the prospectus
supplements distributed to Contract
owners and participants, within five
business days after the proposed
Substitutions are completed, Contract
owners and participants 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
timing activity) each Insurance
Company will not exercise any rights
reserved by it under the Contracts to
impose additional restrictions on
transfers or, to the extent transfer
charges apply to a Contract, to impose
any charges on transfers until at least 30
days after each proposed Substitution.
The Insurance Companies will also send
each Contract owner and participant a
current prospectus for each of the
relevant Replacement Portfolios to the
extent they have not previously received
a current version.
26. Each Insurance Company also is
seeking approval of the proposed
Substitutions from any state insurance
regulators whose approval may be
necessary or appropriate. 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 or
participant’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
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22:24 Jul 27, 2007
Jkt 211001
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).
27. Moreover, the section 26
Applicants state that Contract owners
and participants 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.
Consequently, 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 or
participants. The proposed
Substitutions will not cause the
Contract fees and charges currently
being paid by Contract owners and
participants to be greater after the
proposed Substitutions than before the
proposed Substitutions. All Contractlevel 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 the number of permissible
transfers under the Contracts.
28. With respect to the Substitutions
involving the Old Mutual Select Value
Portfolio, OpCap Managed Portfolio,
Davis Value Portfolio, T. Rowe Price
Equity Income Portfolio, Dreyfus
Appreciation Portfolio (Initial shares),
OpCap Equity Portfolio, Oppenheimer
Main Street Fund/VA (Service shares),
AIM V.I. Mid Cap Core Equity Portfolio
(Series I shares), Alger American
MidCap Growth Portfolio (Class O
shares), MFS Mid Cap Growth Series
(Initial Class shares), Dreyfus Small Cap
Stock Index Portfolio (Service shares),
OpCap Small Cap Portfolio, MFS New
Discovery Series (Initial Class shares),
Janus Flexible Bond Portfolio
(Institutional and Service shares),
OpCap Renaissance Portfolio, and the T.
Rowe Price New America Growth
Portfolio, the section 26 Applicants
represent that, with respect to those
who were Contract owners or
participants 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
Substitution, the subaccounts investing
in the applicable Replacement Portfolio
such that the sum of the Replacement
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41559
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
2006.
29. With respect to the Substitutions
involving the Universal Value Portfolio
(Class I shares), AIM V.I. Basic Value
Fund (Series I shares), Fidelity Growth
Opportunities Portfolio (Initial Class
and Service Class shares), PIMCO Total
Return Portfolio (Administrative
shares), Universal Core Plus Fixed
Income Portfolio (Class I shares), and
the Universal U.S. Real Estate Portfolio
(Class I and Class II shares), the Section
26 Applicants represent that, with
respect to those who were Contract
owners or participants on the date of the
proposed Substitutions, at no time after
the date of the Substitution will the
Insurance Companies increase Contract
charges or total Separate Account
charges (net of any waiver or
reimbursements) of the subaccounts that
invest in the applicable Replacement
Portfolio. If the net operating expenses
for the applicable Replacement Portfolio
(taking into account any expense
waivers or reimbursements) for any
fiscal quarter following the date of the
Substitution exceed on an annualized
basis the net expense ratio for the
corresponding Removed Portfolio for
fiscal year 2006, the Insurance
Companies will reimburse the Separate
Account expenses paid during that
quarter of the subaccount that invests in
the applicable Replacement Portfolio to
the extent necessary to offset the
amount by which that Replacement
Portfolio’s net expense ratio for such
period exceeds, on an annualized basis,
that of the corresponding Removed
Portfolio.
30. The section 26 Applicants also
agree that, with respect to shares issued
in connection with the proposed
Substitution involving the Universal
U.S. Real Estate Portfolio, the Rule 12b–
1 fees for the Replacement Portfolio’s
Class IB shares will not be raised above
the Removed Portfolio’s Class II shares
maximum Rule 12b–1 fee (0.35%)
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without first obtaining shareholder
approval.89
31. In addition, the section 26
Applicants further agree that with
respect to the Substitutions involving
the Alger American Balanced Portfolio
(Class O shares), MFS Total Return
Series (Initial Class shares), T. Rowe
Price Personal Strategy Balanced
Portfolio, Fidelity Growth Portfolio
(Initial Class and Service Class shares),
and the Universal Equity Growth
Portfolio (Class I shares), the Insurance
Companies will not increase total
separate account charges with respect to
the corresponding Replacement
Portfolio sub-accounts for any
outstanding Contracts on the date of the
Substitutions for a period of two years
from the date of the Substitutions.
32. Moreover, the section 26
Applicants agree that, with respect to
the Substitutions involving the Alger
American Balanced Portfolio (Class O
shares), MFS Total Return Series (Initial
Class shares), and the T. Rowe Price
Personal Strategy Balanced Portfolio, to
the extent that the annualized expense
ratio of each applicable Replacement
Portfolio exceeds, for each fiscal period
(not to exceed a fiscal quarter) during
the two years following the date of the
proposed Substitutions, the net expense
ratio of the corresponding Removed
Portfolio for fiscal year 2006, the
Insurance Companies will, for each
Contract outstanding on the date of the
proposed Substitutions, 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 Substitution, the
subaccounts investing in the
Replacement Portfolio such that the sum
of the 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
Removed Portfolio’s net operating
expense ratio (taking into account any
expense waivers or reimbursements)
and subaccount expense ratio for fiscal
year 2006.
33. In addition, with respect to the
Substitutions involving the Fidelity
Growth Portfolio (Initial Class and
Service Class shares), and the Universal
Equity Growth Portfolio (Class I shares),
the Section 26 Applicants agree that, in
89 The Class IB shares of the Replacement
Portfolio have a higher maximum Rule 12b–1 fee
than the Class II shares of the Removed Portfolio.
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22:24 Jul 27, 2007
Jkt 211001
connection with assets held under
Contracts affected by the Substitutions,
the Insurance Companies will not
receive, for three years from the date of
the proposed Substitutions, any direct
or indirect benefits from the relevant
Replacement Portfolio, its advisers, or
underwriters (or its affiliates) at a rate
higher than that which they had
received from the corresponding
Removed Portfolios, their advisers, or
underwriters (or their affiliates),
including without limitation, 12b–1,
shareholder service, administration or
other service fees, revenue sharing or
other arrangements in connection with
such assets. The Insurance Companies
also represent that the proposed
Substitutions and the selection of the
relevant Replacement Portfolio were not
motivated by any financial
consideration paid or to be paid to the
Insurance Companies or their affiliates
by the relevant Replacement Portfolio,
its advisers, underwriters or affiliates.
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.’’
2. The section 26 Applicants assert
that the each proposed Substitution
involves a substitution of securities
within the meaning of section 26(c) of
the 1940 Act and therefore request an
order from the Commission pursuant to
section 26(c) approving the proposed
Substitutions.
3. The section 26 Applicants state
they 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 both
to protect themselves and their Contract
owners and participants 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 and
participants.
4. The section 26 Applicants also
argue that each Replacement Portfolio
and its corresponding Removed
Portfolio have similar, and in some
PO 00000
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Fmt 4703
Sfmt 4703
cases substantially similar or identical,
investment objectives, policies and
risks. In addition, each proposed
Substitution retains for Contract owners
and participants the investment
flexibility that is a central feature of the
Contracts. The section 26 Applicants
assert that any impact on the investment
programs of affected Contract owners
and participants, including the
appropriateness of the available
investment options, should therefore be
negligible.
5. The section 26 Applicants further
assert that the ultimate effect of the
Substitutions would be to remove
overlapping and duplicative investment
options and those investment options
that have not attracted sufficient
Contract owner or participant interest to
support maintaining them as investment
options under the Contracts. The
Substitutions will permit the Insurance
Companies to present information to
their Contract owners and participants
in a simpler and more concise manner,
and it is anticipated that after the
proposed Substitutions, Contract
owners and participants will be
provided with disclosure documents
that contain a simpler presentation of
the available investment options under
their Contracts.
6. In addition, the section 26
Applicants also argue that in connection
with each proposed Substitution,
Contract owners and participants with
subaccount balances invested in a
Replacement Portfolio will have the
same or lower net operating expense
ratio(s) after the Substitution. In this
regard, each Insurance Company has
agreed to impose certain expense limits,
as discussed above, to ensure that
Contract owners and participants do not
incur higher expenses as a result of a
Substitution either for a period of two
years after the Substitution or for the life
of the Contract, as applicable.
7. In addition to the foregoing, the
section 26 Applicants generally submit
that each proposed Substitution meets
the standards that the Commission and
its staff have applied to similar
substitutions that the Commission
previously has approved. The section 26
Applicants also submit that the
proposed Substitutions are not of the
type that section 26(c) was designed to
prevent as the Contracts provide each
Contract owner or participant 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 or participants under their
Contracts. Additionally, the
Substitutions will not, in any manner,
reduce the nature or quality of the
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available investment options. In this
regard, the proposed Substitutions
retain for Contract owners and
participants the investment flexibility
which is a central feature of the
Contracts.
8. Moreover, the section 26
Applicants will offer Contract owners
and participants the opportunity to
transfer amounts out of the affected
subaccounts without any cost or other
penalty (other than with respect to
implementing policies and procedures
designed to prevent disruptive transfer
and other market timing activity) that
may otherwise have been imposed for a
period beginning on the date of the
supplement notifying Contract owners
and participants of the proposed
Substitutions (which supplement has
been delivered to Contract owners and
participants at least thirty (30) days
before the Substitutions) and ending no
earlier than thirty (30) days after the
proposed Substitutions. The
Substitutions, therefore, will not result
in the type of costly forced redemption
that section 26(c) was designed to
prevent.
9. The section 26 Applicants also note
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 or
participating in a group Contract,
Contract owners and participants 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
and participants 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
Substitutions, nor will the annuity, life
or tax benefits afforded under the
Contracts held by any of the affected
Contract owners or participants.
10. Section 17(a)(1) of the 1940 Act,
in relevant part, prohibits any affiliated
person 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.
11. Section 17(b) of the 1940 Act
provides that the Commission may,
upon application, issue an order
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22:24 Jul 27, 2007
Jkt 211001
exempting any proposed transaction
from the provisions of 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.
12. 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) of the 1940
Act to the extent necessary to permit
them to carry out the In-Kind
Transactions in connection with the
proposed Substitutions.
13. The section 17 Applicants submit
that the terms of the proposed In-Kind
Transactions, including the
consideration to be paid and received,
as described in the application, are
reasonable and fair and do not involve
overreaching on the part of any person
concerned. The In-Kind Transactions
will be effected at the respective net
asset values of each of the relevant
Removed Portfolios and each of the
relevant Replacement Portfolios, as
determined in accordance with the
procedures disclosed in the registration
statement for the relevant investment
company 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 or
participant’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
Account’s investment in a Replacement
Portfolio will equal the value of its
investments in the corresponding
Removed Portfolio (together with the
value of any pre-existing investments in
the Replacement Portfolio) before the InKind Transactions.
14. The section 17 Applicants state
they will assure themselves that the InKind Transactions will be in substantial
compliance with the conditions of Rule
17a–7 under the 1940 Act. The section
17 Applicants 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
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41561
being purchased or sold will not be
cash.
15. 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 will be consistent
with the policies of the Removed and
corresponding Replacement Portfolios,
as recited in their respective current
registration statements, and that the
proposed In-Kind Transactions are
consistent with the general purposes of
the 1940 Act and do not present any
conditions or abuses that the 1940 Act
was designed to prevent.
Conclusion
For the reasons set forth in the
application, the Applicants each
respectively 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, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–14663 Filed 7–27–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56120; File No. SR–
NASDAQ–2007–060]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change and
Amendment No. 1 Thereto To Extend
Nasdaq’s Authority Under Its Cease
and Desist Pilot Program
Date: July 24, 2007.
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 June 19,
2007, The NASDAQ Stock Market LLC
(‘‘Nasdaq’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been substantially prepared by
Nasdaq. Nasdaq has filed the proposal
as a ‘‘non-controversial’’ rule change
pursuant to section 19(b)(3)(A) of the
1 15
2 17
E:\FR\FM\30JYN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
30JYN1
]]>Agencies
[Federal Register Volume 72, Number 145 (Monday, July 30, 2007)]
[Notices]
[Pages 41534-41561]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-14663]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-27909; File No. 812-13346]
MONY Life Insurance Company of America, et al.; Notice of
Application
July 24, 2007.
AGENCY: Securities and Exchange Commission (``SEC'' or the
``Commission'').
ACTION: Notice of application for an order pursuant to section 26(c) of
the Investment Company Act of 1940 (``1940 Act''), approving certain
substitutions of securities and for an order of exemption pursuant to
section 17(b) of the 1940 Act.
-----------------------------------------------------------------------
Applicants: MONY Life Insurance Company of America (``MLOA''), MONY
Life Insurance Company (``MONY''), MONY America Variable Account A
(``MLOA Separate Account A''), MONY America Variable Account L (``MLOA
Separate Account L'') (together, ``MLOA Separate Accounts''), MONY
Variable Account A (``MONY Separate Account A''), MONY Variable Account
L (``MONY Separate Account L'') (together, ``MONY Separate Accounts''),
AXA Equitable Life Insurance Company (``AXA Equitable''), Separate
Account A of AXA Equitable (``Separate Account A''), Separate Account
FP of AXA Equitable (``Separate Account FP''), Separate Account I of
AXA Equitable (``Separate Account I''), Separate Account No. 45 of AXA
Equitable (``Separate Account 45''), Separate Account No. 49 of AXA
Equitable (``Separate Account 49'') and Separate Account No. 301+ of
AXA Equitable (``Separate Account 301+'') (each, an ``AXA Equitable
Separate Account'' and together, ``AXA Equitable Separate Accounts'')
(collectively, the ``Section 26 Applicants''), Separate Account No. 66
of AXA Equitable (``Separate Account 66'') and EQ Advisors Trust (the
``Trust'') (together with the section 26 Applicants, the ``section 17
Applicants'').
Summary of Application: The Section 26 Applicants request an order
pursuant to section 26(c) of the 1940 Act, approving the proposed
substitution of shares of certain series of the Trust (which is a
registered investment company that is an affiliate of the Section 26
Applicants), Franklin Templeton Variable Insurance Products Trust
(``Franklin VIT'') and Variable Insurance Products Fund II (``Fidelity
VIT'') (together, Franklin VIT and Fidelity VIT, the ``Outside VITs'')
for shares of other registered investment companies unaffiliated with
the section 26 Applicants (the ``Substitutions''), each of which is
currently used as an underlying investment option for certain variable
annuity contracts and/or variable life insurance policies issued by the
Insurance Companies (``Contracts'').\1\ The section 17 Applicants also
request an order pursuant to section 17(b) of the 1940 Act exempting
them from section 17(a) of the 1940 Act to the extent necessary to
permit partly in-kind redemptions of securities issued by certain
Removed Portfolios (as defined herein) and purchases of securities
issued by certain Replacement Portfolios (as defined herein) (the ``In-
Kind Transactions'') in connection with the Substitutions.
---------------------------------------------------------------------------
\1\ AXA Equitable, MLOA and MONY are sometimes referred to
herein collectively as the ``Insurance Companies'' and individually
as an ``Insurance Company.'' The MLOA Separate Accounts, MONY
Separate Accounts and AXA Equitable Separate Accounts are sometimes
referred to herein collectively as the ``Separate Accounts'' and
individually as a ``Separate Account.''
Filing Date: The application was filed on November 22, 2006, and
amended on July 20, 2007. Applicants have agreed to file an amendment
during the notice period, the substance of which is contained in this
---------------------------------------------------------------------------
notice.
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 August 16, 2007, and should be accompanied
by proof of service on Applicants in the form of an affidavit or, for
lawyers, a certificate of service. Hearing requests should state the
nature of the requester's interest, the reason for the request, and the
issues contested. Persons who wish to be notified of a hearing may
request notification by writing to the Secretary of the Commission.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
[[Page 41535]]
NE., Washington, DC 20549-1090. Applicants, c/o AXA Financial, Inc.,
1290 Avenue of the Americas, New York, NY 10104, Attn: Steven M. Joenk,
Senior Vice President.
FOR FURTHER INFORMATION CONTACT: Sonny Oh, Staff Attorney, or Zandra
Bailes, Branch Chief, Office of Insurance Products, Division of
Investment Management at (202) 551-6795.
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the SEC's Public Reference Branch, 100 F Street, NE., Room 1580,
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. The principal office of MLOA is
located at 1290 Avenue of the Americas, New York, NY 10104. 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. AXA Financial, Inc. (``AXA Financial'') is the
parent company of MLOA.
2. MONY is a stock life insurance company organized in 1998 under
the laws of the State of New York. Prior to 1998, MONY operated as The
Mutual Life Insurance Company of New York, a mutual life insurance
company. The principal office of MONY is located at 1290 Avenue of the
Americas, New York, NY 10104. MONY is licensed to sell life insurance
and annuities in 50 states, the District of Columbia, Puerto Rico, and
the U.S. Virgin Islands. AXA Financial is the parent company of MONY.
3. AXA Equitable is a New York stock life insurance company that
has been in business since 1859 (including the operations of its
predecessors). Its home office is located at 1290 Avenue of the
Americas, New York, New York 10104. AXA Equitable is authorized to sell
life insurance and annuities in all fifty states, the District of
Columbia, Puerto Rico and the Virgin Islands. It maintains local
offices throughout the United States. AXA Equitable is an investment
adviser registered under the Investment Advisers Act of 1940, as
amended, and is a wholly owned subsidiary of AXA Financial.
4. MLOA serves as depositor for MLOA Separate Account A and MLOA
Separate Account L, which fund certain Contracts. 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. Units of interest in the MLOA
Separate Accounts under the Contracts are registered under the
Securities Act of 1933, as amended (``1933 Act'').
5. MONY serves as depositor for MONY Separate Account A and MONY
Separate Account L, which fund certain Contracts. 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. Units of interest in the MONY Separate Accounts under the
Contracts are registered under the 1933 Act.
6. AXA Equitable serves as sponsor and depositor for Separate
Account A, Separate Account I, Separate Account 45, Separate Account
49, Separate Account 301+, Separate Account 66, and Separate Account
FP, which fund certain Contracts. Separate Account A, Separate Account
I, Separate Account 45, Separate Account 49, Separate Account 301+, and
Separate Account 66 were established in 1968, 1996, 1994, 1996, 1981,
and 1997, respectively, pursuant to authority granted by AXA
Equitable's Board of Directors. Separate Account FP was established in
1995 pursuant to authority granted by the Board of Directors of AXA
Equitable in connection with the merger of Equitable Variable Life
Insurance Company with and into AXA Equitable. Each AXA Equitable
Separate Account is a segregated asset account of AXA Equitable and,
except for Separate Account 66, is registered with the Commission as a
unit investment trust under the 1940 Act. Separate Account 66 is
excluded from registration under the 1940 Act pursuant to section
3(c)(11) of the 1940 Act. Units of interest in each AXA Equitable
Separate Account are registered under the 1933 Act.
7. The Trust is organized as a Delaware statutory trust. It is
registered as an open-end management investment company under the 1940
Act, and its shares are registered under the 1933 Act on Form N-1A. It
commenced operations on May 1, 1997. The Trust is a series investment
company and currently offers 65 separate series (each a ``Portfolio''
and collectively, the ``Portfolios''). AXA Equitable currently serves
as investment manager (``Manager'') of each of the Portfolios. The
Trust has 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 Trust,
and without the approval of shareholders to appoint, dismiss, or
replace investment sub-advisers (``Advisers'') and to amend Investment
Advisory Agreements (``Advisory Agreements'').\2\ If a new Adviser is
retained for a Portfolio, Contract owners would receive notice of any
such action.
---------------------------------------------------------------------------
\2\ See EQ Advisors Trust and EQ Financial Consultants, Inc.,
1940 Act Rel. Nos. 23093 (March 30, 1998) (notice) and 23128 (April
24, 1998) (order).
---------------------------------------------------------------------------
8. The Franklin VIT is organized as a Massachusetts business trust.
It is registered as an open-end management investment company under the
1940 Act, and its shares are registered under the 1933 Act on Form N-
1A. It was organized on April 26, 1988. The Franklin VIT is a series
investment company and currently offers 20 separate series. Each
Franklin VIT portfolio is managed by an affiliate of Franklin Templeton
Investments. The Franklin VIT employs Advisers for certain of its
portfolios, but, to the Applicants' knowledge, has not been granted a
Multi-Manager Order by the Commission.
9. The Fidelity VIT is organized as a Massachusetts business trust.
It is registered as an open-end management investment company under the
1940 Act, and its shares are registered under the 1933 Act on Form N-
1A. It was organized on March 21, 1988. The Fidelity VIT is a series
investment company and currently offers 6 separate series. Each
Fidelity VIT portfolio is managed by Fidelity Management & Research
Company. The Fidelity VIT employs Advisers for certain of its
portfolios and has received a Multi-Manager Order granted by the
Commission.
10. All Contracts allow the Contract owners or, in the case of
group annuity Contracts, the participants, to allocate premium payments
by Contract owners or contributions by participants among the variable
and any fixed investment options available under the Contracts where
contributions by Contract owners or premium payments by participants
allocated to variable funding options are held in corresponding
divisions of the appropriate Separate Accounts.
[[Page 41536]]
11. 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 request an order from the SEC
pursuant to section 26(c) of the 1940 Act approving the proposed
substitutions of shares of the following Replacement Portfolios for
shares of the corresponding Removed Portfolios listed opposite their
names:
------------------------------------------------------------------------
Substitution Number--Removed Portfolios Replacement Portfolios
------------------------------------------------------------------------
1. Old Mutual Insurance Series Fund-- EQ/AllianceBernstein Value
Old Mutual Select Value Portfolio. Portfolio (Class IA shares).
2. The Universal Institutional Funds, ...............................
Inc.--Value Portfolio (Class I shares)
(``Universal Value Portfolio'').
3. Premier VIT--OpCap Managed Portfolio ...............................
4. Davis Variable Account Fund, Inc.-- ...............................
Davis Value Portfolio.
5. T. Rowe Price Equity Series, Inc.-- EQ/Boston Advisors Equity
T. Rowe Price Equity Income Portfolio. Income Portfolio (Class IA
shares).
6. AIM Variable Insurance Funds--AIM V. EQ/BlackRock Basic Value Equity
I. Basic Value Fund (Series I shares). Portfolio (Class IB shares).
7. Dreyfus Variable Investment Fund-- EQ/AllianceBernstein Common
Appreciation Portfolio (Initial Stock Portfolio (Class IA
shares) (``Dreyfus Appreciation shares).
Portfolio'').
8. Variable Insurance Products III--VIP EQ/Capital Guardian Research
Growth Opportunities Portfolio Portfolio (Class IA shares).
(Initial Class shares and Service
Class shares) (``Fidelity Growth
Opportunities Portfolio'').
9. Premier VIT--OpCap Equity Portfolio. ...............................
10. Oppenheimer Variable Account Funds-- ...............................
Oppenheimer Main Street Fund/VA
(Service shares)..
11. AIM Variable Insurance Funds--AIM EQ/FI Mid Cap Portfolio (Class
V. I. Mid Cap Core Equity Fund (Series IA shares).
I shares).
12. Alger American Fund--Alger American EQ/Van Kampen Mid Cap Growth
MidCap Growth Portfolio (Class O Portfolio (Class IA shares).
shares).
13. MFS Variable Insurance Trust--MFS ...............................
Mid Cap Growth Series (Initial Class
shares)..
14. Dreyfus Investment Portfolios-- EQ/Small Company Index
Small Cap Stock Index Portfolio Portfolio (Class IA shares).
(Service shares) (``Dreyfus Small Cap
Stock Index Portfolio'').
15. Premier VIT--OpCap Small Cap ...............................
Portfolio.
16. MFS Variable Insurance Trust--MFS EQ/AllianceBernstein Small Cap
New Discovery Series (Initial Class Growth Portfolio (Class IA
shares). shares).
17. Janus Aspen Series--Flexible Bond EQ/JPMorgan Core Bond Portfolio
Portfolio (Institutional and Service (Class IA shares).
shares) (``Janus Flexible Bond
Portfolio'').
18. PIMCO Variable Insurance Trust-- ...............................
PIMCO Total Return Portfolio
(Administrative shares).
19. The Universal Institutional Funds, ...............................
Inc.--Core Plus Fixed Income Portfolio
(Class I shares) (``Universal Core
Plus Fixed Income Portfolio'').
20. Premier VIT--OpCap Renaissance EQ/Lord Abbett Mid Cap Value
Portfolio. Portfolio (Class IA shares).
21. T. Rowe Price Equity Series, Inc.-- EQ/Capital Guardian Growth
T. Rowe Price New America Growth Portfolio (Class IA shares).
Portfolio.
22. The Universal Institutional Funds, EQ/Van Kampen Real Estate
Inc.--U.S. Real Estate Portfolio Portfolio (Class IA and Class
(Class I and Class II shares) IB shares).
(``Universal U.S. Real Estate
Portfolio'').
23. Alger American Fund--Alger American Franklin Templeton Variable
Balanced Portfolio (Class O shares). Insurance Products Trust--
Franklin Income Securities
Fund (Class 2 shares).
24. MFS Variable Insurance Trust--MFS ...............................
Total Return Series (Initial Class
Shares).
25. T. Rowe Price Equity Series, Inc.-- ...............................
T. Rowe Price Personal Strategy
Balanced Portfolio.
26. Variable Insurance Products Fund-- Variable Insurance Products
Growth Portfolio (Initial Class shares Fund II--Contrafund Portfolio
and Service Class shares) (``Fidelity (Initial Class shares and
Growth Portfolio''). Service Class shares, as
applicable) (``Fidelity
Contrafund Portfolio'').
27. The Universal Institutional Funds, ...............................
Inc.--Equity Growth Portfolio (Class I
shares) (``Universal Equity Growth
Portfolio'').
------------------------------------------------------------------------
12. The section 26 Applicants propose the Substitutions as part of
a continued and overall business plan by each Insurance Company to make
its Contracts more attractive to existing Contract owners, participants
or prospective purchasers, as the case may be, and more efficient to
administer and oversee. Each Insurance Company represents that it has
carefully reviewed its Contracts and each investment option offered
under its Contracts with the goal of providing a superior choice of
investment options.
13. Among the principal purposes of the Substitutions, the section
26 Applicants assert that the Removed Portfolios generally have not
attracted sufficient Contract owner or participant 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. As of
December 31, 2006, the Separate Accounts had allocated approximately
the following amounts to the Removed and Replacement Portfolios:
[[Page 41537]]
------------------------------------------------------------------------
Substitution number--Removed portfolios Replacement portfolios (in
(in millions) millions)
------------------------------------------------------------------------
1. Old Mutual Select Value Portfolio EQ/AllianceBernstein Value
($8.0). Portfolio ($4,279.0).
2. Universal Value Portfolio ($13.2)...
3. OpCap Managed Portfolio ($9.9)......
4. Davis Value Portfolio ($1.3)........
5. T. Rowe Price Equity Income EQ/Boston Advisors Equity
Portfolio ($26.8). Income Portfolio ($357.0).
6. AIM V.I. Basic Value Equity Fund EQ/BlackRock Basic Value Equity
($19.5). Portfolio ($3,600.0).
7. Dreyfus Appreciation Portfolio EQ/AllianceBernstein Common
($1.0). Stock Portfolio ($9,279.0).
8. Fidelity Growth Opportunities EQ/Capital Guardian Research
Portfolio ($9.6). Portfolio ($1,056.0).
9. OpCap Equity Portfolio ($1.5).......
10. Oppenheimer Main Street Fund/VA
($11.5).
11. AIM V.I. Mid Cap Core Equity Fund EQ/FI Mid Cap Portfolio
($9.7). ($1,552.0).
12. Alger American MidCap Growth EQ/Van Kampen Mid Cap Growth
Portfolio ($37.7). Portfolio ($138.0).
13. MFS Mid Cap Growth Series ($6.4)...
14. Dreyfus Small Cap Stock Index EQ/Small Company Index
Portfolio ($10.3). Portfolio ($1,056.0).
15. OpCap Small Cap Portfolio ($1.2)...
16. MFS New Discovery Series ($6.6).... EQ/AllianceBernstein Small Cap
Growth Portfolio ($1,201.0).
17. Janus Flexible Bond Portfolio EQ/JPMorgan Core Bond Portfolio
($23.8). ($1,557.0).
18. PIMCO Total Return Portfolio ($0.6)
19. Universal Core Plus Fixed Income
Portfolio ($14.5).
20. OpCap Renaissance Portfolio ($20.2) EQ/Lord Abbett Mid Cap Value
Portfolio ($320.0).
21. T. Rowe Price New America Growth EQ/Capital Guardian Growth
Portfolio ($7.3). Portfolio ($402.0).
22. Universal U.S. Real Estate EQ/Van Kampen Real Estate
Portfolio (Class I and Class II Portfolio (Class IA and Class
shares) (Not Provided). IB shares) (Not Provided).
23. Alger American Balanced Portfolio Franklin Income Securities Fund
($14.9). ($39.3).
24. MFS Total Return Series ($30.5)....
25. T. Rowe Price Personal Strategy
Balanced Portfolio ($2.7).
26. Fidelity Growth Portfolio ($38.3).. Fidelity Contrafund Portfolio
($73.2).
27. Universal Equity Growth Portfolio
($0.1).
------------------------------------------------------------------------
14. The section 26 Applicants also maintain that substituting the
Replacement Portfolios for the Removed Portfolios would lead to greater
efficiencies in administering the Contracts and potentially enable the
Insurance Companies to offer a wider range of investment options in the
future that would be more attractive to Contract owners and
participants. In this connection, the section 26 Applicants note that
the deletion of unpopular investment options would create additional
capacity on their systems and platforms to offer new investment
options.
15. The section 26 Applicants further assert that the Substitutions
also are designed and intended to simplify the prospectuses and related
materials with respect to the Contracts and the investment options
available through the Separate Accounts. In certain cases, the
Insurance Companies offer several investment alternatives that overlap
one another by having similar investment objectives, policies and
risks. The proposed Substitutions would eliminate these overlapping
investment alternatives. The section 26 Applicants believe that the
deletion of overlapping investment options should not adversely affect
Contract owners and participants given that other similar investment
options will remain available under the Contracts and that the
Contracts will either offer the same number of investment options or,
in those cases where the number of investment options is being reduced,
continue to offer a significant number of alternative investment
options (currently expected to range in number from 27 to 51 after the
Substitutions versus 28 to 57 before the Substitutions).
16. In addition, some Contracts offer investment alternatives from
multiple fund complexes, each with its own prospectus and disclosure
format, which significantly increases the volume and complexity of
information that is received by Contract owners and participants. The
Insurance Companies believe that this situation may be confusing to
Contract owners and participants. By substituting the Replacement
Portfolios for the Removed Portfolios, the respective Insurance Company
anticipates that it would simplify the Contract prospectuses and
related materials provided to Contract owners and participants and
thereby reduce the potential for Contract owner and participant
confusion. The section 26 Applicants also assert that the Substitutions
will enable an Insurance Company to reduce certain costs that it incurs
in administering the Contracts by removing overlapping and unpopular
Portfolios and thereby allowing an Insurance Company to offer more
competitively priced products in the future.
17. The section 26 Applicants note that Contract owners and
participants with subaccount balances invested in shares of the
Replacement Portfolios will have the same or lower net operating
expenses immediately after the Substitutions. In addition, the
Insurance Companies have agreed to impose certain expense limits on
Replacement Portfolios to ensure that Contract owners and participants
on the Substitution Date incur the same or lower expense ratios for
certain periods after the Substitutions. In addition, many of the
Replacement Portfolios are larger than their corresponding Removed
Portfolios. Generally speaking, larger funds tend to have lower
expenses than comparable funds that are smaller. This is because, with
a larger asset size, fixed fund expenses are spread over a larger base,
lowering the expense ratios. Therefore, as a result of certain
Substitutions, various costs such as legal, accounting, printing and
trustee fees will be spread over a larger base with each Contract owner
and participant bearing a smaller portion of the cost than would be the
case if the Replacement Portfolios and/or the Trust (as applicable)
were smaller in size. Larger funds also may have lower trading
expenses, potentially resulting in higher returns.
18. The section 26 Applicants also argue that certain of the
proposed Substitutions would replace an outside Portfolio with a
Portfolio for which AXA Equitable serves as Manager and, thus, would
permit AXA Equitable,
[[Page 41538]]
under the Multi-Manager Order, to appoint, dismiss and replace Advisers
and amend Advisory Agreements as necessary to seek optimal performance
from the Portfolio and its portfolio managers. Notwithstanding the
Multi-Manager Order, with respect to the Substitution involving the EQ/
Van Kampen Real Estate Portfolio, after the Substitution Date (as
defined herein), the Section 26 Applicants agree not to change the
Adviser to the EQ/Van Kampen Real Estate Portfolio without first
obtaining shareholder approval of either (a) the Adviser change or (b)
AXA Equitable's continued ability to rely on the Multi-Manager Order.
Even with respect to this Substitution, the section 26 Applicants
believe that the Substitution would provide AXA Equitable, as the
investment manager of the Trust, with greater oversight capabilities
with respect to portfolios offered through its Contracts.
19. Moreover, certain of the Substitutions will replace an outside
Portfolio with a Portfolio that is managed by AXA Equitable. In this
regard, the relevant Replacement Portfolios generally are only
available through the variable insurance and annuity products offered
by AXA Equitable and its affiliates. Consequently, the Board of
Trustees of the relevant Replacement Portfolios has greater sensitivity
to the needs of Contract owners and participants. The relevant
Substitutions also will provide AXA Equitable with more influence over
the administrative aspects of the Portfolios, while providing Contract
owners and participants with the benefit of third party asset
management. Influence is important because changes to Removed
Portfolios can result in costly, off-cycle communications and mailings
to Contract owners and participants. Conversely, for the relevant
Replacement Portfolios, AXA Equitable has greater influence over the
pace and timing of such changes. AXA Equitable believes that the
relevant Substitutions will enable it to exercise more influence over
the management and administration of the Portfolios, thereby reducing
costs and customer confusion. The added influence will give AXA
Equitable the ability to react more quickly to changes and problems it
encounters in its oversight of the relevant Replacement Portfolios.
20. The section 26 Applicants also maintain that the Substitutions
will substitute shares of a Replacement Portfolio for shares of a
Removed Portfolio, which has very similar, and in some cases
substantially similar, investment objectives, investment policies and
risks as those of the corresponding Removed Portfolio. This fact is
expected to simplify the process of explaining the Substitutions to
Contract owners and participants, including an explanation of the
relevant differences in the policies of the Replacement and Removed
Portfolios, and should facilitate their understanding of the effect of
the Substitutions on them. A summary description of the investment
objectives, investment policies and principal risks of each Removed
Portfolio and its corresponding proposed Replacement Portfolio is set
forth below.
----------------------------------------------------------------------------------------------------------------
Substitution Number--Removed Portfolios Replacement
------------------------------------------------------------------------------------------ Portfolio
----------------------
1. Old Mutual Select 2. Universal Value 3. OpCap Managed 4. Davis Value EQ/AllianceBernstein
Value Portfolio Portfolio (Class I Portfolio Portfolio Value Portfolio
shares) (Class IA shares)
----------------------------------------------------------------------------------------------------------------
Investment Objective Investment Objective Investment Objective Investment Objective Investment Objective
and Principal and Principal and Principal and Principal and Principal
Strategies: The Strategies: The Strategies: The Strategies: The Strategies: The
Portfolio seeks to Portfolio seeks Portfolio seeks Portfolio seeks Portfolio seeks
provide investors above-average total growth of capital long-term growth of capital
with long-term return over a market over time. The capital. The appreciation. Under
growth of capital cycle of three to Portfolio invests in Portfolio invests normal
and income; current five years. The common stocks, the majority of its circumstances, the
income is a Portfolio invests bonds, derivatives assets in equity Portfolio invests a
secondary objective. primarily in common and cash equivalents securities issued least 80% of its
The Portfolio stocks of companies in varying by large companies. total assets in
normally invests at with larger percentages based on The Portfolio may equity securities
least 65% of its net capitalizations. The the advisers' views invest in companies that are trading at
assets in equity Portfolio emphasizes of relative values. of any size and a discount to their
securities of large a value style of The Portfolio also also may invest in long term earnings
cap companies with investing seeking may invest in foreign securities, power. The Portfolio
value well established foreign securities debt securities, generally invests in
characteristics. The companies that and government and including large-cap companies.
Portfolio may invest appear undervalued. corporate bonds. The government The Portfolio may
in common and The Portfolio also Portfolio may invest securities, and invest in common
preferred stock. The may invest, to a up to 100% of its derivatives. In stock, preferred
Portfolio also may limited extent, in assets in debt addition, the stock and securities
invest in investment foreign equity securities, but will Portfolio may convertible into
grade fixed income securities and, only do so if, in invest in preferred common stock. The
securities, American without limit, in the judgment of the securities and Portfolio also may
Depositary Receipts securities of adviser, equity convertible invest up to 20% of
(``ADRs'') and up to foreign companies securities are not securities. The its assets in U.S.
20% of its net listed on a U.S. attractive adviser seeks to Government
assets in foreign- national exchange. investments. acquire companies securities and
traded securities. In addition, the with durable investment grade
In addition, the Portfolio may invest business models securities of
Portfolio may invest in investment grade that can be domestic
in derivatives, U.S. debt securities, purchased at corporations and up
government U.S. government attractive to 10% of its assets
securities and securities, valuations in in foreign equity or
convertible convertible relation to their debt securities. In
securities. securities and intrinsic value. addition, the
derivatives. Portfolio may invest
in derivatives.
[[Page 41539]]
Principal Risks: Principal Risks: Principal Risks: Principal Risks: Principal Risks:
Equity Risk, Asset Class Risk, Asset Allocation Company Risk, Adviser Selection
Industry and Sector Equity Risk, Market Risk, Credit Risk, Financial Service Risk, Asset Class
Risk, Investment Risk, Security Risk, Currency Risk, Risk, Foreign Risk, Convertible
Style Risk, Market Small-Cap Company Derivatives Risk, Country Risk, Securities Risk,
Risk, Security Risk, Risk, Value Emerging Markets Headline Risk, Derivatives Risk,
Security Selection Investing Risk. Risk, Fixed Income Market Risk, Equity Risk, Fixed
Risk. Risk, Issuer Risk, Selection Risk. Income Risk, Foreign
Leveraging Risk, Securities Risk
Liquidity Risk, (also known as
Management Risk, currency risk and
Market Risk, emerging markets
Mortgage Risk, Value risk, or foreign
Securities Risk. country risk),
Investment Grade
Securities Risk,
Interest Rate Risk,
Leveraging Risk,
Market Risk,
Security Selection
Risk (also known as
selection risk),
Security Risk (also
known as issuer risk
or company risk),
Value Investing Risk
(also known as
investment style
risk or value
securities risk).
----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
Substitution Number--Removed Replacement Portfolio
Portfolios ------------------------------------
------------------------------------
5. T. Rowe Price Equity Income EQ/Boston Advisors Equity Income
Portfolio Portfolio (Class IA shares)
------------------------------------------------------------------------
Investment Objective and Principal Investment Objective and Principal
Strategies: The Portfolio seeks to Strategies: The Portfolio seeks a
provide substantial dividend combination of growth and income
income as well as long-term growth to achieve an above-average and
of capital. The Portfolio will consistent total return. Under
normally invest at least 80% of normal circumstances, the
its net assets in common stocks, Portfolio invests as least 80% of
with 65% in common stocks of well- its net assets, plus borrowings
established companies paying above for investment purposes, in equity
average dividends. The Portfolio securities. The Portfolio
also may invest in convertible primarily invests in dividend-
securities, foreign securities and paying common stocks of U.S. large
derivatives. The Portfolio capitalization companies, but also
typically employs a value approach may invest in small- and mid-cap
in selecting investments. companies. The Portfolio also may
Principal Risks: Derivatives Risk, invest in convertible securities,
Equity Risk, Fixed Income Risk, foreign securities and
Foreign Securities Risk, Interest derivatives. The Adviser focuses
Rate Risk, Market Risk, Security primarily on companies that offer
Risk, Security Selection Risk, the potential for capital
Value Investing Risk. appreciation combined with an
above market level of dividend
income.
Principal Risks: Adviser Selection
Risk, Asset Class Risk,
Convertible Securities Risk,
Equity Risk, Market Risk, Security
Risk, Security Selection Risk,
Small-Cap and Mid-Cap Company
Risk.
------------------------------------------------------------------------
------------------------------------------------------------------------
Substitution Number--Removed Replacement Portfolio
Portfolio ------------------------------------
------------------------------------
6. AIM V.I. Basic Value Fund EQ/BlackRock Basic Value Equity
(Series I shares) Portfolio (Class IB shares)
------------------------------------------------------------------------
Investment Objective and Principal Investment Objective and Principal
Strategies: The Portfolio seeks Strategies: The Portfolio seeks
long-term growth of capital. The capital appreciation and,
Portfolio normally invests at secondarily, income. Under normal
least 65% of its total assets in circumstances, the Portfolio
equity securities of large- and invests at least 80% of its net
mid-cap U.S. issuers and that the assets, plus borrowings for
portfolio managers believe to be investment purposes, in equity
undervalued in relation to long- securities. The Portfolio invests
term earning power or other primarily in equity securities the
factors. The Portfolio also may Adviser believes are undervalued.
invest up to 30% of its total The Portfolio focuses its
assets in equity securities of investments on large-cap
small-cap U.S. issuers and may companies, but also may invest in
invest in investment grade non- small- and mid-capitalization
convertible debt securities, U.S. companies. The Portfolio also may
government securities and high- invest, to a limited extent, in
quality money market issuers, all investment grade debt securities
of which are issued by U.S. and U.S. government securities and
issuers. In addition, the up to 25% of its total assets in
Portfolio may invest up to 25% of foreign securities.
its total assets in foreign Principal Risks: Adviser Selection
securities. Risk, Asset Class Risk,
Principal Risks: Equity Risk, Derivatives Risk, Equity Risk,
Foreign Securities Risk, Market Foreign Securities Risk, Market
Risk, Security Risk, Security Risk, Security Selection Risk,
Selection Risk, Small-Cap Company Security Risk, Small-Cap and Mid-
Risk, Value Investing Risk. Cap Company Risk, Value Investing
Risk.
------------------------------------------------------------------------
[[Page 41540]]
------------------------------------------------------------------------
Substitution Number--Removed Replacement Portfolio
Portfolio ------------------------------------
------------------------------------
7. Dreyfus Appreciation Portfolio EQ/AllianceBernstein Common Stock
(Initial shares) Portfolio (Class IA shares)
------------------------------------------------------------------------
Investment Objective and Principal Investment Objective and Principal
Strategies: The Portfolio seeks Strategies: The Portfolio seeks to
long-term capital growth achieve long-term growth of
consistent with preservation of capital. The Portfolio generally
capital. The Portfolio normally invests at least 80% of its net
invests at least 80% of its assets assets, plus borrowing for
in common stocks. The Portfolio investment purposes, in common
focuses on blue chip companies, stocks. The Portfolio invests
including multinational companies. primarily in common stocks listed
The adviser may utilize both on national securities exchanges,
growth and value investing styles. but smaller amounts may be
Principal Risks: Blue Chip Risk, invested in stocks that are traded
Foreign Investment Risk, Issuer over-the-counter. The Portfolio
Risk, Market Risk, Market Sector generally will not invest more
Risk. than 20% of its total assets in
foreign securities. The adviser
may utilize both growth and value
investing styles.
Principal Risks: Adviser Selection
Risk, Asset Class Risk (also known
as market risk or market sector
risk), Convertible Securities
Risk, Equity Risk (also known as
issuer risk), Foreign Securities
Risk (also known as foreign
investment risk), Growth Investing
Risk, Market Risk, Security Risk
(also known as issuer risk),
Security Selection Risk, Small-Cap
and Mid-Cap Company Risk, Value
Investing Risk.
------------------------------------------------------------------------
------------------------------------------------------------------------
Substitution Number--Removed Portfolios Replacement
------------------------------------------------------- Portfolio
8. Fidelity -----------------
Growth
Opportunities 10. Oppenheimer EQ/Capital
Portfolio 9. OpCap Equity Main Street Fund/ Guardian
(Initial Class Portfolio VA (Service Research
shares and shares) Portfolio (Class
Service Class IA shares)
shares)
------------------------------------------------------------------------
Investment Investment Investment Investment
Objective and Objective and Objective and Objective and
Principal Principal Principal Principal
Strategies: The Strategies: The Strategies: The Strategies: The
Portfolio seeks Portfolio seeks Portfolio seeks Portfolio seeks
to provide long term high total to achieve long-
capital growth. capital return from term growth of
The Portfolio appreciation. equity and debt capital. The
normally invests Under normal securities. The Portfolio
primarily in conditions, the Portfolio invests
common stocks. Portfolio currently primarily
The Portfolio invests at least invests mainly (generally at
may invest in 80% of its net in common least 65% of
securities of assets, plus stocks of U.S. its assets) in
foreign issuers borrowings for companies of equity
in addition to investment different securities of
domestic purposes, in capitalization U.S issuers and
issuers. The equity ranges, securities
adviser is not securities of presently whose principal
constrained by companies that focusing on markets are in
any particular the manager large- the United
investment style believes are capitalization States. The
and may utilize undervalued in issuers. The Portfolio
both growth and the marketplace. Portfolio may invests
value investing The Portfolio also buy debt primarily in
styles. may invest in securities such common stocks
Principal Risks: foreign as bonds and of large-cap
Foreign Exposure securities and debentures, but companies. The
Risk, Issuer- invests in does not Portfolio may
Specific equity currently invest up to
Changes, Stock securities emphasize these 15% of its
Market listed on U.S. investments. In total assets in
Volatility Risk. or foreign addition, the securities of
securities Portfolio may issuers outside
exchanges or invest in of the U.S. and
traded in over- foreign not included in
the-counter securities the S&P 500.
markets. without limit, The Adviser
Principal Risks: however, the seeks to invest
Credit Risk, Portfolio does in stocks whose
Equity Risk, not currently prices are not
Issuer Risk, expect to have excessive
Leveraging Risk, substantial relative to
Liquidity Risk, investments in book value or
Management Risk, such in companies
Market Risk, securities. whose asset
Value Securities Principal Risks: values are
Risk. Asset Class understated.
Risk, Equity Principal Risks:
Risk, Fixed Adviser
Income Risk, Selection Risk,
Interest Rate Asset Class
Risk, Market Risk, Equity
Risk, Security Risk (also
Risk, Security known as issuer-
Selection Risk, specific
Small-Cap and changes risk),
Mid-Cap Company Foreign
Risk. Securities Risk
(also known as
foreign
exposure risk),
Market Risk
(also known as
stock-market
volatility
risk), Security
Selection Risk
(also known as
management
risk), Security
Risk (also
known as issuer-
specific
changes risk or
issuer risk),
Small-Cap and
Mid-Cap Company
Risk.
------------------------------------------------------------------------
[[Page 41541]]
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Substitution Number--Removed Replacement Portfolio
Portfolio ------------------------------------
------------------------------------
11. AIM V.I. Mid Cap Core Equity EQ/FI Mid Cap Portfolio (Class IA
Fund (Series I shares) shares)
------------------------------------------------------------------------
Investment Objective and Principal Investment Objective and Principal
Strategies: The Portfolio seeks Strategies: The Portfolio seeks
long-term growth of capital. long-term growth of capital. The
Normally, the Portfolio invests at Portfolio normally invests at
least 80% of its net assets, plus least 80% of its net assets, plus
the amount of any borrowing for any borrowings for investment
investment purposes, in equity purposes, in common stocks of
securities, including convertible companies with medium market
securities, of mid-capitalization capitalizations. The Portfolio may
companies. In selecting also invest in companies with
investments, the adviser seeks to smaller or larger market
identify those companies that are, capitalization and securities of
in its view, undervalued relative foreign issuers. The Portfolio is
to current or projected earnings. not constrained by any particular
The Portfolio may invest up to 20% investment style and may buy
of its assets in equity securities growth-oriented or value-oriented
of companies in other market stock or a combination of both.
capitalization ranges. The While the Portfolio does not have
Portfolio may also invest up to a stated limit with respect to
20% of its assets in investment investments in securities of
grade debt securities, U.S. foreign issuers, from January 1,
Government securities and high 2004 through December 31, 2006,
quality money market instruments the Portfolio generally has
and 25% of its total assets in invested between 10-20% of its net
foreign securities. In addition, assets in such securities. In
the Portfolio may invest in addition, the Portfolio may invest
derivatives. in derivatives and up to 20% of
Principal Risks: Equity Risk, its net assets in investment grade
Foreign Securities Risk, Market debt securities and U.S.
Risk, Security Risk, Security Government securities.
Selection Risk. Principal Risks: Adviser Selection
Risk, Asset Class Risk,
Derivatives Risk, Equity Risk,
Foreign Securities Risk, Growth
Investing Risk, Market Risk,
Portfolio Turnover Risk, Security
Risk, Security Selection Risk,
Small-Cap and Mid-Cap Company
Risk, Value Investing Risk.
------------------------------------------------------------------------
------------------------------------------------------------------------
Substitution Number--Removed Portfolios Replacement Portfolio
------------------------------------------------------------------------
12. Alger American 13. MFS Mid Cap Growth EQ/Van Kampen Mid Cap
MidCap Growth Portfolio Series (Initial Class Growth Portfolio
(Class O shares) shares) (Class IA shares)
------------------------------------------------------------------------
Investment Objective Investment Objective Investment Objective
and Principal and Principal and Principal
Strategies: The Strategies: The Strategies: The
Portfolio seeks long- Portfolio seeks long- Portfolio seeks
term capital term growth of capital growth. Under
appreciation. Under capital. Under normal normal circumstances,
normal circumstances, circumstances, the the Portfolio invests
the portfolio invests Portfolio invests at at least 80% of its
at least 80% of its least 80% of its net net assets, plus
net assets in the assets in common borrowings for
equity securities of stocks and related investment purposes,
mid-cap companies at securities, of in securities of
the time of companies with medium medium-sized
investment. The market capitalization companies at the time
Portfolio also may which the Portfolio's of investment. The
invest in equity adviser believes have Portfolio primarily
securities of small- above-average growth invests (generally at
and large-cap potential. The least 65% of its
companies. The Portfolio also may assets) in equity
Portfolio focuses on invest, to a limited securities and may
mid-sized companies extent, in investment also invest in equity
the adviser believes grade debt securities, securities of small-
demonstrate promising up to 10% in lower and large-cap
growth potential. The rated bonds and up to companies. The
Portfolio may invest 20% in foreign Adviser seeks to
in derivatives, securities, including invest in high
convertible securities emerging markets quality companies it
and up to 20% of its securities. In believes have
total assets in addition, the sustainable
foreign securities. Portfolio may invest competitive
Principal Risks: in convertible advantages and the
Derivatives Risk, securities and ability to redeploy
Equity Risk, Growth derivatives. capital at high rates
Investing Risk, Principal Risks: of return. The
Liquidity Risk, Market Emerging Markets Risk, Portfolio also may
Risk, Mid-Cap Company Foreign Securities invest in debt
Risk, Security Risk, Risk, Market Risk, Mid- securities of various
Security Selection Cap Growth Company maturities considered
Risk. Risk, Over-the-Counter investment grade and
Risk, Short Sales up to 5% of its net
Risk. assets in convertible
securities below
investment grade. In
addition, the
Portfolio may invest
in derivatives and up
to 25% of its total
assets in foreign
issuers, including
issuers in emerging
markets.
Principal Risks:
Adviser Selection
Risk, Asset Class
Risk, Convertible
Securities Risk,
Currency Risk,
Derivatives Risk,
Emerging Markets
Risk, Equity Risk,
Foreign Securities
Risk, Fixed Income
Risk, Investment
Grade Securities
risk, Junk Bond or
Lower Rated
Securities Risk,
Growth Investing Risk
(also known as mid-
cap growth company
risk), Market Risk,
Security Risk,
Security Selection
Risk, Small-Cap and
Mid-Cap Company Risk
(also known as mid-
cap growth company
risk).
------------------------------------------------------------------------
[[Page 41542]]
------------------------------------------------------------------------
Substitution Number--Removed Portfolios Replacement Portfolio
------------------------------------------------------------------------
14. Dreyfus Small Cap EQ/Small Company Index
Stock Index Portfolio 15. OpCap Small Cap Portfolio (Class IA
(Service shares) Portfolio shares)
------------------------------------------------------------------------
Investment Objective Investment Objective Investment Objective
and Principal and Principal and Principal
Strategies: The Strategies: The Strategies: The
Portfolio seeks to Portfolio seeks Portfolio seeks to
match the performance capital appreciation. replicate as closely
of the S&P SmallCap Under normal as possible the total
600 Index. The circumstances, the return of the Russell
Portfolio invests in a Portfolio invests at 2000. Under normal
representative sample least 80% of its net circumstances, the
of stocks included in assets, plus Portfolio invests at
the S&P SmallCap 600 borrowings for least 80% of its net
Index. The Portfolio investment purposes, assets, plus
may also invest in in equity securities borrowing for
derivatives and, to a of small-cap companies investment purposes,
limited extent, in that the adviser in equity securities
short-term debt believes are of small-cap
securities. undervalued in the companies included in
Principal Risks: marketplace. The the Russell 2000. The
Derivatives Risk, Portfolio's benchmark Portfolio may also
Indexing Strategy is the Russell 2000 invest in derivatives
Risk, Issuer Risk, Index (``Russell and, to a limited
Market Risk, Small and 2000''). The Portfolio extent, in short-term
Midsize Company Risk also may invest in debt securities.
securities issued in Principal Risks:
an IPO, foreign Adviser Selection
securities, Risk, Asset Class
derivatives and, to a Risk, Derivatives
limited extent, in Risk, Equity Risk,
short-term debt Index-Fund Risk (also
securities. known as indexing
Principal Risks: Credit strategy risk),
Risk, Issuer Risk, Liquidity Risk,
Leveraging Risk, Market Risk (also
Liquidity Risk, known as issuer
Management Risk, risk), Security Risk
Market Risk, Small (also known as issuer
Company Risk, Value risk), Small-Cap
Securities Risk. Company Risk (also
known as small
company risk).
------------------------------------------------------------------------
------------------------------------------------------------------------
Substitution Number--Removed Replacement Portfolio
Portfolios ------------------------------------
------------------------------------
16. MFS New Discovery Series EQ/AllianceBernstein Small Cap
(Initial Class shares) Growth Portfolio (Class IA shares)
------------------------------------------------------------------------
Investment Objective and Principal Investment Objective and Principal
Strategies: The Portfolio seeks Strategies: The Portfolio seeks to
capital appreciation. Under normal achieve long-term growth of
market conditions, the Portfolio capital. Under normal
invests at least 65% of its net circumstances, the Portfolio
assets in equity securities of invests at least 80% of its net
emerging growth companies. While assets, plus borrowing for
emerging growth companies may be investment purposes, in securities
of any size, the Portfolio of small capitalization
