[Federal Register Volume 81, Number 127 (Friday, July 1, 2016)]
[Notices]
[Pages 43301-43306]
[FR Doc No: 2016-15584]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. IC-32163; File No. 812-14523]

MainStay Funds Trust, et al.; Notice of Application

June 27, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order pursuant to: (a) Section
6(c) of the Investment Company Act of 1940 (``Act'') granting an
exemption from sections 18(f) and 21(b) of the Act; (b) section
12(d)(1)(J) of the Act granting an exemption from section 12(d)(1) of
the Act; (c) sections 6(c) and 17(b) of the Act granting an exemption
from sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d)
section 17(d) of the Act and rule 17d-1 under the Act to permit certain
joint arrangements and transactions.

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    Summary of the Application: Applicants request an order that would
permit certain registered open-end management investment companies to
participate in a joint lending and borrowing facility.
    Applicants: MainStay Funds Trust, The MainStay Funds and MainStay
VP Funds Trust (each a ``Trust'' and collectively the ``Trusts'') and
New York Life Investment Management LLC (``New York Life
Investments'').
    Filing Dates: The application was filed on July 30, 2015, and
amended on September 28, 2015, January 19, 2016, May 12, 2016, and June
20, 2016.
    Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on July 22, 2016 and should be accompanied by proof of
service on the applicants, in the form of an affidavit, or, for
lawyers, a certificate of service. Pursuant to rule 0-5 under the Act,
hearing requests should state the nature of the writer's interest, any
facts bearing upon the desirability of a hearing on the matter, 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
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090; Applicants: New York Life
Investment Management LLC, 51 Madison Avenue, New York, NY 10010.

FOR FURTHER INFORMATION CONTACT:  Robert Shapiro, Senior Counsel, at
(202) 551-7758 or Mary Kay Frech, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling<PHONE_NUMBER>.
Applicants' Representations
    1. Each Trust is organized as a Massachusetts business trust or a
Delaware statutory trust and is registered under the Act as an open-end

management investment company. Each Trust has issued shares of one or
more Funds with its own distinctive investment objectives, policies and
restrictions.\1\ New York Life Investments, an indirect, wholly-owned
subsidiary of New York Life, is a Delaware limited liability company
that is registered as an investment adviser under the Investment
Advisers Act of 1940 (``Advisers Act'').\2\ Any Adviser which serves as
investment advisor to an applicant will be registered as an investment
adviser under the Advisers Act.
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    \1\ Applicants request that the order apply to any existing or
future registered open-end management investment company or series
thereof for which New York Life Investments or any successor thereto
or an investment adviser controlling, controlled by, or under common
control (within the meaning of section 2(a)(9) of the Act) with New
York Life Investments or any successor thereto serves as investment
adviser (each such investment company or series thereof, a ``Fund''
and collectively the ``Funds'' or each such investment adviser an
``Adviser''). For purposes of the requested order, ``successor'' is
limited to any entity that results from a reorganization into
another jurisdiction or a change in the type of a business
organization.
    \2\ All Funds that currently intend to rely on the requested
order have been named as applicants. Any other Fund that relies on
the requested order in the future will comply with the terms and
conditions of the application.
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    2. At any particular time, those Funds with uninvested cash may, in
effect, lend money to banks or other entities by entering into
repurchase agreements or purchasing other short-term money market
instruments. At the same time, other Funds may need to borrow money
from the same or similar banks for temporary purposes, to cover
unanticipated cash shortfalls such as a trade ``fail'' or for other
temporary purposes. The Funds are parties to an unsecured 364-day, $600
million revolving credit facility with a group of lenders (the ``Credit
Facility''), to meet unanticipated or excessive redemption requests.
    3. If Funds that experience a cash shortfall were to borrow under
the Credit Facility (or another credit facility), they would pay
interest at a rate that is likely to be higher than the rate that could
be earned by non-borrowing Funds on investments in repurchase
agreements and other short-term money market instruments. Applicants
assert the difference between the higher rate paid on a borrowing and
what the bank pays to borrow under repurchase agreements or other
arrangements represents the bank's profit for serving as the
middleperson between a borrower and lender and is not attributable to
any material difference in the credit quality or risk of such
transactions.
    4. The Funds seek to enter into master interfund lending agreements
with each other (the ``InterFund Program'') that will allow each Fund
whose policies permit it to do so to lend money directly to and borrow
money directly from other Funds for temporary purposes through the
InterFund Program (an ``InterFund Loan'').\3\ Applicants state that the
requested relief will enable the Funds to access an available source of
money and reduce costs incurred by the Funds that need to obtain loans
for temporary purposes and permit those Funds that have uninvested cash
available: (i) To earn a return on the money that they might not
otherwise be able to invest; or (ii) to earn a higher rate of interest
on investment of their short-term balances. Although the proposed
InterFund Program would reduce the Funds' need to borrow from banks or
through custodian overdrafts, the Funds would be free to establish and/
or continue lines of credit or other borrowing arrangements with banks.
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    \3\ No money market fund advised by an Adviser that complies
with the requirements of rule 2a-7 under the Act will participate in
the InterFund Program as either a borrower or a lender.
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    5. Applicants anticipate that the proposed InterFund Program would
provide a borrowing Fund with a source of liquidity at a rate lower
than the bank borrowing rate and also operational flexibility at times
when the cash position of the borrowing Fund is insufficient to meet
temporary cash requirements. This situation could arise when
shareholder redemptions exceed anticipated cash volumes and certain
Funds have insufficient cash on hand to satisfy such redemptions. When
the Funds liquidate portfolio securities to meet redemption requests,
they often do not receive payment in settlement for up to three days
(or longer for certain foreign transactions and fixed income
instruments). However, redemption requests for the Funds normally are
effected on the day following the trade date.\4\ The InterFund Program
would provide a source of immediate, short-term liquidity pending
settlement of the sale of portfolio securities.
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    \4\ Applicants represent that although a significant amount of
redemption requests for the Funds normally are effected on a trade
date plus 1 (T+1) basis, redemption payments can take as long as
seven days from receipt of a request in good order and may be
delayed further in certain limited circumstances to the extent
permitted by law.
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    6. Applicants also anticipate that a Fund could use the InterFund
Program when a sale of securities ``fails'' due to circumstances beyond
the Fund's control, such as a delay in the delivery of cash to the
Fund's custodian or improper delivery instructions by the broker
effecting the transaction. ``Sales fails'' may result in a cash
shortfall if the Fund has undertaken to purchase a security using the
proceeds from securities sold. Applicants state that, in the event of a
sales fail, the custodian typically extends temporary credit to cover
the shortfall, and the Fund incurs overdraft charges. Alternatively,
the Fund could: (i) ``Fail'' on its intended purchase due to lack of
funds from the previous sale, resulting in additional cost to the Fund;
or (ii) sell a security on a same-day settlement basis, earning a lower
return on the investment. Use of the InterFund Program under these
circumstances would enable the Fund to have access to immediate short-
term liquidity.
    7. While bank borrowings (including the Credit Facility) and/or
custodian overdrafts generally could supply Funds with a portion of the
needed cash to cover unanticipated redemptions and sales fails, under
the proposed InterFund Program, a borrowing Fund would pay lower
interest rates than those that typically would be payable under short-
term loans offered by banks or custodian overdrafts. In addition, Funds
making short-term cash loans directly to other Funds would earn
interest at a rate higher than they otherwise could obtain from
investing their cash in repurchase agreements or certain other short-
term money market instruments. Thus, applicants assert that the
proposed InterFund Program would benefit both borrowing and lending
Funds.
    8. The interest rate to be charged to the Funds on any InterFund
Loan (the ``InterFund Loan Rate'') would be the average of the ``Repo
Rate'' and the ``Bank Loan Rate,'' each as defined below. The Repo Rate
would be the highest current overnight repurchase agreement rate
available to a lending Fund. The Bank Loan Rate for any day would be
calculated by the InterFund Program Team (as defined below) on each day
an InterFund Loan is made according to a formula established by each
Fund's board of trustees (the ``Board'') intended to approximate the
lowest interest rate at which a bank short-term loan would be available
to the Fund. The formula would be based upon a publicly available rate
(e.g., Federal funds rate and/or LIBOR) plus an additional spread of
basis points and would vary with this rate so as to reflect changing
bank loan rates. The initial formula and any subsequent modifications
to the formula would be subject to the approval of the Board. In
addition, the Board periodically would review the continuing
appropriateness of reliance on the formula used to determine the Bank
Loan Rate, as well

as the relationship between the Bank Loan Rate and current bank loan
rates that would be available to the Fund.
    9. Certain members of the Trusts' administration personnel (other
than investment advisory personnel) (the ``InterFund Program Team'')
will administer the InterFund Program. No portfolio manager of any Fund
will serve as a member of the InterFund Program Team. Under the
proposed InterFund Program, the portfolio managers for each
participating Fund would have the ability to provide standing
instructions to participate daily as a borrower or lender. The
InterFund Program Team on each business day would collect data on the
uninvested cash and borrowing requirements of all participating Funds.
Once the InterFund Program Team has determined the aggregate amount of
cash available for loans and borrowing demand, the InterFund Program
Team will allocate loans among borrowing Funds without any further
communication from the portfolio managers of the Funds. After the
InterFund Program Team has allocated cash for InterFund Loans, the
InterFund Program Team will invest any remaining cash in accordance
with the standing instructions of the relevant portfolio manager or
such remaining amounts will be invested directly by the portfolio
managers of the Funds.
    10. The InterFund Program Team will allocate borrowing demand and
cash available for lending among the Funds on what the InterFund
Program Team believes to be an equitable basis, subject to certain
administrative procedures applicable to all Funds, such as the time of
filing requests to participate, minimum loan lot sizes, and the need to
minimize the number of transactions and associated administrative
costs. To reduce transaction costs, each InterFund Loan normally would
be allocated in a manner intended to minimize the number of
participants necessary to complete the loan transaction. The procedures
for allocating cash among borrowers and determining loan participations
among lenders, together with related administrative procedures, will be
approved by the Board, including a majority of the Board members who
are not ``interested persons,'' as defined in section 2(a)(19) of the
Act (``Independent Board Members''), to ensure that both borrowing and
lending Funds participate on an equitable basis.
    11. The InterFund Program Team will: (a) Monitor the InterFund Loan
Rate and the other terms and conditions of the InterFund Loans; (b)
limit the borrowings and loans entered into by each Fund to ensure that
they comply with the Fund's investment policies and limitations; (c)
implement and follow procedures designed to ensure equitable treatment
of each Fund; and (d) make quarterly reports to the Board of each Fund
concerning any transactions by the applicable Fund under the InterFund
Program and the InterFund Loan Rate.
    12. New York Life Investments, through the InterFund Program Team,
would administer the InterFund Program as a disinterested fiduciary as
part of its duties under the investment management agreements with each
Fund and would receive no additional fee as compensation for its
services in connection with the administration of the InterFund
Program.
    13. No Fund may participate in the InterFund Program unless: (a)
The Fund has obtained shareholder approval for its participation, if
such approval is required by law; (b) the Fund has fully disclosed all
material information concerning the InterFund Program in its
registration statement on Form N-1A; and (c) the Fund's participation
in the InterFund Program is consistent with its investment objectives,
investment restrictions, policies, limitations, and organizational
documents.
    14. As part of the Board's review of the continuing appropriateness
of a Fund's participation in the proposed InterFund Program as required
by condition 14, the Board members of the Fund, including a majority of
the Independent Board Members, also will review the process in place to
appropriately assess: (i) If the Fund participates as a lender, any
effect its participation may have on the Fund's liquidity risk; and
(ii) if the Fund participates as a borrower, whether the Fund's
portfolio liquidity is sufficient to satisfy its obligations under the
facility along with its other liquidity needs.
    15. In connection with the InterFund Program, applicants request an
order under section 6(c) of the Act exempting them from the provisions
of sections 18(f) and 21(b) of the Act; under section 12(d)(1)(J) of
the Act exempting them from section 12(d)(1) of the Act; under sections
6(c) and 17(b) of the Act exempting them from sections 17(a)(1),
17(a)(2), and 17(a)(3) of the Act; and under section 17(d) of the Act
and rule 17d-1 under the Act to permit certain joint arrangements and
transactions.
Applicants' Legal Analysis:
    1. Section 17(a)(3) of the Act generally prohibits any affiliated
person of a registered investment company, or affiliated person of an
affiliated person, from borrowing money or other property from the
registered investment company. Section 21(b) of the Act generally
prohibits any registered management company from lending money or other
property to any person, directly or indirectly, if that person controls
or is under common control with that company. Section 2(a)(3)(C) of the
Act defines an ``affiliated person'' of another person, in part, to be
any person directly or indirectly controlling, controlled by, or under
common control with, such other person. Section 2(a)(9) of the Act
defines ``control'' as the ``power to exercise a controlling influence
over the management or policies of a company,'' but excludes
circumstances in which ``such power is solely the result of an official
position with such company.'' Applicants state that the Funds may be
under common control by virtue of having common investment advisers
and/or by having common trustees, managers and/or officers.
    2. Section 6(c) of the Act provides that an exemptive order may be
granted where an exemption is necessary or 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.
Section 17(b) of the Act authorizes the Commission to exempt a proposed
transaction from section 17(a) provided that the terms of the
transaction, including the consideration to be paid or received, are
fair and reasonable and do not involve overreaching on the part of any
person concerned, and the transaction is consistent with the policy of
the investment company as recited in its registration statement and
with the general purposes of the Act. Applicants believe that the
proposed arrangements satisfy these standards for the reasons discussed
below.
    3. Applicants assert that sections 17(a)(3) and 21(b) of the Act
were intended to prevent a party with strong potential adverse
interests to, and some influence over the investment decisions of, a
registered investment company from causing or inducing the investment
company to engage in lending transactions that unfairly inure to the
benefit of such party and that are detrimental to the best interests of
the investment company and its shareholders. Applicants assert that the
proposed transactions do not raise these concerns because: (a) New York
Life Investments, through the InterFund Program Team members, would
administer the InterFund Program as a disinterested fiduciary as part
of its duties under the investment management and administrative

agreements with each Fund; (b) all InterFund Loans would consist only
of uninvested cash reserves that the Fund otherwise would invest in
short-term repurchase agreements or other short-term investments; (c)
the InterFund Loans would not involve a greater risk than such other
investments; (d) the lending Fund would receive interest at a rate
higher than it could obtain through short-term repurchase agreements or
certain other short-term investments; and (e) the borrowing Fund would
pay interest at a rate lower than otherwise available to it under its
bank loan agreements. Moreover, applicants assert that the other terms
and conditions that applicants propose also would effectively preclude
the possibility of any Fund obtaining an undue advantage over any other
Fund.
    4. Section 17(a)(1) of the Act generally prohibits an affiliated
person of a registered investment company, or any affiliated person of
such a person, from selling securities or other property to the
investment company. Section 17(a)(2) of the Act generally prohibits an
affiliated person of a registered investment company, or any affiliated
person of such a person, from purchasing securities or other property
from the investment company. Section 12(d)(1) of the Act generally
prohibits a registered investment company from purchasing or otherwise
acquiring any security issued by any other investment company except in
accordance with the limitations set forth in that section.
    5. Applicants state that the obligation of a borrowing Fund to
repay an InterFund Loan could be deemed to constitute a security for
the purposes of sections 17(a)(1) and 12(d)(1). Applicants also state
that any pledge of securities to secure an InterFund Loan by the
borrowing Fund to the lending Fund could constitute a purchase of
securities for purposes of section 17(a)(2) of the Act. Section
12(d)(1)(J) of the Act provides that the Commission may exempt persons
or transactions from any provision of section 12(d)(1) if and to the
extent that such exemption is consistent with the public interest and
the protection of investors. Applicants contend that the standards
under sections 6(c), 17(b), and 12(d)(1)(J) are satisfied for all the
reasons set forth above in support of their request for relief from
sections 17(a)(3) and 21(b) and for the reasons discussed below.
Applicants state that the requested relief from section 17(a)(2) of the
Act meets the standards of section 6(c) and 17(b) because any
collateral pledged to secure an InterFund Loan would be subject to the
same conditions imposed by any other lender to a Fund that imposes
conditions on the quality of or access to collateral for a borrowing
(if the lender is another Fund) or the same or better conditions (in
any other circumstance).
    6. Applicants state that section 12(d)(1) was intended to prevent
the pyramiding of investment companies in order to avoid imposing on
investors additional and duplicative costs and fees attendant upon
multiple layers of investment companies. Applicants submit that the
proposed InterFund Program does not involve the type of abuse at which
section 12(d)(1) of the Act was directed. Applicants note that there
will be no duplicative costs or fees to the Funds or their
shareholders, and that New York Life Investments will receive no
additional compensation for its services in administering the InterFund
Program. Applicants also note that the purpose of the proposed
InterFund Program is to provide economic benefits for all the
participating Funds and their shareholders.
    7. Section 18(f)(1) of the Act prohibits open-end investment
companies from issuing any senior security except that a company is
permitted to borrow from any bank, provided, that immediately after the
borrowing, there is asset coverage of at least 300 per centum for all
borrowings of the company. Under section 18(g) of the Act, the term
``senior security'' generally includes any bond, debenture, note or
similar obligation or instrument constituting a security and evidencing
indebtedness. Applicants request exemptive relief under section 6(c)
from section 18(f)(1) to the limited extent necessary to allow a Fund
to borrow through the InterFund Program (because the lending Funds are
not banks).
    8. Applicants believe that granting relief under section 6(c) is
appropriate because the Funds would remain subject to the requirement
of section 18(f)(1) that all borrowings of a Fund, including combined
InterFund Loans and bank borrowings, have at least 300% asset coverage.
Based on the conditions and safeguards described in the application,
applicants also submit that to allow the Funds to borrow from other
Funds pursuant to the proposed InterFund Program is consistent with the
purposes and policies of section 18(f)(1).
    9. Section 17(d) of the Act and rule 17d-1 under the Act generally
prohibit an affiliated person of a registered investment company, or
any affiliated person of such a person, when acting as principal, from
effecting any joint transaction in which the investment company
participates, unless, upon application, the transaction has been
approved by the Commission. Rule 17d-1(b) under the Act provides that
in passing upon an application filed under the rule, the Commission
will consider whether the participation of the registered investment
company in a joint enterprise, joint arrangement or profit sharing plan
on the basis proposed is consistent with the provisions, policies and
purposes of the Act and the extent to which such participation is on a
basis different from or less advantageous than that of the other
participants.
    10. Applicants assert that the purpose of section 17(d) is to avoid
overreaching by and unfair advantage to insiders. Applicants assert
that the InterFund Program is consistent with the provisions, policies
and purposes of the Act in that it offers both reduced borrowing costs
and enhanced returns on loaned funds to all participating Funds and
their shareholders. Applicants note that each Fund would have an equal
opportunity to borrow and lend on equal terms consistent with its
investment policies and fundamental investment limitations. Applicants
assert that each Fund's participation in the proposed InterFund Program
would be on terms that are no different from or less advantageous than
that of other participating Funds.
Applicants' Conditions
    Applicants agree that any order granting the requested relief will
be subject to the following conditions:
    1. The InterFund Loan Rate will be the average of the Repo Rate and
the Bank Loan Rate.
    2. On each business day, when an interfund loan is to be made, the
InterFund Program Team will compare the Bank Loan Rate with the Repo
Rate and will make cash available for InterFund Loans only if the
InterFund Loan Rate is: (i) More favorable to the lending Fund than the
Repo Rate; and (ii) more favorable to the borrowing Fund than the Bank
Loan Rate.
    3. If a Fund has outstanding bank borrowings, any InterFund Loan to
the Fund will: (i) Be at an interest rate equal to or lower than the
interest rate of any outstanding bank borrowing; (ii) be secured at
least on an equal priority basis with at least an equivalent percentage
of collateral to loan value as any outstanding bank loan that requires
collateral; (iii) have a maturity no longer than any outstanding bank
loan (and in any event not over seven days); and (iv) provide that, if
an event of default occurs under any agreement evidencing an
outstanding bank loan to the Fund, that the event of default by the
Fund,

will automatically (without need for action or notice by the lending
Fund) constitute an immediate event of default under the interfund
lending agreement, which both (aa) entitles the lending Fund to call
the InterFund Loan immediately and exercise all rights with respect to
any collateral and (bb) causes the call to be made if the lending bank
exercises its right to call its loan under its agreement with the
borrowing Fund.
    4. A Fund may borrow on an unsecured basis through the InterFund
Program only if the relevant borrowing Fund's outstanding borrowings
from all sources immediately after the interfund borrowing total 10% or
less of its total assets, provided that if the borrowing Fund has a
secured loan outstanding from any other lender, including but not
limited to another Fund, the lending Fund's InterFund Loan will be
secured on at least an equal priority basis with at least an equivalent
percentage of collateral to loan value as any outstanding loan that
requires collateral. If a borrowing Fund's total outstanding borrowings
immediately after an InterFund Loan would be greater than 10% of its
total assets, the Fund may borrow through the InterFund Program only on
a secured basis. A Fund may not borrow through the InterFund Program or
from any other source if its total outstanding borrowings immediately
after the borrowing would be more than 33\1/3\% of its total assets or
any lower threshold provided for by a Fund's fundamental restriction or
non-fundamental policy.
    5. Before any Fund that has outstanding interfund borrowings may,
through additional borrowings, cause its outstanding borrowings from
all sources to exceed 10% of its total assets, it must first secure
each outstanding InterFund Loan by the pledge of segregated collateral
with a market value at least equal to 102% of the outstanding principal
value of the loan. If the total outstanding borrowings of a Fund with
outstanding InterFund Loans exceed 10% of its total assets for any
other reason (such as a decline in net asset value or because of
shareholder redemptions), the Fund will within one business day
thereafter either: (i) Repay all its outstanding InterFund Loans; (ii)
reduce its outstanding indebtedness to 10% or less of its total assets;
or (iii) secure each outstanding InterFund Loan by the pledge of
segregated collateral with a market value at least equal to 102% of the
outstanding principal value of the loan until the Fund's total
outstanding borrowings cease to exceed 10% of its total assets, at
which time the collateral called for by this condition 5 shall no
longer be required. Until each InterFund Loan that is outstanding at
any time that a Fund's total outstanding borrowings exceed 10% of its
total assets is repaid or the Fund's total outstanding borrowings cease
to exceed 10% of its total assets, the Fund will mark the value of the
collateral to market each day and will pledge such additional
collateral as is necessary to maintain the market value of the
collateral that secures each outstanding InterFund Loan to Funds at
least equal to 102% of the outstanding principal value of the InterFund
Loans.
    6. No Fund may lend to another Fund through the InterFund Program
if the loan would cause the lending Fund's aggregate outstanding loans
through the InterFund Program to exceed 15% of its current net assets
at the time of the loan.
    7. A Fund's InterFund Loans to any one Fund shall not exceed 5% of
the lending Fund's net assets.
    8. The duration of InterFund Loans will be limited to the time
required to receive payment for securities sold, but in no event more
than seven days. Loans effected within seven days of each other will be
treated as separate loan transactions for purposes of this condition.
    9. A Fund's borrowings through the InterFund Program, as measured
on the day when the most recent loan was made, will not exceed the
greater of 125% of the Fund's total net cash redemptions for the
preceding seven calendar days or 102% of the Fund's sales fails for the
preceding seven calendar days.
    10. Each InterFund Loan may be called on one business day's notice
by a lending Fund and may be repaid on any day by a borrowing Fund.
    11. A Fund's participation in the InterFund Program must be
consistent with its investment objectives and limitations, and
organizational documents.
    12. The InterFund Program Team will calculate total Fund borrowing
and lending demand through the InterFund Program, and allocate
InterFund Loans on an equitable basis among the Funds, without the
intervention of any portfolio manager of the Funds. The InterFund
Program Team will not solicit cash for the InterFund Program from any
Fund or prospectively publish or disseminate loan demand data to
portfolio managers of the Funds. The InterFund Program Team will invest
all amounts remaining after satisfaction of borrowing demand in
accordance with the standing instructions of the relevant portfolio
manager or such remaining amounts will be invested directly by the
portfolio managers of the Funds.
    13. The InterFund Program Team will monitor the InterFund Loan Rate
and the other terms and conditions of the InterFund Loans and will make
a quarterly report to the Board concerning the participation of the
Funds in the InterFund Program and the terms and other conditions of
any extensions of credit under the InterFund Program.
    14. The Board, including a majority of its Independent Board
Members, will:
    (i) Review, no less frequently than quarterly, the participation of
each Fund in the InterFund Program during the preceding quarter for
compliance with the conditions of any order permitting such
participation;
    (b) establish the Bank Loan Rate formula used to determine the
interest rate on InterFund Loans;
    (c) review, no less frequently than annually, the continuing
appropriateness of the Bank Loan Rate formula; and
    (d) review, no less frequently than annually, the continuing
appropriateness of the participation in the InterFund Program by each
Fund it oversees.
    15. Each Fund will maintain and preserve for a period of not less
than six years from the end of the fiscal year in which any transaction
by it under the InterFund Program occurred, the first two years in an
easily accessible place, written records of all such transactions
setting forth a description of the terms of the transaction, including
the amount, the maturity and the InterFund Loan Rate, the rate of
interest available at the time each InterFund Loan is made on overnight
repurchase agreements and bank borrowings, and such other information
presented to the Board of the Funds in connection with the review
required by conditions 13 and 14.
    16. In the event an InterFund Loan is not paid according to its
terms and the default is not cured within two business days from its
maturity or from the time the lending Fund makes a demand for payment
under the provisions of the interfund lending agreement, the Adviser to
the lending Fund promptly will refer the loan for arbitration to an
independent arbitrator selected by the Board of any Fund involved in
the loan who will serve as arbitrator of disputes concerning InterFund
Loans. The arbitrator will resolve any problem promptly, and the
arbitrator's decision will be binding on both Funds. The arbitrator
will submit, at least annually, a written report to the Board of each
Fund setting forth a description of the nature of any dispute and the
actions taken by the Funds to resolve the dispute.

    17. The Adviser will prepare and submit to the Board for review an
initial report describing the operations of the InterFund Program and
the procedures to be implemented to ensure that all Funds are treated
fairly. After the commencement of the InterFund Program, the Adviser
will report on the operations of the InterFund Program at the Board's
quarterly meetings. Each Fund's chief compliance officer, as defined in
rule 38a-1(a)(4) under the Act, shall prepare an annual report for the
Board each year that the Fund participates in the InterFund Program,
that evaluates the Fund's compliance with the terms and conditions of
the application and the procedures established to achieve such
compliance. Each Fund's chief compliance officer will also annually
file a certification pursuant to Item 77Q3 of Form N-SAR as such Form
may be revised, amended or superseded from time to time, for each year
that the Fund participates in the InterFund Program, that certifies
that the Fund and its Adviser have implemented procedures reasonably
designed to achieve compliance with the terms and conditions of the
order. In particular, such certification will address procedures
designed to achieve the following objectives:
    (a) That the InterFund Loan Rate will be higher than the Repo Rate
but lower than the Bank Loan Rate;
    (b) compliance with the collateral requirements as set forth in the
application;
    (c) compliance with the percentage limitations on interfund
borrowing and lending;
    (d) allocation of interfund borrowing and lending demand in an
equitable manner and in accordance with procedures established by the
Board; and
    (e) that the InterFund Loan Rate does not exceed the interest rate
on any third party borrowings of a borrowing Fund at the time of the
InterFund Loan.
    Additionally, each Fund's independent public accountants, in
connection with their audit examination of the Fund, will review the
operation of the InterFund Program for compliance with the conditions
of the application and their review will form the basis, in part, of
the auditor's report on internal accounting controls in Form N-SAR.
    18. No Fund will participate in the InterFund Program, upon receipt
of requisite regulatory approval, unless it has fully disclosed in its
prospectus and/or statement of additional information all material
facts about its intended participation.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-15584 Filed 6-30-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 136 (Tuesday, July 16, 2019)]
[Notices]
[Pages 33932-33933]
[FR Doc No: 2019-15063]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings

    Take notice that the Commission has received the following Natural
Gas Pipeline Rate and Refund Report filings:

Filings Instituting Proceedings

    Docket Numbers: RP19-1091-001.
    Applicants: American Midstream (Midla), LLC.
    Description: Compliance filing Order No. 587-Y NAESB Filing to be
effective 8/1/2019.
    Filed Date: 7/8/19.
    Accession Number: 20190708-5094.

    Comments Due: 5 p.m. ET 7/22/19.

    Docket Numbers: RP19-1378-000.
    Applicants: Columbia Gas Transmission, LLC.
    Description: Sec.  4(d) Rate Filing: TCO J. Aron Neg Rate Agmt
Correction to be effective 6/1/2019.
    Filed Date: 7/8/19.
    Accession Number: 20190708-5121.
    Comments Due: 5 p.m. ET 7/22/19.
    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: July 10, 2019.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2019-15063 Filed 7-15-19; 8:45 am]
BILLING CODE 6717-01-P