New York Life Insurance and Annuity Corporation, et al.; Notice of Application, 59783-59789 [E5-5598]
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Federal Register / Vol. 70, No. 197 / Thursday, October 13, 2005 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–27112; File No. 812–13229]
New York Life Insurance and Annuity
Corporation, et al.; Notice of
Application
October 5, 2005.
Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’).
ACTION: Notice of Application for an
order pursuant to Section 26(c) of the
Investment Company Act of 1940, as
amended, approving certain
substitutions of securities.
AGENCY:
Applicants: New York Life Insurance
and Annuity Corporation (‘‘NYLIAC’’)
and its NYLIAC Variable Annuity
Separate Account—III (‘‘SA–III,’’
together, the ‘‘Applicants’’).
Summary of Application: Applicants
request an order of the SEC, pursuant to
Section 26(c) of the Act, approving the
substitutions (the ‘‘Substitutions’’) by
SA–III of its subaccounts’ shares of the
AmSouth Enhanced Market Fund,
AmSouth International Equity Fund,
AmSouth Large Cap Fund, and
AmSouth Mid Cap Fund (the ‘‘Replaced
Funds’’), each separate portfolios of the
Variable Insurance Funds, with shares
of certain series of the MainStay VP S&P
500 Index Portfolio, MainStay VP
International Equity Portfolio, MainStay
VP Value Portfolio (‘‘MainStay
Replacing Funds’’), and Fidelity VIP
Mid Cap Portfolio (‘‘VIP Fund,’’ together
with the MainStay Replacing Funds, the
‘‘Replacing Funds’’). The MainStay
Replacing Funds are separate portfolios
of the MainStay VP Series Fund, Inc.
(the ‘‘MainStay VP Fund’’). The
Fidelity VIP Mid Cap Portfolio is a
portfolio of the Variable Insurance
Products Fund.
Filing Date: The Application was filed
on August 12, 2005 and amended and
restated on October 3, 2005
(‘‘Application’’).
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 Secretary of
the SEC 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
October 28, 2005, 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
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hearing may request notification by
writing to the Secretary of the SEC.
ADDRESSES: Secretary, SEC, 100 F Street,
NE., Washington, DC 20549. Applicants,
c/o New York Life Insurance and
Annuity Corporation, 1 Rockwood
Road, Sleepy Hollow, NY 10591, Attn:
Judy Bartlett, Esq. Copy to Foley &
Lardner, LLP, 3000 K Street, NW., Suite
500, Washington, DC 20007, Attn:
Richard T. Choi and Chip Lunde.
FOR FURTHER INFORMATION CONTACT:
Patrick F. Scott, Esq., Senior Counsel, or
Zandra Y. Bailes, Esq., Branch Chief,
Office of Insurance Products, Division of
Investment Management (tel. (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. NYLIAC is a Delaware stock life
insurance company that is whollyowned by New York Life Insurance
Company, a New York mutual life
insurance company. NYLIAC is licensed
to sell life, accident and health
insurance and annuities in the District
of Columbia and all States.
2. SA–III is a segregated asset account
of NYLIAC established pursuant to a
resolution of its Board of Directors on
November 30, 1994 under Delaware law
to fund variable annuity policies issued
by NYLIAC. SA–III is registered under
the Act as a unit investment trust. The
variable annuity policies funded by SA–
III that are affected by the Application
are the AmSouth Premium Plus Variable
Annuity and the AmSouth Premium
Plus II Variable Annuity (each, a
‘‘Policy’’; together, the ‘‘Policies’’),
interests under which are registered on
Form N–4 under the 1933 Act (File No.
333–30706).
3. Purchase payments under the
Policies are allocated to one or more
subaccounts (‘‘Subaccounts’’) of SA–III.
Income, gains, and losses, whether or
not realized, from assets allocated to
SA–III are, as provided in the Policies,
credited to or charged against the
Separate Account without regard to
other income, gains or losses of
NYLIAC. The assets maintained in SA–
III will not be charged with any
liabilities arising out of any other
business conducted by NYLIAC.
Nevertheless, all of the obligations of
NYLIAC arising under the Policies,
including its commitment to make cash
value payments, annuity payments, or
death benefit payments, are general
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59783
corporate obligations of NYLIAC.
Accordingly, all of the assets of NYLIAC
are available to meet its obligations
under its Policies. SA–III meets the
definition of ‘‘separate account’’
contained in Section 2(a)(37) of the Act.
4. Each Policy permits its owner to
allocate the Policy’s accumulated value
among numerous available
Subaccounts, each of which invests in a
different investment portfolio of an
underlying mutual fund. Each Policy
has 20 different Subaccounts (and
corresponding investment portfolios)
that are currently available for this
purpose.
5. Each Policy permits its owner to
transfer the Policy’s accumulated value
from one Subaccount to another
Subaccount of SA–III at any time,
subject to certain potential restrictions.
NYLIAC reserves the right to charge up
to $30 per transfer for each transfer in
excess of 12 in any one policy year.
6. NYLIAC reserves the right to make
certain changes, including the right to
substitute, for the shares held in any
Subaccount, the shares of another
underlying mutual fund, as stated in the
prospectus for the Policies contained in
the registration statement.
7. Each of the Replaced Funds is
managed by AmSouth Asset
Management, Inc. (‘‘AAMI’’). AAMI is a
separate, wholly-owned subsidiary of
AmSouth Bank (‘‘AmSouth Bank’’),
which is owned by AmSouth
Bancorporation. As discussed below,
AmSouth Bancorporation recently
informed NYLIAC that it has agreed to
sell its mutual fund management
business to Pioneer Investment
Management, Inc., and that it plans to
liquidate the Replaced Funds no later
than October 31, 2005. OakBrook
Investments, LLC (‘‘OakBrook’’) serves
as the investment sub-adviser of the
AmSouth Enhanced Market Fund and
the AmSouth Mid Cap Fund. OakBrook
is 49% owned by AmSouth Bank.
Dimensional Fund Advisors
(‘‘Dimensional’’) serves as the
investment sub-adviser of the AmSouth
International Equity Fund.
8. Each of the MainStay Replacing
Funds is managed by New York Life
Investment Management LLC
(‘‘NYLIM’’). NYLIM is a subsidiary of
New York Life Insurance Company
(‘‘New York Life’’). MacKay Shields LLC
(‘‘MacKay Shields’’) serves as the
investment sub-adviser of the MainStay
VP Value and MainStay VP
International Equity Portfolios. MacKay
Shields is a wholly-owned but
autonomously managed subsidiary of
New York Life. MacKay Shields became
a Delaware limited liability company in
1999. As of December 31, 2004, MacKay
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Shields managed approximately $39,208
million in assets. The Fidelity VIP Mid
Cap Portfolio is managed by Fidelity
Management and Research Company
(‘‘FMR’’). FMR Co. Inc. (‘‘FMRC’’) serves
as sub-adviser to the Fidelity VIP Mid
Cap Portfolio. FMRC has day-to-day
responsibility for choosing investments
for the Portfolio. The following affiliates
of FMR and FMRC assist with foreign
investments of the Fidelity VIP Mid
Cap Portfolio: Fidelity Management &
Research (U.K.) Inc., Fidelity
Management & Research (Far East) Inc.,
Fidelity Investments Japan Limited,
Fidelity International Investment
Advisors, Fidelity International
Investment Advisors (U.K.) Limited.
Neither FMR nor any of the Fidelity
VIP Mid Cap Portfolio’s sub-advisers is
affiliated with NYLIAC. No Replaced
Fund or Replacing Fund is operated by
its investment manager or adviser under
a ‘‘manager of managers’’ exemption
from certain requirements of Section 15
of the Act.
9. AmSouth Bancorporation recently
informed NYLIAC that it is selling its
mutual fund management business to
Pioneer Investment Management, Inc.,
and intends to liquidate the Replaced
Funds and terminate their operations,
and that the Board of Directors of the
Variable Insurance Funds has approved
a plan of liquidation.
10. In addition, Applicants contend,
the Replaced Funds have not achieved
the success in NYLIAC’s products that
has been hoped for. Since NYLIAC first
made the Replaced Funds available with
its products, they have together
garnered only approximately
$36,981,551 of accumulated value under
the Policies as of July 31, 2005. The
Policies are the only variable contracts
that offer the Replaced Funds as
underlying investment options. Partly as
a result of the Replaced Funds’ small
asset size, the Replaced Funds have
experienced higher operating expenses
relative to the Replacing Funds.
11. Against the foregoing background,
Applicants state, NYLIAC has
determined that its resources would be
better spent, and the interests of Policy
owners better served, if it terminates its
relationship with the Replaced Funds,
via the Substitutions described herein.
In selecting Replacing Funds for the
affected Policy owners, Applicants
concluded that the assets in question
could be most efficiently and effectively
managed as part of the Replacing Funds.
Applicants evaluated the investment
options available in other variable
contracts issued by SA–III and believe
that the Replacing Funds are the best
choices based on their investment
programs and their expense levels.
12. In addition, in view of the
foregoing considerations, NYLIAC
ceased offering new Policies effective
September 16, 2005.
13. Applicants submit that the
investment characteristics of each
Replacing Fund are substantially similar
to those of the corresponding Replaced
Fund. The investment objectives of each
Replacing Fund and corresponding
Replaced Fund, as described in their
prospectuses, are as follows:
AmSouth Large Cap
MainStay VP Value
Long term capital appreciation by investing in equity securities of largecap U.S. companies.
Maximum long-term total return from a combination of capital growth
and income.
AmSouth Enhanced Market
MainStay VP S&P 500 Index
Long-term capital growth by investing primarily in a diversified portfolio
of common stocks that are representative of the U.S. stock market.
Investment results that correspond to the total return performance (and
reflect reinvestment of dividends) of publicly traded common stocks
represented by the S&P 500 Index.
AmSouth Mid Cap
Fidelity VIP Mid Cap
Capital appreciation by investing in equity securities of mid-cap companies.
Long-term growth of capital.
AmSouth International Equity
MainStay VP International Equity
Capital appreciation by investing in equity securities of large foreign
companies.
Long-term growth of capital by investing in a portfolio consisting primarily of non-U.S. equity securities. Current income is a secondary
objective.
14. Applicants represents in the
Application that the principal
investment strategies of each Replacing
Fund and corresponding Replaced Fund
are as follows:
AmSouth Large Cap
MainStay VP Value
Under normal market conditions, the Fund will invest at least 80% of its
assets in equity securities of U.S. companies having $1 billion or
more in market capitalization, and will primarily invest in companies
that AAMI believes have the potential to provide capital appreciation.
AAMI seeks to diversify the Fund’s portfolio within industries that
AAMI believes to be among the fastest growing segments of the U.S.
economy. A portion of the Fund’s assets may be invested in preferred stocks or bonds convertible into common stocks.
The Portfolio normally invests at least 65% of its total assets in common stocks that MacKay Shields believes were ‘‘undervalued’’ (selling below their value) when purchased; typically pay dividends, although there may be non-dividend paying stocks if they meet the
‘‘undervalued’’ criteria; and are listed on a national securities exchange or are traded in the over-the-counter market.
The Portfolio normally invests in U.S. common stocks that:
• MacKay Shields believes are ‘‘undervalued’’ (selling below their
value) when purchased,
• Typically pay dividends, although there may be non-dividend paying stocks if they meet the ‘‘undervalued’’ criterion, and
• Are listed on a national securities exchange or are traded in the
over-the-counter market.
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59785
AmSouth Enhanced Market
MainStay VP S&P 500 Index
Under normal market conditions, the Fund will invest primarily in a
broadly diversified portfolio of securities represented in the S&P
500 Index, overweighting relative to their index weights those that
OakBrook believes to be undervalued compared to others in the S&P
500 Index. The Fund seeks to maintain risk characteristics similar
to those of the S&P 500 Index. OakBrook’s stock selection process
utilizes computer-aided quantitative analysis. OakBrook’s computer
models use many types of data, but emphasize technical data such
as price and volume information. Applying these models to stocks
within the S&P 500 Index, OakBrook attempts to generate more
capital growth than that of the S&P 500 Index.
The Portfolio normally invests at least 80% of its total assets in stocks
in the S&P 500 Index in the same proportion, to the extent feasible,
as they are represented in the S&P 500 Index.
NYLIM uses statistical techniques to determine which stocks are to be
purchased or sold to replicate the S&P 500 Index to the extent feasible. From time to time, adjustments may be made in the Portfolio’s
holdings because of changes in the composition of the S&P 500
Index. The correlation between the performance of the Portfolio and
the S&P 500 Index is expected to be at least 0.95, before fees and
expenses, on an annual basis. A correlation of 1.00 would indicate
perfect correlation, which would be achieved when the net asset
value of the Portfolio, including the value of its dividend and capital
gains distributions, increases or decreases in exact proportion to
changes in the S&P 500 Index.
The Portfolio’s investments also include S&P 500 Index futures that
are used for cash management purposes.
AmSouth Mid Cap Fund
Fidelity VIP Mid Cap
Under normal market conditions, the Fund will invest at least 80% of its
assets in a broadly diversified portfolio of securities issued by medium capitalization companies drawn from the Standard & Poor’s Mid
Cap 400 Index (‘‘S&P Mid Cap 400 Index’’), overweighting relative
to their index weights those that OakBrook believes to be undervalued compared to others in the S&P Mid Cap 400 Index. The
Fund seeks to maintain risk characteristics similar to those of the
S&P Mid Cap 400 Index.
The Portfolio’s principal investment strategies include:
• Normally investing primarily in common stocks.
• Normally investing at least 80% of assets in securities of companies with medium market capitalizations (which, for purposes of
this fund, are those companies with market capitalizations similar
to companies in the Russell Midcap Index or the Standard &
Poor’s MidCap 400 Index (S&P MidCap 400)).
• Potentially investing in companies with smaller or larger market
capitalizations.
• Investing in domestic and foreign issuers.
• Investing in either ‘‘growth’’ stocks or ‘‘value’’ stocks or both.
• Using fundamental analysis of each issuer’s financial condition
and industry position and market and economic conditions to select investments.
OakBrook’s stock selection process utilizes computer-aided quantitative
analysis. Stringent risk controls at the style, industry and individual
stock levels help ensure the Fund maintains risk characteristics similar to those of the S&P Mid Cap 400 Index. OakBrook’s computer
models use many types of data, but emphasize technical data such
as price and volume information. Applying these models to securities
comprising the S&P Mid Cap 400 Index, OakBrook hopes to generate more capital growth than that of the S&P Mid Cap 400 Index.
AmSouth International Equity Fund
MainStay VP International Equity
Under normal market conditions, the Fund will invest at least 80% of its
assets in equity securities of large foreign companies. The Fund intends to invest primarily in companies in economically developed
countries whose stocks Dimensional believes are undervalued at the
time of investment. While Dimensional may consider other factors,
Dimensional generally determines that a stock is undervalued if it
has a high book value in relation to its market value.
The Portfolio normally invests at least 80% of its assets in equity securities, and invests primarily in a diversified portfolio of equity securities of issuers, wherever organized, who do business mainly outside
the United States. Investments will be made in a variety of countries,
with a minimum of five countries other than the United States. This
includes countries with established economies as well as emerging
market countries that MacKay Shields believes present favorable opportunities.
The Portfolio’s subadvisor seeks to identify investment opportunities by
pursuing a bottom up, stock selection investment discipline. Proprietary, quantitative and qualitative tools are used to identify attractive
companies. In-depth, original, fundamental research is performed on
identified companies to assess their business and investment prospects. In conducting the research, particular attention is paid to the
generation and utilization of cash flows, the returns on invested capital and the overall track record of management in creating shareholder value.
Portfolios are constructed by combining securities with low correlation.
Quantitative tools are used for risk control at the portfolio level.
Country allocations in the Portfolio are a result of the bottom up,
stock selection process. To reduce risk, an attempt is made at the
portfolio level to stay within a reasonable range of the key constituents of the benchmark, unless the stock selection process strongly
argues against it.
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The Portfolio may buy and sell currency on a spot basis and enter into
foreign currency forward contracts for hedging purposes. In addition,
the Portfolio may buy or sell foreign currency options, securities and
securities index options and enter into swap agreements and futures
contracts and related options. These techniques may be used for
any legally permissible purpose, including to increase the Portfolio’s
return.
The subadvisor may sell a security if it no longer believes the security
will contribute to meeting the objective of the Portfolio. In considering
whether to sell a security, the subadvisor may evaluate, among other
things, the condition of foreign economies and meaningful changes
in the issuer’s financial condition and competitiveness.
15. With respect to the principal
investment risks of each Replacing Fund
compared to each and corresponding
Replaced Fund, Applicants submit that
they are substantially similar, and that
they are as follows:
AmSouth Large Cap
MainStay VP Value
Investment risk, market risk (including those particular to large cap
growth stocks), interest rate risk, credit risk, and active trading risk.
Changing economic, stock market, industry and company conditions,
the risks inherent in management’s ability to anticipate such changes
that can adversely affect the value of the Portfolio’s holdings, and
the risks associated with value stocks. The Portfolio also may experience high portfolio turnover.
AmSouth Enhanced Market
MainStay VP S&P 500 Index
Investment risk, market risk (including those particular to large capitalization companies represented in the S&P 500 Index, growth stocks
and value stocks), interest rate risk, credit risk, derivatives risk and
active trading risk.
Changing economic, stock market, industry and company conditions
which can adversely affect the value of the Portfolio’s holdings, risks
associated with the value of the S&P 500 Index, and the potential
inability to mirror the S&P 500 Index. In addition, the Portfolio is
subject to the risks associated with derivatives instruments.
Fidelity VIP Mid Cap
AmSouth Mid Cap
Investment risk, market risk (including those particular to growth stocks,
value stocks and mid cap companies), interest rate risk credit risk,
derivatives risk and active trading risk.
Stock market volatility, foreign exposure, issuer-specific changes, and
mid cap investing.
AmSouth International Equity
MainStay VP International Equity
Investment risk, market risk, credit risk, derivatives risk and active trading risk. The Fund also is subject to foreign securities risk.
Changing economic, stock market, industry and company conditions
and the risks inherent in management’s ability to anticipate such
changes that can adversely affect the value of the Portfolio’s holdings. The Portfolio also is subject to foreign securities risk and
emerging markets risk. In addition, the Portfolio is subject to the risks
associated with derivatives instruments. The Portfolio also may experience high portfolio turnover.
16. The table below compares fees
and expenses of each Replaced Fund
and each corresponding Replacing Fund
as of December 31, 2004. As the table
shows, the total expenses of each
Replaced Fund are higher than the total
expenses of the corresponding
Replacing Fund.
Replaced funds
AmSouth Large Cap
(percent)
Management Fee ....................................................
Shareholder Service Fee ........................................
Rule 12b–1 Fee ......................................................
Other Expenses ......................................................
Gross Operating Expenses ....................................
Net (After Waiver) Expenses ..................................
0.70 ........................................................................
0.25 ........................................................................
None .......................................................................
0.70 ........................................................................
1.65 ........................................................................
1.05 ........................................................................
AmSouth Enhanced Market
Management Fee ....................................................
Shareholder Service Fee ........................................
Rule 12b–1 Fee ......................................................
Other Expenses ......................................................
Gross Operating Expenses ....................................
Net (After Waiver) Expenses ..................................
0.45 ........................................................................
0.25 ........................................................................
None .......................................................................
0.93 ........................................................................
1.63 ........................................................................
1.01 ........................................................................
AmSouth Mid Cap
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Replacing funds
MainStay VP Value (percent)
Initial Class
Service Class
0.36
0.36
None
None
None
0.25
0.29
0.29
0.65
0.90
0.65
0.90
MainStay VP S&P 500 Index
Initial Class
Service Class
0.10
0.10
None
None
None
0.25
0.29
0.29
0.39
0.64
0.39
0.64
VIP Mid Cap
Fidelity
Service Class 2
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Replacing funds
MainStay VP Value (percent)
Replaced funds
AmSouth Large Cap
(percent)
Initial Class
Management Fee ....................................................
Shareholder Service Fee ........................................
Rule 12b–1 Fee ......................................................
Other Expenses ......................................................
Gross Operating Expenses ....................................
Net (After Waiver) Expenses ..................................
0.90 ........................................................................
0.25 ........................................................................
None .......................................................................
1.08 ........................................................................
2.23 ........................................................................
1.25 ........................................................................
AmSouth International Equity
Management Fee ....................................................
Shareholder Service Fee ........................................
Rule 12b–1 Fee ......................................................
Other Expenses ......................................................
Gross Operating Expenses ....................................
Net (After Waiver) Expenses ..................................
1.00 ........................................................................
0.25 ........................................................................
None .......................................................................
0.79 ........................................................................
2.04 ........................................................................
1.43 ........................................................................
In each case, the class of Replaced
Funds available under the Policies
impose an asset-based shareholder
service fee equal to 0.25% per annum of
the Fund’s average daily net assets. In
each case, the service class of the
MainStay Replacing Funds that will be
available under the Policies issued on or
after June 2, 2003, and the service class
2 of the Fidelity VIP Mid Cap Portfolio,
impose an asset-based sales charge
pursuant to Rule 12b–1 under the Act
(‘‘Rule 12b–1 fee’’) equal to 0.25% per
annum of the Fund’s average daily net
assets. In each case, the initial class of
the MainStay Replacing Funds that will
Replaced fund
AmSouth
AmSouth
AmSouth
AmSouth
Applicants state that, the table above
demonstrates that each Replacing Fund
has a significantly greater asset size than
the Replaced Fund to which it
corresponds, and that the principal
potential advantages of size in the
circumstances presented here would be
economies of scale and ease of
diversification.
18. Each Substitution will take place
at the applicable Funds’ relative per
share net asset values determined on the
date of the Substitution in accordance
with Section 22 of the Act and Rule
22c–1 thereunder. Accordingly,
Applicants state, the Substitutions will
have no financial impact on any Policy
owner. Each Substitution will be
effected by having each Subaccount that
invests in a Replaced Fund redeem its
shares of the Replaced Fund at the net
asset value calculated on the date of the
Substitution and purchase shares of the
appropriate class of the appropriate
Replacing Fund at the net asset value
calculated on the same date. Proceeds of
AmSouth Large Cap Fund, AmSouth
Enhanced Market Fund and AmSouth
International Equity Fund shares
applicable to Policies purchased prior to
June 2, 2003 will be used to purchase
initial class shares of the MainStay VP
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Service Class
0.57
None
0.25
0.14
0.96
0.96
MainStay VP International Equity
Initial Class
Service Class
0.60
0.60
None
None
None
0.25
0.39
0.39
0.99
1.24
0.99
1.24
be available under Policies issued prior
to June 2, 2003, do not impose any Rule
12b–1 fee.
17. The Application indicates that,
the net assets of each Fund as of July 31,
2005 were as follows (in thousands):
Replacing fund
Enhanced Market Fund—$7,744
International Equity Fund—$13,546
Large Cap Fund—$8,852
Mid Cap Fund—$6,839
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MainStay VP S&P 500 Index Portfolio—$1,457,870
MainStay VP International Equity Portfolio—$282,428
MainStay VP Value Portfolio—$630,226
Fidelity VIP Mid Cap Portfolio—$4,964,945
S&P 500 Index Portfolio, MainStay VP
International Equity Portfolio and
MainStay VP Value Portfolio,
respectively. Proceeds of AmSouth
Large Cap Fund, AmSouth Enhanced
Market Fund and AmSouth
International Equity Fund shares
applicable to Policies purchased on or
after June 2, 2003 will be used to
purchase service class shares of the
MainStay VP S&P 500 Index Portfolio,
MainStay VP International Equity
Portfolio and MainStay VP Value
Portfolio, respectively. Proceeds of
AmSouth Mid Cap Fund shares will be
used to purchase service class 2 shares
of the Fidelity VIP Mid Cap Portfolio.
19. To the extent that NYLIAC
imposes any limit on the number of
subaccounts that may be used over the
life of a Policy, no Substitution will be
counted as giving rise to use of a new
Subaccount for such purpose.
20. The Applicants state that, NYLIAC
will pay all expenses and transaction
costs of the Substitutions, including all
legal, accounting, and brokerage
expenses relating to the Substitutions,
the below described disclosure
documents, and the Application. No
costs will be borne directly or indirectly
by Policy owners. Affected Policy
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owners will not incur any fees or
charges as a result of the Substitutions.
Nor will their rights or the obligations
of NYLIAC under the Policies be altered
in any way. The Substitutions will not
cause the fees and charges under the
Policies currently being paid by Policy
owners to be greater after the
Substitutions than before the
Substitutions.
21. The prospectuses for all of the
Policies have disclosed that the issuing
insurance company has the right to
substitute any other mutual fund shares
for the shares in which a Subaccount is
investing at any time.
22. Applicants state that, the
Substitutions requested in the
Application were described in
supplements to the applicable
prospectuses for the Policies filed with
the Commission or in other
supplemental disclosure documents
(collectively, ‘‘Supplements’’) and
mailed to all affected Policy owners.
Each Supplement gave the relevant
Policy owners notice of the Substitution
that would affect their Policies and
described the reasons for engaging in
that Substitution. The Supplements also
informed existing Policy owners with
values allocated to a Subaccount
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Federal Register / Vol. 70, No. 197 / Thursday, October 13, 2005 / Notices
investing in a Replaced Fund that no
additional amounts may be allocated to
the Subaccounts that invest in that Fund
on or after the date of Substitution. In
addition, the Supplements informed
these affected Policy owners that they
will have an opportunity to reallocate
their accumulated value:
• Prior to a Substitution, from the
Subaccount investing in the Replaced
Fund to one or more Subaccounts
investing in other Funds available under
the applicable Policy or the fixed
account without the imposition of any
transfer charge or limitation (except
potentially harmful transfers) 1 and
without diminishing the number of free
transfers that otherwise may be made in
a given Policy year, or
• For 30 days after a Substitution,
from a Subaccount investing in the
Replacing Fund to one or more
Subaccounts investing in other Funds
available under the applicable Policy or
the fixed account without the
imposition of any transfer charge or
limitation (except potentially harmful
transfers) and without diminishing the
number of free transfers that otherwise
may be made in a given Policy year.
23. Applicants aver that each affected
Policy owner was provided with a
prospectus for each relevant Replacing
Fund, which accompanied the
Supplement discussed above. Within
five days after a Substitution, NYLIAC
will send to its affected Policy owners
written confirmation that the
Substitutions have occurred. The
confirmations will also identify the
shares of the Replaced Funds that have
been eliminated and the shares of the
Replacing Funds that have been
substituted. That confirmation will
reiterate the free transfer rights
disclosed in the Supplements that such
owners will have previously received.
Applicants’ Legal Analysis
1. Section 26(c) of the Act makes it
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
approves the substitution. Section 26(c)
of the Act provides the Commission will
issue an order approving such a
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
the Act.
1 The exception for potentially harmful transfers
refers to NYLIAC’s procedures designed to limit
potentially harmful transfers such as market timing
as described under ‘‘Limits on Transfers’’ in the
prospectus contained in the Policy Registration
Statement.
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16:14 Oct 12, 2005
Jkt 208001
2. Section 26(c) of the Act (then
denominated as Section 26(b)) was
enacted as part of the Investment
Company Act Amendments of 1970.
Section 26(a)(4)(B) of the Act had
theretofore required only that the trust
instrument of a unit investment trust
require that the sponsor or trustee notify
the trust’s shareholders within five days
after a substitution of underlying
securities. The legislative history of
Section 26(c) describes its underlying
purpose as follows:
The proposed amendment recognizes that
in the case of a unit investment trust holding
the securities of a single issuer notification to
shareholders does not provide adequate
protection since the only relief available to
the shareholders, if dissatisfied, would be to
redeem their shares. A shareholder who
redeems and reinvests the proceeds in
another unit investment trust or in an openend company would under most
circumstances be subject to a new sales load.
The proposed amendment would close this
gap in shareholder protection by providing
for Commission approval of the substitution.
The Commission would be required to issue
an order approving the substitution if it finds
the substitution consistent with the
protection of investors and the purposes
fairly intended by the policy and provisions
of the Act.
3. The legislative history makes it
clear that the purpose of Section 26(c)
is to protect the expectation of investors
in a unit investment trust that the unit
investment trust will accumulate shares
of a particular issuer by preventing
unscrutinized substitutions, which
might, in effect, force shareholders
dissatisfied with the substituted security
to redeem their shares, thereby possibly
incurring either a loss of the sales load
deducted from initial premium
payments, an additional sales load upon
reinvestment of the redemption
proceeds, or both. Moreover, a Policy
owner forced to redeem may suffer
adverse tax consequences. Section 26(c)
affords this protection to investors by
preventing a depositor or trustee of a
unit investment trust that holds shares
of one issuer from substituting for those
shares the shares of another issuer,
unless the Commission approves that
substitution.
4. Applicants assert that the purposes,
terms, and conditions of the
Substitutions are consistent with the
principles and purposes of Section 26(c)
and do not entail any of the abuses that
Section 26(c) is designed to prevent.
The Substitutions are necessary and
appropriate because, for the reasons
discussed above, continuing to use the
Replaced Funds as a funding medium
for the Policies is no longer consistent
with, or possible under, the business
plan that Applicants are now pursuing
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Frm 00075
Fmt 4703
Sfmt 4703
in order to enhance the success of the
Policies and the benefits to Policy
owners. Moreover, as also noted above,
each Policy has reserved to the issuing
insurance company the right to make
such substitutions, and each such
company has specifically disclosed this
reserved right in the prospectuses for its
Policies.
5. Applicants contend that the
Substitutions will not result in the type
of costly forced redemption that Section
26(c) was intended to guard against and,
for the following reasons, are consistent
with the protection of investors and the
purposes fairly intended by the Act.
6. The MainStay VP Value Portfolio is
an appropriate Fund to which to move
the accumulated values of Policy
owners with values allocated to the
AmSouth Large Cap Fund, because its
investment program, like that of the
AmSouth Large Cap Fund, involves
seeking long-term total return. The
MainStay VP S&P 500 Index Portfolio is
an appropriate Fund to which to move
the accumulated values of Policy
owners with values allocated to the
AmSouth Enhanced Market Fund,
because its investment program, like
that of the AmSouth Enhanced Market
Fund, involves investing in a diversified
selection of common stocks represented
by the S&P 500 Index. The Fidelity
VIP Mid Cap Portfolio is an appropriate
Fund to which to move the accumulated
values of Policy owners with values
allocated to the AmSouth Mid Cap
Fund, because its investment objective,
like that of the AmSouth Mid Cap Fund,
involves growth of capital by investing,
primarily, in companies with market
capitalizations that, at the time of
investment, are similar to the companies
in the S&P MidCap 400 Index. The
MainStay VP International Equity
Portfolio is an appropriate Fund to
which to move the accumulated values
of Policy owners with values allocated
to the AmSouth International Equity
Fund, because its investment program,
like that of the AmSouth International
Equity Fund, involves seeking growth of
capital by investing in a portfolio
consisting primarily of non-US equity
securities.
7. The costs of the Substitutions
(including brokerage, legal, accounting,
and other expenses) will be borne by
NYLIAC and will not be borne by Policy
owners. No charges will be assessed to
the Policy owners to effect the
Substitutions. It is expected that each
Substitution will be effected by
redeeming shares of the Replaced Fund
for cash and using the cash to purchase
shares of the corresponding Replacing
Fund.
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Federal Register / Vol. 70, No. 197 / Thursday, October 13, 2005 / Notices
8. For each fiscal period (not to
exceed a fiscal quarter) during the 24
months following the date of the
Substitutions, NYLIAC will, as a
condition of any Commission order
approving the Substitutions, for each
Policy outstanding on the date of the
Substitution, adjust the Policy values to
the extent necessary to effectively
reimburse Policy owners invested in a
MainStay Replacing Fund for their
proportionate share of any amount by
which the annual rate of the MainStay
Replacing Fund’s total operating
expenses (after any expense waivers or
reimbursements) for that fiscal period,
as a percentage of the Fund’s average
daily net assets, plus the annual rate of
any asset-based charges (excluding any
such charges that are for premium taxes,
or for Policy riders added after
December 31, 2004) deducted under the
terms of the owner’s Policy for that
fiscal period, exceed the sum of:
(a) The annualized rate of the
corresponding Replaced Fund’s total
operating expenses, as a percentage of
such Replaced Fund’s average daily net
assets, for the twelve months ended
December 31, 2004; plus
(b) The annual rate of any asset-based
charges (excluding any such charges
that are for premium taxes), deducted
under that Policy for such twelve
months.
9. NYLIAC represents that the
substitution and the selection of the
Fidelity VIP Mid Cap Portfolio was not
motivated by any financial
consideration paid or to be paid to
NYLIAC or its affiliates by the Fidelity
VIP Mid Cap Portfolio, its advisor or
underwriter, or their respective
affiliates. In connection with assets held
under Policies affected by the
Substitutions, NYLIAC will not receive,
for 36 months following the
Substitution, any direct or indirect
benefits from the Fidelity VIP Mid Cap
Portfolio, or its advisor or underwriter
(or their affiliates), at a rate higher than
that which they had received from the
AmSouth Mid Cap Fund, its advisor or
underwriter (or their affiliates),
including without limitation Rule 12b–
1, shareholder service, administration,
or other service fees, or revenue sharing
or other arrangements.
10. All affected Policy owners will be
given notice of the Substitutions prior to
the Substitutions, and will have an
opportunity to make the following
transfers of their accumulated value
without the imposition of any charge or
limitation (except potentially harmful
transfers, as described above) and
without diminishing the number of
charge-free transfers that otherwise may
be made in a Policy year:
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16:14 Oct 12, 2005
Jkt 208001
• Transfers of accumulated value
from a Subaccount investing in a
Replaced Fund to one or more
Subaccounts investing in other Funds
available under the applicable Policy or
the fixed account, from the date of
notice until the date of Substitution, and
• Transfers of accumulated value
from a Subaccount investing in a
Replacing Fund as a result of a
Substitution to one or more
Subaccounts investing in other Funds
available under the applicable Policy or
the fixed account, for 30 days after a
Substitution.
11. Within five days after each
substitution, NYLIAC will send to the
affected Policy owners written
confirmation that the Substitutions have
occurred and identify the shares of the
Replaced Funds that have been
eliminated and the shares of the
Replacing Funds that have been
substituted.
12. The Substitutions will in no way
alter the insurance benefits to Policy
owners or the contractual obligations of
NYLIAC. The Substitutions will in no
way alter the tax treatment of owners in
connection with their Policies, and no
tax liability will arise for Policy owners
as a result of the Substitutions.
Conclusion
Applicants request an order of the
Commission pursuant to Section 26(c)
of the Act approving the proposed
Substitutions under the terms and
subject to the conditions set forth
herein. Section 26(c), in pertinent part,
provides that the Commission shall
issue an order approving a substitution
of securities if the evidence establishes
that it is consistent with the protection
of investors and the purposes fairly
intended by the policy and provisions of
the Act. For the reasons and upon the
facts set forth above, Applicants
respectfully submit that the
Substitutions meet the standards set
forth in Section 26(c) and that the
approval requested therefore, should be
granted.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5–5598 Filed 10–12–05; 8:45 am]
BILLING CODE 8010–01–P
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Sfmt 4703
59789
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IA–2439]
Approval of Investment Adviser
Registration Depository Filing Fees
Securities and Exchange
Commission.
ACTION: Order.
AGENCY:
SUMMARY: The Securities and Exchange
Commission (Commission or SEC) is
waiving for one year Investment Adviser
Registration Depository (IARD) annual
filing fees for all advisers.
EFFECTIVE DATE: October 7, 2005.
FOR FURTHER INFORMATION CONTACT:
Jennifer L. Sawin, Assistant Director, at
(202) 551–6787, or Iarules@sec.gov,
Office of Investment Adviser
Regulation, Division of Investment
Management, Securities and Exchange
Commission, 450 Fifth Street, NW.,
Washington, DC 20549–0506.
Discusson
Section 203A(d) of the Investment
Advisers Act of 1940 (Advisers Act)
authorizes us to require investment
advisers to file applications and other
documents through an entity designated
by the Commission, and to pay
reasonable costs associated with such
filings.1 In 2000, we designated the
NASD as the IARD system operator and
approved filing fees,2 and later required
advisers registered or registering with us
to file Form ADV through the IARD.3
Approximately 9,000 advisers now use
the IARD to register with us and make
State notice filings electronically
through the Internet.
IARD filing fee revenues from
advisers registering or registered with
the SEC (SEC-associated IARD revenues)
have exceeded projections made in 2000
when the current fee schedule was
approved. Pursuant to that schedule,
filing fees vary according to the
adviser’s assets under management. The
number of SEC-registered advisers has
grown from an estimated 8,100 in 2000
to approximately 9,000 today. More
significantly, advisers’ managed assets
have increased, which has moved many
investment advisers to higher fee
1 See
15 U.S.C. 80b–3a(d).
of NASD Regulation, Inc., to
Establish and Maintain the Investment Adviser
Registration Depository; Approval of IARD Fees,
Investment Advisers Act Release No. 1888 (July 28,
2000) [65 FR 47807 (Aug. 3, 2000)]. Following a
corporate restructuring in 2002, the name of the
IARD system operator was changed to ‘‘NASD.’’
3 Electronic Filing by Investment Advisers;
Amendments to Form ADV, Investment Advisers
Act Release No. 1897 (Sept. 22, 2000) [65 FR 57438
(Sept. 22, 2000)].
2 Designation
E:\FR\FM\13OCN1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 197 (Thursday, October 13, 2005)]
[Notices]
[Pages 59783-59789]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-5598]
[[Page 59783]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-27112; File No. 812-13229]
New York Life Insurance and Annuity Corporation, et al.; Notice
of Application
October 5, 2005.
AGENCY: Securities and Exchange Commission (``Commission'' or ``SEC'').
ACTION: Notice of Application for an order pursuant to Section 26(c) of
the Investment Company Act of 1940, as amended, approving certain
substitutions of securities.
-----------------------------------------------------------------------
Applicants: New York Life Insurance and Annuity Corporation
(``NYLIAC'') and its NYLIAC Variable Annuity Separate Account--III
(``SA-III,'' together, the ``Applicants'').
Summary of Application: Applicants request an order of the SEC,
pursuant to Section 26(c) of the Act, approving the substitutions (the
``Substitutions'') by SA-III of its subaccounts' shares of the AmSouth
Enhanced Market Fund, AmSouth International Equity Fund, AmSouth Large
Cap Fund, and AmSouth Mid Cap Fund (the ``Replaced Funds''), each
separate portfolios of the Variable Insurance Funds, with shares of
certain series of the MainStay VP S&P 500 Index Portfolio, MainStay VP
International Equity Portfolio, MainStay VP Value Portfolio (``MainStay
Replacing Funds''), and Fidelity[supreg] VIP Mid Cap Portfolio (``VIP
Fund,'' together with the MainStay Replacing Funds, the ``Replacing
Funds''). The MainStay Replacing Funds are separate portfolios of the
MainStay VP Series Fund, Inc. (the ``MainStay VP Fund''). The
Fidelity[supreg] VIP Mid Cap Portfolio is a portfolio of the Variable
Insurance Products Fund.
Filing Date: The Application was filed on August 12, 2005 and
amended and restated on October 3, 2005 (``Application'').
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 Secretary of the SEC
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
October 28, 2005, 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 SEC.
ADDRESSES: Secretary, SEC, 100 F Street, NE., Washington, DC 20549.
Applicants, c/o New York Life Insurance and Annuity Corporation, 1
Rockwood Road, Sleepy Hollow, NY 10591, Attn: Judy Bartlett, Esq. Copy
to Foley & Lardner, LLP, 3000 K Street, NW., Suite 500, Washington, DC
20007, Attn: Richard T. Choi and Chip Lunde.
FOR FURTHER INFORMATION CONTACT: Patrick F. Scott, Esq., Senior
Counsel, or Zandra Y. Bailes, Esq., Branch Chief, Office of Insurance
Products, Division of Investment Management (tel. (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. NYLIAC is a Delaware stock life insurance company that is
wholly-owned by New York Life Insurance Company, a New York mutual life
insurance company. NYLIAC is licensed to sell life, accident and health
insurance and annuities in the District of Columbia and all States.
2. SA-III is a segregated asset account of NYLIAC established
pursuant to a resolution of its Board of Directors on November 30, 1994
under Delaware law to fund variable annuity policies issued by NYLIAC.
SA-III is registered under the Act as a unit investment trust. The
variable annuity policies funded by SA-III that are affected by the
Application are the AmSouth Premium Plus Variable Annuity and the
AmSouth Premium Plus II Variable Annuity (each, a ``Policy''; together,
the ``Policies''), interests under which are registered on Form N-4
under the 1933 Act (File No. 333-30706).
3. Purchase payments under the Policies are allocated to one or
more subaccounts (``Subaccounts'') of SA-III. Income, gains, and
losses, whether or not realized, from assets allocated to SA-III are,
as provided in the Policies, credited to or charged against the
Separate Account without regard to other income, gains or losses of
NYLIAC. The assets maintained in SA-III will not be charged with any
liabilities arising out of any other business conducted by NYLIAC.
Nevertheless, all of the obligations of NYLIAC arising under the
Policies, including its commitment to make cash value payments, annuity
payments, or death benefit payments, are general corporate obligations
of NYLIAC. Accordingly, all of the assets of NYLIAC are available to
meet its obligations under its Policies. SA-III meets the definition of
``separate account'' contained in Section 2(a)(37) of the Act.
4. Each Policy permits its owner to allocate the Policy's
accumulated value among numerous available Subaccounts, each of which
invests in a different investment portfolio of an underlying mutual
fund. Each Policy has 20 different Subaccounts (and corresponding
investment portfolios) that are currently available for this purpose.
5. Each Policy permits its owner to transfer the Policy's
accumulated value from one Subaccount to another Subaccount of SA-III
at any time, subject to certain potential restrictions. NYLIAC reserves
the right to charge up to $30 per transfer for each transfer in excess
of 12 in any one policy year.
6. NYLIAC reserves the right to make certain changes, including the
right to substitute, for the shares held in any Subaccount, the shares
of another underlying mutual fund, as stated in the prospectus for the
Policies contained in the registration statement.
7. Each of the Replaced Funds is managed by AmSouth Asset
Management, Inc. (``AAMI''). AAMI is a separate, wholly-owned
subsidiary of AmSouth Bank (``AmSouth Bank''), which is owned by
AmSouth Bancorporation. As discussed below, AmSouth Bancorporation
recently informed NYLIAC that it has agreed to sell its mutual fund
management business to Pioneer Investment Management, Inc., and that it
plans to liquidate the Replaced Funds no later than October 31, 2005.
OakBrook Investments, LLC (``OakBrook'') serves as the investment sub-
adviser of the AmSouth Enhanced Market Fund and the AmSouth Mid Cap
Fund. OakBrook is 49% owned by AmSouth Bank. Dimensional Fund Advisors
(``Dimensional'') serves as the investment sub-adviser of the AmSouth
International Equity Fund.
8. Each of the MainStay Replacing Funds is managed by New York Life
Investment Management LLC (``NYLIM''). NYLIM is a subsidiary of New
York Life Insurance Company (``New York Life''). MacKay Shields LLC
(``MacKay Shields'') serves as the investment sub-adviser of the
MainStay VP Value and MainStay VP International Equity Portfolios.
MacKay Shields is a wholly-owned but autonomously managed subsidiary of
New York Life. MacKay Shields became a Delaware limited liability
company in 1999. As of December 31, 2004, MacKay
[[Page 59784]]
Shields managed approximately $39,208 million in assets. The
Fidelity[supreg] VIP Mid Cap Portfolio is managed by Fidelity
Management and Research Company (``FMR''). FMR Co. Inc. (``FMRC'')
serves as sub-adviser to the Fidelity VIP Mid Cap Portfolio. FMRC has
day-to-day responsibility for choosing investments for the Portfolio.
The following affiliates of FMR and FMRC assist with foreign
investments of the Fidelity[supreg] VIP Mid Cap Portfolio: Fidelity
Management & Research (U.K.) Inc., Fidelity Management & Research (Far
East) Inc., Fidelity Investments Japan Limited, Fidelity International
Investment Advisors, Fidelity International Investment Advisors (U.K.)
Limited. Neither FMR nor any of the Fidelity[supreg] VIP Mid Cap
Portfolio's sub-advisers is affiliated with NYLIAC. No Replaced Fund or
Replacing Fund is operated by its investment manager or adviser under a
``manager of managers'' exemption from certain requirements of Section
15 of the Act.
9. AmSouth Bancorporation recently informed NYLIAC that it is
selling its mutual fund management business to Pioneer Investment
Management, Inc., and intends to liquidate the Replaced Funds and
terminate their operations, and that the Board of Directors of the
Variable Insurance Funds has approved a plan of liquidation.
10. In addition, Applicants contend, the Replaced Funds have not
achieved the success in NYLIAC's products that has been hoped for.
Since NYLIAC first made the Replaced Funds available with its products,
they have together garnered only approximately $36,981,551 of
accumulated value under the Policies as of July 31, 2005. The Policies
are the only variable contracts that offer the Replaced Funds as
underlying investment options. Partly as a result of the Replaced
Funds' small asset size, the Replaced Funds have experienced higher
operating expenses relative to the Replacing Funds.
11. Against the foregoing background, Applicants state, NYLIAC has
determined that its resources would be better spent, and the interests
of Policy owners better served, if it terminates its relationship with
the Replaced Funds, via the Substitutions described herein. In
selecting Replacing Funds for the affected Policy owners, Applicants
concluded that the assets in question could be most efficiently and
effectively managed as part of the Replacing Funds. Applicants
evaluated the investment options available in other variable contracts
issued by SA-III and believe that the Replacing Funds are the best
choices based on their investment programs and their expense levels.
12. In addition, in view of the foregoing considerations, NYLIAC
ceased offering new Policies effective September 16, 2005.
13. Applicants submit that the investment characteristics of each
Replacing Fund are substantially similar to those of the corresponding
Replaced Fund. The investment objectives of each Replacing Fund and
corresponding Replaced Fund, as described in their prospectuses, are as
follows:
------------------------------------------------------------------------
------------------------------------------------------------------------
AmSouth Large Cap MainStay VP Value
------------------------------------
Long term capital appreciation by Maximum long-term total return from
investing in equity securities of a combination of capital growth
large-cap U.S. companies. and income.
------------------------------------
AmSouth Enhanced Market MainStay VP S&P 500 Index
------------------------------------
Long-term capital growth by Investment results that correspond
investing primarily in a to the total return performance
diversified portfolio of common (and reflect reinvestment of
stocks that are representative of dividends) of publicly traded
the U.S. stock market. common stocks represented by the
S&P 500[supreg] Index.
------------------------------------
AmSouth Mid Cap Fidelity[supreg] VIP Mid Cap
------------------------------------
Capital appreciation by investing Long-term growth of capital.
in equity securities of mid-cap
companies.
------------------------------------
AmSouth International Equity MainStay VP International Equity
------------------------------------
Capital appreciation by investing Long-term growth of capital by
in equity securities of large investing in a portfolio
foreign companies. consisting primarily of non-U.S.
equity securities. Current income
is a secondary objective.
------------------------------------------------------------------------
14. Applicants represents in the Application that the principal
investment strategies of each Replacing Fund and corresponding Replaced
Fund are as follows:
------------------------------------------------------------------------
------------------------------------------------------------------------
AmSouth Large Cap MainStay VP Value
------------------------------------
Under normal market conditions, the The Portfolio normally invests at
Fund will invest at least 80% of least 65% of its total assets in
its assets in equity securities of common stocks that MacKay Shields
U.S. companies having $1 billion believes were ``undervalued''
or more in market capitalization, (selling below their value) when
and will primarily invest in purchased; typically pay
companies that AAMI believes have dividends, although there may be
the potential to provide capital non-dividend paying stocks if they
appreciation. AAMI seeks to meet the ``undervalued'' criteria;
diversify the Fund's portfolio and are listed on a national
within industries that AAMI securities exchange or are traded
believes to be among the fastest in the over-the-counter market.
growing segments of the U.S. The Portfolio normally invests in
economy. A portion of the Fund's U.S. common stocks that:
assets may be invested in MacKay Shields believes
preferred stocks or bonds are ``undervalued'' (selling below
convertible into common stocks. their value) when purchased,
Typically pay dividends,
although there may be non-
dividend paying stocks if they
meet the ``undervalued''
criterion, and
Are listed on a national
securities exchange or are traded
in the over-the-counter market.
------------------------------------
[[Page 59785]]
AmSouth Enhanced Market MainStay VP S&P 500 Index
------------------------------------
Under normal market conditions, the The Portfolio normally invests at
Fund will invest primarily in a least 80% of its total assets in
broadly diversified portfolio of stocks in the S&P 500[supreg]
securities represented in the S&P Index in the same proportion, to
500[supreg] Index, overweighting the extent feasible, as they are
relative to their index weights represented in the S&P 500[supreg]
those that OakBrook believes to be Index.
undervalued compared to others in NYLIM uses statistical techniques
the S&P 500[supreg] Index. The to determine which stocks are to
Fund seeks to maintain risk be purchased or sold to replicate
characteristics similar to those the S&P 500[supreg] Index to the
of the S&P 500[supreg] Index. extent feasible. From time to
OakBrook's stock selection process time, adjustments may be made in
utilizes computer-aided the Portfolio's holdings because
quantitative analysis. OakBrook's of changes in the composition of
computer models use many types of the S&P 500[supreg] Index. The
data, but emphasize technical data correlation between the
such as price and volume performance of the Portfolio and
information. Applying these models the S&P 500[supreg] Index is
to stocks within the S&P expected to be at least 0.95,
500[supreg] Index, OakBrook before fees and expenses, on an
attempts to generate more capital annual basis. A correlation of
growth than that of the S&P 1.00 would indicate perfect
500[supreg] Index. correlation, which would be
achieved when the net asset value
of the Portfolio, including the
value of its dividend and capital
gains distributions, increases or
decreases in exact proportion to
changes in the S&P 500[supreg]
Index.
The Portfolio's investments also
include S&P 500[supreg] Index
futures that are used for cash
management purposes.
------------------------------------
AmSouth Mid Cap Fund Fidelity[supreg] VIP Mid Cap
------------------------------------
Under normal market conditions, the The Portfolio's principal
Fund will invest at least 80% of investment strategies include:
its assets in a broadly Normally investing
diversified portfolio of primarily in common stocks.
securities issued by medium Normally investing at
capitalization companies drawn least 80% of assets in securities
from the Standard & Poor's Mid Cap of companies with medium market
400[supreg] Index (``S&P Mid Cap capitalizations (which, for
400[supreg] Index''), purposes of this fund, are those
overweighting relative to their companies with market
index weights those that OakBrook capitalizations similar to
believes to be undervalued companies in the Russell
compared to others in the S&P Mid Midcap[supreg] Index or the
Cap 400[supreg] Index. The Fund Standard & Poor's[supreg] MidCap
seeks to maintain risk 400 Index (S&P[supreg] MidCap
characteristics similar to those 400)).
of the S&P Mid Cap 400[supreg] Potentially investing in
Index. companies with smaller or larger
market capitalizations.
Investing in domestic and
foreign issuers.
Investing in either
``growth'' stocks or ``value''
stocks or both.
Using fundamental analysis
of each issuer's financial
condition and industry position
and market and economic conditions
to select investments.
------------------------------------
OakBrook's stock selection process
utilizes computer-aided
quantitative analysis. Stringent
risk controls at the style,
industry and individual stock
levels help ensure the Fund
maintains risk characteristics
similar to those of the S&P Mid
Cap 400[supreg] Index. OakBrook's
computer models use many types of
data, but emphasize technical data
such as price and volume
information. Applying these models
to securities comprising the S&P
Mid Cap 400[supreg] Index,
OakBrook hopes to generate more
capital growth than that of the
S&P Mid Cap 400[supreg] Index.
------------------------------------
AmSouth International Equity Fund MainStay VP International Equity
------------------------------------
Under normal market conditions, the The Portfolio normally invests at
Fund will invest at least 80% of least 80% of its assets in equity
its assets in equity securities of securities, and invests primarily
large foreign companies. The Fund in a diversified portfolio of
intends to invest primarily in equity securities of issuers,
companies in economically wherever organized, who do
developed countries whose stocks business mainly outside the United
Dimensional believes are States. Investments will be made
undervalued at the time of in a variety of countries, with a
investment. While Dimensional may minimum of five countries other
consider other factors, than the United States. This
Dimensional generally determines includes countries with
that a stock is undervalued if it established economies as well as
has a high book value in relation emerging market countries that
to its market value. MacKay Shields believes present
favorable opportunities.
The Portfolio's subadvisor seeks to
identify investment opportunities
by pursuing a bottom up, stock
selection investment discipline.
Proprietary, quantitative and
qualitative tools are used to
identify attractive companies. In-
depth, original, fundamental
research is performed on
identified companies to assess
their business and investment
prospects. In conducting the
research, particular attention is
paid to the generation and
utilization of cash flows, the
returns on invested capital and
the overall track record of
management in creating shareholder
value.
Portfolios are constructed by
combining securities with low
correlation. Quantitative tools
are used for risk control at the
portfolio level. Country
allocations in the Portfolio are a
result of the bottom up, stock
selection process. To reduce risk,
an attempt is made at the
portfolio level to stay within a
reasonable range of the key
constituents of the benchmark,
unless the stock selection process
strongly argues against it.
[[Page 59786]]
The Portfolio may buy and sell
currency on a spot basis and enter
into foreign currency forward
contracts for hedging purposes. In
addition, the Portfolio may buy or
sell foreign currency options,
securities and securities index
options and enter into swap
agreements and futures contracts
and related options. These
techniques may be used for any
legally permissible purpose,
including to increase the
Portfolio's return.
The subadvisor may sell a security
if it no longer believes the
security will contribute to
meeting the objective of the
Portfolio. In considering whether
to sell a security, the subadvisor
may evaluate, among other things,
the condition of foreign economies
and meaningful changes in the
issuer's financial condition and
competitiveness.
------------------------------------------------------------------------
15. With respect to the principal investment risks of each
Replacing Fund compared to each and corresponding Replaced Fund,
Applicants submit that they are substantially similar, and that they
are as follows:
------------------------------------------------------------------------
------------------------------------------------------------------------
AmSouth Large Cap MainStay VP Value
------------------------------------
Investment risk, market risk Changing economic, stock market,
(including those particular to industry and company conditions,
large cap growth stocks), interest the risks inherent in management's
rate risk, credit risk, and active ability to anticipate such changes
trading risk. that can adversely affect the
value of the Portfolio's holdings,
and the risks associated with
value stocks. The Portfolio also
may experience high portfolio
turnover.
------------------------------------
AmSouth Enhanced Market MainStay VP S&P 500 Index
------------------------------------
Investment risk, market risk Changing economic, stock market,
(including those particular to industry and company conditions
large capitalization companies which can adversely affect the
represented in the S&P 500 Index, value of the Portfolio's holdings,
growth stocks and value stocks), risks associated with the value of
interest rate risk, credit risk, the S&P 500 [supreg] Index, and
derivatives risk and active the potential inability to mirror
trading risk. the S&P 500 [supreg] Index. In
addition, the Portfolio is subject
to the risks associated with
derivatives instruments.
------------------------------------
AmSouth Mid Cap Fidelity[supreg] VIP Mid Cap
------------------------------------
Investment risk, market risk Stock market volatility, foreign
(including those particular to exposure, issuer-specific changes,
growth stocks, value stocks and and mid cap investing.
mid cap companies), interest rate
risk credit risk, derivatives risk
and active trading risk.
------------------------------------
AmSouth International Equity MainStay VP International Equity
------------------------------------
Investment risk, market risk, Changing economic, stock market,
credit risk, derivatives risk and industry and company conditions
active trading risk. The Fund also and the risks inherent in
is subject to foreign securities management's ability to anticipate
risk. such changes that can adversely
affect the value of the
Portfolio's holdings. The
Portfolio also is subject to
foreign securities risk and
emerging markets risk. In
addition, the Portfolio is subject
to the risks associated with
derivatives instruments. The
Portfolio also may experience high
portfolio turnover.
------------------------------------------------------------------------
16. The table below compares fees and expenses of each Replaced
Fund and each corresponding Replacing Fund as of December 31, 2004. As
the table shows, the total expenses of each Replaced Fund are higher
than the total expenses of the corresponding Replacing Fund.
----------------------------------------------------------------------------------------------------------------
Replacing funds MainStay VP Value
Replaced funds AmSouth Large (percent)
Cap (percent) -------------------------------------
Initial Class Service Class
----------------------------------------------------------------------------------------------------------------
Management Fee............................. 0.70......................... 0.36 0.36
Shareholder Service Fee.................... 0.25......................... None None
Rule 12b-1 Fee............................. None......................... None 0.25
Other Expenses............................. 0.70......................... 0.29 0.29
Gross Operating Expenses................... 1.65......................... 0.65 0.90
Net (After Waiver) Expenses................ 1.05......................... 0.65 0.90
AmSouth Enhanced Market MainStay VP S&P 500 Index
Initial Class Service Class
Management Fee............................. 0.45......................... 0.10 0.10
Shareholder Service Fee.................... 0.25......................... None None
Rule 12b-1 Fee............................. None......................... None 0.25
Other Expenses............................. 0.93......................... 0.29 0.29
Gross Operating Expenses................... 1.63......................... 0.39 0.64
Net (After Waiver) Expenses................ 1.01......................... 0.39 0.64
AmSouth Mid Cap Fidelity[supreg] VIP Mid Cap
Service Class 2
[[Page 59787]]
Management Fee............................. 0.90......................... 0.57
Shareholder Service Fee.................... 0.25......................... None
Rule 12b-1 Fee............................. None......................... 0.25
Other Expenses............................. 1.08......................... 0.14
Gross Operating Expenses................... 2.23......................... 0.96
Net (After Waiver) Expenses................ 1.25......................... 0.96
AmSouth International Equity MainStay VP International Equity
Initial Class Service Class
Management Fee............................. 1.00......................... 0.60 0.60
Shareholder Service Fee.................... 0.25......................... None None
Rule 12b-1 Fee............................. None......................... None 0.25
Other Expenses............................. 0.79......................... 0.39 0.39
Gross Operating Expenses................... 2.04......................... 0.99 1.24
Net (After Waiver) Expenses................ 1.43......................... 0.99 1.24
----------------------------------------------------------------------------------------------------------------
In each case, the class of Replaced Funds available under the
Policies impose an asset-based shareholder service fee equal to 0.25%
per annum of the Fund's average daily net assets. In each case, the
service class of the MainStay Replacing Funds that will be available
under the Policies issued on or after June 2, 2003, and the service
class 2 of the Fidelity[supreg] VIP Mid Cap Portfolio, impose an asset-
based sales charge pursuant to Rule 12b-1 under the Act (``Rule 12b-1
fee'') equal to 0.25% per annum of the Fund's average daily net assets.
In each case, the initial class of the MainStay Replacing Funds that
will be available under Policies issued prior to June 2, 2003, do not
impose any Rule 12b-1 fee.
17. The Application indicates that, the net assets of each Fund as
of July 31, 2005 were as follows (in thousands):
------------------------------------------------------------------------
Replaced fund Replacing fund
------------------------------------------------------------------------
AmSouth Enhanced Market Fund-- MainStay VP S&P 500 Index
$7,744 Portfolio--$1,457,870
AmSouth International Equity Fund-- MainStay VP International Equity
$13,546 Portfolio--$282,428
AmSouth Large Cap Fund--$8,852 MainStay VP Value Portfolio--
$630,226
AmSouth Mid Cap Fund--$6,839 Fidelity[supreg] VIP Mid Cap
Portfolio--$4,964,945
------------------------------------------------------------------------
Applicants state that, the table above demonstrates that each
Replacing Fund has a significantly greater asset size than the Replaced
Fund to which it corresponds, and that the principal potential
advantages of size in the circumstances presented here would be
economies of scale and ease of diversification.
18. Each Substitution will take place at the applicable Funds'
relative per share net asset values determined on the date of the
Substitution in accordance with Section 22 of the Act and Rule 22c-1
thereunder. Accordingly, Applicants state, the Substitutions will have
no financial impact on any Policy owner. Each Substitution will be
effected by having each Subaccount that invests in a Replaced Fund
redeem its shares of the Replaced Fund at the net asset value
calculated on the date of the Substitution and purchase shares of the
appropriate class of the appropriate Replacing Fund at the net asset
value calculated on the same date. Proceeds of AmSouth Large Cap Fund,
AmSouth Enhanced Market Fund and AmSouth International Equity Fund
shares applicable to Policies purchased prior to June 2, 2003 will be
used to purchase initial class shares of the MainStay VP S&P 500 Index
Portfolio, MainStay VP International Equity Portfolio and MainStay VP
Value Portfolio, respectively. Proceeds of AmSouth Large Cap Fund,
AmSouth Enhanced Market Fund and AmSouth International Equity Fund
shares applicable to Policies purchased on or after June 2, 2003 will
be used to purchase service class shares of the MainStay VP S&P 500
Index Portfolio, MainStay VP International Equity Portfolio and
MainStay VP Value Portfolio, respectively. Proceeds of AmSouth Mid Cap
Fund shares will be used to purchase service class 2 shares of the
Fidelity[supreg] VIP Mid Cap Portfolio.
19. To the extent that NYLIAC imposes any limit on the number of
subaccounts that may be used over the life of a Policy, no Substitution
will be counted as giving rise to use of a new Subaccount for such
purpose.
20. The Applicants state that, NYLIAC will pay all expenses and
transaction costs of the Substitutions, including all legal,
accounting, and brokerage expenses relating to the Substitutions, the
below described disclosure documents, and the Application. No costs
will be borne directly or indirectly by Policy owners. Affected Policy
owners will not incur any fees or charges as a result of the
Substitutions. Nor will their rights or the obligations of NYLIAC under
the Policies be altered in any way. The Substitutions will not cause
the fees and charges under the Policies currently being paid by Policy
owners to be greater after the Substitutions than before the
Substitutions.
21. The prospectuses for all of the Policies have disclosed that
the issuing insurance company has the right to substitute any other
mutual fund shares for the shares in which a Subaccount is investing at
any time.
22. Applicants state that, the Substitutions requested in the
Application were described in supplements to the applicable
prospectuses for the Policies filed with the Commission or in other
supplemental disclosure documents (collectively, ``Supplements'') and
mailed to all affected Policy owners. Each Supplement gave the relevant
Policy owners notice of the Substitution that would affect their
Policies and described the reasons for engaging in that Substitution.
The Supplements also informed existing Policy owners with values
allocated to a Subaccount
[[Page 59788]]
investing in a Replaced Fund that no additional amounts may be
allocated to the Subaccounts that invest in that Fund on or after the
date of Substitution. In addition, the Supplements informed these
affected Policy owners that they will have an opportunity to reallocate
their accumulated value:
Prior to a Substitution, from the Subaccount investing in
the Replaced Fund to one or more Subaccounts investing in other Funds
available under the applicable Policy or the fixed account without the
imposition of any transfer charge or limitation (except potentially
harmful transfers) \1\ and without diminishing the number of free
transfers that otherwise may be made in a given Policy year, or
---------------------------------------------------------------------------
\1\ The exception for potentially harmful transfers refers to
NYLIAC's procedures designed to limit potentially harmful transfers
such as market timing as described under ``Limits on Transfers'' in
the prospectus contained in the Policy Registration Statement.
---------------------------------------------------------------------------
For 30 days after a Substitution, from a Subaccount
investing in the Replacing Fund to one or more Subaccounts investing in
other Funds available under the applicable Policy or the fixed account
without the imposition of any transfer charge or limitation (except
potentially harmful transfers) and without diminishing the number of
free transfers that otherwise may be made in a given Policy year.
23. Applicants aver that each affected Policy owner was provided
with a prospectus for each relevant Replacing Fund, which accompanied
the Supplement discussed above. Within five days after a Substitution,
NYLIAC will send to its affected Policy owners written confirmation
that the Substitutions have occurred. The confirmations will also
identify the shares of the Replaced Funds that have been eliminated and
the shares of the Replacing Funds that have been substituted. That
confirmation will reiterate the free transfer rights disclosed in the
Supplements that such owners will have previously received.
Applicants' Legal Analysis
1. Section 26(c) of the Act makes it 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 approves the substitution. Section 26(c) of the Act
provides the Commission will issue an order approving such a
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 the Act.
2. Section 26(c) of the Act (then denominated as Section 26(b)) was
enacted as part of the Investment Company Act Amendments of 1970.
Section 26(a)(4)(B) of the Act had theretofore required only that the
trust instrument of a unit investment trust require that the sponsor or
trustee notify the trust's shareholders within five days after a
substitution of underlying securities. The legislative history of
Section 26(c) describes its underlying purpose as follows:
The proposed amendment recognizes that in the case of a unit
investment trust holding the securities of a single issuer
notification to shareholders does not provide adequate protection
since the only relief available to the shareholders, if
dissatisfied, would be to redeem their shares. A shareholder who
redeems and reinvests the proceeds in another unit investment trust
or in an open-end company would under most circumstances be subject
to a new sales load. The proposed amendment would close this gap in
shareholder protection by providing for Commission approval of the
substitution. The Commission would be required to issue an order
approving the substitution if it finds the substitution consistent
with the protection of investors and the purposes fairly intended by
the policy and provisions of the Act.
3. The legislative history makes it clear that the purpose of
Section 26(c) is to protect the expectation of investors in a unit
investment trust that the unit investment trust will accumulate shares
of a particular issuer by preventing unscrutinized substitutions, which
might, in effect, force shareholders dissatisfied with the substituted
security to redeem their shares, thereby possibly incurring either a
loss of the sales load deducted from initial premium payments, an
additional sales load upon reinvestment of the redemption proceeds, or
both. Moreover, a Policy owner forced to redeem may suffer adverse tax
consequences. Section 26(c) affords this protection to investors by
preventing a depositor or trustee of a unit investment trust that holds
shares of one issuer from substituting for those shares the shares of
another issuer, unless the Commission approves that substitution.
4. Applicants assert that the purposes, terms, and conditions of
the Substitutions are consistent with the principles and purposes of
Section 26(c) and do not entail any of the abuses that Section 26(c) is
designed to prevent. The Substitutions are necessary and appropriate
because, for the reasons discussed above, continuing to use the
Replaced Funds as a funding medium for the Policies is no longer
consistent with, or possible under, the business plan that Applicants
are now pursuing in order to enhance the success of the Policies and
the benefits to Policy owners. Moreover, as also noted above, each
Policy has reserved to the issuing insurance company the right to make
such substitutions, and each such company has specifically disclosed
this reserved right in the prospectuses for its Policies.
5. Applicants contend that the Substitutions will not result in the
type of costly forced redemption that Section 26(c) was intended to
guard against and, for the following reasons, are consistent with the
protection of investors and the purposes fairly intended by the Act.
6. The MainStay VP Value Portfolio is an appropriate Fund to which
to move the accumulated values of Policy owners with values allocated
to the AmSouth Large Cap Fund, because its investment program, like
that of the AmSouth Large Cap Fund, involves seeking long-term total
return. The MainStay VP S&P 500 Index Portfolio is an appropriate Fund
to which to move the accumulated values of Policy owners with values
allocated to the AmSouth Enhanced Market Fund, because its investment
program, like that of the AmSouth Enhanced Market Fund, involves
investing in a diversified selection of common stocks represented by
the S&P 500 Index. The Fidelity [supreg] VIP Mid Cap Portfolio is an
appropriate Fund to which to move the accumulated values of Policy
owners with values allocated to the AmSouth Mid Cap Fund, because its
investment objective, like that of the AmSouth Mid Cap Fund, involves
growth of capital by investing, primarily, in companies with market
capitalizations that, at the time of investment, are similar to the
companies in the S&P MidCap 400 [supreg] Index. The MainStay VP
International Equity Portfolio is an appropriate Fund to which to move
the accumulated values of Policy owners with values allocated to the
AmSouth International Equity Fund, because its investment program, like
that of the AmSouth International Equity Fund, involves seeking growth
of capital by investing in a portfolio consisting primarily of non-US
equity securities.
7. The costs of the Substitutions (including brokerage, legal,
accounting, and other expenses) will be borne by NYLIAC and will not be
borne by Policy owners. No charges will be assessed to the Policy
owners to effect the Substitutions. It is expected that each
Substitution will be effected by redeeming shares of the Replaced Fund
for cash and using the cash to purchase shares of the corresponding
Replacing Fund.
[[Page 59789]]
8. For each fiscal period (not to exceed a fiscal quarter) during
the 24 months following the date of the Substitutions, NYLIAC will, as
a condition of any Commission order approving the Substitutions, for
each Policy outstanding on the date of the Substitution, adjust the
Policy values to the extent necessary to effectively reimburse Policy
owners invested in a MainStay Replacing Fund for their proportionate
share of any amount by which the annual rate of the MainStay Replacing
Fund's total operating expenses (after any expense waivers or
reimbursements) for that fiscal period, as a percentage of the Fund's
average daily net assets, plus the annual rate of any asset-based
charges (excluding any such charges that are for premium taxes, or for
Policy riders added after December 31, 2004) deducted under the terms
of the owner's Policy for that fiscal period, exceed the sum of:
(a) The annualized rate of the corresponding Replaced Fund's total
operating expenses, as a percentage of such Replaced Fund's average
daily net assets, for the twelve months ended December 31, 2004; plus
(b) The annual rate of any asset-based charges (excluding any such
charges that are for premium taxes), deducted under that Policy for
such twelve months.
9. NYLIAC represents that the substitution and the selection of the
Fidelity [supreg] VIP Mid Cap Portfolio was not motivated by any
financial consideration paid or to be paid to NYLIAC or its affiliates
by the Fidelity [supreg] VIP Mid Cap Portfolio, its advisor or
underwriter, or their respective affiliates. In connection with assets
held under Policies affected by the Substitutions, NYLIAC will not
receive, for 36 months following the Substitution, any direct or
indirect benefits from the Fidelity [supreg] VIP Mid Cap Portfolio, or
its advisor or underwriter (or their affiliates), at a rate higher than
that which they had received from the AmSouth Mid Cap Fund, its advisor
or underwriter (or their affiliates), including without limitation Rule
12b-1, shareholder service, administration, or other service fees, or
revenue sharing or other arrangements.
10. All affected Policy owners will be given notice of the
Substitutions prior to the Substitutions, and will have an opportunity
to make the following transfers of their accumulated value without the
imposition of any charge or limitation (except potentially harmful
transfers, as described above) and without diminishing the number of
charge-free transfers that otherwise may be made in a Policy year:
Transfers of accumulated value from a Subaccount investing
in a Replaced Fund to one or more Subaccounts investing in other Funds
available under the applicable Policy or the fixed account, from the
date of notice until the date of Substitution, and
Transfers of accumulated value from a Subaccount investing
in a Replacing Fund as a result of a Substitution to one or more
Subaccounts investing in other Funds available under the applicable
Policy or the fixed account, for 30 days after a Substitution.
11. Within five days after each substitution, NYLIAC will send to
the affected Policy owners written confirmation that the Substitutions
have occurred and identify the shares of the Replaced Funds that have
been eliminated and the shares of the Replacing Funds that have been
substituted.
12. The Substitutions will in no way alter the insurance benefits
to Policy owners or the contractual obligations of NYLIAC. The
Substitutions will in no way alter the tax treatment of owners in
connection with their Policies, and no tax liability will arise for
Policy owners as a result of the Substitutions.
Conclusion
Applicants request an order of the Commission pursuant to Section
26(c) of the Act approving the proposed Substitutions under the terms
and subject to the conditions set forth herein. Section 26(c), in
pertinent part, provides that the Commission shall issue an order
approving a substitution of securities if the evidence establishes that
it is consistent with the protection of investors and the purposes
fairly intended by the policy and provisions of the Act. For the
reasons and upon the facts set forth above, Applicants respectfully
submit that the Substitutions meet the standards set forth in Section
26(c) and that the approval requested therefore, should be granted.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-5598 Filed 10-12-05; 8:45 am]
BILLING CODE 8010-01-P
