AXA Equitable Life Insurance Company, et al.; Notice of Application, 39994-40000 [2010-16987]
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39994
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Notices
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #12181 and #12182]
South Dakota Disaster Number SD–
00031
SUMMARY: This is an amendment of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of South Dakota (FEMA–1915–
DR), dated 05/13/2010.
Incident: Flooding.
Incident Period: 03/10/2010 through
06/20/2010.
DATES: Effective Date: 07/01/2010.
Physical Loan Application Deadline
Date: 07/12/2010.
Economic Injury (EIDL) Loan
Application Deadline Date: 02/14/2011
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street, SW., Suite 6050,
Washington, DC 20416.
SUPPLEMENTARY INFORMATION: The notice
of the President’s major disaster
declaration for Private Non-Profit
organizations in the State of South
Dakota, dated 05/13/2010, is hereby
amended to include the following areas
as adversely affected by the disaster.
Primary Counties: Deuel, Douglas,
Gregory, Hand, Lake, Tripp.
All other information in the original
declaration remains unchanged.
(Catalog of Federal Domestic Assistance
Numbers 59002 and 59008)
James E. Rivera,
Associate Administrator for Disaster
Assistance.
[FR Doc. 2010–16978 Filed 7–12–10; 8:45 am]
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #12224 and #12225]
Minnesota Disaster #MN–00026
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This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Minnesota (FEMA–1921–
DR), dated 07/02/2010.
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07/02/2010.
PHYSICAL LOAN APPLICATION
DEADLINE DATE: 08/31/2010.
ECONOMIC INJURY (EIDL) LOAN
APPLICATION DEADLINE DATE: 04/
02/2011.
AXA Equitable Life Insurance
Company, et al.; Notice of Application
Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street, SW., Suite 6050,
Washington, DC 20416.
Notice is
hereby given that as a result of the
President’s major disaster declaration on
07/02/2010, Private Non-Profit
organizations that provide essential
services of governmental nature may file
disaster loan applications at the address
listed above or other locally announced
locations.
The following areas have been
determined to be adversely affected by
the disaster:
SUPPLEMENTARY INFORMATION:
Primary Counties: Faribault, Freeborn,
Olmsted, Otter Tail, Polk, Steele,
Wadena.
The Interest Rates are:
Percent
For Physical Damage:
Non-Profit Organizations With
Credit Available Elsewhere
Non-Profit
Organizations
Without Credit Available
Elsewhere ..........................
For Economic Injury:
Non-Profit
Organizations
Without Credit Available
Elsewhere ..........................
3.625
3.000
3.000
The number assigned to this disaster
for physical damage is 12224B and for
economic injury is 12225B.
(Catalog of Federal Domestic Assistance
Numbers 59002 and 59008)
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
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SECURITIES AND EXCHANGE
COMMISSION
EFFECTIVE DATE:
AGENCY: U.S. Small Business
Administration.
ACTION: Amendment 3.
SUMMARY:
INCIDENT: Severe Storms, Tornadoes,
and Flooding.
INCIDENT PERIOD: 06/17/2010
through 06/26/2010.
James E. Rivera,
Associate Administrator for Disaster
Assistance.
[FR Doc. 2010–16982 Filed 7–12–10; 8:45 am]
BILLING CODE 8025–01–P
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[Release No. IC–29338; File No. 812–13686]
July 7, 2010.
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’’ or ‘‘Act’’), approving certain
substitutions of securities and for an
order of exemption pursuant to Section
17(b) of the Act.
AXA Equitable Life
Insurance Company (‘‘AXA Equitable’’),
Separate Account 45 of AXA Equitable
(‘‘Separate Account 45’’), Separate
Account 49 of AXA Equitable (‘‘Separate
Account 49’’), Separate Account A of
AXA Equitable (‘‘Separate Account A’’),
Separate Account FP of AXA Equitable
(‘‘Separate Account FP’’) (together, ‘‘AXA
Equitable Separate Accounts’’), MONY
Life Insurance Company of America
(‘‘MLOA’’) and MONY America Variable
Account L (‘‘MLOA Separate Account
L’’) (collectively, the ‘‘Section 26
Applicants’’), Separate Account 65 of
AXA Equitable (‘‘Separate Account 65’’),
and the AXA Premier VIP Trust (the
‘‘Trust’’) (Separate Account 65 and the
Trust, together with the Section 26
Applicants, the ‘‘Section 17 Applicants’’
or ‘‘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
securities of the Multimanager
Aggressive Equity Portfolio (the
‘‘Replacement Portfolio’’) for securities
of the Multimanager Large Cap Growth
Portfolio (the ‘‘Removed Portfolio’’) (the
‘‘Substitution’’). Each of these portfolios
currently serves as an underlying
investment option for certain variable
annuity contracts issued by AXA
Equitable (‘‘Annuity Contracts’’) and/or
variable life insurance policies issued
by AXA Equitable and MLOA (‘‘Life
Insurance Contracts’’) (collectively, the
‘‘Contracts’’), as more fully described
below.1 The Section 17 Applicants also
request an order pursuant to Section
17(b) of the 1940 Act exempting them
APPLICANTS:
1 AXA Equitable and MLOA are sometimes
referred to herein collectively as the ‘‘Insurance
Companies’’ and individually as an ‘‘Insurance
Company.’’ MLOA Separate Account L and the 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. 75, No. 133 / Tuesday, July 13, 2010 / Notices
from Section 17(a) of the 1940 Act to the
extent necessary to permit in-kind
redemptions of securities issued by the
Removed Portfolio and purchases of
securities issued by the Replacement
Portfolio (the ‘‘In-Kind Transactions’’) in
connection with the Substitution.
FILING DATE: The application was filed
on August 27, 2009, and amended on
December 18, 2009, March 29, 2010, and
June 10, 2010. Applicants have agreed
to file an amendment during the notice
period, the substance of which is
reflected 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 July 28, 2010, 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.
Secretary, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–1090.
Applicants, c/o AXA Equitable Life
Insurance Company, 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 Harry
Eisenstein, Branch Chief, Office of
Insurance Products, Division of
Investment Management at (202) 551–
6795.
ADDRESSES:
The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
SUPPLEMENTARY INFORMATION:
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Applicants’ Representations
1. AXA Equitable is a New York stock
life insurance company authorized to
sell life insurance and annuities in 50
states, the District of Columbia, Puerto
Rico and the Virgin Islands. AXA
Equitable is an investment adviser
registered under the Investment
Advisers Act of 1940, as amended, and
is a wholly owned subsidiary of AXA
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Financial, Inc. (‘‘AXA Financial’’). AXA
Financial is an indirect, wholly owned
subsidiary of AXA, which is a publicly
traded French holding company.
2. MLOA is an Arizona stock life
insurance company 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 is the
parent company of MLOA.
3. AXA Equitable serves as depositor
for Separate Account 45, Separate
Account 49 and Separate Account A,
which fund certain Contracts, and for
Separate Account FP, which funds
certain Life Insurance Contracts. AXA
Equitable also serves as depositor for
Separate Account 65, which funds
group pension and profit-sharing plans
under group Annuity Contracts issued
by AXA Equitable (Separate Account 65
is also an ‘‘AXA Equitable Separate
Account’’ and may be referred to herein
as a ‘‘Separate Account’’ and collectively
with MLOA Separate Account L and the
AXA Equitable Separate Accounts, the
‘‘Separate Accounts’’).
4. Each AXA Equitable Separate
Account is a segregated asset account of
AXA Equitable and, except for Separate
Account 65, is registered with the
Commission as a unit investment trust
under the 1940 Act. Separate Account
65 is excluded from registration under
the 1940 Act pursuant to Section
3(c)(11) of the 1940 Act. Units of
interest in the AXA Equitable Separate
Accounts, except Separate Account 65,
are registered under the Securities Act
of 1933, as amended (‘‘1933 Act’’). Units
of interest in Separate Account 65 are
exempt from registration under the 1933
Act, pursuant to Section 3(a)(2) of the
1933 Act.
5. MLOA serves as depositor for
MLOA Separate Account L, which
funds variable benefits available under
certain Life Insurance Contracts issued
by MLOA.
6. MLOA Separate Account L 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 MLOA Separate
Account L under the Life Insurance
Contracts are registered under the 1933
Act.
7. The Trust is organized as a
Delaware statutory trust and 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. The Trust
is a series investment company and
currently offers 21 separate series (each
a ‘‘Portfolio’’ and collectively, the
‘‘Portfolios’’).
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8. The Trust currently offers two
classes of shares, Class A and Class B
shares. The Class A and Class B shares
differ only in that Class B shares are
subject to a distribution plan adopted
and administered pursuant to Rule
12b–1 under the 1940 Act. The 12b–1
fees with respect to the Class B Shares
of each Portfolio of the Trust currently
are limited to an annual rate of 0.25%
of the average daily net assets
attributable to the Class B shares of the
Portfolio and may be increased to an
annual rate of 0.50% by the Board of
Trustees without shareholder approval.
9. AXA Equitable currently serves as
investment manager (‘‘Manager’’) of each
of the Portfolios. The Trust has received
an exemptive order from the
Commission 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.2 If a
new Adviser is retained for a Portfolio,
Contract owners would receive notice of
any such action.
10. Each Insurance Company, on its
own behalf and on behalf of its Separate
Accounts, proposes to exercise its
contractual right to substitute a different
underlying investment option for one of
the current underlying investment
options offered as a funding option
under the Contracts. In particular, the
Section 26 Applicants request an order
from the Commission pursuant to
Section 26(c) of the 1940 Act approving
the proposed substitution
(‘‘Substitution’’) of (i) Class A shares of
the Multimanager Aggressive Equity
Portfolio for Class A shares of the
Multimanager Large Cap Growth
Portfolio; and (ii) Class B shares of the
Multimanager Aggressive Equity
Portfolio for Class B shares of the
Multimanager Large Cap Growth
Portfolio.
11. The Section 26 Applicants
propose the Substitution as part of a
continued and overall business plan by
each of the Insurance Companies to
make its Contracts more attractive to
existing Contract owners, Participants or
prospective purchasers, as the case may
be, and more efficient to administer and
oversee.
2 See EQ Advisors Trust and EQ Financial
Consultants, Inc., Investment Company Act Release
Nos. 23093 (March 30, 1998) (notice) and 23128
(April 24, 1998) (order).
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12. Among the principal purposes of
the Substitutions, the Section 26
Applicants assert the proposed
Substitution is designed and intended to
simplify the prospectuses and related
materials with respect to the Contracts
and the investment options available
through the Separate Accounts. The
Section 26 Applicants believe that the
Replacement Portfolio and the Removed
Portfolio overlap and largely duplicate
one another by having substantially
similar investment objectives, policies
and risks, and that consolidating the
Removed Portfolio into the Replacement
Portfolio would simplify the Contract
prospectuses and related materials
provided to Contract owners, thereby
reducing the potential for Contract
owner confusion.
13. The Section 26 Applicants believe
that the deletion of an overlapping
investment option should not adversely
affect Contract owners and Participants
given that a similar investment option
will remain available under the
Contracts and the Contracts will 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 offering a
full range of investment objectives,
strategies and Advisers (currently
expected to range in number from 27 to
66 after the Substitution versus 28 to 67
before the Substitution).
14. The Removed Portfolio and the
Replacement Portfolio have identical
investment objectives and substantially
similar investment policies. Each
Portfolio seeks long-term growth of
capital as its investment objective.
Under normal circumstances, each
Portfolio invests at least 80% of its net
assets, plus borrowings for investment
purposes, in equity securities. Under
normal circumstances, the Removed
Portfolio invests at least 80% of its net
assets in the equity securities of U.S.
large capitalization companies, and the
Replacement Portfolio invests at least
80% of its net assets in equity securities,
primarily investing in the securities of
large capitalization growth companies
but also investing, to a lesser extent, in
the equity securities of small- and midcapitalization growth companies.
Although the Replacement Portfolio
may invest in a broader range of
companies to a greater extent than the
Removed Portfolio, both Portfolios seek
to achieve the same long-term
investment goal by emphasizing
investments in large capitalization U.S.
companies.
15. Each Portfolio invests primarily in
common stocks, but may invest in other
securities that its respective Advisers
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believe provide opportunities for capital
growth, such as preferred stocks,
warrants and securities convertible into
common stock. In addition, each
Portfolio may invest in derivatives: the
Removed Portfolio may invest up to
approximately 10% of its net assets in
futures and options, while the
Replacement Portfolio may invest up to
25% of its net assets in derivatives, such
as exchange-traded futures and options
contracts on indices or other similar
instruments.
16. To achieve its investment
objectives, each Portfolio combines
active and passive management
strategies. With respect to each
Portfolio, AXA Equitable allocates
approximately 50% of the Portfolio’s net
assets to a portion of the Portfolio that
seeks to achieve the total return
performance of an index (the Russell
1000 Growth Index in the case of the
Removed Portfolio and the Russell 3000
Growth Index for the Replacement
Portfolio) while maintaining as minimal
tracking error as possible (‘‘Index
Allocated Portion’’). The Russell 1000
Growth Index includes those Russell
1000 companies (the 1,000 largest
companies of the Russell 3000 Index)
with higher price-to-book ratios and
higher forecasted growth values, while
the Russell 3000 Growth Index includes
those Russell 3000 companies (the 3,000
largest U.S. securities) with higher
price-to-book ratios and higher
forecasted growth values. The Russell
3000 Growth Index generally has greater
exposure to small- and midcapitalization companies than the
Russell 1000 Growth Index, and thus
has greater exposure to the risks of
investing in such companies. However,
the average weighted market
capitalization of each Portfolio is almost
the same (approximately $76.3 billion
for the Russell 1000 Growth Index and
approximately $70.7 billion for the
Russell 3000 Growth Index, each as of
December 31, 2009).
17. With respect to each Portfolio,
AXA Equitable allocates the remaining
50% of the Portfolio’s net assets among
the other portions of the Portfolio that
are actively managed by multiple
Advisers (the ‘‘Active Allocated
Portions’’) utilizing similar growth style
strategies. The Active Allocated
Portions of each Portfolio may invest, to
a limited extent, in illiquid securities
and in securities of foreign companies,
including companies based in
developing countries. The Replacement
Portfolio’s Active Allocated Portions
may invest up to 25% of their total
assets in foreign securities. The Active
Allocated Portions of the Removed
Portfolio also may invest in foreign
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securities, to a limited extent, but have
no stated limit. Given the similarity
between the Portfolios’ holdings and
investment objectives and strategies, the
Trust intends to retain the Advisers to
the Active Allocated Portions of the
Removed Portfolio to manage the assets
of the Active Allocated Portions of the
Removed Portfolio that are transferred
to the Replacement Portfolio in
connection with the Substitution.
18. The Portfolios have substantially
similar risk profiles. Each Portfolio is
subject to the following principal risks:
derivatives risk, equity risk, index
strategy risk, large-cap company risk
and leverage risk. The primary
differences between the principal risks
of the Portfolios are that the
Replacement Portfolio also is subject to
foreign securities risk, which is not a
principal risk of the Removed Portfolio,
and the Removed Portfolio also is
subject to investment style risk, which
is not a principal risk of the
Replacement Portfolio. However, the
Section 26 Applicants do not believe
that these differences are significant.
While the Replacement Portfolio has the
flexibility to invest in foreign securities
to a greater extent than the Removed
Portfolio, each Portfolio’s investments
in foreign securities generally have been
limited to a relatively small percentage
of the Portfolio’s assets. For instance, as
of May 31, 2010, the Removed and
Replacement Portfolios had invested
approximately 1.8% and 3.8%,
respectively, in foreign securities. In
addition, while the Removed Portfolio is
subject to investment style risk because
its Advisers primarily utilize growth
investing styles, both of the Portfolios
seek long-term growth of capital, invest
in similar types of securities and
generally are classified by third party
mutual fund rating organizations as
aggressive equity portfolios (e.g.,
Morningstar currently classifies each
Portfolio as a large cap growth
portfolio).
19. As provided in the chart below,
the Section 26 Applicants anticipate
that the Replacement Portfolio’s total
annual operating expense ratio (taking
into account any expense waivers or
reimbursements) will be lower than that
of the Removed Portfolio immediately
after the Substitution. The chart below
compares the advisory fees and total
annual operating expenses of the Class
A and Class B shares of the Removed
Portfolio and the Replacement Portfolio
for the fiscal year ended December 31,
2009. Class A shares of each Portfolio
are not subject to plans adopted
pursuant to Rule 12b–1 under the 1940
Act.
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Removed portfolio
Multimanager large cap
growth portfolio
(Class A)
(percent)
39997
Replacement portfolio
Multimanager aggressive equity portfolio
(Class A)
(percent)
Management Fee 3 ..................................................................................................................
Rule 12b–1 Fee .......................................................................................................................
Other Expenses .......................................................................................................................
0.75
N/A
0.32
0.59
N/A
0.23
Total Expenses .................................................................................................................
1.07
0.82
Removed portfolio
Multimanager large cap
growth portfolio
(Class A)
(percent)
Replacement portfolio
Multimanager aggressive equity portfolio
(Class A)
(percent)
Management Fee 3 ..................................................................................................................
Rule 12b–1 Fee .......................................................................................................................
Other Expenses .......................................................................................................................
0.75
0.25
0.32
0.59
0.25
0.23
Total Expenses .................................................................................................................
1.32
1.07
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As of December 31, 2009, the assets of
the Replacement Portfolio were
approximately $1.34 billion, while the
assets of the Removed Portfolio were
approximately $270 million.
20. The Section 26 Applicants
currently expect that the proposed
Substitution will be carried out on or
about August 1, 2010, or as soon as
reasonably practicable 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 proposed Substitution, each
Insurance Company will notify 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 Portfolio for the
Removed Portfolio as described herein.
The supplements advised Contract
owners and Participants that, from the
date of the supplement until the date of
the proposed Substitution, Contract
owners and Participants are permitted
to make transfers of Contract value (or
annuity unit value) out of a Removed
Portfolio subaccount to one or more
other subaccounts without the transfers
(or exchanges) being treated as one of a
limited number of permitted transfers
(or exchanges) or a limited number of
transfers (or exchanges) permitted
without a transfer charge, as applicable.
3 The management fee schedule for the Removed
Portfolio on an annual basis is equal to 0.750% on
the first $750 million, 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 for the Replacement
Portfolio on an annual basis is equal to 0.600% on
the first $750 million, 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.
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The supplements also will inform
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 the proposed Substitution.4
The supplement also will advise
Contract owners and Participants how
to instruct the relevant Insurance
Company, if so desired in light of the
proposed Substitution, to reallocate
Contract value from a Removed
Portfolio subaccount to any other
subaccount available for investment
under their Contracts. In addition, the
supplements will advise Contract
owners and Participants that any
Contract value remaining in a Removed
Portfolio subaccount on the Substitution
Date will be transferred to a
Replacement Portfolio subaccount and
that the proposed Substitution will take
place at relative net asset value. The
supplements will also advise Contract
owners and Participants that for at least
30 days following the proposed
Substitution, the Insurance Companies
will permit Contract owners and
Participants to make transfers of
Contract value (or annuity unit value)
out of a 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.
4 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.
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21. Each Insurance Company also has
sent or will send Contract owners and
Participants prospectuses for the
Replacement Portfolio prior to the
Substitution. The Section 26 Applicants
have sent or 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
supplement containing disclosure
regarding the proposed Substitution, as
well as a prospectus and supplement for
the Replacement Portfolio. The Contract
prospectus and supplement, and the
prospectus and supplement for the
Replacement Portfolio will be delivered
to purchasers of new Contracts in
accordance with all applicable legal
requirements.
22. In addition to the prospectus
supplements distributed to Contract
owners and Participants, within five
business days after the Substitution
Date, Contract owners and Participants
will be sent a written notice of the
Substitution informing them that the
Substitution was carried out and that
they may transfer all Contract value or
cash value under a Contract in a
subaccount invested in the Replacement
Portfolio 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
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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 the Substitution Date. The
Insurance Companies will also send
each Contract owner and Participant a
current prospectus for the Replacement
Portfolio if they have not previously
received a current version.
23. Each Insurance Company also is
seeking approval of the proposed
Substitution from any state insurance
regulators whose approval may be
necessary or appropriate. The proposed
Substitution will take place at relative
net asset value determined on the
Substitution Date 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. The proposed Substitution
will be effected by redeeming shares of
the Removed Portfolio in cash and/or
in-kind 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 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. (pub. avail. Dec.
28, 1999).
24. Moreover, the Section 26
Applicants state that Contract owners
and Participants will not incur any fees
or charges as a result of the proposed
Substitution, 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
Substitution, including any brokerage,
legal, accounting, and other fees and
expenses, will be paid by the Insurance
Companies. In addition, the proposed
Substitution will not impose any tax
liability on Contract owners or
Participants. The proposed Substitution
will not cause the Contract fees and
charges currently being paid by Contract
owners and Participants to be greater
after the Substitution than before the
Substitution; all Contract-level fees will
remain the same after the Substitution.
In addition, because the Substitution
will not be treated as a transfer for
purposes of assessing transfer charges or
computing the number of permissible
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transfers under the Contracts, no fees
will be charged on the transfers made at
the time of the Substitution.
25. The Section 26 Applicants
represent that with respect to those
Contract owners or Participants on the
date of the Substitution, the Insurance
Companies will reimburse the
subaccounts investing in the
Replacement Portfolio for a period of
two years after the date of the
Substitution, on the last business day of
each fiscal period (not to exceed a fiscal
quarter), such that the sum of the
Replacement Portfolio’s total operating
expense ratio (taking into account any
expense waivers and reimbursements)
and subaccount expense ratio (assetbased 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 total
operating expense ratio (taking into
account any expense waivers and
reimbursements) and subaccount
expense ratio for fiscal year 2009.
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 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
underlying investment option for one of
the current underlying investment
options 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.
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4. The Section 26 Applicants argue
that the Removed Portfolio and the
Replacement Portfolio have identical
investment objectives and substantially
similar investment policies and risks. In
addition, the Section 26 Applicants
clarify that the 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. Furthermore, the Section 26
Applicants claim that the Substitution
will permit the Insurance Companies to
present information to their Contract
owners and Participants in a simpler
and more concise manner. It is
anticipated that after the Substitution,
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 point out that as a result of
the proposed Substitution, Contract
owners and Participants with
subaccount balances currently invested
in the Removed Portfolio will have a
lower total operating expense ratio after
the Substitution as Contract owners or
Participants with subaccount balances
invested in the Replacement Portfolio.
In this regard, each Insurance Company
has agreed to impose certain expense
limits, as discussed earlier in the
application, to ensure that Contract
owners and Participants do not incur
higher expenses as a result of the
Substitution for a period of two years
after the Substitution.
7. In addition to the foregoing, the
Section 26 Applicants generally submit
that the 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 Substitution is not of the type
that Section 26(c) was designed to
prevent. Unlike traditional unit
investment trusts where a depositor
could only substitute investment
securities in a manner that permanently
affected all the investors in the trust, 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.
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Additionally, the Section 26 Applicants
assert that the proposed Substitution
will not reduce in any manner the
nature or quality of the available
investment options.
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 those necessary to
implement 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
Substitution and ending no earlier than
thirty (30) days after the Substitution.
The proposed Substitution, 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 Substitution is
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 Substitution,
nor will the annuity, life or tax benefits
afforded under the Contracts held by
any of the affected Contract owners or
Participants.
10. 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 Substitution.
11. 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.
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12. Section 17(b) of the 1940 Act
provides that the Commission may,
upon application, issue an order
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.
13. The Removed Portfolio and the
Replacement Portfolio may be deemed
to be affiliated persons of one another,
or affiliated persons of an affiliated
person. Shares held by a separate
account of an insurance company are
legally owned by the insurance
company. Thus, the Insurance
Companies and their affiliates
collectively own substantially all of the
shares of the Trust. Accordingly, the
Trust and its respective Portfolios may
be deemed to be under the control of the
Insurance Companies notwithstanding
the fact that the Contract owners and
Participants may be considered the
beneficial owners of those shares held
in the Separate Accounts. If the Trust is
under the common control of the
Insurance Companies, then each
Insurance Company is an affiliated
person or an affiliated person of an
affiliated person of the Trust and its
respective Portfolios. If the Trust and its
respective Portfolios are under the
control of the Insurance Companies,
then the Trust and its respective
affiliates are affiliated persons of the
Insurance Companies.
14. Regardless of whether the
Insurance Companies can be considered
to control the Trust and its Portfolios,
the Insurance Companies may be
deemed to be affiliated persons of the
Trust and its Portfolios, including the
Removed Portfolio and the Replacement
Portfolio, because the Insurance
Companies (which are under common
control) and their affiliates own of
record more than 5% of the outstanding
shares. Likewise, each of the Trust’s
Portfolios may be deemed to be an
affiliated person of each Insurance
Company. As a result of these
relationships, the Removed Portfolio
may be deemed to be an affiliated
person of an affiliated person (the
Insurance Companies or the Separate
Accounts) of the Replacement Portfolio,
and vice versa.
15. The proposed In-Kind
Transactions could be seen as the
indirect purchase of shares of the
Replacement Portfolio with portfolio
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Fmt 4703
Sfmt 4703
39999
securities of the Removed Portfolio and
the indirect sale of portfolio securities of
the Removed Portfolio for shares of the
Replacement Portfolio. Pursuant to this
analysis, the proposed In-Kind
Transactions also could be categorized
as a purchase of shares of the
Replacement Portfolio by the Removed
Portfolio, acting as principal, and a sale
of portfolio securities by the Removed
Portfolio, acting as principal, to the
Replacement Portfolio. In addition, the
proposed In-Kind Transactions could be
viewed as a purchase of securities from
the Removed Portfolio and a sale of
securities to the Replacement Portfolio
by each Insurance Company (or the
Separate Accounts), acting as principal.
If categorized in this manner, the
proposed In-Kind Transactions may be
deemed to contravene Section 17(a) due
to the affiliated status of these
participants.
16. The Section 17 Applicants assert
that the In-Kind Transactions will be
effected at the respective net asset
values of the Removed Portfolio and the
Replacement Portfolio, as determined in
accordance with the procedures
disclosed in the registration statement
for the Trust 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. Immediately after the
proposed In-Kind Transactions, the
value of a Separate Account’s
investment in the Replacement Portfolio
will equal the value of its investments
in the Removed Portfolio (together with
the value of any pre-existing
investments in the Replacement
Portfolio) immediately before the InKind Transactions.
17. Rule 17a–7 under the 1940 Act
exempts from the prohibitions of
Section 17(a), subject to certain
enumerated conditions, a purchase or
sale transaction between registered
investment companies or separate series
of registered investment companies,
which are affiliated persons, or affiliated
persons of affiliated persons, of each
other, between separate series of a
registered investment company, or
between a registered investment
company or a separate series of a
registered investment company and a
person which is an affiliated person of
such registered investment company (or
affiliated person of such person) solely
by reason of having a common
investment adviser or investment
advisers which are affiliated persons of
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each other, common directors, and/or
common officers.
18. However, one of the conditions
enumerated in Rule 17a–7 requires that
the transaction be a purchase or sale for
no consideration other than cash
payment against prompt delivery of a
security for which market quotations are
readily available. If the proposed InKind Transactions are viewed as
purchases and sales of securities, the
consideration in the proposed
redemptions of shares of the Removed
Portfolio and the proposed purchases of
shares of the Replacement Portfolio
would not be cash, but rather, the
portfolio securities received from the
Removed Portfolio.
19. The Section 17 Applicants will
ensure that the Trust will carry out the
proposed In-Kind Transactions in
conformity with the conditions of Rule
17a–7, except that the consideration
paid for the securities being purchased
or sold will not be cash.
20. For the reasons stated above, 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. 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
jlentini on DSKJ8SOYB1PROD with NOTICES
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. 2010–16987 Filed 7–12–10; 8:45 am]
BILLING CODE 8010–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62441; File No. SR–FINRA–
2010–027]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving
Proposed Rule Change Relating to the
Restated Certificate of Incorporation of
Financial Industry Regulatory
Authority, Inc.
July 2, 2010.
On May 21, 2010, Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to amend the Restated Certificate
of Incorporation of FINRA (‘‘Certificate
of Incorporation’’) to specify its quorum
requirements. The proposed rule change
was published for comment in the
Federal Register on June 1, 2010.3 The
Commission received no comment
letters on the proposed rule change.
This order approves the proposed rule
change.
The proposed rule change would
amend FINRA’s Certificate of
Incorporation to specify the quorum
required for a meeting of FINRA
members and the quorum required to
take action on a matter where a separate
vote by a class or group is required.4
FINRA has represented that it has
proposed this rule change in order to
preserve FINRA’s current quorum
requirements in anticipation of
amendments to the General Corporation
Law of the State of Delaware (the
‘‘General Corporation Law’’) that will
take effect on August 1, 2010.
Section 215(c) of the General
Corporation Law, as currently in effect,
provides that the certificate of
incorporation or bylaws of a nonstock
corporation may specify the number of
members having voting power who shall
be present or represented by proxy at
any meeting in order to constitute a
quorum for the transaction of any
business and, that in the absence of
such specification, one-third of the
members of such corporation shall
constitute a quorum at a meeting of such
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 62160
(May 24, 2010), 75 FR 30457.
4 Pursuant to FINRA’s Certificate of Incorporation
and By-Laws, FINRA members vote as three distinct
classes, based upon firm size, for the election of
members to the Board of Governors, i.e., Small Firm
Governors, Mid-Size Firm Governor, and Large
Firm Governors.
2 17
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Fmt 4703
Sfmt 4703
members.5 FINRA is a nonstock
corporation and neither FINRA’s
Certificate of Incorporation nor its ByLaws specify the quorum required at a
meeting of its members. Accordingly,
pursuant to Section 215(c) of the
General Corporation Law, attendance in
person or by proxy of one-third of
FINRA’s members currently constitutes
a quorum at a meeting of such
members.6
On August 1, 2010, the General
Corporation Law will be amended to,
among other things, add new Section
215(c)(4), which section will add a new
default quorum requirement for
instances where a separate vote by a
class or group of members is required.
Specifically, effective August 1, 2010,
unless the certificate of incorporation or
bylaws of a nonstock corporation
provides otherwise, where a separate
vote by a class or group of members is
required, a majority of the members of
such class or group shall constitute a
quorum entitled to take action with
respect to the vote on such matter.7
In anticipation of the foregoing
amendment to the General Corporation
Law, FINRA has proposed to amend its
Certificate of Incorporation to set forth
quorum requirements for its meetings of
members, including in instances where
a separate vote by a class or group is
required. Specifically, FINRA has
proposed that, at all meetings of its
members, the presence in person or by
proxy of one-third of the members
entitled to vote at the meeting shall
constitute a quorum; provided,
however, where a separate vote by a
class or group of members is required,
the presence in person or by proxy of
one-third of the members of such class
or group shall constitute a quorum with
respect to the vote on that matter. By
incorporating these quorum
requirements into the Certification of
Incorporation, FINRA has represented
that the proposed rule change would
maintain FINRA’s current one-third
quorum requirement where a separate
vote of classes or groups of members is
required instead of resorting to the
default requirement in the General
Corporation Law.
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities association.8 In particular, the
5 Del.
Code Ann. tit. 8 § 215(c) and (c)(1) (2010).
id.
7 Del. H.B. 341, 145th Gen. Assem. § 19 (2010).
8 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
6 See
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]]>Agencies
[Federal Register Volume 75, Number 133 (Tuesday, July 13, 2010)]
[Notices]
[Pages 39994-40000]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-16987]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-29338; File No. 812-13686]
AXA Equitable Life Insurance Company, et al.; Notice of
Application
July 7, 2010.
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'' or ``Act''), approving
certain substitutions of securities and for an order of exemption
pursuant to Section 17(b) of the Act.
-----------------------------------------------------------------------
APPLICANTS: AXA Equitable Life Insurance Company (``AXA Equitable''),
Separate Account 45 of AXA Equitable (``Separate Account 45''),
Separate Account 49 of AXA Equitable (``Separate Account 49''),
Separate Account A of AXA Equitable (``Separate Account A''), Separate
Account FP of AXA Equitable (``Separate Account FP'') (together, ``AXA
Equitable Separate Accounts''), MONY Life Insurance Company of America
(``MLOA'') and MONY America Variable Account L (``MLOA Separate Account
L'') (collectively, the ``Section 26 Applicants''), Separate Account 65
of AXA Equitable (``Separate Account 65''), and the AXA Premier VIP
Trust (the ``Trust'') (Separate Account 65 and the Trust, together with
the Section 26 Applicants, the ``Section 17 Applicants'' or
``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 securities of the Multimanager Aggressive Equity
Portfolio (the ``Replacement Portfolio'') for securities of the
Multimanager Large Cap Growth Portfolio (the ``Removed Portfolio'')
(the ``Substitution''). Each of these portfolios currently serves as an
underlying investment option for certain variable annuity contracts
issued by AXA Equitable (``Annuity Contracts'') and/or variable life
insurance policies issued by AXA Equitable and MLOA (``Life Insurance
Contracts'') (collectively, the ``Contracts''), as more fully described
below.\1\ The Section 17 Applicants also request an order pursuant to
Section 17(b) of the 1940 Act exempting them
[[Page 39995]]
from Section 17(a) of the 1940 Act to the extent necessary to permit
in-kind redemptions of securities issued by the Removed Portfolio and
purchases of securities issued by the Replacement Portfolio (the ``In-
Kind Transactions'') in connection with the Substitution.
---------------------------------------------------------------------------
\1\ AXA Equitable and MLOA are sometimes referred to herein
collectively as the ``Insurance Companies'' and individually as an
``Insurance Company.'' MLOA Separate Account L and the 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 August 27, 2009, and amended
on December 18, 2009, March 29, 2010, and June 10, 2010. Applicants
have agreed to file an amendment during the notice period, the
---------------------------------------------------------------------------
substance of which is reflected 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 July 28, 2010, 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,
NE., Washington, DC 20549-1090. Applicants, c/o AXA Equitable Life
Insurance Company, 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 Harry
Eisenstein, 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 via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. AXA Equitable is a New York stock life insurance company
authorized to sell life insurance and annuities in 50 states, the
District of Columbia, Puerto Rico and the Virgin Islands. 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,
Inc. (``AXA Financial''). AXA Financial is an indirect, wholly owned
subsidiary of AXA, which is a publicly traded French holding company.
2. MLOA is an Arizona stock life insurance company 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 is the parent company of MLOA.
3. AXA Equitable serves as depositor for Separate Account 45,
Separate Account 49 and Separate Account A, which fund certain
Contracts, and for Separate Account FP, which funds certain Life
Insurance Contracts. AXA Equitable also serves as depositor for
Separate Account 65, which funds group pension and profit-sharing plans
under group Annuity Contracts issued by AXA Equitable (Separate Account
65 is also an ``AXA Equitable Separate Account'' and may be referred to
herein as a ``Separate Account'' and collectively with MLOA Separate
Account L and the AXA Equitable Separate Accounts, the ``Separate
Accounts'').
4. Each AXA Equitable Separate Account is a segregated asset
account of AXA Equitable and, except for Separate Account 65, is
registered with the Commission as a unit investment trust under the
1940 Act. Separate Account 65 is excluded from registration under the
1940 Act pursuant to Section 3(c)(11) of the 1940 Act. Units of
interest in the AXA Equitable Separate Accounts, except Separate
Account 65, are registered under the Securities Act of 1933, as amended
(``1933 Act''). Units of interest in Separate Account 65 are exempt
from registration under the 1933 Act, pursuant to Section 3(a)(2) of
the 1933 Act.
5. MLOA serves as depositor for MLOA Separate Account L, which
funds variable benefits available under certain Life Insurance
Contracts issued by MLOA.
6. MLOA Separate Account L 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 MLOA Separate Account L under the
Life Insurance Contracts are registered under the 1933 Act.
7. The Trust is organized as a Delaware statutory trust and 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. The
Trust is a series investment company and currently offers 21 separate
series (each a ``Portfolio'' and collectively, the ``Portfolios'').
8. The Trust currently offers two classes of shares, Class A and
Class B shares. The Class A and Class B shares differ only in that
Class B shares are subject to a distribution plan adopted and
administered pursuant to Rule 12b-1 under the 1940 Act. The 12b-1 fees
with respect to the Class B Shares of each Portfolio of the Trust
currently are limited to an annual rate of 0.25% of the average daily
net assets attributable to the Class B shares of the Portfolio and may
be increased to an annual rate of 0.50% by the Board of Trustees
without shareholder approval.
9. AXA Equitable currently serves as investment manager
(``Manager'') of each of the Portfolios. The Trust has received an
exemptive order from the Commission 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.\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.,
Investment Company Act Release Nos. 23093 (March 30, 1998) (notice)
and 23128 (April 24, 1998) (order).
---------------------------------------------------------------------------
10. Each Insurance Company, on its own behalf and on behalf of its
Separate Accounts, proposes to exercise its contractual right to
substitute a different underlying investment option for one of the
current underlying investment options offered as a funding option under
the Contracts. In particular, the Section 26 Applicants request an
order from the Commission pursuant to Section 26(c) of the 1940 Act
approving the proposed substitution (``Substitution'') of (i) Class A
shares of the Multimanager Aggressive Equity Portfolio for Class A
shares of the Multimanager Large Cap Growth Portfolio; and (ii) Class B
shares of the Multimanager Aggressive Equity Portfolio for Class B
shares of the Multimanager Large Cap Growth Portfolio.
11. The Section 26 Applicants propose the Substitution as part of a
continued and overall business plan by each of the Insurance Companies
to make its Contracts more attractive to existing Contract owners,
Participants or prospective purchasers, as the case may be, and more
efficient to administer and oversee.
[[Page 39996]]
12. Among the principal purposes of the Substitutions, the Section
26 Applicants assert the proposed Substitution is designed and intended
to simplify the prospectuses and related materials with respect to the
Contracts and the investment options available through the Separate
Accounts. The Section 26 Applicants believe that the Replacement
Portfolio and the Removed Portfolio overlap and largely duplicate one
another by having substantially similar investment objectives, policies
and risks, and that consolidating the Removed Portfolio into the
Replacement Portfolio would simplify the Contract prospectuses and
related materials provided to Contract owners, thereby reducing the
potential for Contract owner confusion.
13. The Section 26 Applicants believe that the deletion of an
overlapping investment option should not adversely affect Contract
owners and Participants given that a similar investment option will
remain available under the Contracts and the Contracts will 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 offering a full range of
investment objectives, strategies and Advisers (currently expected to
range in number from 27 to 66 after the Substitution versus 28 to 67
before the Substitution).
14. The Removed Portfolio and the Replacement Portfolio have
identical investment objectives and substantially similar investment
policies. Each Portfolio seeks long-term growth of capital as its
investment objective. Under normal circumstances, each Portfolio
invests at least 80% of its net assets, plus borrowings for investment
purposes, in equity securities. Under normal circumstances, the Removed
Portfolio invests at least 80% of its net assets in the equity
securities of U.S. large capitalization companies, and the Replacement
Portfolio invests at least 80% of its net assets in equity securities,
primarily investing in the securities of large capitalization growth
companies but also investing, to a lesser extent, in the equity
securities of small- and mid-capitalization growth companies. Although
the Replacement Portfolio may invest in a broader range of companies to
a greater extent than the Removed Portfolio, both Portfolios seek to
achieve the same long-term investment goal by emphasizing investments
in large capitalization U.S. companies.
15. Each Portfolio invests primarily in common stocks, but may
invest in other securities that its respective Advisers believe provide
opportunities for capital growth, such as preferred stocks, warrants
and securities convertible into common stock. In addition, each
Portfolio may invest in derivatives: the Removed Portfolio may invest
up to approximately 10% of its net assets in futures and options, while
the Replacement Portfolio may invest up to 25% of its net assets in
derivatives, such as exchange-traded futures and options contracts on
indices or other similar instruments.
16. To achieve its investment objectives, each Portfolio combines
active and passive management strategies. With respect to each
Portfolio, AXA Equitable allocates approximately 50% of the Portfolio's
net assets to a portion of the Portfolio that seeks to achieve the
total return performance of an index (the Russell 1000 Growth Index in
the case of the Removed Portfolio and the Russell 3000 Growth Index for
the Replacement Portfolio) while maintaining as minimal tracking error
as possible (``Index Allocated Portion''). The Russell 1000 Growth
Index includes those Russell 1000 companies (the 1,000 largest
companies of the Russell 3000 Index) with higher price-to-book ratios
and higher forecasted growth values, while the Russell 3000 Growth
Index includes those Russell 3000 companies (the 3,000 largest U.S.
securities) with higher price-to-book ratios and higher forecasted
growth values. The Russell 3000 Growth Index generally has greater
exposure to small- and mid-capitalization companies than the Russell
1000 Growth Index, and thus has greater exposure to the risks of
investing in such companies. However, the average weighted market
capitalization of each Portfolio is almost the same (approximately
$76.3 billion for the Russell 1000 Growth Index and approximately $70.7
billion for the Russell 3000 Growth Index, each as of December 31,
2009).
17. With respect to each Portfolio, AXA Equitable allocates the
remaining 50% of the Portfolio's net assets among the other portions of
the Portfolio that are actively managed by multiple Advisers (the
``Active Allocated Portions'') utilizing similar growth style
strategies. The Active Allocated Portions of each Portfolio may invest,
to a limited extent, in illiquid securities and in securities of
foreign companies, including companies based in developing countries.
The Replacement Portfolio's Active Allocated Portions may invest up to
25% of their total assets in foreign securities. The Active Allocated
Portions of the Removed Portfolio also may invest in foreign
securities, to a limited extent, but have no stated limit. Given the
similarity between the Portfolios' holdings and investment objectives
and strategies, the Trust intends to retain the Advisers to the Active
Allocated Portions of the Removed Portfolio to manage the assets of the
Active Allocated Portions of the Removed Portfolio that are transferred
to the Replacement Portfolio in connection with the Substitution.
18. The Portfolios have substantially similar risk profiles. Each
Portfolio is subject to the following principal risks: derivatives
risk, equity risk, index strategy risk, large-cap company risk and
leverage risk. The primary differences between the principal risks of
the Portfolios are that the Replacement Portfolio also is subject to
foreign securities risk, which is not a principal risk of the Removed
Portfolio, and the Removed Portfolio also is subject to investment
style risk, which is not a principal risk of the Replacement Portfolio.
However, the Section 26 Applicants do not believe that these
differences are significant. While the Replacement Portfolio has the
flexibility to invest in foreign securities to a greater extent than
the Removed Portfolio, each Portfolio's investments in foreign
securities generally have been limited to a relatively small percentage
of the Portfolio's assets. For instance, as of May 31, 2010, the
Removed and Replacement Portfolios had invested approximately 1.8% and
3.8%, respectively, in foreign securities. In addition, while the
Removed Portfolio is subject to investment style risk because its
Advisers primarily utilize growth investing styles, both of the
Portfolios seek long-term growth of capital, invest in similar types of
securities and generally are classified by third party mutual fund
rating organizations as aggressive equity portfolios (e.g., Morningstar
currently classifies each Portfolio as a large cap growth portfolio).
19. As provided in the chart below, the Section 26 Applicants
anticipate that the Replacement Portfolio's total annual operating
expense ratio (taking into account any expense waivers or
reimbursements) will be lower than that of the Removed Portfolio
immediately after the Substitution. The chart below compares the
advisory fees and total annual operating expenses of the Class A and
Class B shares of the Removed Portfolio and the Replacement Portfolio
for the fiscal year ended December 31, 2009. Class A shares of each
Portfolio are not subject to plans adopted pursuant to Rule 12b-1 under
the 1940 Act.
[[Page 39997]]
----------------------------------------------------------------------------------------------------------------
Removed portfolio Replacement portfolio
Multimanager large cap Multimanager aggressive
growth portfolio equity portfolio
(Class A) (percent) (Class A) (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee \3\............................................ 0.75 0.59
Rule 12b-1 Fee................................................ N/A N/A
Other Expenses................................................ 0.32 0.23
-------------------------------------------------
Total Expenses............................................ 1.07 0.82
----------------------------------------------------------------------------------------------------------------
Removed portfolio Replacement portfolio
Multimanager large cap Multimanager aggressive
growth portfolio equity portfolio
(Class A) (percent) (Class A) (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee \3\............................................ 0.75 0.59
Rule 12b-1 Fee................................................ 0.25 0.25
Other Expenses................................................ 0.32 0.23
-------------------------------------------------
Total Expenses............................................ 1.32 1.07
----------------------------------------------------------------------------------------------------------------
As of December 31, 2009, the assets of the Replacement Portfolio
were approximately $1.34 billion, while the assets of the Removed
Portfolio were approximately $270 million.
---------------------------------------------------------------------------
\3\ The management fee schedule for the Removed Portfolio on an
annual basis is equal to 0.750% on the first $750 million, 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
for the Replacement Portfolio on an annual basis is equal to 0.600%
on the first $750 million, 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.
---------------------------------------------------------------------------
20. The Section 26 Applicants currently expect that the proposed
Substitution will be carried out on or about August 1, 2010, or as soon
as reasonably practicable 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 proposed Substitution, each Insurance
Company will notify 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
Portfolio for the Removed Portfolio as described herein. The
supplements advised Contract owners and Participants that, from the
date of the supplement until the date of the proposed Substitution,
Contract owners and Participants are permitted to make transfers of
Contract value (or annuity unit value) out of a Removed Portfolio
subaccount to one or more other subaccounts without the transfers (or
exchanges) being treated as one of a limited number of permitted
transfers (or exchanges) or a limited number of transfers (or
exchanges) permitted without a transfer charge, as applicable. The
supplements also will inform 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 the proposed Substitution.\4\ The supplement also will
advise Contract owners and Participants how to instruct the relevant
Insurance Company, if so desired in light of the proposed Substitution,
to reallocate Contract value from a Removed Portfolio subaccount to any
other subaccount available for investment under their Contracts. In
addition, the supplements will advise Contract owners and Participants
that any Contract value remaining in a Removed Portfolio subaccount on
the Substitution Date will be transferred to a Replacement Portfolio
subaccount and that the proposed Substitution will take place at
relative net asset value. The supplements will also advise Contract
owners and Participants that for at least 30 days following the
proposed Substitution, the Insurance Companies will permit Contract
owners and Participants to make transfers of Contract value (or annuity
unit value) out of a 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.
---------------------------------------------------------------------------
\4\ 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.
---------------------------------------------------------------------------
21. Each Insurance Company also has sent or will send Contract
owners and Participants prospectuses for the Replacement Portfolio
prior to the Substitution. The Section 26 Applicants have sent or 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 supplement
containing disclosure regarding the proposed Substitution, as well as a
prospectus and supplement for the Replacement Portfolio. The Contract
prospectus and supplement, and the prospectus and supplement for the
Replacement Portfolio will be delivered to purchasers of new Contracts
in accordance with all applicable legal requirements.
22. In addition to the prospectus supplements distributed to
Contract owners and Participants, within five business days after the
Substitution Date, Contract owners and Participants will be sent a
written notice of the Substitution informing them that the Substitution
was carried out and that they may transfer all Contract value or cash
value under a Contract in a subaccount invested in the Replacement
Portfolio 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
[[Page 39998]]
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 the Substitution Date. The
Insurance Companies will also send each Contract owner and Participant
a current prospectus for the Replacement Portfolio if they have not
previously received a current version.
23. Each Insurance Company also is seeking approval of the proposed
Substitution from any state insurance regulators whose approval may be
necessary or appropriate. The proposed Substitution will take place at
relative net asset value determined on the Substitution Date 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. The proposed Substitution will be
effected by redeeming shares of the Removed Portfolio in cash and/or
in-kind 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 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. (pub. avail. Dec. 28, 1999).
24. Moreover, the Section 26 Applicants state that Contract owners
and Participants will not incur any fees or charges as a result of the
proposed Substitution, 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 Substitution, including any brokerage, legal, accounting, and
other fees and expenses, will be paid by the Insurance Companies. In
addition, the proposed Substitution will not impose any tax liability
on Contract owners or Participants. The proposed Substitution will not
cause the Contract fees and charges currently being paid by Contract
owners and Participants to be greater after the Substitution than
before the Substitution; all Contract-level fees will remain the same
after the Substitution. In addition, because the Substitution will not
be treated as a transfer for purposes of assessing transfer charges or
computing the number of permissible transfers under the Contracts, no
fees will be charged on the transfers made at the time of the
Substitution.
25. The Section 26 Applicants represent that with respect to those
Contract owners or Participants on the date of the Substitution, the
Insurance Companies will reimburse the subaccounts investing in the
Replacement Portfolio for a period of two years after the date of the
Substitution, on the last business day of each fiscal period (not to
exceed a fiscal quarter), such that the sum of the Replacement
Portfolio's total operating expense ratio (taking into account any
expense waivers and 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 total operating expense ratio (taking into account
any expense waivers and reimbursements) and subaccount expense ratio
for fiscal year 2009.
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 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 underlying
investment option for one of the current underlying investment options
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 argue that the Removed Portfolio and
the Replacement Portfolio have identical investment objectives and
substantially similar investment policies and risks. In addition, the
Section 26 Applicants clarify that the 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. Furthermore, the Section 26 Applicants claim that the
Substitution will permit the Insurance Companies to present information
to their Contract owners and Participants in a simpler and more concise
manner. It is anticipated that after the Substitution, 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 point out that as a
result of the proposed Substitution, Contract owners and Participants
with subaccount balances currently invested in the Removed Portfolio
will have a lower total operating expense ratio after the Substitution
as Contract owners or Participants with subaccount balances invested in
the Replacement Portfolio. In this regard, each Insurance Company has
agreed to impose certain expense limits, as discussed earlier in the
application, to ensure that Contract owners and Participants do not
incur higher expenses as a result of the Substitution for a period of
two years after the Substitution.
7. In addition to the foregoing, the Section 26 Applicants
generally submit that the 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 Substitution is not of the type that
Section 26(c) was designed to prevent. Unlike traditional unit
investment trusts where a depositor could only substitute investment
securities in a manner that permanently affected all the investors in
the trust, 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.
[[Page 39999]]
Additionally, the Section 26 Applicants assert that the proposed
Substitution will not reduce in any manner the nature or quality of the
available investment options.
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
those necessary to implement 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
Substitution and ending no earlier than thirty (30) days after the
Substitution. The proposed Substitution, 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
Substitution is 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 Substitution, nor will the annuity, life or
tax benefits afforded under the Contracts held by any of the affected
Contract owners or Participants.
10. 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
Substitution.
11. 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.
12. Section 17(b) of the 1940 Act provides that the Commission may,
upon application, issue an order 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.
13. The Removed Portfolio and the Replacement Portfolio may be
deemed to be affiliated persons of one another, or affiliated persons
of an affiliated person. Shares held by a separate account of an
insurance company are legally owned by the insurance company. Thus, the
Insurance Companies and their affiliates collectively own substantially
all of the shares of the Trust. Accordingly, the Trust and its
respective Portfolios may be deemed to be under the control of the
Insurance Companies notwithstanding the fact that the Contract owners
and Participants may be considered the beneficial owners of those
shares held in the Separate Accounts. If the Trust is under the common
control of the Insurance Companies, then each Insurance Company is an
affiliated person or an affiliated person of an affiliated person of
the Trust and its respective Portfolios. If the Trust and its
respective Portfolios are under the control of the Insurance Companies,
then the Trust and its respective affiliates are affiliated persons of
the Insurance Companies.
14. Regardless of whether the Insurance Companies can be considered
to control the Trust and its Portfolios, the Insurance Companies may be
deemed to be affiliated persons of the Trust and its Portfolios,
including the Removed Portfolio and the Replacement Portfolio, because
the Insurance Companies (which are under common control) and their
affiliates own of record more than 5% of the outstanding shares.
Likewise, each of the Trust's Portfolios may be deemed to be an
affiliated person of each Insurance Company. As a result of these
relationships, the Removed Portfolio may be deemed to be an affiliated
person of an affiliated person (the Insurance Companies or the Separate
Accounts) of the Replacement Portfolio, and vice versa.
15. The proposed In-Kind Transactions could be seen as the indirect
purchase of shares of the Replacement Portfolio with portfolio
securities of the Removed Portfolio and the indirect sale of portfolio
securities of the Removed Portfolio for shares of the Replacement
Portfolio. Pursuant to this analysis, the proposed In-Kind Transactions
also could be categorized as a purchase of shares of the Replacement
Portfolio by the Removed Portfolio, acting as principal, and a sale of
portfolio securities by the Removed Portfolio, acting as principal, to
the Replacement Portfolio. In addition, the proposed In-Kind
Transactions could be viewed as a purchase of securities from the
Removed Portfolio and a sale of securities to the Replacement Portfolio
by each Insurance Company (or the Separate Accounts), acting as
principal. If categorized in this manner, the proposed In-Kind
Transactions may be deemed to contravene Section 17(a) due to the
affiliated status of these participants.
16. The Section 17 Applicants assert that the In-Kind Transactions
will be effected at the respective net asset values of the Removed
Portfolio and the Replacement Portfolio, as determined in accordance
with the procedures disclosed in the registration statement for the
Trust 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. Immediately
after the proposed In-Kind Transactions, the value of a Separate
Account's investment in the Replacement Portfolio will equal the value
of its investments in the Removed Portfolio (together with the value of
any pre-existing investments in the Replacement Portfolio) immediately
before the In-Kind Transactions.
17. Rule 17a-7 under the 1940 Act exempts from the prohibitions of
Section 17(a), subject to certain enumerated conditions, a purchase or
sale transaction between registered investment companies or separate
series of registered investment companies, which are affiliated
persons, or affiliated persons of affiliated persons, of each other,
between separate series of a registered investment company, or between
a registered investment company or a separate series of a registered
investment company and a person which is an affiliated person of such
registered investment company (or affiliated person of such person)
solely by reason of having a common investment adviser or investment
advisers which are affiliated persons of
[[Page 40000]]
each other, common directors, and/or common officers.
18. However, one of the conditions enumerated in Rule 17a-7
requires that the transaction be a purchase or sale for no
consideration other than cash payment against prompt delivery of a
security for which market quotations are readily available. If the
proposed In-Kind Transactions are viewed as purchases and sales of
securities, the consideration in the proposed redemptions of shares of
the Removed Portfolio and the proposed purchases of shares of the
Replacement Portfolio would not be cash, but rather, the portfolio
securities received from the Removed Portfolio.
19. The Section 17 Applicants will ensure that the Trust will carry
out the proposed In-Kind Transactions in conformity with the conditions
of Rule 17a-7, except that the consideration paid for the securities
being purchased or sold will not be cash.
20. For the reasons stated above, 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. 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. 2010-16987 Filed 7-12-10; 8:45 am]
BILLING CODE 8010-01-P
