[Federal Register Volume 66, Number 74 (Tuesday, April 17, 2001)]
[Notices]
[Pages 19809-19814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-9428]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-24936; File No. 812-12314]


Equitable Life Assurance Society of the United States, et al.

April 10, 2001.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order pursuant to section 26(b) of 
the

[[Page 19810]]

Investment Company Act of 1940 (``1940 Act'') approving certain 
substitutions of securities, and pursuant to section 17(b) of the 1940 
Act exempting related transactions from section 17(a) of the 1940 Act.

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

SUMMARY OF APPLICATION: Applicants request an order to permit certain 
registered unit investment trusts to substitute securities issued by EQ 
Advisors Trust's (``EQ Trust'') EQ/Balanced Portfolio (``Substituted 
Portfolio'') for securities issued by four other portfolios of EQ 
Trust: the Alliance Conservative Investors Portfolio; the Mercury World 
Strategy Portfolio; the EQ/Evergreen Foundation Portfolio; and the EQ/
Putnam Balanced Portfolio (collectively, ``Removed Portfolios'') 
currently held by those unit investment trusts, and to permit certain 
in-kind redemptions of portfolio securities in connection with the 
substitution (``In-Kind Transaction'').

APPLICANTS: For purposes of the order requested pursuant to section 
26(b), The Equitable Life Assurance Society of the United States 
(``Equitable''), Separate Account A of Equitable (``SA A''), Separate 
Account No. 301 of Equitable (``SA 301''), Separate Account No. 45 of 
Equitable (``SA 45''), Separate Account No. 49 of Equitable (``SA 
49''), and Separate Account FP of Equitable (``SA FP,'' and together 
with SA A, SA 301, SA 45, and SA 49, the ``Equitable Accounts'') 
(collectively, ``Section 26 Applicants''). For purposes of the order 
pursuant to section 17(b), Equitable, the Equitable Accounts, and 
Separate Account No. 65 of Equitable (``SA 65'' and together with 
Equitable and the Equitable Accounts, ``Section 17 Applicants'').

FILING DATE: The application was filed on October 31, 2000, and was 
amended and restated on January 31, 2001 and April 9, 2001.

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 May 7, 2001, and should be accompanied by 
proof of service on Applicants, in the form of an affidavit or, for 
lawyers, a certificate of service. Hearing requests should state the 
nature of the writer's interest, the reason for the request, and the 
issues contested. Persons may request notification of a hearing by 
writing to the Secretary of the Commission.

FOR FURTHER INFORMATION CONTACT: Mark Cowan, Senior Counsel, at (202) 
942-0675, or Keith Carpenter, Branch Chief, at (202) 942-0679, Office 
of Insurance Products, Division of Investment Management.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549-0609. Applicants: c/o Peter D. Noris, 
Executive Vice President and Chief Investment Officer, The Equitable 
Life Assurance Society of the United States, 1290 Avenue of the 
Americas, New York, New York 10104. Copies to: Jane A. Kanter, Esq., 
Dechert, 1775 Eye Street, NW., Washington, DC 20006-2401.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application; the complete application may be obtained for a fee from 
the Public Reference Branch of the Commission, 450 5th Street, NW., 
Washington, DC 20549, tel. (202) 942-8090.

Applicants' Represenatations

    1. Equitable is a New York stock life insurance company. Equitable 
is the depositor and sponsor of SA A, SA 301, SA 45, SA 49, SA FP, and 
SA 65, each a separate investment account established under New York 
law.
    2. Equitable is a wholly owned subsidiary of AXA Financial, Inc., a 
member of the global AXA Group, which is a holding company for an 
international group of insurance and related financial services 
companies.
    3. Each of the Equitable Accounts is registered with the Commission 
under the 1940 Act as a unit investment trust. The assets of the 
Equitable Accounts support certain variable annuity contracts and 
variable life insurance policies (collectively, ``Contracts''). The 
variable annuity Contracts issued by the section 26 Applicants include 
flexible premium deferred variable annuity contracts and single premium 
immediately variable annuity contracts. The variable life insurance 
contracts issued by the section 26 Applicants include individual 
flexible premium, individual modified single premium and second to die 
variable life insurance contracts. Each sub-account invests exclusively 
in shares representing an interest in a separate corresponding 
portfolio (each, a ``Portfolio'') of EQ Trust. The Removed Portfolios 
and the Substituted Portfolio (collectively, ``Balanced Portfolios'') 
currently are used as underlying investment options for the Contracts, 
as more fully described below.
    4. EQ 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 EQ 
Trust, and within the approval of shareholders to: (a) Select a new or 
additional investment advisers (``Advisers'') for each Portfolio; (b) 
enter into new Advisory Agreements and/or materially modify the terms 
of any existing Advisory Agreement;\1\ 9c) terminate any existing 
Adviser and replace the Adviser; and (d) continue the employment of the 
an existing Adviser on the same contract terms where the Advisory 
Agreement has been assigned because of a change of control of the 
Adviser.\2\ In such circumstances, Contract owners would receive notice 
of any such action, including all information concerning any new 
Adviser or Advisory Agreement that would be included in an information 
statement meeting the requirements of Regulation 14C and Schedule 14C 
under the Securities Exchange Act of 1934, as amended.
---------------------------------------------------------------------------

    \1\ The Manager will not enter into an Advisory Agreement with 
an Adviser that is an ``affiliated pers'' (as defined in section 
2(a)(3) of the 1940 Act) of the Portfolio or the Manager, other than 
by reason of serving as an Adviser to a Portfolio, without the 
Advisory Agreement, including the compensation to be paid 
thereunder, being approved by the shareholders of the applicable 
Portfolio (of, if the Portfolio serves as a funding medium for any 
sub-account of a registered separate account, then pursuant to 
voting instructions by the unitholders of the sub-account).
    \2\ See EQ Advisers and EQ Financial Consultants, Inc., 
Investment Company Act Rel. Nos. 23128 (April 24, 1998) (order) and 
23093 (March 30, 1998) (notice). An investment company that has 
received such an order is commonly referred to as a ``multi-manger'' 
investment company.
---------------------------------------------------------------------------

    5. All of the Contracts expressly reserve Equitable's right, 
subject to compliance with applicable law, to substitute shares of 
another open-end management investment company for shares of an open-
end management investment company held by a sub-account.
    6. The Section 26 Applicants propose to substitute: (a) Class IA 
Shares of the Substituted Portfolio for Class IA Shares of the Alliance 
Conservative Investors Portfolio, as well as for Class IB Shares of 
each Removed Portfolio offered through a Contract also offering Class 
IA Shares of the Substituted Portfolio or the Alliance Conservative 
Investors Portfolio; and (b) Class IB Shares of the Substituted 
Portfolio for Class IB Shares of each Removed Portfolio offered through 
a Contract not also offering

[[Page 19811]]

Class IA Shares of the Substituted Portfolio or the Alliance 
Conservative Investors Portfolio (``Substitution'' or ``Substitution 
Transactions''). The Section 26 Applicants assert that the Substitution 
will benefit Contract owners by: (a) Facilitating Contract owner 
understanding of the underlying investment options for the Contracts 
and reducing the potential for Contract owners to be confused by 
multiple Balanced Portfolio options currently available under the 
Contracts; (b) consolidating the assets attributable to the Balanced 
Portfolios in a single Portfolio, thereby eliminating duplicative 
Portfolios, which may make the Contracts more efficient to administer 
and may provide economics of scale that could benefit Contract owners; 
and (c) providing Contract owners who have their Contract values 
currently allocated to any Removed Portfolio with a Portfolio that has 
the same or lower investment management fees and lower total expense 
ratios than those of the relevant Removed Portfolio.
    7. The Substituted Portfolio has similar investment objectives, 
investment strategies and anticipated risks to those of Removed 
Portfolios. The prospectus for EQ Trust currently classifies all of the 
Removed Portfolios as ``Balanced/Hybrid Portfolios.'' The investment 
objectives and principal investment strategies of the Substituted 
Portfolio and the Removed Portfolios are shown below:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Substituted portfolio                                       Removed portfolio
                                    --------------------------------------------------------------------------------------------------------------------
                                                                  Mercury world           EQ/Evergreen                             Alliance Conservative
                                           EQ/Balanced              strategy               foundation         EQ/Putnam balanced          Investors
--------------------------------------------------------------------------------------------------------------------------------------------------------
Investment Objective...............  Seeks to achieve a      Seeks high total        Seeks to provide, in   Seeks to provide a     Seeks to achieve a
                                      high return through     investment return by    order of priority,     balance investment     high total return
                                      both appreciation of    investing primarily     reasonable income,     composed of a well-    without, in the
                                      capital and current     in a portfolio of       conservation of        diversified            opinion of the
                                      income.                 equity and fixed        capital and capital    portfolio of stocks    Adviser, undue risk
                                                              income securities,      appreciation.          and bonds that will    of principal.
                                                              including convertible                          produce both capital
                                                              securities, of U.S.                            growth and current
                                                              and foreign issuers.                           income.
Principal Investment Strategies....  Debt and equity         Equity and fixed        Common stocks,         Well-diversified       Investment grade debt
                                      securities, money       income securities of    preferred stocks,      portfolio of stocks    securities and
                                      market instruments,     U.S. and foreign        securities             and bonds, and         equity securities of
                                      foreign securities      companies.              convertible into or    negotiable             U.S. and foreign
                                      and derivatives.                                exchangeable for       instruments.           issuers, and
                                                                                      common stock,                                 derivatives.
                                                                                      corporate debt
                                                                                      obligations, U.S.
                                                                                      Government
                                                                                      securities and short-
                                                                                      term debt
                                                                                      instruments.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    8. As demonstrated in the charts below: (a) The effective 
investment management fees (i.e., the total investment management fees 
paid to the Manager as a percentage of average daily net assets, after 
giving effect to breakpoints in each investment management fee rate) 
\3\ with respect to the Substituted Portfolio are lower than the 
effective investment management fees with respect to each of the 
Removed Portfolios; and (b) the total expense ratio of the Substituted 
Portfolio is less than the total expense ratio of each of the Removed 
portfolios. The chart below shows the investment management fees and 
total expenses for Class IA shares of the Substituted Portfolio and the 
Alliance Conservative Investors Portfolio and investment management 
fees, Rule 12b-1 fees and total expenses for Class IB shares of the 
Mercury World Strategy Portfolio, EQ/Evergreen Foundation Portfolio and 
EQ/Putnam Balanced Portfolio for the year ended December 31, 2000.
---------------------------------------------------------------------------

    \3\ The investment advisory fees are paid to each Adviser by the 
Manager from its investment management fees.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Substituted                            Removed portfolios
                                                                        portfolio    -------------------------------------------------------------------
                                                                    -----------------                                                        Alliance
                                                                                       Mercury world     EQ/Evergreen      EQ/Putnam       Conservative
                                                                       EQ/Balanced        strategy        foundation        balanced        Investors
                                                                        (Class IA)       (Class IB)       (Class IB)       (Class IB)       (Class IA)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Management Fee (in percent)........................................             0.52             0.70             0.61          0.55\4\             0.56
12b-1 Fee (in percent).............................................              N/A             0.25             0.25             0.25              N/A
Other Expenses (in percent)........................................             0.07             0.33             0.48             0.18             0.08
                                                                    ------------------------------------------------------------------------------------
    Total Expenses (in percent)....................................             0.59             1.28             1.34             0.98             0.64
                                                                    ====================================================================================
Fee Waiver and/or Expense Reimbursement (in percent)...............              N/A             0.08             0.39             0.08              N/A
                                                                    ------------------------------------------------------------------------------------

[[Page 19812]]

 
    Net Expenses (in percent)......................................             0.59             1.20             0.95             0.90            0.64
--------------------------------------------------------------------------------------------------------------------------------------------------------
\4\ The annual contractual management fee rate of the EQ/Putnam Balanced Portfolio currently equals 0.60% of the Portfolio's average daily net assets.
  The Manager has voluntarily agreed not to collect a portion of its fee equal to 0.05% of the Portfolio's average daily net assets until July 31, 2001.

    The chart immediately below shows the investment management fees, 
Rule 12b-1 fees and total expenses for Class IB shares of the 
Substituted Portfolio and each of the Removed Portfolios for the year 
ended December 31, 2000.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Substituted                            Removed portfolios
                                                                        portfolio    -------------------------------------------------------------------
                                                                    -----------------                                                        Alliance
                                                                                       Mercury world     EQ/Evergreen      EQ/Putnam       Conservative
                                                                       EQ/Balanced        strategy        foundation        balanced        Investors
                                                                        (Class 1B)       (Class 1B)       (Class IB)       (Class 1B)       (Class 1B)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Management Fee (in percent)........................................             0.52             0.70             0.61             0.55             0.56
12b-1 Fee (in percent).............................................             0.25             0.25             0.25             0.25             0.25
Other Expenses (in percent)........................................             0.07             0.33             0.48             0.18             0.09
                                                                    ------------------------------------------------------------------------------------
    Total Expenses (in percent)....................................             0.84             1.28             1.34             0.98             0.90
                                                                    ====================================================================================
Fee Waiver and/or Expense Reimbursement (in percent)...............              N/A             0.08             0.39             0.08              N/A
                                                                    ------------------------------------------------------------------------------------
    Net Expenses (in percent)......................................             0.84             1.20             0.95             0.90             0.90
--------------------------------------------------------------------------------------------------------------------------------------------------------

    9. The section 26 Applicants will provide their respective Contract 
owners and participants with disclosure of the Substitution through 
prospectuses, prospectus supplements (or other notice, in the case of 
Contracts no longer actively marketed and for which there are a 
relatively small number of existing Contract owners (``Inactive 
Contracts'')), as appropriate. Such disclosure will describe the 
Substituted Portfolio and the Removed Portfolios and disclose the 
impact of the Substitution on fees and expenses at the underlying fund 
level. At or after the time the Commission approves the Application, 
the section 26 Applicants will send to existing Contract owners and 
participants a supplement to the relevant Contract prospectus (or other 
notice in the case of Inactive Contracts) that discloses to such 
Contract owners and participants that the Application has been 
approved. Together with this disclosure, the Section 26 Applicants will 
send to any of those existing Contract owners and participants who have 
not previously received a prospectus for the Substituted Portfolio a 
prospectus and/or prospectus supplement for the Substituted Portfolio. 
New purchasers of Contracts will be provided with a Contract prospectus 
and/or supplement containing disclosure that the Commission has issued 
an order approving the Substitution, as well as a prospectus for the 
Substituted Portfolio. The Contract prospectus and/or supplement and 
the prospectus and/or prospectus supplement for EQ Trust, including the 
Substituted Portfolio, will be delivered to purchasers of new Contracts 
in accordance with all applicable legal requirements.
    10. Contract owners and participants will be sent a notice of the 
Substitution. All such notices will be mailed to affected Contract 
owners and participants before the date the Substitution is effected 
(``Substitution Date''). The notice will inform contract owners and 
participants that the Substitution will be effected on the Substitution 
Date and that they may transfer assets from the Removed Portfolios (or 
from the Substituted Portfolio following the Substitution Date) to 
another investment option available under their Contract without the 
imposition of any fee, charge, or other penalty that might otherwise be 
imposed through a date at least thirty (3) days following the 
Substitution Date. Confirmation of the Substitution will be mailed to 
affected Contract owners and participants within five (5) days after 
the Substitution Date.
    11. The significant terms of the Substitution described above 
include:
    a. The Substituted Portfolio will have investment objectives, 
investment strategies and anticipated risks that are similar to those 
of the Removed Portfolios.
    b. The fees and expenses of the Substituted portfolio will be less 
than those of the Removed Portfolios, assuming that the assets of the 
Substituted Portfolio do not decrease significantly from its present 
asset levels.
    c. Contract owners and participants may transfer assets from the 
Removed Portfolios (or from the Substituted Portfolio following the 
Substitution Date) to another investment option available under their 
Contract without the imposition of any fee, charge, or other penalty 
that might otherwise be imposed from the date of the initial notice 
through a date at least thirty (30) days following the Substitution 
Date.
    d. The Substitution will be effected at the net asset value of the 
respective shares of the Removed Portfolios and the Substituted 
Portfolio in conformity with Section 22(c) of the 1940 Act and Rule 
22c-1 thereunder, without the imposition of any transfer or similar 
charge by the Section 26 Applicants, and with no change in the amount 
of any Contract owner's or participant's Contract value or in the 
dollar value of his or her investment in such Contract.
    e. Contract owners and participants will not incur any fees or 
charges as a result of the Substitution, nor will their rights or 
Equitable's obligations under the Contracts be altered in any way.

[[Page 19813]]

Equitable will bear all expenses incurred in connection with the 
Substitution and related filings and notices, including legal, 
accounting and other fees and expenses. The Substitution will not cause 
the Contract fees and charges currently being paid by existing Contract 
owners to be greater after the Substitution than before the 
Substitution.
    f. Redemptions-in-kind and contributions in-kind will be done in a 
manner consistent with the investment objectives, policies and 
diversification requirements of the Removed Portfolios and the 
Substituted Portfolio, and the Manager will review the In-Kind 
Transaction to assure that the assets are suitable for the Substituted 
Portfolio. Consistent with Rule 17a-7(d) under the 1940 Act, no 
brokerage commissions, fees (except customary transfer fees) or other 
remuneration will be paid in connection with the In-Kind Transaction.
    g. The Substitution will not be counted as a new investment 
selection in determining the limit, if any, on the total number of 
Portfolios that Contract owners and participants can select during the 
life of a Contract.
    h. The Substitution will not alter in any way the annuity or life 
benefits, tax benefits or any contractual obligations of the Section 26 
Applicants under the Contracts.
    i. Contract owners and participants may withdraw amounts under the 
Contracts or terminate their interest in a Contract, under the 
conditions that currently exist, including payment of any applicable 
withdrawal or surrender charge.
    j. Contract owners and participants affected by the Substitution 
will be sent written confirmation of the Substitution that identify the 
Substitution Transactions made on behalf of that Contract owner or 
participant within five (5) days following the Substitution Date.
    k. The Manager will waive its management fee with respect to the 
Substituted Portfolio and/or reimburse expenses incurred by the 
Substituted Portfolio during the twenty-four (24) months following the 
Substitution Date to the extent necessary to ensure that the total 
operating expenses for any period (not to exceed a fiscal quarter) of: 
(i) Class IA Shares of the Substituted Portfolio do not exceed 0.64% of 
the Substituted Portfolio's average daily net assets (on an annualized 
basis); and (ii) Class IB Shares of the Substituted Portfolio do not 
exceed 0.90% of the Substituted Portfolio's average daily net assets 
(on an annualized basis).
    l. In addition, for those Contract owners who were Contract owners 
on the date of the substitutions, Equitable will not increase 
subaccount of Contract expenses for a period of twenty-four (24) months 
following the Substitution Date.

Applicants' Legal Analysis and Conditions

    1. Section 26(b) of the 1940 Act provides that it shall be unlawful 
for any depositor or trustee of a registered unit investment trust 
holding the security of a single issuer to substitute another security 
for such security unless the Commission shall have approved such 
substitution; and the 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 
policies and provisions of the 1940 Act. Section 26(b) protects the 
expectation of investors that the unit investment trust will accumulate 
shares of a particular issuer and is intended to insure that 
unnecessary or burdensome sales loads, additional reinvestment costs or 
other charges will not be incurred due to unapproved substitutions of 
securities.
    2. The Section 26 Applicants request an order pursuant to section 
26(b) of the 1940 Act approving the Substitution. The section 26 
Applicants represent that the purposes, terms, and conditions of the 
Substitution are consistent with the protections for which section 
26(b) was designed. The section 26 Applicants believe the Substitution 
will benefit Contract owners by: (a) Facilitating Contract owner 
understanding of the underlying investment options for the Contracts 
and reducing the potential for Contract owners to be confused by 
multiple Balanced Portfolio options currently available under the 
Contracts; (b) consolidating the assets attributable to the Balanced 
Portfolios in a single Portfolio, thereby eliminating duplicative 
Portfolios, which may make the Contracts more efficient to administer 
and may provide economies of scale that could benefit Contract owners; 
and (c) providing Contract owners who have their Contract values 
currently allocated to any Removed Portfolio with a Portfolio that has 
the same or lower investment management fees and lower total expense 
ratios than those of the relevant Removed Portfolio.
    3. Contract owners who do not want their assets allocated to the 
Substituted Portfolio would be able to transfer assets to any one of 
the other sub-accounts available under their Contract without charge 
until thirty days after the Substitution have elapsed.
    4. Equitable, on behalf of itself and on behalf of the Equitable 
Accounts, represents that the Substitution and related redemptions in 
kind and purchases by Equitable will not result in any change in the 
amount of any Contract owner's or participant's Contract value or in 
the dollar value of his or her investment in such Contract, or the 
annuity or life benefits, tax benefits or any contractual obligation of 
the section 26 Applicants under the Contracts. Contract owners will not 
incur any fees, expenses or charges as a result of the proposed 
transactions. Furthermore, the proposed transactions will not result in 
any change to the Contract fees and charges currently being paid by 
existing Contract owners.
    5. The section 26 Applicants will not complete the Substitution as 
described in the application unless all of the following conditions are 
met:
    a. The Commission will have issued an order approving the 
Substitution under Section 26(b) of the 1940 Act.
    b. The Commission will have issued an order exempting the In-Kind 
Transaction from the provisions of section 17(a) of the 1940 Act, to 
the extent necessary to carry out the Substitution as described herein.
    c. The amendments to the registration statements for the Contracts 
describing the Substitution shall have become effective.
    d. Each Contract owner or participant will have been mailed initial 
disclosure of the Substitution following the initial filing of the 
Application and will have been mailed a prospectus and/or prospectus 
supplement with respect to the Substituted Portfolio and an amendment 
and/or supplemented prospectus for the applicable Contracts (or other 
notice in the case of Inactive Contracts) before the Substitution Date. 
In conjunction with this mailing, each Contract owner or participant 
will have been sent a notice that describes the terms of the 
Substitution and Contract owners' and participants' rights in 
connection with them.
    e. The section 26 Applicants will have satisfied themselves, based 
on advice of counsel familiar with insurance laws, that the Contracts 
allow the substitution of Portfolios as described in the Application, 
and that the transactions can be consummated as described in the 
Application under applicable insurance laws and under the various 
Contracts.
    f. The section 26 Applicants will have complied with any regulatory 
requirements they believe are necessary to complete the transactions in 
each jurisdiction where the Contracts are qualified for sale.

[[Page 19814]]

    6. Section 17(a)(1) of the 1940 Act prohibits any affiliated person 
or an affiliate of an affiliated person, of a registered investment 
company, from selling any security or other property to such registered 
investment company. Section 17(a)(2) of the 1940 Act prohibits such 
affiliated persons from purchasing any security or other property from 
such registered investment company.
    7. Section 17(b) of the 1940 Act authorizes the Commission to issue 
an order exempting a proposed transaction from Section 17(a) if: (a) 
The terms of the proposed transaction are fair and reasonable and do 
not involve overreaching on the part of any person concerned; (b) the 
proposed transaction is consistent with the policy of each registered 
investment company concerned; and (c) the proposed transaction is 
consistent with the general purposes of the 1940 Act.
    8. The section 17 Applicants submit that the Removed Portfolios and 
the Substituted Portfolio may be deemed to be affiliated persons of one 
another, or affiliated persons of an affiliated person (Equitable or 
the Equitable Separate Accounts). If viewed as such, the proposed In-
Kind Transaction may be deemed to contravene section 17(a) due to the 
affiliated status of these participants.
    9. 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 
Transaction.
    10. The section 17 Applicants assert that the In-Kind Transaction, 
including the consideration to be paid and received, is reasonable and 
fair and does not involve overreaching on the part of any person 
concerned. The In-Kind Transaction will be effected at the respective 
net asset values of the Removed Portfolios and the Substituted 
Portfolio, as determined in accordance with the procedures disclosed in 
the registration statement of EQ Trust and as required by Rule 22c-1 
under the 1940 Act. The In-Kind Transaction will not change the dollar 
value of any participant's or Contract owner's investment in any of the 
Equitable Accounts or SA 65 (collectively, ``Equitable 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 Transaction, the value of the 
Equitable Separate Account's investment in the Substituted Portfolio 
will equal the value of its investment in the Removed Portfolios before 
the In-Kind Transaction. The section 17 Applicants also state that the 
transactions will conform substantially with the conditions of Rule 
17a-7. To the extent that the In-Kind Transaction does not comply fully 
with the provisions of paragraphs (a) and (b) of Rule 17a-7, the 
section 17 Applicants assert that the terms of the In-Kind Transaction 
provide the same degree of protection to the participating companies 
and their shareholders as if the In-Kind Transaction satisfied all of 
the conditions enumerated in Rule 17a-7. The section 17 Applicants also 
assert that the proposed In-Kind Transaction by the Section 17 
Applicants does not involve overreaching on the part of any person 
concerned. Furthermore, the section 17 Applicants represent that the 
proposed substitutions will be consistent with the policies of the 
Removed Portfolios and Substituted Portfolio, as recited in EQ Trust's 
current registration statement.
    11. The section 17 Applicants assert that the In-Kind Transaction 
is consistent with the general purposes of the 1940 Act and that the 
In-Kind Transaction does not present any of the conditions or abuses 
that the 1940 Act was designed to prevent.

Conclusion

    Applicants assert that, for the reasons summarized above, the 
requested order approving the Substitution and exempting the In-Kind 
Transaction should be granted.
    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-9428 Filed 4-16-01; 8:45 am]
BILLING CODE 8010-01-M