

[Federal Register: October 30, 2006 (Volume 71, Number 209)]
[Notices]               
[Page 63360-63366]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30oc06-135]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-27526; File No. 812-13316]

 
AXA Equitable Life Insurance Company, et al.; Notice of 
Application

October 24, 2006.
AGENCY: Securities and Exchange Commission (SEC).

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.

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    Applicants: AXA Equitable Life Insurance Company (``AXA 
Equitable''), Separate Account A of AXA Equitable (``Separate Account 
A''), Separate Account FP of AXA Equitable (``Separate Account FP'') 
and Separate Account No. 49 of AXA Equitable (``Separate Account 49'') 
(collectively, the ``Section 26 Applicants''); and AXA Equitable, 
Separate Account A, Separate Account FP, Separate Account 49, Separate 
Account No. 65 of AXA

[[Page 63361]]

Equitable (``Separate Account 65'') and the EQ Advisors Trust (the 
``Trust'') (collectively, the ``Section 17 Applicants,'' together with 
the Section 26 Applicants, the ``Applicants'').
    Summary of Application: The Section 26 Applicants request an order 
pursuant to Section 26(c) of the 1940 Act, approving the proposed 
substitution of shares of a series of EQ Advisors Trust (the ``Trust'') 
for shares of a comparable series of an unaffiliated registered 
investment company (the ``Substitution''), which is currently used as 
an underlying investment option for certain variable annuity contracts 
and/or variable life insurance policies issued by AXA Equitable 
(``Contracts''), as more fully described below. The Section 17 
Applicants also request an order pursuant to Section 17(b) of the 1940 
Act exempting them from Section 17(a) of the 1940 Act to the extent 
necessary to permit in-kind redemptions of securities issued by the 
Removed Portfolio (as defined herein) and purchases of securities 
issued by the Replacement Portfolio (as defined herein) (the ``In-Kind 
Transactions'') in connection with the Substitution.
    Filing Date: The application was filed on July 21, 2006, and 
amended on October 23, 2006.
    Hearing or Notification of Hearing: An order granting the 
application will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Secretary of 
the Commission and serving Applicants with a copy of the request, 
personally or by mail. Hearing requests should be received by the 
Commission by 5:30 p.m. on November 16, 2006, and should be accompanied 
by proof of service on Applicants in the form of an affidavit or, for 
lawyers, a certificate of service. Hearing requests should state the 
nature of the 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 Zandra 
Bailes, Branch Chief, Office of Insurance Products, Division of 
Investment Management at (202) 551-6795.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the SEC's Public Reference Branch, 100 F Street, NE., Room 1580, 
Washington, DC 20549 (tel. (202) 551-8090).

Applicants' Representations

    1. AXA Equitable is a New York stock life insurance company that 
has been in business since 1859. AXA Equitable is authorized to sell 
life insurance and annuities in all fifty 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''). Majority-owned publicly traded subsidiaries 
of AXA Financial currently include AllianceBernstein, L.P. AXA 
Financial, a holding company, is an indirect, wholly owned subsidiary 
of AXA. AXA is a French holding company for an international group of 
insurance and related financial services companies and is publicly 
traded.
    2. AXA Equitable serves as sponsor and depositor for Separate 
Account A, Separate Account FP, Separate Account 49 and Separate 
Account 65 (sometimes referred to herein collectively as the ``Separate 
Accounts'' and individually as a ``Separate Account''). Separate 
Account A was established in 1968 pursuant to authority granted by AXA 
Equitable's Board of Directors and funds certain variable annuity 
contracts. Separate Account FP was established in 1995 pursuant to 
authority granted by the Board of Directors of AXA Equitable in 
connection with the merger of Equitable Variable Life Insurance Company 
with and into AXA Equitable and funds certain variable life insurance 
policies. Separate Account 49 was established in 1996 pursuant to 
authority granted by AXA Equitable's Board of Directors and funds 
certain variable annuity contracts. Separate Account 65 was established 
in 1996 pursuant to authority granted by AXA Equitable's Board of 
Directors and funds group pension and profit-sharing plans under group 
annuity contracts issued by AXA Equitable.
    3. Each Separate Account is a segregated asset account of AXA 
Equitable. Each Separate Account, with the exception of 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 Separate Accounts, except for 
Separate Account 65, under the Contracts 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. As noted above, the 
Separate Accounts fund the respective variable benefits available under 
the Contracts issued by AXA Equitable.
    4. That portion of the respective assets of the Separate Accounts 
that is equal to the reserves and other Contract liabilities with 
respect to the respective Separate Accounts is not chargeable with 
liabilities arising out of any other business of AXA Equitable, as the 
case may be. In accordance with the respective Contracts for those 
Separate Accounts, any income, gains or losses, realized or unrealized, 
from assets allocated to the respective Separate Accounts are credited 
or charged against the Separate Accounts, without regard to other 
income, gains or losses of AXA Equitable.
    5. The Trust is organized as a Delaware statutory trust. It is 
registered as an open-end management investment company under the 1940 
Act, and its shares are registered under the 1933 Act on Form N-1A. It 
commenced operations on May 1, 1997. The Trust is a series investment 
company and currently offers 63 separate series (each a ``Portfolio'' 
and collectively, the ``Portfolios''). AXA Equitable currently serves 
as investment manager (``Manager'') of each of the Portfolios. The 
Trust has received an exemptive order from the Commission (``Multi-
Manager Order'') that permits the Manager, or any entity controlling, 
controlled by, or under common control (within the meaning of Section 
2(a)(9) of the 1940 Act) with the Manager, subject to certain 
conditions, including approval of the Board of Trustees of the Trust, 
and without the approval of shareholders to appoint, dismiss, or 
replace investment sub-advisers (``Advisers'') and to amend Investment 
Advisory Agreements (``Advisory Agreements'').\1\ If a new Adviser is 
retained for a Portfolio, Contract owners would receive notice of any 
such action.
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    \1\ See EQ Advisors Trust and EQ Financial Consultants, Inc., 
1940 Act Rel. Nos. 23093 (March 30, 1998) (notice) and 23128 (April 
24, 1998) (order).
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    6. The variable annuity Contracts (``Annuity Contracts'') subject 
to the application include flexible premium deferred variable annuity 
contracts and single premium immediate variable annuity contracts with 
a variety of sales charge structures. Some of the Annuity Contracts are 
issued as group contracts where the owner of the Annuity Contract is 
the employer, sponsor or trustee of a group retirement plan.

[[Page 63362]]

Members of the group (``participants'') acquire an interest in the 
Annuity Contract and have certain rights as determined by the Annuity 
Contract and/or, if applicable, the retirement plan covering the 
participants' interest. The remaining Annuity Contracts are issued to 
or on behalf of individuals. All Annuity Contracts allow the Contract 
owner or, in the case of group Annuity Contracts, the participants, to 
allocate contributions by participants or premium payments by Contract 
owners among the variable and any fixed investment options available 
under the Annuity Contracts where contributions or premium payments 
allocated to variable funding options are held in corresponding 
divisions of the appropriate Separate Accounts.
    7. Variable life insurance policies issued by the Section 26 
Applicants include flexible premium, scheduled premium and single 
premium individual variable life, second to die and corporate variable 
life policies. Insurance charges are deducted on a monthly basis by 
redeeming shares of the underlying investment options if necessary. 
Premium payments under these Contracts accumulate in variable and any 
fixed investment options. Accumulated amounts are used to fund death 
benefits, loans, surrenders and withdrawals payable under these 
Contracts.
    8. AXA Equitable, on its own behalf and on behalf of the Separate 
Accounts, proposes to exercise its contractual right to substitute a 
different eligible investment fund for one of the current investment 
funds offered as a funding option under the Contracts. In particular, 
the Section 26 Applicants propose to substitute Class IB shares of the 
EQ/AXA Rosenberg Value Long /Short Equity Portfolio (``Replacement 
Portfolio'') for Class 2 shares of Laudus Variable Insurance Trust--
Laudus Rosenberg VIT Value Long/Short Equity Fund (``Removed 
Portfolio'').
    9. The Section 26 Applicants believe that, as set forth below, the 
Replacement Portfolio's investment objective, investment policies and 
principal risks are substantially identical to those of the Removed 
Portfolio and that the essential objective and risk expectations of 
Contract owners and participants can continue to be met.

------------------------------------------------------------------------
           Removed portfolio                  Replacement portfolio
------------------------------------------------------------------------
Laudus Variable Insurance Trust--Laudus  EQ/AXA Rosenberg Value Long/
 Rosenberg VIT Value Long/Short Equity    Short Equity Portfolio (Class
 Fund (Class 2 shares): The Portfolio     IB shares): Same.
 seeks to increase value through bull    Principal Risks:
 markets and bear markets using           Adviser Selection Risk
 strategies that are designed to limit    Asset Class Risk
 exposure to general equity market        Equity Risk
 risk. Under normal circumstances, the    Large-Cap Company Risk
 Portfolio will invest at least 80% of    Leveraging Risk
 its net assets, plus borrowings for      Market Risk
 investment purposes, in equity           Portfolio Turnover
 securities. The Portfolio attempts to    Risk
 achieve its objective by taking long     Real Estate Investing
 positions in stocks of companies in      Risk
 certain capitalization ranges            Security Risk
 principally traded in U.S. markets       Security Selection
 that the Adviser has identified as       Risk
 undervalued and short positions in       Short Sales Risk
 such stocks that the Adviser has         Small- and Mid-Cap
 identified as overvalued. The            Companies Risk
 Portfolio will invest primarily in       Value Investing Risk
 stocks of small- and mid-
 capitalization companies, but also may
 invest in stocks of large-
 capitalization companies. The
 Portfolio also may purchase shares of
 ETFs to a limited extent and may
 engage in active and frequent trading.
Principal Risks:
 Exchange-Traded Funds Risk
 Investment Risk
 Large-Size Company Risk
 Management Risk
 Market Risk
 Short Sales Risk
 Small and Mid-Size Company
 Risk
 Style Risk
------------------------------------------------------------------------

    10. The Section 26 Applicants propose the Substitution as part of a 
continued and overall business plan by AXA Equitable to make its 
Contracts more competitive and thus more attractive to existing 
Contract owners and participants or to prospective purchasers, as the 
case may be, and more efficient to administer and oversee. AXA 
Equitable represents that it has carefully reviewed its Contracts and 
each of the investment options offered under the Contracts with the 
goal of providing a superior choice of investment options.
    11. The Section 26 Applicants assert that the Substitution is 
intended to simplify the prospectuses and related materials with 
respect to the Contracts and the investment options available through 
the Separate Accounts. The Contracts offer investment alternatives from 
multiple fund complexes, each with its own prospectus and disclosure 
format, which significantly increases the volume and complexity of 
information that is received by Contract owners and participants. AXA 
Equitable believes

[[Page 63363]]

that this situation may be confusing to Contract owners and 
participants. By substituting the Replacement Portfolio for the Removed 
Portfolio, AXA Equitable anticipates that it would simplify the 
Contract prospectuses and related materials provided to Contract owners 
and participants and thereby reduce the potential for Contract owner 
and participant confusion.
    12. The Section 26 Applicants also maintain that the Removed 
Portfolio has a substantially identical investment objective, policies 
and risks as those of the Replacement Portfolio. This fact is expected 
to simplify the process of explaining the Substitution to Contract 
owners and participants, including an explanation of the relevant 
differences in the policies of the Replacement and Removed Portfolio, 
and should facilitate their understanding of the effect of the 
Substitution on them.
    13. The Section 26 Applicants also argue that the Substitution 
would replace an outside Portfolio with a Portfolio for which AXA 
Equitable serves as Manager and, thus, would permit AXA Equitable, 
under the Multi-Manager Order, to appoint, dismiss and replace Advisers 
and amend Advisory Agreements as necessary to seek optimal performance 
from the Portfolio and its portfolio managers. Notwithstanding the 
Multi-Manager Order, after the Substitution Date (as defined herein), 
the Section 26 Applicants agree not to change the Replacement 
Portfolio's Adviser without first obtaining shareholder approval of 
either (a) the Adviser change or (b) AXA Equitable's continued ability 
to rely on the Multi-Manager Order.
    14. The replacement of an outside Portfolio with a Portfolio that 
is managed by AXA Equitable will provide AXA Equitable with more 
influence over the administrative aspects of the Portfolio, while 
providing Contract owners and participants with the benefit of third 
party asset management. Influence is important because changes to the 
Removed Portfolio can result in costly, off-cycle communications and 
mailings to Contract owners and participants. Conversely, for the 
Replacement Portfolio, AXA Equitable has greater influence over the 
pace and timing of such changes. AXA Equitable believes that the 
Substitution will enable it to exercise more influence over the 
management and administration of the Portfolio, thereby reducing costs 
and customer confusion. The added influence will give AXA Equitable the 
ability to react more quickly to changes and problems it encounters in 
its oversight of the Replacement Portfolio.
    15. The Section 26 Applicants note that the Substitution is 
designed to provide Contract owners and participants with an 
opportunity to continue their investment in a similar Portfolio without 
interruption and without any cost to them. In this regard, AXA 
Equitable has agreed to bear all expenses incurred in connection with 
the Substitution and related filings and notices, including legal, 
accounting, brokerage and other fees and expenses. On the effective 
date of the Substitution, the amount of any Contract owner's or 
participant's Contract value or the dollar value of a Contract owner's 
or participant's investment in the relevant Contract will not change as 
a result of the Substitution.
    16. As provided in the chart below, it is also anticipated that the 
Replacement Portfolio's net annual operating expense ratio for the 
Class IB shares (before dividend expenses on securities sold short) 
will be the same as the Removed Portfolio's net annual operating 
expense ratio for the Class 2 shares (before dividend expenses on 
securities sold short) immediately after the Substitution due primarily 
to a lower management fee rate and the contractual expense limitation 
arrangement in effect. Accordingly, the Section 26 Applicants represent 
that the proposed Substitution of the Replacement Portfolio for the 
Removed Portfolio will benefit the Contract owners and participants by 
maintaining an annual operating expense ratio (before dividend expenses 
on securities sold short) for the Class IB shares of the Replacement 
Portfolio that is no higher than that of the Class 2 shares of the 
Removed Portfolio.

----------------------------------------------------------------------------------------------------------------
                                                      Laudus Variable Insurance
                                                     Trust--Laudus Rosenberg VIT    EQ/AXA Rosenberg Value Long/
                                                     Value Long/Short Equity Fund  Short Equity Portfolio (Class
                                                         (Class 2)  (percent)             IB) * (percent)
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Management Fee \2\................................                          1.50                           1.40
Rule 12b-1 Fee \3\................................                          0.25                           0.25
Other Expenses....................................                          0.26                           0.36
Total Annual Operating Expenses...................                          2.01                           2.01
Less Fee Waiver/Expense Reimbursement \4\.........                         (0.02)                         (0.02)
Net Annual Operating Expenses.....................                          1.99                           1.99
Dividend Expenses on Securities Sold Short........                          1.22                           1.22
Net Annual Operating Expenses.....................                          3.21                           3.21
----------------------------------------------------------------------------------------------------------------
* The EQ/AXA Rosenberg Value Long/Short Equity Portfolio is a newly created Portfolio; therefore, the fees and
  expenses presented in the table above are estimates for the current fiscal period.

    17. The Section 26 Applicants currently expect that the proposed 
Substitution will be carried out on or about November 17, 2006 
(``Substitution Date'') and by supplements to the prospectuses for the 
Contracts and Separate Accounts, AXA Equitable has notified 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, as applicable, that from the date of the supplement until 
the date of the proposed Substitution, owners are permitted to make 
transfers of Contract value (or annuity unit value) out of each Removed 
Portfolio subaccount to another subaccount without the transfer (or 
exchange) being treated as one of a limited number of permitted 
transfers (or exchanges) or a limited number of transfers (or 
exchanges) permitted without a transfer charge. The supplements also 
informed Contract owners and participants that AXA Equitable will not 
exercise any rights reserved under any Contract to impose additional 
restrictions on transfers until at least 30 days after the proposed 
Substitution.\5\ The supplements also

[[Page 63364]]

advised Contract owners and participants that for at least 30 days 
following the proposed Substitution, AXA Equitable will permit Contract 
owners and participants affected by the Substitution to make transfers 
of Contract value (or annuity unit value) out of each Replacement 
Portfolio subaccount to another subaccount without the transfer (or 
exchange) being treated as one of a limited number of permitted 
transfers (or exchanges) or a limited number of transfers (or 
exchanges) permitted without a transfer charge, as applicable.
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    \2\ The annual management fee rate for the Replacement Portfolio 
as a percentage of the Portfolio's average daily net assets is equal 
to 1.40% on the first $1 billion; 1.35% on the next $1 billion, 
1.325% on the next $3 billion; 1.30% on the next $5 billion; and 
1.275% thereafter. The annual management fee rate for the Removed 
Portfolio as a percentage of the Portfolio's average daily net 
assets is equal to 1.50% on the first $500 million and 1.45% 
thereafter.
    \3\ Class 2 shares of the Removed Portfolio and Class IB shares 
of the Replacement Portfolio are each subject to a plan adopted 
pursuant to Rule 12b-1 under the 1940 Act where the maximum Rule 
12b-1 fee for the Removed Portfolio's Class 2 shares is 0.25% and 
that of the Replacement Portfolio's Class IB shares is 0.50%. 
However, under an arrangement approved by the Trust's Board of 
Trustees, the Rule 12b-1 fee currently is limited to 0.25% of the 
average daily net assets attributable to the Portfolio's Class IB 
shares and will be in effect at least until April 30, 2008.
    \4\ The Manager of the Replacement Portfolio has agreed to make 
payments or waive its management, administrative and other fees to 
limit the expenses of the Portfolio through April 30, 2008, pursuant 
to an expense limitation agreement, so that the Total Annual 
Operating Expenses of the Class IB shares of the Portfolio do not 
exceed an annual rate of 1.99% (excluding dividend expenses on 
securities sold short). The adviser of the Removed Portfolio has 
agreed to waive its management fee and bear certain expenses through 
April 30, 2008, pursuant to an expense limitation agreement, so that 
the ordinary operating expenses of the Class 2 shares of the 
Portfolio do not exceed an annual rate of 1.99% (does not include 
dividend expenses sold short).
    \5\ One exception to this is that AXA Equitable 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 and participants as 
described in the prospectuses for the Separate Accounts and the 
Portfolios.
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    18. The Section 26 Applicants have sent or will send the 
appropriate prospectus supplement containing this disclosure to all 
existing and new Contract owners and participants as applicable. New 
purchasers of Contracts will be provided with a Contract prospectus 
and/or supplement containing disclosure regarding the Substitution, as 
well as a prospectus and/or supplement for the Replacement Portfolio. 
The Contract prospectus and/or supplement and the prospectus and/or 
supplement for the Replacement Portfolio will be delivered to 
purchasers of new Contracts in accordance with all applicable legal 
requirements.
    19. In addition to the prospectus supplements distributed to 
Contract owners and participants, within five business days after the 
proposed Substitution, 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 invested in any one of the subaccounts on the 
date of the notice to another subaccount available under their Contract 
at no cost and without regard to the usual limit on the frequency of 
transfers among the variable account options. The notice will also 
reiterate that (other than with respect to implementing policies and 
procedures designed to prevent disruptive transfer and other market 
timing activity) AXA Equitable will not exercise any rights reserved by 
it under the Contracts to impose additional restrictions on transfers 
or to impose any charges on transfers until at least 30 days after the 
proposed Substitution. AXA Equitable will also send each affected 
Contract owner and participant a current prospectus for the Replacement 
Portfolio.
    20. AXA Equitable also is seeking approval of the proposed 
Substitution from any state insurance regulators whose approval may be 
necessary or appropriate and states that the proposed Substitution will 
take place at relative net asset value 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 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
    21. 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 AXA Equitable's 
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 AXA Equitable. 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 proposed Substitution than before 
the proposed Substitution. All Contract-level fees will remain the same 
after the proposed Substitution. No fees will be charged on the 
transfers made at the time of the proposed Substitution because the 
proposed Substitution will not be treated as a transfer for purposes of 
assessing transfer charges or computing the number of permissible 
transfers under the Contracts.
    22. The Section 26 Applicants represent that with respect to those 
who were Contract owners or participants on the date of the proposed 
Substitution, AXA Equitable will reimburse, on the last business day of 
each fiscal period (not to exceed a fiscal quarter) during the two 
years following the date of the proposed Substitution, the subaccounts 
investing in the Replacement Portfolio such that the sum of the 
Replacement Portfolio's applicable net operating expense ratio (taking 
into account any expense waivers or reimbursements and before dividend 
expenses on securities sold short) 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 applicable net operating expense ratio (taking into account 
any expense waivers or reimbursements and before dividend expenses on 
securities sold short) and subaccount expense ratio for fiscal year 
2005.
    23. In addition, the Section 26 Applicants further represent that 
the Rule 12b-1 fees for the Replacement Portfolio's Class IB shares 
will not be raised above the Removed Portfolio's Class 2 shares' 
maximum Rule 12b-1 fee (0.25%) without first obtaining shareholder 
approval.

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 
Substitution.
    3. The Section 26 Applicants state that they have reserved the 
right under the Contracts to substitute shares of another eligible 
investment fund for any of the current investment funds offered as a 
funding option under the Contracts both to protect themselves and their 
Contract owners and participants in situations where either might be 
harmed or disadvantaged by events affecting the issuer of the 
securities held by a Separate Account and to preserve the opportunity 
to replace such shares in situations where a substitution could benefit 
AXA Equitable and its Contract owners and participants.
    4. The Section 26 Applicants also argue that the Replacement 
Portfolio and the Removed Portfolio have substantially identical 
investment objectives, policies and risks. In addition, 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.

[[Page 63365]]

    5. Furthermore, the Substitution will permit AXA Equitable to 
present information to its Contract owners and participants in a 
simpler and more concise manner. It is anticipated that, after the 
proposed 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 invested in the Replacement Portfolio will 
have the same net operating expenses. In this regard, AXA Equitable has 
agreed to impose a two year expense limit so that the sum of the 
Replacement Portfolio's applicable net operating expense ratio (taking 
into account any expense waivers and reimbursements and before dividend 
expenses on securities sold short) and subaccount expense ratio (asset-
based charges deducted on a daily basis from subaccount assets and 
reflected in the calculation of subaccount unit values) for each fiscal 
period (not to exceed a fiscal quarter) will not exceed, on an 
annualized basis, the sum of the Removed Portfolio's applicable net 
operating expense ratio and subaccount expense ratio for fiscal year 
2005.
    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 as the Contracts provide each 
Contract owner and 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 and 
participants under their Contracts. Additionally, the Substitution will 
not, in any manner, reduce the nature or quality of the available 
investment options. In this regard, the proposed Substitution retains 
for Contract owners and participants the investment flexibility which 
is a central feature of the Contracts.
    8. Moreover, the Section 26 Applicants state they will offer 
Contract owners and participants the opportunity to transfer amounts 
out of the affected subaccounts without any cost or other penalty 
(other than with respect to implementing policies and procedures 
designed to prevent disruptive transfer and other market timing 
activity) that may otherwise have been imposed for a period beginning 
on the date of the supplement notifying Contract owners and 
participants of the proposed Substitution and ending no earlier than 
thirty (30) days after the proposed Substitution. The 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 which Section 
26(c) was designed to prevent in that by purchasing a 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. Section 17(a)(1) of the 1940 Act prohibits any affiliated 
person (as defined in Section 2(a)(3) of the 1940 Act) of a registered 
investment company, or any affiliated person of such a person, acting 
as principal, from knowingly selling any security or other property to 
that company. Section 17(a)(2) of the 1940 Act generally prohibits the 
same persons, acting as principals, from knowingly purchasing any 
security or other property from the registered investment company.
    11. Section 17(b) of the 1940 Act provides that the Commission may, 
upon application, issue an order exempting any proposed transaction 
from Section 17(a) if: (i) The terms of the proposed transactions are 
reasonable and fair and do not involve overreaching on the part of any 
person concerned; (ii) the proposed transactions are consistent with 
the policy of each registered investment company concerned; and (iii) 
the proposed transactions are consistent with the general purposes of 
the 1940 Act.
    12. The Section 17 Applicants request an order pursuant to Section 
17(b) of the 1940 Act exempting them from the provisions of Section 
17(a) to the extent necessary to permit them to carry out the In-Kind 
Transactions in connection with the proposed Substitution.
    13. The Section 17 Applicants submit that the terms of the proposed 
In-Kind Transactions, including the consideration to be paid and 
received are reasonable and fair and do not involve overreaching on the 
part of any person concerned. The 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 relevant investment 
company and as required by Rule 22c-1 under the 1940 Act. The In-Kind 
Transactions will not change the dollar value of any Contract owner's 
or participant's investment in any of the Separate Accounts, the value 
of any Contract, the accumulation value or other value credited to any 
Contract, or the death benefit payable under any Contract. After the 
proposed In-Kind Transactions, the value of a Separate Account's 
investment in the Replacement Portfolio will equal the value of its 
investment in the Removed Portfolio (together with the value of any 
pre-existing investments in the Replacement Portfolio) immediately 
before the In-Kind Transactions.
    14. Section 17 Applicants state that they will assure themselves 
that the In-Kind Transactions will be in substantial compliance with 
the conditions of Rule 17a-7 under the 1940 Act. The Section 17 
Applicants will assure themselves that the investment companies will 
carry out the proposed In-Kind Transactions in conformity with the 
conditions of Rule 17a-7 (or, as applicable, the Removed Portfolio's 
and the Replacement Portfolio's normal valuation procedures, as set 
forth in the relevant investment company's registration statement), 
except that the consideration paid for the securities being purchased 
or sold will not be cash.
    15. The Section 17 Applicants also assert that the proposed In-Kind 
Transactions by the Section 17 Applicants do not involve overreaching 
on the part of any person concerned. Furthermore, the Section 17 
Applicants represent that the proposed Substitution will be consistent 
with the policies of the Removed Portfolio and the Replacement 
Portfolio, 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.

[[Page 63366]]

Conclusion

    For the reasons set forth in the application, the Applicants each 
respectfully 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.
Nancy M. Morris,
Secretary.
[FR Doc. E6-18143 Filed 10-27-06; 8:45 am]

BILLING CODE 8011-01-P
