[Federal Register Volume 59, Number 25 (Monday, February 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2720]
[[Page Unknown]]
[Federal Register: February 7, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Rel. No. 20046; 812-8722]
The MainStay Funds, et al.; Application
January 31, 1994.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of Application for Exemption under the Investment
Company Act of 1940 (``Act'').
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Applicants: The MainStay Funds (the ``Trust'') and NYLIFE Distributors
Inc. (the ``Distributor''), on behalf of all existing and subsequently
created series of the Trust and all other registered open-end
management investment companies having the Distributor or an entity
controlling, controlled by, or under common control with the
Distributor as principal underwriter (the ``Funds'').\1\
\1\The Distributor serves as underwriter to the following Funds,
which do not presently intend to rely on the requested order and
have not signed the application: New York Life Institutional Funds
Inc., New York Life Fund, Inc., New York Life MFA Series Fund, Inc.,
and New York Life VLI Series Fund, Inc. Any such Fund may rely on
the order in the future if the Fund determines to issue shares
subject to a contingent deferred sales charge (``CDSC'') in
accordance with the representations and conditions in the
application.
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Relevant Act Sections: Exemption requested under section 6(c) from the
provisions of sections 2(a)(32), 2(a)(35), 22(c), and 22(d), and rule
22c-1 thereunder.
Summary of Application: Applicants seek an order that would amend
certain prior orders (the ``Prior Orders'') issued under section 6(c)
of the Investment Company Act of 1940.\2\ The Prior Orders granted an
exemption from sections 2(a)(32), 2(a)(35), 22(c), and 22(d) of the
Act, and rule 22c-1 thereunder to permit the imposition or waiver of a
contingent deferred sales charge (``CDSC'') on certain redemptions.
Applicants seek to amend the prior orders to alter the CDSC schedule
described in the prior applications, and to add other instances in
which the CDSC can be waived.
\2\Investment Company Act Release Nos. 15038 (Apr. 3, 1986)
(notice) and 15078 (Apr. 30, 1986) (order), and 15718 (May 5, 1987)
(notice) and 15758 (May 29, 1987) (order).
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Filing DATE: The application was filed on December 14, 1993 and amended
on January 24, 1994. Applicants have agreed to file an additional
amendment, the substance of which is reflected in this notice, prior to
the issuance of the requested order.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on February 28,
1994, 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 who wish to
be notified of a hearing may request such notification by writing to
the SEC's Secretary.
Addresses: Secretary, SEC, 450 Fifth Street NW., Washington, DC 20549.
Applicants, 51 Madison Avenue, New York, New York 10010.
For Further Information Contact: Courtney S. Thornton, Senior Attorney,
at (202) 272-5287, or C. David Messman, Branch Chief, at (202) 272-3018
(Division of Investment Management, Office of Investment Company
Regulation).
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.
Applicants' Representations
1. The Trust is an open-end management investment company organized
as a Massachusetts business trust. The Trust is a series company, and
currently offers shares of thirteen separate series for sale to
investors.
2. The Distributor, a wholly-owned subsidiary of New York Life
Insurance Company (``New York Life''), acts as administrator, principal
underwriter, and distributor to all series of the Trust.
3. The Trust offers shares in nine of its existing series subject
to a CDSC. The CDSC is imposed in reliance upon the Prior Orders, which
exempt applicants from the provisions of sections 2(a)(32), 2(a)(35),
22(c), and 22(d), and rule 22c-1 thereunder. Currently, a CDSC of up to
5% is imposed on shares of these series at the time of any redemption
by a shareholder that reduces the value of the shareholder's account in
the series to an amount that is lower than the amount of all payments
by the shareholder for the purchase of shares during the preceding six
years. Each of these series has adopted a distribution plan pursuant to
rule 12b-1 under the Act.
4. Applicants seek to amend the Prior Orders to permit the Funds to
sell shares subject to a CDSC that may vary from the rate and schedule
contained in the Prior Orders. No increase in the CDSC amount or
extension of the applicable period will apply to shares sold prior to
the issuance of an amended order.
5. The CDSC schedule may vary from Fund to Fund. The CDSC will not
be imposed on redemptions of shares that were purchased more than a
maximum number of years prior to the exemptions, as indicated in the
relevant CDSC schedule (the ``CDSC Period''), or on shares derived from
reinvestment of distributions. Furthermore, no CDSC will be imposed on
an amount that represents an increase in the value of a shareholder's
account resulting from capital appreciation above the amount paid for
shares purchased during the CDSC Period. As a result, the amount of the
CDSC will be calculated as the lesser of the amount that represents a
specified percentage of the net asset value of the shares at the time
of purchase, or the amount that represents such percentage of the net
value of the shares at the time of redemption. In determining the
applicability and rate of any CDSC, it will be assumed that a
redemption is made first of shares representing capital appreciation,
next of shares representing reinvestment of dividends and capital gain
distributions, and finally of other shares held by the shareholder for
the longest period of time.
6. Applicants also request amendment of the Prior Orders to waive
the CDSC for pre-retirement transfers or rollovers from a Fund to
another investment sponsored or distributed by New York Life or its
subsidiaries, when both the Fund and the other investment are funding
vehicles for a single retirement plan.
7. As amended, the order would permit applicants to waive the CDSC
for redemptions: (a) Following the death or disability, as defined in
section 72 (m)(7) of the Internal Revenue Code of 1986, as amended (the
``Code''), of a shareholder; (b) in connection with distributions
permitted to be made under the Code from an individual retirement
account (``IRA''), or other retirement and tax-deferred plans; (c) of
shares purchased by active or retired officers, directors or trustees,
partners, and employees of the Funds, by the Distributor or affiliated
companies, by members of the immediate families of such persons, and by
dealers having a sales agreement with the Distributor, or any trust,
pension, or profit sharing plan for the benefit of such persons; (d) by
New York Life or an affiliate thereof; (e) in connection with
redemptions of shares made pursuant to a shareholder's participation in
any systematic withdrawal plan adopted by a Fund; (f) by accounts
established with an initial purchase order of $1 million or more; (g)
effected by separate accounts or advisory accounts managed by New York
Life or an affiliated company; (h) by tax-exempt employee benefit plans
resulting from the adoption of any law or regulation pursuant to which
continuation of the investment in the Funds would be improper; (i)
effected by registered investment companies in connection with the
combination of the investment company with a Fund by merger,
acquisition of assets or by any other transaction; (j) by any state,
county, or city, or any instrumentality; department, authority or
agency thereof, and by trust companies and bank trust departments that
are holding shares in a fiduciary capacity; (k) made for the purpose of
funding a loan to a participant in a tax-qualified retirement plan
permitted to make such loans; (l) on transfers to (i) other funding
vehicles sponsored or distributed by New York Life or an affiliated
company, or (ii) guaranteed investment contracts, regardless of
sponsor, within a retirement plan; (m) made to meet required
distributions by a charitable remainder trust under section 664 of the
Code; and (n) by living revocable trusts. Applicants believe that these
proposed waivers are appropriate because they involve the redemption of
shares sold at little or no selling expense to the Funds or the
Distributor.
8. In addition to the CDSC waivers described above, no CDSC will be
charged in connection with the exercise of an exchange privilege
whereby an investor exchanges shares of a Fund for shares of another
Fund subject to a CDSC. In such a case, the Fund will add the period
for which the shares of the original Fund were held to the holding
period of the shares acquired in the exchange for purposes of
determining what, if any, CDSC is applicable in the event that such
acquired shares are redeemed following the exchange. In the event of
redemptions of shares after exchanges, as investor will be subject to
the CDSC of the Fund with the longest CDSC period or highest CDSC
schedule which may have been owned by him, whichever results in the
greatest payment. All exchanges will be effected in accordance with the
provisions of section 11(a) and rule 11a-3.
9. Applicants also propose to provide a pro-rata credit for and
CDSC paid in connection with a redemption of shares followed by a
reinvestment effected within a set number of days, not to exceed 365,
of the redemption. The credit will be paid for by the Distributor, not
by the Funds.
Applicants' Legal Analysis
Applicants believe that the implementation of the CDSC in the
manner and under the circumstances described above would be fair and in
the best interests of shareholders of the Funds. Accordingly,
applicants believe that the granting of the order requested herein
would be appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the Act.
Applicants' Condition
Applicants agree that, as a condition of granting the requested
relief, they will comply with the provisions of proposed rule 6c-10
under the Act (Investment Company Act Release No. 16619 (Nov. 2,
1988)), as such rule currently is proposed and as it may be reproposed,
adopted, or amended.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-2720 Filed 2-4-94; 8:45 am]
BILLING CODE 8010-01-M
