SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
(Amendment No. )
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| ¨ | Preliminary Information Statement | |
| ¨ | Confidential, for Use of the Commission Only as permitted by Rule 14c-6(e)(2) | |
| x | Definitive Information Statement | |
EQ ADVISORS TRUST
(Name of Registrant as Specified in Its Charter)
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| ¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
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| ¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
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AXA EQUITABLE FUNDS MANAGEMENT GROUP, LLC
1290 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10104
EQ ADVISORS TRUST
INFORMATION STATEMENT DATED AUGUST 20, 2013
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY
The purpose of this Information Statement is to provide you with information about a new investment sub-adviser for the EQ/Mid Cap Value PLUS Portfolio (“Portfolio”), a series of EQ Advisors Trust (the “Trust”). The information in this document should be considered to be an Information Statement for purposes of Schedule 14C under the Securities Exchange Act of 1934, as amended. You may obtain an additional copy of the Trust’s Prospectus or Statement of Additional Information, or its most recent Annual Report, free of charge, by writing to the Trust at 1290 Avenue of the Americas, New York, New York 10104, by calling 1-877-222-2144 or by visiting the Trust’s website at www.axa-equitablefunds.com.
AXA Equitable Funds Management Group, LLC (“FMG LLC” or “Manager”) serves as the Investment Manager and Administrator of the Trust. AXA Distributors, LLC serves as the Distributor for the Trust’s shares and is located at 1290 Avenue of the Americas, New York, New York 10104. FMG LLC, in its capacity as the Investment Manager of the Trust, has received an exemptive order from the Securities and Exchange Commission (“SEC”) to permit it and the Trust’s Board of Trustees (“Board”) to select and replace investment sub-advisers for the Trust (“Advisers”) and to amend the advisory agreements between FMG LLC and the Advisers without obtaining shareholder approval, subject to certain conditions. Accordingly, FMG LLC is able, subject to the approval of the Board, to appoint and replace Advisers and to amend advisory agreements without obtaining shareholder approval.
At a June 5-6, 2013 regular meeting of the Board, the Board, including the Trustees who are not “interested persons” (as that term is defined in the Investment Company Act of 1940, as amended (“1940 Act”)) of the Trust, the Manager, the Advisers or the Distributor (“Independent Trustees”), unanimously approved the Manager’s proposal to appoint Diamond Hill Capital Management, Inc. (“Diamond Hill” or “New Adviser”) as an additional Adviser to an allocated portion of the Portfolio. The Manager’s proposal was based on certain factors, including, but not limited to, the desire of FMG LLC to reduce Adviser concentration in the Portfolio’s Active Allocated Portion and to add a new adviser that would complement the investment strategies of the Portfolio’s other Advisers. FMG LLC is the Manager of the Portfolio, Wellington Management Company (“Wellington Management”) is the other Adviser to the Portfolio’s Active Allocated Portion, and BlackRock Investment Management, LLC (“BlackRock”) is the Adviser to the Portfolio’s Index Allocated Portion.
Factors Considered by the Board
In approving the advisory agreement (“Agreement”) between FMG LLC and Diamond Hill, the Board considered the overall fairness of the Agreement and whether the Agreement was in the best interest of the Portfolio and its shareholders. The Board noted that the New Adviser currently serves as an investment sub-adviser to Multimanager Mid Cap Value Portfolio, a series of AXA Premier VIP Trust. AXA Premier VIP Trust also is managed by FMG LLC. The Board further considered factors it deemed relevant with respect to the Portfolio and the Agreement, including, as applicable: (1) the nature, quality and extent of the services to be provided by the New Adviser, including the New Adviser’s resources, and
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responsibilities under the Agreement; (2) comparative performance information; (3) the level of the proposed advisory fees; (4) economies of scale that may be realized by the Portfolio; and (5) the “fall out” benefits to be realized by the New Adviser and its affiliates (i.e., any direct or indirect benefits to be derived by the New Adviser and its affiliates from the relationship with the Portfolio) as well as relationships that may exist involving an Adviser and the Manager. In considering the Agreement, the Board did not identify any single factor or information as all-important or controlling and each Trustee may have attributed different weight to each factor.
The Board considered, among other things, information regarding the New Adviser’s investment process, the qualifications and background of each portfolio manager who would provide services to the portion of the Portfolio that would be advised by the New Adviser, and the New Adviser’s best execution trading policies. In addition, the Board considered that adding the New Adviser to the Portfolio would reduce Adviser concentration risk in the Portfolio’s Active Allocated Portion, improve the Portfolio’s investment risk characteristics and complement the investment strategies of the Portfolio’s other Advisers. The Board noted the Manager’s familiarity with the New Adviser, particularly with the strategy and investment team being added to the Portfolio. With respect to performance information, the Board evaluated the performance of Diamond Hill’s Small-Mid Cap Composite performance as compared to its benchmark. The Board also considered the level of the proposed advisory fees under the Agreement in light of the nature, quality and extent of the services to be provided by the New Adviser, including comparisons of the advisory fees to those of comparable accounts advised by the New Adviser. The Board noted that the advisory fees were negotiated at arm’s length between the Manager and the New Adviser and are paid by the Manager (not the Portfolio) and, thus, the management fee paid by the Portfolio would not change as a result of the approval of the Agreement. The Board did not consider the New Adviser’s costs and profitability to be material to its deliberations. The Board, did however, evaluate the impact on the Manager’s profitability of the appointment of the New Adviser, as well as ancillary benefits to be derived by the Manager, the New Adviser and their affiliates.
Based on these considerations and the information described below, the Board determined that the nature, quality and extent of the advisory services to be provided by the New Adviser and the performance of the New Adviser’s allocated portion of Multimanager Mid Cap Value Portfolio supported a decision to approve the Agreement. The Board also determined that the New Adviser’s proposed fee rate is fair and reasonable and would not result in an excessive level of profits to the Manager and that there was a reasonable sharing of benefits from any economies of scale with the Portfolio in light of the existence of breakpoints with respect to the Manager’s and the New Adviser’s fee schedules for the Portfolio. In addition, the Board determined that any ancillary benefits which may accrue to the New Adviser are fair and reasonable. As a result, the Board, including the Independent Trustees, unanimously approved the Agreement. Diamond Hill became an Adviser to the Portfolio effective as of July 19, 2013.
Information Regarding the Investment Advisory Agreement
The terms of the Agreement between FMG LLC and Diamond Hill are substantially similar to those of the Agreements between FMG LLC and the other Advisers to the Portfolio, except as to the effective date and compensation. The Agreement will remain in effect for its initial two-year term and thereafter only so long as the Board, including a majority of the Independent Trustees, specifically approves its continuance at least annually. The Agreement can be terminated at any time, without the payment of any penalty, by the Board, including a majority of the Independent Trustees or by the vote of a majority of the outstanding voting securities of the Portfolio, on sixty days’ written notice to FMG LLC and the New Adviser, or by FMG LLC or the New Adviser on sixty days’ written notice to the Trust and the other party. The Agreement also terminates automatically in the event of its “assignment” (as defined in the 1940 Act) or in the event that the Investment Management Agreement between FMG LLC and the Trust is terminated for any other reason. FMG LLC (and not the Portfolio) is responsible for the payment of the advisory fee to the New Adviser.
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The Agreement generally provides that the New Adviser will not be liable for any losses, claims, damages, liabilities or litigation incurred by FMG LLC or the Trust as a result of any error of judgment or mistake of law by the New Adviser with respect to the Portfolio, except that nothing in the Agreement limits the New Adviser’s liability for all losses, claims, damages, liabilities or litigation arising out of or based on (i) any willful misconduct, bad faith, reckless disregard or gross negligence of the New Adviser in the performance of any of its duties or obligations or (ii) any untrue statement of a material fact, or any omission thereof, in the Trust’s Prospectus, Statement of Additional Information, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Portfolio, if such statement or omission was made in reliance upon information furnished by the New Adviser to FMG LLC or the Trust.
Information Regarding Diamond Hill Capital Management, Inc.
The following provides additional information about the New Adviser. Information is provided in Appendix A to this Information Statement with respect to advisory fees paid to the New Adviser by comparable funds subject to the 1940 Act that it advises.
Diamond Hill is a wholly owned subsidiary of Diamond Hill Investment Group, Inc., a publicly traded investment adviser.
Diamond Hill has been the Adviser to the Multimanager Mid Cap Value Portfolio, a series of AXA Premier VIP Trust, since January 2011. As of December 31, 2012, Diamond Hill had $9.43 billion in assets under management.
Chris Welch, CFA, Tom Schindler, CFA and Chris Bingaman, CFA serve as Portfolio Managers and are primarily responsible for the day-to-day management of a portion of the Active Allocated Portion of the Portfolio. Mr. Welch currently serves as Portfolio Manager and Co-Chief Investment Officer of Diamond Hill, positions he has held since 2005 and 2010, respectively. Mr. Schindler has held portfolio management responsibilities at Diamond Hill since 2000. Mr. Bingaman has held portfolio management responsibilities at Diamond Hill since 2001.
Diamond Hill’s office is located at 325 John H. McConnell Blvd., Suite 200, Columbus, Ohio 43215. Diamond Hill is organized as a corporation in the State of Ohio. Diamond Hill’s principal executive officers and directors include: Ric H. Dillon, Director. The address of each of these individuals is 325 John H. McConnell Blvd., Suite 200, Columbus, OH 43215.
For its services to the Portfolio, Diamond Hill receives an advisory fee based on the aggregated net assets of its allocated portion of the Portfolio and the Multimanager Mid Cap Value Portfolio, a series of AXA Premier VIP Trust, also managed by FMG LLC and for which Diamond Hill serves as an Adviser (“Diamond Hill Portfolios”) as follows: 0.55% of the Diamond Hill Portfolios’ daily net assets up to and including $50 million; 0.50% of the Diamond Hill Portfolios’ daily net assets over $50 million up to and including $100 million; and 0.45% of the Diamond Hill Portfolios’ daily net assets over $100 million.
Portfolio Transactions
To the extent permitted by law and in accordance with procedures established by the Trust’s Board, each Portfolio of the Trust may engage in brokerage transactions with brokers that are affiliates of the Manager or the Advisers, with brokers who are affiliates of such brokers, or with unaffiliated brokers who trade or clear through affiliates of the Manager or Advisers. For the fiscal year ended December 31, 2012, the Portfolio paid $1,192.98 in brokerage commissions to brokerage affiliates of the Portfolio.
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Control Persons and Principal Holders
AXA Equitable Life Insurance Company (“AXA Equitable”), the parent company of FMG LLC, may be deemed to be a control person with respect to the Trust by virtue of its ownership of more than 99% of the Trust’s shares as of July 31, 2013. FMG LLC is organized as a Delaware limited liability company and is a wholly owned subsidiary of AXA Equitable. AXA Equitable is a wholly owned subsidiary of AXA Financial, Inc., a subsidiary of AXA, a French insurance holding company. As a “series” type of mutual fund, the Trust issues separate series of shares of beneficial interest with respect to each Portfolio. As of July 31, 2013, the Trustees and Officers of the Trust owned Contracts entitling them to provide voting instructions in the aggregate with respect to less than one percent of the beneficial interest of the Portfolio.
As of July 31, 2013, there were no shareholders who owned beneficially or of record 5% or more of any class of shares of the Portfolio.
A copy of the Trust’s 2013 Semi-Annual Report is enclosed.
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Appendix A
The charts below provide information regarding the advisory fees charged by the Adviser to comparable funds that it advises.
Name of Fund | Net Assets (as of June 30, 2013) | Advisory Fee Rate (% of net assets) | ||||
Multimanager Mid Cap Value Portfolio | $ | 112 Million | First $50 Million – 0.55% Next $50 Million – 0.50% Over $100 Million – 0.45% | |||
Diamond Hill Small-Mid Cap Fund | $ | 202.6 Million | 0.75% all assets | |||
A-1
