UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
In the Matter of:
MainStay CBRE Global Infrastructure Megatrends
Fund
MainStay MacKay
DefinedTerm Municipal Opportunities Fund
and
New York Life Investment Management LLC
Investment Company Act of 1940
File No. 812-15242
APPLICATION
PURSUANT TO SECTION 6(C) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “ACT”) FOR AN ORDER GRANTING EXEMPTIONS
FROM SECTION 19(B) OF THE ACT AND RULE 19B-1 THEREUNDER
EXPEDITED REVIEW REQUESTED UNDER
17 CFR 270.0-5(d)
PLEASE SEND ALL COMMUNICATIONS AND ORDERS TO:
J. Kevin Gao, Esq
New York Investment Management LLC
51 Madison Avenue
New York, New York 10010
WITH A COPY TO:
Thomas C. Bogle, Esq
Corey F. Rose, Esq
Dechert LLP
1900 K Street
Washington D.C. 20006
This Application (including Exhibits) consists
of 93 pages.
The Exhibit Index is on page 17.
I. INTRODUCTION
MainStay
CBRE Global Infrastructure Megatrends Fund (“MainStay CBRE Fund”), MainStay MacKay DefinedTerm Municipal Opportunities Fund
(“MainStay MMD Fund”) (each a “Fund, ” and together, the “Funds”) and New York Life Investment Management
LLC (“New York Life Investments” and together with the Funds, the “Applicants”) hereby submit this application
for an order (the “Order”) of the Securities and Exchange Commission (the “Commission”) pursuant to Section 6(c)
of the Investment Company Act of 1940, as amended (the “1940 Act”), providing the Funds and each other closed-end management
investment company registered under the 1940 Act advised or to be advised in the future by New York Life Investments or by an entity
controlling, controlled by or under common control (within the meaning of Section 2(a)(9) of the 1940 Act) with New York Life Investments
(including any successor in interest1) (each such entity,
including New York Life Investments, an “Adviser”) that in the future seeks to rely on the Order (each, a “Future Fund”),
an exemption from the provisions of Section 19(b) of the 1940 Act and Rule 19b-1 thereunder, as more fully set forth below (the “Application”).2
The Funds and the Future Funds are hereinafter collectively referred to as the “Funds” and separately as a “Fund.”
II. THE APPLICANTS
The Funds are, and any
Future Fund will be, closed-end management investment companies registered under the 1940 Act. MainStay CBRE Fund is a Delaware statutory
trust and intends to operate as a non-diversified, closed-end management investment company. It is currently contemplated that the common
stock of the MainStay CBRE Fund (when and if issued) and common stock of Funds that may rely on the Order in the future will be listed
on the New York Stock Exchange, the Nasdaq or another national securities exchange as defined in Section 2(a)(26) of the 1940 Act (each,
an “Exchange”). It is currently anticipated that MainStay CBRE Fund’s investment objective will be to seek a high level
of total return with an emphasis on current income. Moreover, it is expected that, under normal circumstances, MainStay CBRE Fund will
invest at least 80% of its assets (net assets plus borrowings for investment purposes) in securities issued by infrastructure companies.
The investment objective and policies for MainStay CBRE Fund will be set forth in its registration statement and may be modified from
time to time. The Funds and any Future Fund may incur leverage through the issuance of preferred stock and debt securities, by entering
into a credit agreement or otherwise as permitted by applicable law. MainStay CBRE Fund does not currently intend to issue preferred shares.
The Board of Trustees of the Funds (the “Board”) may authorize the issuance of preferred shares in the future. Each Future
Fund may have issued or may issue preferred shares.
1 For
the purposes of the requested order, “successor” is limited to an entity that results from a reorganization into another
jurisdiction or a change in the type of business organization.
2 The only registered
closed-end investment companies that currently intend to rely on the Order have been named as Applicants. Any Fund that may rely on the
Order in the future will comply with the terms and conditions of the Application
MainStay MMD Fund is
organized as a Delaware Statutory Trust, which is registered under the 1940 Act as a diversified, closed-end management investment
company, and commenced operations on June 26, 2012. Shares of common stock of MainStay MMD Fund are currently listed and traded on
the New York Stock Exchange under the symbol “MMD.” As of March 31, 2021, MainStay MMD Fund has total net assets of
$582,002,768 and on that date 27,761,315.602 common stock were issued and outstanding.3 MainStay
MMD Fund’s primary investment objective is to seek current income exempt from regular U.S. Federal income taxes (but which may
be includable in taxable income for the purpose of the Federal alternative minimum tax). Total return is a secondary objective.
MainStay MMD Fund seeks to achieve its investment objectives by investing in municipal bonds, the interest on which is, in the
opinion of bond counsel to the issuers, generally excludable from gross income for regular U.S. Federal income tax purposes (except
that the interest may be includable in taxable income for purposes of the Federal alternative minimum tax).
New
York Life Investments, a limited liability company organized under the laws of the State of Delaware and an investment adviser registered
with the Commission under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), serves, or will serve, as
investment adviser to the Funds. Each Fund and New York Life Investments have entered, or will enter, into an investment management agreement
pursuant to which New York Life Investments will be responsible for, among other things, managing all aspects of the advisory operations
of the Fund and the composition of the investment portfolio according to the Fund’s investment objective, policies, and restrictions,
subject to the general oversight of the Board. The Adviser intends to enter into a subadvisory agreement with CBRE Clarion Securities
LLC (“CBRE Clarion or “Subadvisor”), pursuant to which New York Life Investments will delegate its day-to-day portfolio
management responsibilities of the MainStay CBRE Fund to CBRE Clarion. The Adviser has entered into a subadvisory agreement with MacKay
Shields LLC “MacKay Shields”), pursuant to which New York Life Investments has delegated its day-to-day portfolio management
responsibilities of the MainStay MMD Fund to MacKay Shields. Any Adviser to a Future Fund or future Adviser to the Funds also will be
registered under the Advisers Act. The portfolio of the Funds or a Future Fund may be subadvised by one or more investment subadvisors
(each, a “Future Subadvisor”). A Future Subadvisor may be an affiliate of New York Life Investments. Any Future Subadvisor
will be registered under the Advisers Act.
III.
REQUEST FOR EXEMPTIVE RELIEF
Section 19(b) of the 1940
Act provides that it shall be unlawful in contravention of such rules, regulations, or orders as the Commission may prescribe as necessary
or appropriate in the public interest or for the protection of investors for any registered investment company to distribute long-term
capital gains, as defined in the Internal Revenue Code of 1986, as amended (the “Code”), more often than once every twelve
months. Rule 19b-1 under the 1940 Act provides that no registered investment company which is a “regulated investment company”
as defined in Section 851 of the Code may make more than (i) one “capital gain dividend,” as defined in Section 852(b)(3)(C)
of the Code, in any one taxable year of the company, (ii) one additional capital gain distribution made in whole or in part to avoid payment
of excise tax under Section 4982 of the Code plus (iii) one supplemental capital gain dividend pursuant to Section 855 of the Code (provided
that it does not exceed 10% of the total amount distributed for the taxable year).
3 On
October 4, 2012, MMD Fund issued and has outstanding, two series of Fixed Rate Municipal Term Preferred Shares.
Applicants believe
that Rule 19b-1 should be interpreted to permit a Fund to pay an unlimited number of distributions on its common and preferred stock
(if any) so long as it makes the designation necessary under the Code and Rule 19b-1 to characterize those distributions as
“capital gain dividends” restricted by Rule 19b-1 only as often as is permitted by Rule 19b-1, even if the Code would
then require retroactively spreading the capital gain resulting from that designation over more than the permissible number of
distributions. However, to obtain certainty for a Fund’s proposed distribution policies (each, a “Distribution
Policy”), in the absence of such an interpretation, Applicants hereby request an order pursuant to Section 6(c) of the 1940
Act granting an exemption from Section 19(b) of the 1940 Act and Rule 19b-1 thereunder. The Order would permit each Fund to make
periodic capital gain dividends (as defined in Section 852(b)(3)(C) of the Code) that include long-term capital gains as frequently
as twelve times in any one taxable year in respect of its common stock and as often as specified by, or determined in accordance
with the terms of, any preferred stock issued by the Fund.
IV.
REPRESENTATIONS OF APPLICANTS
Prior to a Fund’s
implementing a Distribution Policy in reliance on the Order, the Board of each Fund seeking to rely on the Order, including a majority
of the directors or trustees who are not interested persons of the Fund, as defined in Section 2(a)(19) of the 1940 Act (the “Independent
Board Members”), will request, and the Adviser will provide, such information as is reasonably necessary to make an informed determination
of whether the Board should adopt a proposed Distribution Policy. In particular, the Board and the Independent Board Members will review
information regarding (i) the purpose and terms of the proposed Distribution Policy; (ii) the likely effects of the proposed Distribution
Policy on the Fund’s long-term total return (in relation to market price and net asset value per share of common stock (“NAV”));
(iii) the expected relationship between the Fund’s distribution rate on its shares of common stock under the proposed Distribution
Policy and the Fund’s total return (in relation to NAV); (iv) whether the rate of distribution is anticipated to exceed the Fund’s
expected total return in relation to its NAV; and (v) any foreseeable material effects of the proposed Distribution Policy on the Fund’s
long-term total return (in relation to market price and NAV).
The Independent Board
Members will also consider what conflicts of interest the Adviser and the affiliated persons of the Adviser and the Fund might have with
respect to the adoption or implementation of the proposed Distribution Policy.
Following this review,
the Board, including the Independent Board Members, of each Fund will, before adopting or implementing any proposed Distribution Policy,
make a determination that the proposed Distribution Policy is consistent with the Fund’s investment objective(s) and in the best
interests of the holders of the Fund’s common stock. The Distribution Policy will be consistent with the Fund’s policies and
procedures and will be described in the Fund’s registration statement.
In addition, prior to
implementation of a Distribution Policy for any Fund pursuant to the Order requested by this Application, the Board of the Fund shall
have adopted policies and procedures (the “Section 19 Compliance Policies”) pursuant to Rule 38a-1 under the 1940 Act that:
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(i)
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are reasonably designed to ensure that all notices required to be sent
to the Fund’s stockholders pursuant to Section 19(a) of the 1940 Act, Rule 19a-1 thereunder and by condition 4 below (each, a
“19(a) Notice”) include the disclosure required by Rule 19a-1 and by condition 2(a) below, and that all other written communications
by the Fund or its agents regarding distributions under the Distribution Policy include the disclosure required by condition 3(a) below;
and
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(ii)
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require the Fund to keep records that demonstrate its compliance with
all of the conditions of the Order and that are necessary for the Fund to form the basis for, or demonstrate the calculation of, the
amounts disclosed in its 19(a) Notices.
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The records of the actions
of the Board of each Fund will summarize the basis for the Board’s approval of the Distribution Policy, including its consideration
of the factors described above. These records will be maintained for a period of at least six years from the date of the applicable meeting,
the first two years in an easily accessible place, or for such longer period as may otherwise be required by law.
Generally, the purpose
of a Distribution Policy would be to permit a Fund to distribute periodically, over the course of each year, an amount closely approximating
the total taxable income of the Fund during the year through distributions in relatively equal amounts (plus any required special distributions)
that are composed of payments received from portfolio companies, supplemental amounts generally representing realized capital gains or,
possibly, returns of capital that may represent unrealized capital gains. The Fund seeks to establish a distribution rate that approximates
the Fund’s projected total return that can reasonably be expected to be generated by the Fund over an extended period of time, although
the distribution rate will not be solely dependent on the amount of income earned or capital gains realized by the Fund for the year.
Under the Distribution Policy of a Fund, the Fund would distribute periodically (as frequently as twelve times in any taxable year) to
its respective common stockholders a fixed percentage of the market price of the Fund’s shares of common stock at a particular point
in time or a fixed percentage of NAV at a particular time or a fixed amount per share of common stock, any of which may be adjusted from
time to time. It is anticipated that under a Distribution Policy, the minimum annual distribution rate with respect to the Fund’s
shares of common stock would be independent of the Fund’s performance during any particular period but would be expected to correlate
with the Fund’s performance over time. Except for extraordinary distributions and potential increases or decreases in the final
dividend periods in light of the Fund’s performance for an entire calendar year and to enable the Fund to comply with the distribution
requirements of Subchapter M of the Code for the calendar year, each distribution on the Fund’s common stock would be at the stated
rate then in effect. The Board will periodically review the amount of potential distributions in light of the investment experience of
the Fund, and may modify or terminate a Distribution Policy at any time.
V. JUSTIFICATION
FOR REQUESTED RELIEF
Section 6(c) of the 1940
Act provides that the Commission may exempt any person, security or transaction from any provision of the 1940 Act or of any rule or regulation
thereunder, if and to the extent that the 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 1940 Act. For the reasons set forth below, Applicants
submit that the requested exemption from Section 19(b) of the 1940 Act and Rule 19b-1 thereunder would be consistent with the standards
set forth in Section 6(c) of the 1940 Act and in the best interests of the Funds and their respective stockholders.
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A.
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Receipt of the
Order would serve stockholders interests
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Applicants believe that
closed-end fund investors may prefer an investment vehicle that provides regular current income through fixed distribution policies that
would be available through a Distribution Policy. Allowing a Distribution Policy to operate in the manner described in this Application
would help fill current investor demand and foster competition in the registered fund market.
An exemption from Rule
19b-1 would benefit stockholders in another way. Shares of common stock of closed-end funds often trade in the marketplace at a discount
to their NAV. Applicants believe that this discount may be reduced if a Fund is permitted to pay relatively frequent dividends on its
common stock at a consistent rate, whether or not those dividends contain an element of long-term capital gains. Any reduction in the
discount at which Fund shares of common stock trade in the market would benefit the holders of the Fund’s common stock along with
the Fund.
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B.
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The Fund’s stockholders would receive information sufficient to clearly inform
them of the nature of the distributions they are receiving
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One of the concerns leading
to the enactment of Section 19(b) and adoption of Rule 19b-1 was that stockholders might be unable to distinguish between frequent distributions
of capital gains and dividends from investment income.4 However, Rule 19a-1 under the 1940 Act effectively addresses this
concern by requiring that distributions (or the confirmation of the reinvestment thereof) estimated to be sourced in part from capital
gains or capital be accompanied by a separate statement showing the sources of the distribution (e.g., estimated net income, net short-term
capital gains, net long-term capital gains and/or return of capital). The same information will be included in each Fund’s annual
report to stockholders and on its Internal Revenue Service (“IRS”) Form 1099-DIV, which will be sent to each common and preferred
stockholder who received distributions during a particular year (including stockholders who have sold shares during the year).
In addition, each of the
Funds will make the additional disclosures required by the conditions set forth in Part VI below, and each of them will adopt compliance
policies and procedures in accordance with Rule 38a-1 under the 1940 Act to ensure that all required notices and disclosures are sent
to stockholders.
The information
required by Section 19(a), Rule 19a-1, the Distribution Policy, the Section 19 Compliance Policies and the conditions listed below
will help to ensure that each Fund’s stockholders are provided sufficient information to understand that their periodic
distributions are not tied to the Fund’s net investment income (which for this purpose is the Fund’s taxable income
other than from capital gains) and realized capital gains to date, and may not represent yield or investment return. Accordingly,
subjecting the Funds to Section 19(b) and Rule 19b-1 would afford stockholders no extra protection. In addition, the Funds will
undertake to request intermediaries, or their agent(s), to forward 19(a) Notices to their customers and to reimburse them for the
costs of forwarding. Such forwarding may occur in any manner permitted by statute, rule or order or by the staff of the
Commission.
4 See Securities
and Exchange Commission 1966 Report to Congress on Investment Company Growth (H.R. Rep. No. 2337, 89th Cong. 2d Sess. 190-95 (1966));
S. Rep. No. 91-184, 91st Cong., 1st Sess. 29 (1969); H.R. Rep. No. 91-1382, 91st Cong., 2d Sess. 29 (1970).
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C.
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Under certain circumstances, Rule 19b-1 gives rise to improper influence on portfolio
management decisions, with no offsetting benefit to stockholders
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Rule 19b-1, when applied
to a Distribution Policy, actually gives rise to one of the concerns that Rule 19b-1 was intended to avoid: inappropriate influence on
portfolio management decisions. Funds that pay long-term capital gains distributions only once per year in accordance with Rule 19b-1
impose no pressure on management to realize capital gains at any time when purely investment considerations do not dictate doing so. In
the absence of an exemption from Rule 19b-1, the adoption of a periodic distribution plan imposes pressure on management (i) not to realize
any net long-term capital gains until the point in the year that the fund can pay all of its remaining distributions in accordance with
Rule 19b-1 and (ii) not to realize any long-term capital gains during any particular year in excess of the amount of the aggregate pay-out
for the year (since as a practical matter excess gains must be distributed and accordingly would not be available to satisfy pay-out requirements
in following years), notwithstanding that purely investment considerations might favor realization of long-term gains at different times
or in different amounts.
No purpose is served by
the distortion in the normal operation of a periodic distribution plan required in order to comply with Rule 19b-1. There is no benefit
in requiring any fund that adopts a periodic distribution plan either to retain (and pay taxes on) long-term capital gains (with the resulting
additional tax return complexities for the fund’s stockholders) or to avoid designating its distributions of long-term gains as
capital gains dividends for tax purposes (thereby avoiding a Rule 19b-1 problem but providing distributions taxable at ordinary income
rates rather than the much lower long-term capital gains rates). The desirability of avoiding these anomalous results creates pressure
to limit the realization of long-term capital gains that otherwise would be taken for purely investment considerations.
The Order requested by
Applicants would minimize these anomalous effects of Rule 19b-1 by enabling the Funds to realize long-term capital gains as often as investment
considerations dictate without fear of violating Rule 19b-1.
D. Other concerns
leading to adoption of Rule 19b-1 are not applicable
Another concern that led
to the enactment of Section 19(b) of the 1940 Act and adoption of Rule 19b-1 was that frequent capital gains distributions could facilitate
improper fund share sales practices, including, in particular, the practice of urging an investor to purchase shares of a fund on the
basis of an upcoming capital gains dividend (“selling the dividend”), where the dividend would result in an immediate corresponding
reduction in NAV and would be in effect a taxable return of the investor’s capital. Applicants submit that this concern should not
apply to closed-end investment companies, such as the Funds, that do not continuously distribute shares. Furthermore, if the underlying
concern extends to secondary market purchases of shares of closed-end funds that are subject to a large upcoming capital gains dividend,
adoption of a periodic distribution plan may help minimize the concern by avoiding, through periodic distributions, any buildup of large
end-of-the-year distributions.
Applicants also submit
that the “selling the dividend” concern is not applicable to preferred stock, which entitles a holder to no more than a specified
periodic dividend and, like a debt security, is initially sold at a price based upon its liquidation preference, credit quality, dividend
rate and frequency of payment. Investors buy preferred stock for the purpose of receiving specific payments at the frequency bargained
for, and any application of Rule 19b-1 to preferred stock would be contrary to the expectation of investors. There is also currently a
tax rule that provides that any loss realized by a stockholder upon sale of shares of a regulated investment company that were held for
six months or less will be treated as a long-term capital loss, to the extent of any long-term capital gains paid on such shares, to avoid
the selling of dividends.
E. Further limitations
of Rule 19b-1
Subparagraphs (a) and
(f) of Rule 19b-1 limit the number of capital gains dividends, as defined in Section 852(b) (3)(C) of the Code, that a fund may make with
respect to any one taxable year to one, plus a supplemental distribution made pursuant to Section 855 of the Code not exceeding 10% of
the total amount distributed for the year, plus one additional capital gain dividend made in whole or in part to avoid the excise tax
under Section 4982 of the Code.
Applicants assert that
by limiting the number of capital gain dividends that a Fund may make with respect to any one year, Rule 19b-1 may prevent the normal
and efficient operation of a periodic distribution plan whenever that Fund’s realized net long-term capital gains in any year exceed
the total of the periodic distributions that may include such capital gains under the rule. Rule 19b-1 thus may force the fixed regular
periodic distributions to be funded with returns of capital5 (to the extent net investment income and realized
short term capital gains are insufficient to fund the distribution), even though realized net long-term capital gains otherwise would
be available. To distribute all of a Fund’s long-term capital gains within the limits in Rule 19b-1, a Fund may be required to make
total distributions in excess of the annual amount called for by its periodic distribution plan or to retain and pay taxes on the excess
amount. Applicants believe that the application of Rule 19b-1 to a Fund’s periodic distribution plan may create pressure to limit
the realization of long-term capital gains based on considerations unrelated to investment goals.
Revenue Ruling
89-816 under the Code requires that a fund that seeks to qualify as a regulated investment company under the Code and
that has both common stock and preferred stock outstanding designate the types of income, e.g., investment income and capital gains,
in the same proportion as the total distributions distributed to each class for the tax year. To satisfy the proportionate
designation requirements of Revenue Ruling 89-81, whenever a fund has realized a long-term capital gain with respect to a given tax
year, the fund must designate the required proportionate share of such capital gain to be included in common and preferred stock
dividends. Although Rule 19b-1 allows a fund some flexibility with respect to the frequency of capital gains distributions, a fund
might use all of the exceptions available under Rule 19b-1 for a tax year and still need to distribute additional capital gains
allocated to the preferred stock to comply with Revenue Ruling 89-81.
5 These would be returns of capital
for financial accounting purposes and not for tax accounting purposes.
6 1989-1 C.B. 226.
The potential abuses addressed
by Section 19(b) and Rule 19b-1 do not arise with respect to preferred stock issued by a closed-end fund. Such distributions generally
are either fixed or are determined in periodic auctions or remarketings or are periodically reset by reference to short term interest
rates rather than by reference to performance of the issuer, and Revenue Ruling 89-81 determines the proportion of such distributions
that are comprised of the long-term capital gains. The Applicants also submit that the “selling the dividend” concern is not
applicable to preferred stock, which entitles a holder to no more than a periodic dividend at a fixed rate or the rate determined by the
market, and, like a debt security, is priced based upon its liquidation value, dividend rate, credit quality, and frequency of payment.
Investors buy preferred stock for the purpose of receiving payments at the frequency bargained for and do not expect the liquidation value
of their shares to change.
The proposed Order will assist the Funds in avoiding these
Rule 19b-1 problems.
F. General
The relief requested is
that the Commission permit the Funds to make periodic distributions in respect of their common stock as frequently as twelve times in
any one taxable year and in respect of their preferred stock as specified by or determined in accordance with the terms thereof. Granting
this relief would provide the Funds with flexibility in meeting investor interest in receiving more frequent distributions. Implementation
of the relief would actually ameliorate the concerns that gave rise to Section 19(b) and Rule 19b-1 and help avoid the “selling
of dividends” problem, which Section 19(b) and Rule 19b-1 are not effective in preventing.
The potential issues under
Rule 19b-1 are not relevant to distributions on preferred stock. Not only are such distributions fixed or determined by the market rather
than by reference to the performance of the issuer but also the long-term capital gain component is mandated by the IRS to be the same
proportion as the proportion of long-term gain dividends bears to the total distributions in respect of the common stock and consequently
the long-term gain component cannot even be known until the end of the fund’s fiscal year. In these circumstances it would be very
difficult for any of the potential abuses reflected in Rule 19b-1’s restrictions to occur.
In summary, Rule 19b-1,
in the circumstances referred to above, is likely to distort the effective and proper functioning of a Fund’s Distribution Policy
and gives rise to the very pressures on portfolio management decisions that Rule 19b-1 was intended to avoid. These distortions forced
by Rule 19b-1 serve no purpose and are not in the best interests of stockholders.
VI. APPLICANTS’
CONDITIONS
Applicants agree that,
with respect to each Fund seeking to rely on the Order, the Order will be subject to each of the following conditions:
1. Compliance Review
and Reporting
The Fund’s
chief compliance officer will: (a) report to the Fund’s Board, no less frequently than once every three months or at the next regularly
scheduled quarterly Board meeting, whether (i) the Fund and its Adviser have complied with the conditions of the Order and (ii) a material
compliance matter (as defined in Rule 38a-1(e)(2) under the 1940 Act) has occurred with respect to such conditions; and (b) review the
adequacy of the policies and procedures adopted by the Board no less frequently than annually.
2. Disclosures to
Fund Stockholders
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(a)
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Each 19(a) Notice disseminated to the holders of the Fund’s common stock, in addition to the information
required by Section 19(a) and Rule 19a-1:
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(i) will provide,
in a tabular or graphical format:
(1)
the amount of the distribution, on a per share of common stock basis, together with the amounts of such distribution amount, on
a per share of common stock basis and as a percentage of such distribution amount, from estimated: (A) net investment income; (B) net
realized short-term capital gains; (C) net realized long-term capital gains; and (D) return of capital or other capital source;
(2)
the fiscal year-to-date cumulative amount of distributions, on a per share of common stock basis, together with the amounts of
such cumulative amount, on a per share of common stock basis and as a percentage of such cumulative amount of distributions, from estimated:
(A) net investment income; (B) net realized short-term capital gains; (C) net realized long-term capital gains; and (D) return of capital
or other capital source;
(3)
the average annual total return in relation to the change in NAV for the 5-year period (or, if the Fund’s history of operations
is less than five years, the time period commencing immediately following the Fund’s first public offering) ending on the last day
of the month ended immediately prior to the most recent distribution record date compared to the current fiscal period’s annualized
distribution rate expressed as a percentage of NAV as of the last day of the month prior to the most recent distribution record date;
and
(4)
the cumulative total return in relation to the change in NAV from the last completed fiscal year to the last day of the month prior
to the most recent distribution record date compared to the fiscal year-to-date cumulative distribution rate expressed as a percentage
of NAV as of the last day of the month prior to the most recent distribution record date.
Such disclosure
shall be made in a type size at least as large and as prominent as the estimate of the sources of the current distribution; and
(ii) will include
the following disclosure:
(1)
“You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution
or from the terms of the Fund’s Distribution Policy.”;
(2)
“The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of
your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested
in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance
and should not be confused with ‘yield’ or ‘income’”;7
and
(3)
“The amounts and sources of distributions reported in this 19(a) Notice are only estimates and are not being provided for
tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment
experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form
1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.”
Such disclosure shall
be made in a type size at least as large as and as prominent as any other information in the 19(a) Notice and placed on the same page
in close proximity to the amount and the sources of the distribution.
7 The disclosure
in this condition 2(a)(ii)(2) will be included only if the current distribution or the fiscal year-to-date cumulative distributions are
estimated to include a return of capital.
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(b)
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On the inside front cover of each report to stockholders under Rule 30e-1 under
the 1940 Act, the Fund will:
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(i)
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describe the terms of the Distribution Policy (including the fixed amount or fixed
percentage of the distributions and the frequency of the distributions);
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(ii)
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include the disclosure required by condition 2(a)(ii)(1) above;
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(iii)
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state, if applicable, that the Distribution Policy provides that the Board may amend
or terminate the Distribution Policy at any time without prior notice to Fund stockholders; and
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(iv)
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describe any reasonably foreseeable circumstances that might cause the Fund to terminate
the Distribution Policy and any reasonably foreseeable consequences of such termination.
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(c)
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Each report provided to stockholders of a Fund under Rule 30e-1 under the 1940 Act
and each prospectus filed with the Commission on Form N-2 under the 1940 Act, will provide the Fund’s total return in relation to
changes in NAV in the financial highlights table and in any discussion about the Fund’s total return.
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3. Disclosure to Stockholders, Prospective Stockholders
and Third Parties
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(a)
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The Fund will include the information contained in the relevant 19(a) Notice, including
the disclosure required by condition 2(a)(ii) above, in any written communication (other than a communication on Form 1099) about the
Distribution Policy or distributions under the Distribution Policy by the Fund, or agents that the Fund has authorized to make such communication
on the Fund’s behalf, to any Fund stockholder, prospective stockholder or third-party information provider;
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(b)
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The Fund will issue, contemporaneously with the issuance of any 19(a) Notice, a
press release containing the information in the 19(a) Notice and will file with the Commission the information contained in such 19(a)
Notice, including the disclosure required by condition 2(a)(ii) above, as an exhibit to its next filed Form N-CSR; and
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(c)
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The Fund will post prominently a statement on its (or the Adviser’s) website
containing the information in each 19(a) Notice, including the disclosure required by condition 2(a)(ii) above, and maintain such information
on such website for at least 24 months.
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4. Delivery of 19(a) Notices to Beneficial Owners
If a broker, dealer, bank or other
person (“financial intermediary”) holds common stock issued by the Fund in nominee name, or otherwise, on behalf of a beneficial
owner, the Fund:
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(a)
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will request that the financial intermediary, or its agent, forward the 19(a) Notice
to all beneficial owners of the Fund’s stock held through such financial intermediary;
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(b)
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will provide, in a timely manner, to the financial intermediary, or its agent, enough
copies of the 19(a) Notice assembled in the form and at the place that the financial intermediary, or its agent, reasonably requests to
facilitate the financial intermediary’s sending of the 19(a) Notice to each beneficial owner of the Fund’s stock; and
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(c)
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upon the request of any financial intermediary, or its agent, that receives copies
of the 19(a) Notice, will pay the financial intermediary, or its agent, the reasonable expenses of sending the 19(a) Notice to such beneficial
owners.
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5. Additional
Board Determinations for Funds Whose Common Stock Trades at a Premium If:
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(a)
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The Fund’s common stock has traded on the stock exchange that they primarily
trade on at the time in question at an average premium to NAV equal to or greater than 10%, as determined on the basis of the average
of the discount or premium to NAV of the Fund’s shares of common stock as of the close of each trading day over a 12-week rolling period (each
such 12-week rolling period ending on the last trading day of each week); and
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(b)
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The Fund’s annualized distribution rate for such 12-week rolling period, expressed
as a percentage of NAV as of the ending date of such 12-week rolling period, is greater than the Fund’s average annual total return
in relation to the change in NAV over the 2-year period ending on the last day of such 12-week rolling period;
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then:
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(i)
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At the earlier of the next regularly scheduled meeting or within four months of
the last day of such 12-week rolling period, the Board, including a majority of its Independent Board Members:
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(1) will
request and evaluate, and the Fund’s Adviser will furnish, such information as may be reasonably necessary to make an informed determination
of whether the
Distribution Policy should be continued or continued after
amendment;
(2) will
determine whether continuation, or continuation after amendment, of the Distribution Policy is consistent with the Fund’s investment
objective(s) and policies and is in the best interests of the Fund and its stockholders, after considering the information in condition
5(b)(i)(1) above; including, without limitation:
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(A)
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whether the Distribution Policy is accomplishing its purpose(s);
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(B)
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the reasonably foreseeable material effects of the Distribution Policy on the Fund’s
long-term total return in relation to the market price and NAV of the Fund’s common stock; and
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(C)
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the Fund’s current distribution rate, as described in condition 5(b) above,
compared with the Fund’s average annual taxable income or total return over the 2-year period, as described in condition 5(b), or
such longer period as the Board deems appropriate; and
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(3) based
upon that determination, will approve or disapprove the continuation, or continuation after amendment, of the Distribution Policy; and
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(ii)
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The Board will record the information considered by it, including its consideration
of the factors listed in condition 5(b)(i)(2) above, and the basis for its approval or disapproval of the continuation, or continuation
after amendment, of the Distribution Policy in its meeting minutes, which must be made and preserved for a period of not less than six
years from the date of such meeting, the first two years in an easily accessible place.
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6. Public Offerings
The Fund will not make a public offering of the Fund’s
common stock other than:
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(a)
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a rights offering below NAV to holders of the Fund’s common stock;
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(b)
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an offering in connection with a dividend reinvestment plan, merger, consolidation,
acquisition, spin off or reorganization of the Fund; or
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(c)
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an offering other than an offering described in conditions 6(a) and 6(b) above,
provided that, with respect to such other offering:
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(i)
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the Fund’s annualized distribution rate for the six months ending on the last
day of the month ended immediately prior to the most recent distribution record date,8
expressed as a percentage of NAV as of such date, is no more than 1 percentage point greater than the Fund’s average annual total
return for the 5-year period ending on such date;9 and
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(ii)
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the transmittal letter accompanying any registration statement filed with the Commission
in connection with such offering discloses that the Fund has received an order under Section 19(b) to permit it to make periodic distributions
of long-term capital gains with respect to its shares of common stock as frequently as twelve times each year, and as frequently as distributions
are specified by or determined in accordance with the terms of any outstanding shares of preferred stock as the Fund may issue.
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7. Amendments to
Rule 19b-1
The requested Order will
expire on the effective date of any amendment to Rule 19b-1 that provides relief permitting certain closed-end investment companies to
make periodic distributions of long-term capital gains with respect to their outstanding common stock as frequently as twelve times each
year.
VII.
APPLICABLE PRECEDENT
The Commission has
recently granted substantially the same relief as that sought herein in Vertical Capital Income Fund and Oakline Advisors LLC,
Investment Company Act Release Nos. 33505 (June 12, 2019) (notice) and 33548 (July 9, 2019) (order); Putnam Managed Municipal Income
Trust et al., Investment Company Act Release Nos. 33449 (April 17, 2019) (notice) and 33474 (May 14, 2019) (order); Macquarie Global
Infrastructure Total Return Fund Inc., et al., Investment Company Act Release Nos. 33389 (March 5, 2019) (notice) and (April 2,
2019) (order); Special Opportunities Fund, Inc. and Bulldog Investors, LLC, Investment Company Act Release Nos. 33367 (April 4,
2016) (notice) and 33386 (Mach 4, 2019) (order); Vivaldi Opportunities Fund and Vivaldi Asset Management, LLC, Investment Company
Act Release Nos. 33147 (July 3, 2018) (notice) and 33185 (July 31, 2018) (order); The Swiss Helvetia Fund, Inc., et al., Investment
Company Act Release Nos. 33075 (April 23, 2018) (notice) and 33099 (May 21, 2018) (order); The Mexico Equity & Income Fund, Inc.
and Pichardo Asset Management, S.A. de C.V., Investment Company Act Release Nos. 32640 (May 18, 2017) (notice) and 32676 (June 13,
2017) (order); RiverNorth DoubleLine Strategic Opportunity Fund, Inc. and RiverNorth Capital Management LLC, Investment Company Act
Release Nos. 32635 (May 12, 2017)(notice) and 32673 (June 7, 2017) (order); Brookfield Global Listed Infrastructure Income Fund
Inc., et al., Investment Company Act Release Nos. 31802 (September 1, 2015) (notice) and 31855 (September 30, 2015) (order); and
Ares Dynamic Credit Allocation Fund, Inc., et al., Investment Company Act Release Nos. 31665 (June 9, 2015) (notice) and 31708 (July
7, 2015) (order).
8 If the Fund has been in operation
fewer than six months, the measured period will begin immediately following the Fund’s first public offering.
9 If the Fund has been in operation
fewer than five years, the measured period will begin immediately following the Fund’s first public offering.
VIII.
PROCEDURAL MATTERS
All of the requirements
for execution and filing of this Application on behalf of the Applicants have been complied with in accordance with the applicable organizational
documents of the Applicants, and the undersigned officers of the Applicants are fully authorized to execute this Application. The resolutions
of the Boards of the Funds authorizing the filing of this Application, required by Rule 0-2(c) under the 1940 Act, are included as Exhibit
A to this Application. The verifications required by Rule 0-2(d) under the 1940 Act are included as Exhibit B to this Application.
Pursuant to Rule 0-2(f)
under the 1940 Act, the Applicants state that their address is: 51 Madison Avenue, New York, New York 10010; and that all written communications
regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.
Applicants desire that
the Commission issue the requested order pursuant to Rule 0-5 under the 1940 Act without conducting a hearing.
IX.
CONCLUSION
For the foregoing reasons,
Applicants respectfully request that the Commission issue an order under Section 6(c) of the 1940 Act exempting the Funds from the provisions
of Section 19(b) of the 1940 Act and Rule 19b-1 thereunder to permit each Fund to make distributions on its common stock consisting in
whole or in part of capital gain dividends as frequently as twelve times in any one taxable year so long as it complies with the conditions
of the Order and maintains in effect a Distribution Policy with respect to its common stock as described in this Application. In addition,
Applicants request that the Order permit each Fund to make distributions on its preferred stock (if any) that it has issued or may issue
in the future consisting in whole or in part of capital gain dividends as frequently as specified by or determined in accordance with
the terms thereof. Applicants submit that the requested exemption is necessary or appropriate in the public interest, consistent with
the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the 1940 Act.
[Signature Page Follows]
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MainStay
CBRE Global Infrastructure Megatrends Fund
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Dated: July 30, 2021
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By:
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/s/ Kirk
C. Lehneis
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Name: Kirk C. Lehneis
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Title: President
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MainStay MacKay DefinedTerm Municipal
Bond Opportunities Fund
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Dated: July 30, 2021
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By:
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/s/ Kirk C. Lehneis
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Name: Kirk C. Lehneis
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Title: President
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New
York Investment Management LLC
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Dated: July 30, 2021
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By:
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/s/ Yie-Hsin Hung
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Name: Yie-Hsin Hung
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Title: Chief Executive Officer
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EXHIBITS TO APPLICATION
The following materials are made a part of the Application
and are attached hereto:
DESIGNATION
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DOCUMENT
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Exhibit A
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Resolutions of the Board
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Exhibit B
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Verifications Exhibit C
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Exhibit C
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Marked copies of the Application against two substantially identical applications pursuant to 17 CFR 270.0-5(e)(2) and (3) and the initial
exemptive application
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EXHIBIT A
Resolutions of the Boards of MainStay CBRE Global
Infrastructure Megatrends Fund and MainStay MacKay DefinedTerm Municipal Opportunities Fund
RESOLVED,
that the officers of the MainStay CBRE Global Infrastructure Megatrends Fund be, and they hereby are, authorized in the name and on behalf
of the MainStay CBRE Global Infrastructure Megatrends Fund, to file an exemptive application with the U.S. Securities and Exchange Commission
to seek relief under Section 19 of the Investment Company Act of 1940, as amended, to implement a managed distribution policy, as presented
and discussed at this meeting, with such changes as an officer of the MainStay CBRE Global Infrastructure Megatrends Fund, with the advice
of the MainStay CBRE Global Infrastructure Megatrends Fund’s legal counsel, may deem appropriate.
RESOLVED,
that the officers of the MainStay MacKay DefinedTerm Municipal Opportunities Fund be, and they hereby are, authorized in the name and
on behalf of MainStay MacKay DefinedTerm Municipal Opportunities Fund, to file an exemptive application with the U.S. Securities and Exchange
Commission to seek relief under Section 19 of the Investment Company Act of 1940, as amended, to implement a managed distribution policy,
as presented and discussed at this meeting, with such changes as an officer of MainStay MacKay DefinedTerm Municipal Opportunities Fund,
with the advice of MainStay MacKay DefinedTerm Municipal Opportunities Fund’s legal counsel, may deem appropriate.
FURTHER
RESOLVED, that each of the Fund’s officers be, and each hereby is, authorized and directed, in consultation with the
Fund’s legal counsel, to take such steps and to prepare, execute and file with necessary authorities such documents as he or she
may deem necessary or appropriate to effect the foregoing resolutions adopted at this meeting.
EXHIBIT B
Verifications
of MainStay CBRE Global Infrastructure Megatrends Fund, MainStay MacKay DefinedTerm Municipal Opportunities Fund and New
York Life Investment Management LLC
The undersigned states that he has duly executed
the attached application dated July 30, 2021, for and on behalf of MainStay CBRE Global Infrastructure Megatrends Fund in his capacity
as President of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and
file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof,
and that the facts therein set forth are true to the best of his knowledge, information and belief.
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By:
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/s/ Kirk C. Lehneis
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Name: Kirk C. Lehneis
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Title: President
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The undersigned states that he has duly executed
the attached application dated July 30, 2021, for and on behalf of MainStay MacKay DefinedTerm Municipal Opportunities Fund in his capacity
as President of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and
file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof,
and that the facts therein set forth are true to the best of his knowledge, information and belief.
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By:
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/s/ Kirk C. Lehneis
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Name: Kirk C. Lehneis
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Title: President
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The undersigned states that he has duly executed
the attached application dated July 30, 2021, for and on behalf of New York Life Investment Management LLC in her capacity as Chief Executive
Officer of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file
such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and
that the facts therein set forth are true to the best of his knowledge, information and belief.
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By:
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/s/ Yie-Hsin Hung
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Name: Yie-Hsin Hung
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Title: Chief Executive Officer
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EXHIBIT C
UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
In the Matter of:
MainStay CBRE Global Infrastructure Megatrends
Fund
MainStay MacKay
DefinedTerm Municipal Opportunities Fund
and
New York Life Investment Management LLC
Investment Company Act of 1940
File
No. [ ]812-15242
APPLICATION PURSUANT TO SECTION 6(C) OF THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED (THE “ACT”) FOR AN ORDER GRANTING EXEMPTIONS FROM SECTION 19(B) OF THE ACT AND RULE 19B-1
THEREUNDER
EXPEDITED REVIEW REQUESTED UNDER
17 CFR 270.0-5(d)
PLEASE SEND ALL COMMUNICATIONS AND ORDERS TO:
J. Kevin Gao, Esq
New York Investment Management LLC
51 Madison Avenue
New York, New York 10010
WITH A COPY TO:
Thomas C. Bogle, Esq
Corey F. Rose, Esq
Dechert LLP
1900 K Street
Washington D.C. 20006
This Application (including Exhibits) consists
of 19 pages.
The Exhibit Index is on page 17.
MainStay
CBRE Global Infrastructure Megatrends Fund (“MainStay CBRE Fund”), MainStay MacKay DefinedTerm Municipal Opportunities Fund
(“MainStay MMD Fund”) (each a “Fund, ” and together, the “Funds”) and New York Life Investment Management
LLC (“New York Life Investments” and together with the Funds, the “Applicants”) hereby submit this application
for an order (the “Order”) of the Securities and Exchange Commission (the “Commission”) pursuant to Section 6(c)
of the Investment Company Act of 1940, as amended (the “1940 Act”), providing the Funds and each other closed-end management
investment company registered under the 1940 Act advised or to be advised in the future by New York Life Investments or by an entity
controlling, controlled by or under common control (within the meaning of Section 2(a)(9) of the 1940 Act) with New York Life Investments
(including any successor in interest1) (each such entity, including
New York Life Investments, aan
“ManagerAdviser”)
that in the future seeks to rely on the Order (each, a “Future Fund”), an exemption from the provisions of Section 19(b) of
the 1940 Act and Rule 19b-1 thereunder, as more fully set forth below (the “Application”).2
The Funds and the Future Funds are hereinafter collectively referred to as the “Funds” and separately as a “Fund.”
II. THE APPLICANTS
The
Funds are, and any Future Fund will be, closed-end management investment companies registered under the 1940 Act. MainStay CBRE Fund is
a Delaware statutory trust and intends to operate as a non-diversified, closed-end management investment company. It is currently contemplated
that the common sharesstock
of the MainStay CBRE Fund (when and if issued) and common sharesstock
of Funds that may rely on the Order in the future will be listed on the New York Stock Exchange, the Nasdaq or another national securities
exchange as defined in Section 2(a)(26) of the 1940 Act (each, an “Exchange”). It is currently anticipated that MainStay CBRE
Fund’s investment objective will be to seek a high level of total return with an emphasis on current income. Moreover, it is expected
that, under normal circumstances, MainStay CBRE Fund will invest at least 80% of its assets (net assets plus borrowings for investment
purposes) in securities issued by infrastructure companies. The investment objective and policies for MainStay CBRE Fund will be set forth
in its registration statement and may be modified from time to time. The Funds and any Future Fund may incur leverage through the issuance
of preferred stock and debt securities, by entering into a credit agreement or otherwise as permitted by applicable law. MainStay CBRE
Fund does not currently intend to issue preferred shares. The Board of Trustees of the Funds (the “Board”) may authorize the
issuance of preferred shares in the future. Each Future Fund may have issued or may issue preferred shares.
MainStay
MMD Fund is organized as a Delaware Statutory Trust, which is registered under the 1940 Act as a diversified, closed-end management investment
company, and commenced operations on June 26, 2012. Shares of common stock of MainStay MMD Fund are currently listed and traded on the
New York Stock Exchange under the symbol “MMD.” As of March 31, 2021, MainStay MMD Fund has total net assets of $582,002,768
and on that date 27,761,315.602 common sharesstock
were issued and outstanding.3 MainStay MMD Fund’s primary
investment objective is to seek current income exempt from regular U.S. Federal income taxes (but which may be includable in taxable income
for the purpose of the Federal alternative minimum tax). Total return is a secondary objective. MainStay MMD Fund seeks to achieve its
investment objectives by investing in municipal bonds, the interest on which is, in the opinion of bond counsel to the issuers, generally
excludable from gross income for regular U.S. Federal income tax purposes (except that the interest may be includable in taxable income
for purposes of the Federal alternative minimum tax).
1 For the purposes
of the requested order, “successor” is limited to an entity that results from a reorganization into another jurisdiction
or a change in the type of business organization.
2 The only registered
closed-end investment companies that currently intend to rely on the Order have been named as Applicants. Any Fund that may rely on the
Order in the future will comply with the terms and conditions of the Application
New
York Life Investments, a limited liability company organized under the laws of the State of Delaware and an investment adviser registered
with the Commission under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), serves, or will serve, as
investment adviser to the Funds. Each Fund and New York Life Investments have entered, or will enter, into an investment management agreement
pursuant to which New York Life Investments will be responsible for, among other things, managing all aspects of the advisory operations
of the Fund and the composition of the investment portfolio according to the Fund’s investment objective, policies, and restrictions,
subject to the general oversight of the Board. The ManagerAdviser
intends to enter into a subadvisory agreement with CBRE Clarion Securities LLC (“CBRE Clarion or “Subadvisor”), pursuant
to which New York Life Investments will delegate its day-to-day portfolio management responsibilities of the MainStay CBRE Fund to CBRE
Clarion. The ManagerAdviser
has entered into a subadvisory agreement with MacKay Shields LLC “MacKay Shields”), pursuant to which New York Life Investments
has delegated its day-to-day portfolio management responsibilities of the MainStay MMD Fund to MacKay Shields. Any ManagerAdviser
to a Future Fund or future ManagerAdviser
to the Funds also will be registered under the Advisers Act. The portfolio of the Funds or a Future Fund may be subadvised by one or more
investment subadvisors (each, a “Future Subadvisor”). A Future Subadvisor may be an affiliate of New York Life Investments.
Any Future Subadvisor will be registered under the Advisers Act.
III.
REQUEST FOR EXEMPTIVE RELIEF
Section 19(b) of the
1940 Act provides that it shall be unlawful in contravention of such rules, regulations, or orders as the Commission may prescribe
as necessary or appropriate in the public interest or for the protection of investors for any registered investment company to
distribute long-term capital gains, as defined in the Internal Revenue Code of 1986, as amended (the “Code”), more often
than once every twelve months. Rule 19b-1 under the 1940 Act provides that no registered investment company which is a
“regulated investment company” as defined in Section 851 of the Code may make more than (i) one “capital gain
dividend,” as defined in Section 852(b)(3)(C) of the Code, in any one taxable year of the company, (ii) one additional capital
gain distribution made in whole or in part to avoid payment of excise tax under Section 4982 of the Code plus (iii) one supplemental
capital gain dividend pursuant to Section 855 of the Code (provided that it does not exceed 10% of the total amount distributed for
the taxable year).
3 On October
4, 2012, MMD Fund issued and has outstanding, two series of Fixed Rate Municipal Term Preferred Shares.
Applicants believe that
Rule 19b-1 should be interpreted to permit a Fund to pay an unlimited number of distributions on its common and preferred stock (if any)
so long as it makes the designation necessary under the Code and Rule 19b-1 to characterize those distributions as “capital gain
dividends” restricted by Rule 19b-1 only as often as is permitted by Rule 19b-1, even if the Code would then require retroactively
spreading the capital gain resulting from that designation over more than the permissible number of distributions. However, to obtain
certainty for a Fund’s proposed distribution policies (each, a “Distribution Policy”), in the absence of such an interpretation,
Applicants hereby request an order pursuant to Section 6(c) of the 1940 Act granting an exemption from Section 19(b) of the 1940 Act and
Rule 19b-1 thereunder. The Order would permit each Fund to make periodic capital gain dividends (as defined in Section 852(b)(3)(C) of
the Code) that include long-term capital gains as frequently as twelve times in any one taxable year in respect of its common stock and
as often as specified by, or determined in accordance with the terms of, any preferred stock issued by the Fund.
IV.
REPRESENTATIONS OF APPLICANTS
Prior
to a Fund’s implementing a Distribution Policy in reliance on the Order, the Board of each Fund seeking to rely on the Order, including
a majority of the directors or trustees who are not interested persons of the Fund, as defined in Section 2(a)(19) of the 1940 Act (the
“Independent TrusteesBoard
Members”), will request, and the ManagerAdviser
will provide, such information as is reasonably necessary to make an informed determination of whether the Board should adopt a proposed
Distribution Policy. In particular, the Board and the Independent TrusteesBoard
Members will review information regarding (i) the purpose and terms of the proposed Distribution Policy; (ii) the likely effects
of the proposed Distribution Policy on the Fund’s long-term total return (in relation to market price and net asset value per share
of common stock (“NAV”)); (iii) the expected relationship between the Fund’s distribution rate on its shares of common
stock under the proposed Distribution Policy and the Fund’s total return (in relation to NAV); (iv) whether the rate of distribution
is anticipated to exceed the Fund’s expected total return in relation to its NAV; and (v) any foreseeable material effects of the
proposed Distribution Policy on the Fund’s long-term total return (in relation to market price and NAV).
The
Independent TrusteesBoard
Members will also consider what conflicts of interest the ManagerAdviser
and the affiliated persons of the ManagerAdviser
and the Fund might have with respect to the adoption or implementation of the proposed Distribution Policy.
Following
this review, the Board, including the Independent TrusteesBoard
Members, of each Fund will, before adopting or implementing any proposed Distribution Policy, make a determination that the
proposed Distribution Policy is consistent with the Fund’s investment objective(s) and in the best interests of the holders of the
Fund’s common stock. The Distribution Policy will be consistent with the Fund’s policies and procedures and will be described
in the Fund’s registration statement.
In addition, prior
to implementation of a Distribution Policy for any Fund pursuant to the Order requested by this Application, the Board of the Fund
shall have adopted policies and procedures (the “Section 19 Compliance Policies”) pursuant to Rule 38a-1 under the 1940
Act that:
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(i)
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are reasonably designed to ensure that all notices required to be sent to the Fund’s
stockholders pursuant to Section 19(a) of the 1940 Act, Rule 19a-1 thereunder and by condition 4 below (each, a “19(a) Notice”)
include the disclosure required by Rule 19a-1 and by condition 2(a) below, and that all other written communications by the Fund or its
agents regarding distributions under the Distribution Policy include the disclosure required by condition 3(a) below; and
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(ii)
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require the Fund to keep records that demonstrate its compliance with all of the
conditions of the Order and that are necessary for the Fund to form the basis for, or demonstrate the calculation of, the amounts disclosed
in its 19(a) Notices.
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The records of the actions
of the Board of each Fund will summarize the basis for the Board’s approval of the Distribution Policy, including its consideration
of the factors described above. These records will be maintained for a period of at least six years from the date of the applicable meeting,
the first two years in an easily accessible place, or for such longer period as may otherwise be required by law.
Generally, the purpose
of a Distribution Policy would be to permit a Fund to distribute periodically, over the course of each year, an amount closely approximating
the total taxable income of the Fund during the year through distributions in relatively equal amounts (plus any required special distributions)
that are composed of payments received from portfolio companies, supplemental amounts generally representing realized capital gains or,
possibly, returns of capital that may represent unrealized capital gains. The Fund seeks to establish a distribution rate that approximates
the Fund’s projected total return that can reasonably be expected to be generated by the Fund over an extended period of time, although
the distribution rate will not be solely dependent on the amount of income earned or capital gains realized by the Fund for the year.
Under the Distribution Policy of a Fund, the Fund would distribute periodically (as frequently as twelve times in any taxable year) to
its respective common stockholders a fixed percentage of the market price of the Fund’s shares of common stock at a particular point
in time or a fixed percentage of NAV at a particular time or a fixed amount per share of common stock, any of which may be adjusted from
time to time. It is anticipated that under a Distribution Policy, the minimum annual distribution rate with respect to the Fund’s
shares of common stock would be independent of the Fund’s performance during any particular period but would be expected to correlate
with the Fund’s performance over time. Except for extraordinary distributions and potential increases or decreases in the final
dividend periods in light of the Fund’s performance for an entire calendar year and to enable the Fund to comply with the distribution
requirements of Subchapter M of the Code for the calendar year, each distribution on the Fund’s common stock would be at the stated
rate then in effect. The Board will periodically review the amount of potential distributions in light of the investment experience of
the Fund, and may modify or terminate a Distribution Policy at any time.
V. JUSTIFICATION
FOR REQUESTED RELIEF
Section 6(c) of the
1940 Act provides that the Commission may exempt any person, security or transaction from any provision of the 1940 Act or of any
rule or regulation thereunder, if and to the extent that the 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 1940 Act. For the
reasons set forth below, Applicants submit that the requested exemption from Section 19(b) of the 1940 Act and Rule 19b-1 thereunder
would be consistent with the standards set forth in Section 6(c) of the 1940 Act and in the best interests of the Funds and their
respective stockholders.
A. Receipt of the
Order would serve stockholders interests
Applicants believe that
closed-end fund investors may prefer an investment vehicle that provides regular current income through fixed distribution policies that
would be available through a Distribution Policy. Allowing a Distribution Policy to operate in the manner described in this Application
would help fill current investor demand and foster competition in the registered fund market.
An exemption from Rule
19b-1 would benefit stockholders in another way. Shares of common stock of closed-end funds often trade in the marketplace at a discount
to their NAV. Applicants believe that this discount may be reduced if a Fund is permitted to pay relatively frequent dividends on its
common stock at a consistent rate, whether or not those dividends contain an element of long-term capital gains. Any reduction in the
discount at which Fund shares of common stock trade in the market would benefit the holders of the Fund’s common stock along with
the Fund.
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B.
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The Fund’s stockholders would receive information sufficient to clearly inform
them of the nature of the distributions they are receiving
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One
of the concerns leading to the enactment of Section 19(b) and adoption of Rule 19b-1 was that stockholders might be unable to distinguish
between frequent distributions of capital gains and dividends from investment income.4 However, Rule 19a-1 under the
1940 Act effectively addresses this concern by requiring that distributions (or the confirmation of the reinvestment thereof) estimated
to be sourced in part from capital gains or capital be accompanied by a separate statement showing the sources of the distribution (e.g.,
estimated net income, net short-term capital gains, net long-term capital gains and/or return of capital). The same information will be
included in each Fund’s annual report to stockholders and on its Internal Revenue Service (“IRS”) Form 1099-DIV, which
will be sent to each common and preferred stockholder who received distributions during a particular year (including stockholders who
have sold shares during the year).
In addition, each of the
Funds will make the additional disclosures required by the conditions set forth in Part VI below, and each of them will adopt compliance
policies and procedures in accordance with Rule 38a-1 under the 1940 Act to ensure that all required notices and disclosures are sent
to stockholders.
4 See Securities
and Exchange Commission 1966 Report to Congress on Investment Company Growth (H.R. Rep. No. 2337, 89th Cong. 2d Sess. 190-95 (1966));
S. Rep. No. 91-184, 91st Cong., 1st Sess. 29 (1969); H.R. Rep. No. 91-1382, 91st Cong., 2d Sess. 29 (1970).
The information
required by Section 19(a), Rule 19a-1, the Distribution Policy, the Section 19 Compliance Policies and the conditions listed below
will help to ensure that each Fund’s stockholders are provided sufficient information to understand that their periodic
distributions are not tied to the Fund’s net investment income (which for this purpose is the Fund’s taxable income
other than from capital gains) and realized capital gains to date, and may not represent yield or investment return. Accordingly,
subjecting the Funds to Section 19(b) and Rule 19b-1 would afford stockholders no extra protection. In addition, the Funds will
undertake to request intermediaries, or their agent(s), to forward 19(a) Notices to their customers and to reimburse them for the
costs of forwarding. Such forwarding may occur in any manner permitted by statute, rule or order or by the staff of the
Commission.
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C.
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Under certain circumstances, Rule 19b-1 gives rise to improper influence on portfolio
management decisions, with no offsetting benefit to stockholders
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Rule 19b-1, when applied
to a Distribution Policy, actually gives rise to one of the concerns that Rule 19b-1 was intended to avoid: inappropriate influence on
portfolio management decisions. Funds that pay long-term capital gains distributions only once per year in accordance with Rule 19b-1
impose no pressure on management to realize capital gains at any time when purely investment considerations do not dictate doing so. In
the absence of an exemption from Rule 19b-1, the adoption of a periodic distribution plan imposes pressure on management (i) not to realize
any net long-term capital gains until the point in the year that the fund can pay all of its remaining distributions in accordance with
Rule 19b-1 and (ii) not to realize any long-term capital gains during any particular year in excess of the amount of the aggregate pay-out
for the year (since as a practical matter excess gains must be distributed and accordingly would not be available to satisfy pay-out requirements
in following years), notwithstanding that purely investment considerations might favor realization of long-term gains at different times
or in different amounts.
No purpose is served by
the distortion in the normal operation of a periodic distribution plan required in order to comply with Rule 19b-1. There is no benefit
in requiring any fund that adopts a periodic distribution plan either to retain (and pay taxes on) long-term capital gains (with the resulting
additional tax return complexities for the fund’s stockholders) or to avoid designating its distributions of long-term gains as
capital gains dividends for tax purposes (thereby avoiding a Rule 19b-1 problem but providing distributions taxable at ordinary income
rates rather than the much lower long-term capital gains rates). The desirability of avoiding these anomalous results creates pressure
to limit the realization of long-term capital gains that otherwise would be taken for purely investment considerations.
The Order requested by
Applicants would minimize these anomalous effects of Rule 19b-1 by enabling the Funds to realize long-term capital gains as often as investment
considerations dictate without fear of violating Rule 19b-1.
D. Other concerns
leading to adoption of Rule 19b-1 are not applicable
Another concern that
led to the enactment of Section 19(b) of the 1940 Act and adoption of Rule 19b-1 was that frequent capital gains distributions could
facilitate improper fund share sales practices, including, in particular, the practice of urging an investor to purchase shares of a
fund on the basis of an upcoming capital gains dividend (“selling the dividend”), where the dividend would result in an
immediate corresponding reduction in NAV and would be in effect a taxable return of the investor’s capital. Applicants submit
that this concern should not apply to closed-end investment companies, such as the Funds, that do not continuously distribute
shares. Furthermore, if the underlying concern extends to secondary market purchases of shares of closed-end funds that are subject
to a large upcoming capital gains dividend, adoption of a periodic distribution plan may help minimize the concern by avoiding,
through periodic distributions, any buildup of large end-of-the-year distributions.
Applicants also submit
that the “selling the dividend” concern is not applicable to preferred stock, which entitles a holder to no more than a specified
periodic dividend and, like a debt security, is initially sold at a price based upon its liquidation preference, credit quality, dividend
rate and frequency of payment. Investors buy preferred stock for the purpose of receiving specific payments at the frequency bargained
for, and any application of Rule 19b-1 to preferred stock would be contrary to the expectation of investors. There is also currently a
tax rule that provides that any loss realized by a stockholder upon sale of shares of a regulated investment company that were held for
six months or less will be treated as a long-term capital loss, to the extent of any long-term capital gains paid on such shares, to avoid
the selling of dividends.
E. Further limitations
of Rule 19b-1
Subparagraphs (a) and
(f) of Rule 19b-1 limit the number of capital gains dividends, as defined in Section 852(b) (3)(C) of the Code, that a fund may make with
respect to any one taxable year to one, plus a supplemental distribution made pursuant to Section 855 of the Code not exceeding 10% of
the total amount distributed for the year, plus one additional capital gain dividend made in whole or in part to avoid the excise tax
under Section 4982 of the Code.
Applicants
assert that by limiting the number of capital gain dividends that a Fund may make with respect to any one year, Rule 19b-1 may prevent
the normal and efficient operation of a periodic distribution plan whenever that Fund’s realized net long-term capital gains in
any year exceed the total of the periodic distributions that may include such capital gains under the rule. Rule 19b-1 thus may force
the fixed regular periodic distributions to be funded with returns of capital5 (to the extent net investment
income and realized short term capital gains are insufficient to fund the distribution), even though realized net long-term capital gains
otherwise would be available. To distribute all of a Fund’s long-term capital gains within the limits in Rule 19b-1, a Fund may
be required to make total distributions in excess of the annual amount called for by its periodic distribution plan or to retain and pay
taxes on the excess amount. Applicants believe that the application of Rule 19b-1 to a Fund’s periodic distribution plan may create
pressure to limit the realization of long-term capital gains based on considerations unrelated to investment goals.
Revenue
Ruling 89-816 under the Code requires that a fund that seeks to qualify as a regulated investment company under
the Code and that has both common stock and preferred stock outstanding designate the types of income, e.g., investment income and
capital gains, in the same proportion as the total distributions distributed to each class for the tax year. To satisfy the
proportionate designation requirements of Revenue Ruling 89-81, whenever a fund has realized a long-term capital gain with respect
to a given tax year, the fund must designate the required proportionate share of such capital gain to be included in common and
preferred stock dividends. Although Rule 19b-1 allows a fund some flexibility with respect to the frequency of capital gains
distributions, a fund might use all of the exceptions available under Rule 19b-1 for a tax year and still need to distribute
additional capital gains allocated to the preferred stock to comply with Revenue Ruling 89-81.
5 These would
be returns of capital for financial accounting purposes and not for tax accounting purposes.
6 1989-1 C.B.
226.
The potential abuses addressed
by Section 19(b) and Rule 19b-1 do not arise with respect to preferred stock issued by a closed-end fund. Such distributions generally
are either fixed or are determined in periodic auctions or remarketings or are periodically reset by reference to short term interest
rates rather than by reference to performance of the issuer, and Revenue Ruling 89-81 determines the proportion of such distributions
that are comprised of the long-term capital gains. The Applicants also submit that the “selling the dividend” concern is not
applicable to preferred stock, which entitles a holder to no more than a periodic dividend at a fixed rate or the rate determined by the
market, and, like a debt security, is priced based upon its liquidation value, dividend rate, credit quality, and frequency of payment.
Investors buy preferred stock for the purpose of receiving payments at the frequency bargained for and do not expect the liquidation value
of their shares to change.
The proposed Order will assist the Funds in avoiding these
Rule 19b-1 problems.
F. General
The relief requested is
that the Commission permit the Funds to make periodic distributions in respect of their common stock as frequently as twelve times in
any one taxable year and in respect of their preferred stock as specified by or determined in accordance with the terms thereof. Granting
this relief would provide the Funds with flexibility in meeting investor interest in receiving more frequent distributions. Implementation
of the relief would actually ameliorate the concerns that gave rise to Section 19(b) and Rule 19b-1 and help avoid the “selling
of dividends” problem, which Section 19(b) and Rule 19b-1 are not effective in preventing.
The potential issues under
Rule 19b-1 are not relevant to distributions on preferred stock. Not only are such distributions fixed or determined by the market rather
than by reference to the performance of the issuer but also the long-term capital gain component is mandated by the IRS to be the same
proportion as the proportion of long-term gain dividends bears to the total distributions in respect of the common stock and consequently
the long-term gain component cannot even be known until the end of the fund’s fiscal year. In these circumstances it would be very
difficult for any of the potential abuses reflected in Rule 19b-1’s restrictions to occur.
In summary, Rule 19b-1,
in the circumstances referred to above, is likely to distort the effective and proper functioning of a Fund’s Distribution Policy
and gives rise to the very pressures on portfolio management decisions that Rule 19b-1 was intended to avoid. These distortions forced
by Rule 19b-1 serve no purpose and are not in the best interests of stockholders.
VI. APPLICANTS’
CONDITIONS
Applicants agree that,
with respect to each Fund seeking to rely on the Order, the Order will be subject to each of the following conditions:
1. Compliance Review
and Reporting
The
Fund’s chief compliance officer will: (a) report to the Fund’s Board, no less frequently than once every three months or at
the next regularly scheduled quarterly Board meeting, whether (i) the Fund and its ManagerAdviser
have complied with the conditions of the Order and (ii) a material compliance matter (as defined in Rule 38a-1(e)(2) under the 1940 Act)
has occurred with respect to such conditions; and (b) review the adequacy of the policies and procedures adopted by the Board no less
frequently than annually.
2. Disclosures to
Fund Stockholders
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(a)
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Each 19(a) Notice disseminated to the holders of the Fund’s common stock, in addition to the information
required by Section 19(a) and Rule 19a-1:
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(i) will provide,
in a tabular or graphical format:
(1)
the amount of the distribution, on a per share of common stock basis, together with the amounts of such distribution amount, on
a per share of common stock basis and as a percentage of such distribution amount, from estimated: (A) net investment income; (B) net
realized short-term capital gains; (C) net realized long-term capital gains; and (D) return of capital or other capital source;
(2)
the fiscal year-to-date cumulative amount of distributions, on a per share of common stock basis, together with the amounts of
such cumulative amount, on a per share of common stock basis and as a percentage of such cumulative amount of distributions, from estimated:
(A) net investment income; (B) net realized short-term capital gains; (C) net realized long-term capital gains; and (D) return of capital
or other capital source;
(3)
the average annual total return in relation to the change in NAV for the 5-year period (or, if the Fund’s history of operations
is less than five years, the time period commencing immediately following the Fund’s first public offering) ending on the last day
of the month ended immediately prior to the most recent distribution record date compared to the current fiscal period’s annualized
distribution rate expressed as a percentage of NAV as of the last day of the month prior to the most recent distribution record date;
and
(4)
the cumulative total return in relation to the change in NAV from the last completed fiscal year to the last day of the month prior
to the most recent distribution record date compared to the fiscal year-to-date cumulative distribution rate expressed as a percentage
of NAV as of the last day of the month prior to the most recent distribution record date.
Such disclosure
shall be made in a type size at least as large and as prominent as the estimate of the sources of the current distribution; and
(ii) will include
the following disclosure:
(1)
“You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution
or from the terms of the Fund’s Distribution Policy.”;
(2)
“The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of
your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested
in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance
and should not be confused with ‘yield’ or ‘income’”;7
and
(3)
“The amounts and sources of distributions reported in this 19(a) Notice are only estimates and are not being provided for
tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment
experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form
1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.”
Such disclosure shall
be made in a type size at least as large as and as prominent as any other information in the 19(a) Notice and placed on the same page
in close proximity to the amount and the sources of the distribution.
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(b)
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On the inside front cover of each report to stockholders under Rule 30e-1 under
the 1940 Act, the Fund will:
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(i)
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describe the terms of the Distribution Policy (including the fixed amount or fixed
percentage of the distributions and the frequency of the distributions);
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(ii)
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include the disclosure required by condition 2(a)(ii)(1) above;
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(iii)
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state, if applicable, that the Distribution Policy provides that the Board may amend
or terminate the Distribution Policy at any time without prior notice to Fund stockholders; and
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(iv)
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describe any reasonably foreseeable circumstances that might cause the Fund to terminate
the Distribution Policy and any reasonably foreseeable consequences of such termination.
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(c)
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Each report provided to stockholders of a Fund under Rule 30e-1 under the 1940 Act
and each prospectus filed with the Commission on Form N-2 under the 1940 Act, will provide the Fund’s total return in relation to
changes in NAV in the financial highlights table and in any discussion about the Fund’s total return.
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7 The disclosure in this condition
2(a)(ii)(2) will be included only if the current distribution or the fiscal year-to-date cumulative distributions are estimated to include
a return of capital.
3. Disclosure to Stockholders, Prospective Stockholders
and Third Parties
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(a)
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The Fund will include the information contained in the relevant 19(a) Notice, including
the disclosure required by condition 2(a)(ii) above, in any written communication (other than a communication on Form 1099) about the
Distribution Policy or distributions under the Distribution Policy by the Fund, or agents that the Fund has authorized to make such communication
on the Fund’s behalf, to any Fund stockholder, prospective stockholder or third-party information provider;
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(b)
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The Fund will issue, contemporaneously with the issuance of any 19(a) Notice, a
press release containing the information in the 19(a) Notice and will file with the Commission the information contained in such 19(a)
Notice, including the disclosure required by condition 2(a)(ii) above, as an exhibit to its next filed Form N-CSR; and
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(c)
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The Fund will post prominently a statement on its (or the ManagerAdviser’s)
website containing the information in each 19(a) Notice, including the disclosure required by condition 2(a)(ii) above, and maintain such
information on such website for at least 24 months.
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4. Delivery of 19(a) Notices to Beneficial Owners
If a broker, dealer, bank or other
person (“financial intermediary”) holds common stock issued by the Fund in nominee name, or otherwise, on behalf of a beneficial
owner, the Fund:
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(a)
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will request that the financial intermediary, or its agent, forward the 19(a) Notice
to all beneficial owners of the Fund’s stock held through such financial intermediary;
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(b)
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will provide, in a timely manner, to the financial intermediary, or its agent, enough
copies of the 19(a) Notice assembled in the form and at the place that the financial intermediary, or its agent, reasonably requests to
facilitate the financial intermediary’s sending of the 19(a) Notice to each beneficial owner of the Fund’s stock; and
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(c)
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upon the request of any financial intermediary, or its agent, that receives copies
of the 19(a) Notice, will pay the financial intermediary, or its agent, the reasonable expenses of sending the 19(a) Notice to such beneficial
owners.
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5. Additional
Board Determinations for Funds Whose Common Stock Trades at a Premium If:
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(a)
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The Fund’s common stock has traded on an
Exchangethe stock exchange that they primarily trade
on at the time in question at an average premium to NAV equal to or greater than 10%, as determined on the basis of the average of the
discount or premium to NAV of the Fund’s shares of common stock as of the close of each trading day over a 12-week rolling
period (each such 12-week rolling period ending on the last trading day of each week); and
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(b)
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The Fund’s annualized distribution rate for such 12-week rolling period, expressed
as a percentage of NAV as of the ending date of such 12-week rolling period, is greater than the Fund’s average annual total return
in relation to the change in NAV over the 2-year period ending on the last day of such 12-week rolling period;
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then:
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(i)
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At the earlier of the next
regularly scheduled meeting or within four months of the last day of such 12-week rolling period, the Board, including a majority of its
Independent TrusteesBoard
Members:
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(1)
will request and evaluate, and the Fund’s ManagerAdviser
will furnish, such information as may be reasonably necessary to make an informed determination of whether the
Distribution Policy should be continued or continued after
amendment;
(2) will
determine whether continuation, or continuation after amendment, of the Distribution Policy is consistent with the Fund’s investment
objective(s) and policies and is in the best interests of the Fund and its stockholders, after considering the information in condition
5(b)(i)(1) above; including, without limitation:
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(A)
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whether the Distribution Policy is accomplishing its purpose(s);
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(B)
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the reasonably foreseeable material effects of the Distribution Policy on the Fund’s
long-term total return in relation to the market price and NAV of the Fund’s common stock; and
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(C)
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the Fund’s current distribution rate, as described in condition 5(b) above,
compared with the Fund’s average annual taxable income or total return over the 2-year period, as described in condition 5(b), or
such longer period as the Board deems appropriate; and
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(3) based
upon that determination, will approve or disapprove the continuation, or continuation after amendment, of the Distribution Policy; and
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(ii)
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The Board will record the information considered by it, including its consideration
of the factors listed in condition 5(b)(i)(2) above, and the basis for its approval or disapproval of the continuation, or continuation
after amendment, of the Distribution Policy in its meeting minutes, which must be made and preserved for a period of not less than six
years from the date of such meeting, the first two years in an easily accessible place.
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6. Public Offerings
The Fund will not make a public offering of the Fund’s
common stock other than:
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(a)
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a rights offering below NAV to holders of the Fund’s common stock;
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(b)
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an offering in connection with a dividend reinvestment plan, merger, consolidation,
acquisition, spin off or reorganization of the Fund; or
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(c)
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an offering other than an offering described in conditions 6(a) and 6(b) above,
provided that, with respect to such other offering:
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(i)
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the Fund’s annualized distribution rate for the six months ending on the last
day of the month ended immediately prior to the most recent distribution record date,8
expressed as a percentage of NAV as of such date, is no more than 1 percentage point greater than the Fund’s average annual total
return for the 5-year period ending on such date;9 and
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(ii)
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the transmittal letter accompanying any registration statement filed with the Commission
in connection with such offering discloses that the Fund has received an order under Section 19(b) to permit it to make periodic distributions
of long-term capital gains with respect to its shares of common stock as frequently as twelve times each year, and as frequently as distributions
are specified by or determined in accordance with the terms of any outstanding shares of preferred stock as the Fund may issue.
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7. Amendments to
Rule 19b-1
The requested Order will
expire on the effective date of any amendment to Rule 19b-1 that provides relief permitting certain closed-end investment companies to
make periodic distributions of long-term capital gains with respect to their outstanding common stock as frequently as twelve times each
year.
VII.
APPLICABLE PRECEDENT
The Commission has
recently granted substantially the same relief as that sought herein in Vertical Capital Income Fund and Oakline Advisors LLC,
Investment Company Act Release Nos. 33505 (June 12, 2019) (notice) and 33548 (July 9, 2019) (order); Putnam Managed Municipal Income
Trust et al., Investment Company Act Release Nos. 33449 (April 17, 2019) (notice) and 33474 (May 14, 2019) (order); Macquarie Global
Infrastructure Total Return Fund Inc., et al., Investment Company Act Release Nos. 33389 (March 5, 2019) (notice) and (April 2,
2019) (order); Special Opportunities Fund, Inc. and Bulldog Investors, LLC, Investment Company Act Release Nos. 33367 (April 4,
2016) (notice) and 33386 (Mach 4, 2019) (order); Vivaldi Opportunities Fund and Vivaldi Asset Management, LLC, Investment Company
Act Release Nos. 33147 (July 3, 2018) (notice) and 33185 (July 31, 2018) (order); The Swiss Helvetia Fund, Inc., et al., Investment
Company Act Release Nos. 33075 (April 23, 2018) (notice) and 33099 (May 21, 2018) (order); The Mexico Equity & Income Fund, Inc.
and Pichardo Asset Management, S.A. de C.V., Investment Company Act Release Nos. 32640 (May 18, 2017) (notice) and 32676 (June 13,
2017) (order); RiverNorth DoubleLine Strategic Opportunity Fund, Inc. and RiverNorth Capital Management LLC, Investment Company Act
Release Nos. 32635 (May 12, 2017)(notice) and 32673 (June 7, 2017) (order); Brookfield Global Listed Infrastructure Income Fund
Inc., et al., Investment Company Act Release Nos. 31802 (September 1, 2015) (notice) and 31855 (September 30, 2015) (order); and
Ares Dynamic Credit Allocation Fund, Inc., et al., Investment Company Act Release Nos. 31665 (June 9, 2015) (notice) and 31708 (July
7, 2015) (order).
8 If the Fund
has been in operation fewer than six months, the measured period will begin immediately following the Fund’s first public offering.
9 If the Fund
has been in operation fewer than five years, the measured period will begin immediately following the Fund’s first public offering.
VIII.
PROCEDURAL MATTERS
All of the requirements
for execution and filing of this Application on behalf of the Applicants have been complied with in accordance with the applicable organizational
documents of the Applicants, and the undersigned officers of the Applicants are fully authorized to execute this Application. The resolutions
of the Boards of the Funds authorizing the filing of this Application, required by Rule 0-2(c) under the 1940 Act, are included as Exhibit
A to this Application. The verifications required by Rule 0-2(d) under the 1940 Act are included as Exhibit B to this Application.
Pursuant to Rule 0-2(f)
under the 1940 Act, the Applicants state that their address is: 51 Madison Avenue, New York, New York 10010; and that all written communications
regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.
Applicants desire that
the Commission issue the requested order pursuant to Rule 0-5 under the 1940 Act without conducting a hearing.
IX.
CONCLUSION
For the foregoing reasons,
Applicants respectfully request that the Commission issue an order under Section 6(c) of the 1940 Act exempting the Funds from the provisions
of Section 19(b) of the 1940 Act and Rule 19b-1 thereunder to permit each Fund to make distributions on its common stock consisting in
whole or in part of capital gain dividends as frequently as twelve times in any one taxable year so long as it complies with the conditions
of the Order and maintains in effect a Distribution Policy with respect to its common stock as described in this Application. In addition,
Applicants request that the Order permit each Fund to make distributions on its preferred stock (if any) that it has issued or may issue
in the future consisting in whole or in part of capital gain dividends as frequently as specified by or determined in accordance with
the terms thereof. Applicants submit that the requested exemption is necessary or appropriate in the public interest, consistent with
the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the 1940 Act.
[Signature Page Follows]
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MainStay
CBRE Global Infrastructure Megatrends Fund
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Dated:
June 28,July 30,
2021
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By:
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/s/
Kirk C. Lehneis
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Name:
Kirk C. Lehneis
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Title:
President
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MainStay
MacKay DefinedTerm Municipal Bond Opportunities Fund
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Dated:
June 28,July 30,
2021
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By:
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/s/
Kirk C. Lehneis
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Name: Kirk C. Lehneis
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Title:
President
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New
York Investment Management LLC
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Dated:
June 28,July 30,
2021
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By:
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/s/
Yie-Hsin Hung
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Name:
Yie-Hsin Hung
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Title:
Chief Executive Officer
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EXHIBITS TO APPLICATION
The following materials are made a part of the Application
and are attached hereto:
DESIGNATION
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DOCUMENT
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Exhibit A
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Resolutions of the Board
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Exhibit B
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Verifications
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Exhibit C
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Marked copies of the Application against two substantially identical applications pursuant to 17 CFR 270.0-5(e)(2) and (3) and the
initial exemptive application
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EXHIBIT A
Resolutions of the Boards of MainStay CBRE Global
Infrastructure Megatrends Fund and MainStay MacKay DefinedTerm Municipal Opportunities Fund
RESOLVED,
that the officers of the MainStay CBRE Global Infrastructure Megatrends Fund be, and they hereby are, authorized in the name and on behalf
of the MainStay CBRE Global Infrastructure Megatrends Fund, to file an exemptive application with the U.S. Securities and Exchange Commission
to seek relief under Section 19 of the Investment Company Act of 1940, as amended, to implement a managed distribution policy, as presented
and discussed at this meeting, with such changes as an officer of the MainStay CBRE Global Infrastructure Megatrends Fund, with the advice
of the MainStay CBRE Global Infrastructure Megatrends Fund’s legal counsel, may deem appropriate.
RESOLVED,
that the officers of the MainStay MacKay DefinedTerm Municipal Opportunities Fund be, and they hereby are, authorized in the name and
on behalf of MainStay MacKay DefinedTerm Municipal Opportunities Fund, to file an exemptive application with the U.S. Securities and Exchange
Commission to seek relief under Section 19 of the Investment Company Act of 1940, as amended, to implement a managed distribution policy,
as presented and discussed at this meeting, with such changes as an officer of MainStay MacKay DefinedTerm Municipal Opportunities Fund,
with the advice of MainStay MacKay DefinedTerm Municipal Opportunities Fund’s legal counsel, may deem appropriate.
FURTHER
RESOLVED, that each of the Fund’s officers be, and each hereby is, authorized and directed, in consultation with the
Fund’s legal counsel, to take such steps and to prepare, execute and file with necessary authorities such documents as he or she
may deem necessary or appropriate to effect the foregoing resolutions adopted at this meeting.
EXHIBIT B
Verifications
of MainStay CBRE Global Infrastructure Megatrends Fund, MainStay MacKay DefinedTerm Municipal Opportunities Fund and New
York Life Investment Management LLC
The
undersigned states that he has duly executed the attached application dated June 28,July
30, 2021, for and on behalf of MainStay CBRE Global Infrastructure Megatrends Fund in his capacity as President of such entity
and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been
taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set
forth are true to the best of his knowledge, information and belief.
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By:
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/s/ Kirk C. Lehneis
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Name: Kirk C. Lehneis
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Title: President
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The
undersigned states that he has duly executed the attached application dated June 28,July
30, 2021, for and on behalf of MainStay MacKay DefinedTerm Municipal Opportunities Fund in his capacity as President of such
entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument
have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts
therein set forth are true to the best of his knowledge, information and belief.
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By:
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/s/ Kirk C. Lehneis
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Name: Kirk C. Lehneis
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Title: President
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The
undersigned states that he has duly executed the attached application dated June 28,July
30, 2021, for and on behalf of New York Life Investment Management LLC in her capacity as Chief Executive Officer of such entity
and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been
taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set
forth are true to the best of his knowledge, information and belief.
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By:
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/s/ Yie-Hsin Hung
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Name: /s/ Yie-Hsin Hung
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Title: Chief Executive Officer
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EXHIBIT
C
UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------------------------------------------------------------------------
In
the Matter of:
MainStay
CBRE Global Infrastructure Megatrends Fund
MainStay
MacKay DefinedTerm Municipal Opportunities Fund
and
New
York Life Investment Management LLC
Investment
Company Act of 1940
File
No. 812-15242
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APPLICATION
PURSUANT TO SECTION 6(C) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “ACT”) FOR AN ORDER GRANTING EXEMPTIONS FROM
SECTION 19(B) OF THE ACT AND RULE 19B-1 THEREUNDER
EXPEDITED
REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)
---------------------------------------------------------------------------------------------------------
IN THE MATTER OF:
VERTICAL CAPITAL INCOME FUND
AND
OAKLINE ADVISORS, LLC
Investment Company Act of
1940
File No. 812-15000
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AMENDMENT NO. 1 TO AN APPLICATION PURSUANT TO SECTION 6(C) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "ACT") FOR AN ORDER GRANTING EXEMPTIONS FROM SECTION 19(B) OF THE ACT AND RULE 19B-1 THEREUNDER
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PLEASE SEND ALL COMMUNICATIONS AND ORDERS TO:
JoAnn Strasser
Partner
Thompson Hine LLP
41 S. High St., 17th Floor
Columbus, OH 43215
J.
Kevin Gao, Esq
New York Investment Management LLC
51 Madison Avenue
New York, New York 10010
WITH A COPY TO:
Stanton Eigenbrodt
Executive Vice President, Chief
Legal Officer, Chief Compliance Officer and Secretary
Oakline Advisors, LLC
14675 Dallas Parkway, Suite
600
Dallas, TX 75254
Thomas
C. Bogle, Esq
Corey F. Rose, Esq
Dechert LLP
1900 K Street
Washington D.C. 20006
This
Application (including Exhibits) consists of 2019
pages.
The Exhibit Index is on page 18.17.
Vertical
Capital Income Fund (the "Fund") and Oakline Advisors,MainStay
CBRE Global Infrastructure Megatrends Fund (“MainStay CBRE Fund”), MainStay MacKay DefinedTerm Municipal Opportunities Fund
(“MainStay MMD Fund”) (each a “Fund, ” and together, the “Funds”) and New York Life Investment Management
LLC ("Oakline"“New
York Life Investments” and together with the FundFunds,
the "“Applicants"”)
hereby submit this amended application for
an order (the "“Order"”)
of the Securities and Exchange Commission (the "“Commission"”)
pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the "“1940
Act"”),
providing the FundFunds
and each other closed-end management investment company registered under the 1940 Act advised or to be advised in the
future by OaklineNew
York Life Investments or by an entity controlling, controlled by or under common control (within the meaning of Section
2(a)(9) of the 1940 Act) with OaklineNew
York Life Investments (including any successor in interest[1])
(each such entity, including OaklineNew
York Life Investments, an "“Adviser"”)
that in the future seeks to rely on the Order (each, a "“Future
Fund"”),
an exemption from the provisions of Section 19(b) of the 1940 Act and Rule 19b-1 thereunder, as more fully set forth below (the "“Application"”).[2] The FundFunds and
the Future Funds are hereinafter collectively referred to as the "“Funds"” and
separately as a "“Fund."”
1
For the purposes of the requested order, “successor” is limited to an entity that results from a reorganization into
another jurisdiction or a change in the type of business organization.
II. THE
APPLICANTS
The Fund
isFunds are, and any Future Fund will
be, a closed-end management investment companycompanies registered
under the 1940 Act. TheMainStay
CBRE Fund is a Delaware statutory trust that
is a and intends to operate as a
non-diversified, closed-end management investment company. The
Fund commenced investment operations on December 30, 2011, as an interval fund pursuant to Rule 23c-3 and offered multiple classes
of shares pursuant to an exemptive order granted July 31, 2017. However, following shareholder approval on March 29, 2019, the Fund
ceased to operate as an interval fund in anticipation of listing its shares for tradingIt
is currently contemplated that the common stock of the MainStay CBRE Fund (when and if issued) and common stock of Funds that may
rely on the Order in the future will be listed on the New York Stock Exchange ("NYSE"),
a, the Nasdaq or another national securities
exchange as defined in Section 2(a)(26) of the 1940 Act.
On April 3, 2019 the Fund re-designated consolidated its two classes of shares to a single class of shares. The Fund has been
approved for trading on the NYSE and expects trading to commence on the NYSE on May 29, 2019. The Fund's investment objective is to
seek income. The Fund pursues its investment objective by investing substantially all its assets in income-producing first lien
whole loans secured by residential real estate. The Fund acquires loans with varying terms and structures, levels of borrower equity
and credit profiles. The Fund does not limit the allocation of Fund assets in performing loans along the dimensions of terms and
structures, borrower equity, and credit profiles. Up to 10% of the loans may be delinquent or in default at the time of acquisition.
The Fund will not purchase loans that currently are in foreclosure; however, loans acquired by the Fund may go into foreclosure
subsequent to acquisition by the Fund. In addition, the Fund may invest up to approximately 10% of its assets in loans that are
classified as "sub-prime" at the time of purchase by the Fund. As of March 31, 2019, the Fund had total net assets of
$129,483,080. The Fund (each, an “Exchange”).
It is currently anticipated that MainStay CBRE Fund’s investment objective will be to seek a high level of total return with
an emphasis on current income. Moreover, it is expected that, under normal circumstances, MainStay CBRE Fund will invest at least
80% of its assets (net assets plus borrowings for investment purposes) in securities issued by infrastructure companies. The
investment objective and policies for MainStay CBRE Fund will be set forth in its registration statement and may be
modified from time to time. The Funds and any Future Fund may incur leverage through the issuance of
preferred stock and debt securities, by entering into a credit agreement or otherwise as permitted by applicable law. MainStay
CBRE Fund does not currently intend to issue preferred shares. The Board of Trustees of the Funds (the “Board”) may
authorize the issuance of preferred shares in the future. Each Future Fund may have issued or may issue preferred
shares.
2
The only registered closed-end investment companies that currently intend to rely on the Order have been named as Applicants. Any
Fund that may rely on the Order in the future will comply with the terms and conditions of the Application
MainStay
MMD Fund is organized as a Delaware Statutory Trust, which is registered under the 1940 Act as a diversified, closed-end management investment
company, and commenced operations on June 26, 2012. Shares of common stock of MainStay MMD Fund are currently listed and traded on the
New York Stock Exchange under the symbol “MMD.” As of March 31, 2021, MainStay MMD Fund has total net assets of $582,002,768 and on that date 27,761,315.602 common stock were issued and outstanding.3
MainStay MMD Fund’s primary investment objective is to seek current income exempt from regular U.S. Federal income taxes (but which
may be includable in taxable income for the purpose of the Federal alternative minimum tax). Total return is a secondary objective. MainStay
MMD Fund seeks to achieve its investment objectives by investing in municipal bonds, the interest on which is, in the opinion of bond
counsel to the issuers, generally excludable from gross income for regular U.S. Federal income tax purposes (except that the interest
may be includable in taxable income for purposes of the Federal alternative minimum tax).
OaklineNew
York Life Investments, a limited liability company organized under the laws of the State of Delaware and an investment adviser
registered with the Commission under the Investment Advisers Act of 1940, as amended (the "“Advisers
Act"”),
serves, or will serve, as investment adviser to the FundFunds.
TheEach
Fund and OaklineNew
York Life Investments have entered, or will enter, into
an investment advisorymanagement
agreement pursuant to which Oakline provides day-to-day investment
[1]
For the purposes of the requested order, “successor” is limited to an entity that results
from a reorganization into another jurisdiction or a change in the type of business organization.
[2]
The only registered closed-end investment company that currently intends to rely on the Order has
been named as an Applicant. Any Fund that may rely on the Order in the future will comply with the terms and conditions of the Application.
management
services to the Fund, including selecting the Fund's investmentsNew
York Life Investments will be responsible for, among other things, managing all aspects of the advisory operations of the Fund and
the composition of the investment portfolio according to the Fund'’s
investment objective, policies, and restrictions, subject to the general supervision
of the Fund’s board of trusteesoversight of the
Board. The Adviser intends to enter into a subadvisory agreement with CBRE Clarion Securities LLC (“CBRE Clarion or
“Subadvisor”), pursuant to which New York Life Investments will delegate its day-to-day portfolio management
responsibilities of the MainStay CBRE Fund to CBRE Clarion. The Adviser has entered into a subadvisory agreement with MacKay Shields
LLC “MacKay Shields”), pursuant to which New York Life Investments has delegated its day-to-day portfolio management
responsibilities of the MainStay MMD Fund to MacKay Shields. Any Adviser to a Future Fund or
future Adviser to the Funds also will be registered under the Advisers Act. The portfolio of the
Funds or a Future Fund may be managedsubadvised by
one or more investment sub-adviserssubadvisors (each,
a "“Future Sub-Adviser"Subadvisor”).
A Future Sub-AdviserSubadvisor may
be an affiliate of OaklineNew
York Life Investments. Any Future Sub-AdviserSubadvisor will
be registered under the Advisers Act.
3
On October 4, 2012, MMD Fund issued and has outstanding, two series of Fixed Rate Municipal Term Preferred
Shares.
V.
REQUEST FOR EXEMPTIVE RELIEF
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III.
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REQUEST FOR EXEMPTIVE RELIEF
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Section
19(b) of the 1940 Act provides that it shall be unlawful in contravention of such rules, regulations, or orders as the Commission may
prescribe as necessary or appropriate in the public interest or for the protection of investors for any registered investment company
to distribute long-term capital gains, as defined in the Internal Revenue Code of 1986, as amended (the "“Code"”),
more often than once every twelve months. Rule 19b-1 under the 1940 Act provides that no registered investment company which is a "“regulated
investment company"”
as defined in Section 851 of the Code may make more than (i) one "“capital
gain dividend,"”
as defined in Section 852(b)(3)(C) of the Code, in any one taxable year of the company, (ii) one additional capital gain distribution
made in whole or in part to avoid payment of excise tax under Section 4982 of the Code plus (iii) one supplemental capital gain dividend
pursuant to Section 855 of the Code (provided that it does not exceed 10% of the total amount distributed for the taxable year).
Applicants
believe that Rule 19b-1 should be interpreted to permit a Fund to pay an unlimited number of distributions on its common and preferred
stock (if any) so long as it makes the designation necessary under the Code and Rule 19b-1 to characterize those distributions as "“capital
gain dividends"”
restricted by Rule 19b-1 only as often as is permitted by Rule 19b-1, even if the Code would then require retroactively spreading the
capital gain resulting from that designation over more than the permissible number of distributions. However, to obtain certainty for
a Fund'’s
proposed distribution policies (each, a "“Distribution
Policy"”),
in the absence of such an interpretation, Applicants hereby request an order pursuant to Section 6(c) of the 1940 Act granting an exemption
from Section 19(b) of the 1940 Act and Rule 19b-1 thereunder. The Order would permit each Fund to make periodic capital gain dividends
(as defined in Section 852(b)(3)(C) of the Code) that include long-term capital gains as frequently as twelve times in any one taxable
year in respect of its shares of beneficial interest (hereinafter
“common stock”)
and as often as specified by, or determined in accordance with the terms of, any preferred stock issued by the Fund.
VI.
REPRESENTATIONS OF APPLICANTS
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IV.
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REPRESENTATIONS OF APPLICANTS
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Prior
to a Fund'’s
implementing a Distribution Policy in reliance on the Order, the board
of directors or trustees (the "Board")
of each Fund seeking to rely on the Order, including a majority of the directors or trustees who are not interested persons of the Fund,
as defined in Section 2(a)(19) of the 1940 Act (the "“Independent
Board Members"”),
will request, and the Adviser will provide, such information as is reasonably
necessary
to make an informed determination of whether the Board should adopt a proposed Distribution Policy. In particular, the Board and the Independent
Board Members will review information regarding (i) the purpose and terms of the proposed Distribution Policy; (ii) the likely effects
of the proposed Distribution Policy on the Fund'’s
long-term total return (in relation to market price and net asset value per share of common stock ("“NAV"”));
(iii) the expected relationship between the Fund'’s
distribution rate on its shares of common stock under the proposed Distribution Policy and the Fund'’s
total return (in relation to NAV); (iv) whether the rate of distribution is anticipated to exceed the Fund'’s
expected total return in relation to its NAV; and (v) any foreseeable material effects of the proposed Distribution Policy on the Fund'’s
long-term total return (in relation to market price and NAV).
The Independent Board
Members will also consider what conflicts of interest the Adviser and the affiliated persons of the Adviser and the Fund might have with
respect to the adoption or implementation of the proposed Distribution Policy.
Following
this review, the Board, including the Independent Board Members, of each Fund will, before adopting or implementing any proposed Distribution
Policy, make a determination that the proposed Distribution Policy is consistent with the Fund'’s
investment objective(s) and in the best interests of the holders of the Fund'’s
common stock. The Distribution Policy will be consistent with the Fund'’s
policies and procedures and will be described in the Fund'’s
registration statement.
In
addition, prior to implementation of a Distribution Policy for any Fund pursuant to the Order requested by this Application, the Board
of the Fund shall have adopted policies and procedures (the "“Section
19 Compliance Policies"”)
pursuant to Rule 38a-1 under the 1940 Act that:
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(iii)
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1.
are reasonably designed to ensure that all notices required to be sent to the Fund'’s
stockholders pursuant to Section 19(a) of the 1940 Act, Rule 19a-1 thereunder and by condition 4 below (each, a "“19(a)
Notice"”)
include the disclosure required by Rule 19a-1 and by condition 2(a) below, and that all other written communications by the Fund or its
agents regarding distributions under the Distribution Policy include the disclosure required by condition 3(a) below; and
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(iv)
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2.
require the Fund to keep records that demonstrate its compliance with all of the conditions of the Order and that are
necessary for the Fund to form the basis for, or demonstrate the calculation of, the amounts disclosed in its 19(a) Notices.
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The
records of the actions of the Board of each Fund will summarize the basis for the Board'’s
approval of the Distribution Policy, including its consideration of the factors described above. These records will be maintained for
a period of at least six years from the date of the applicable meeting, the first two years in an easily accessible place, or for such
longer period as may otherwise be required by law.
Generally, the purpose
of a Distribution Policy would be to permit a Fund to distribute periodically, over the course of each year, an amount closely approximating
the
total taxable income of the Fund during the year through distributions in relatively equal amounts (plus any required special distributions)
that are composed of payments received from portfolio companies, supplemental amounts generally representing realized capital gains or,
possibly, returns of capital that may represent unrealized capital gains. The Fund seeks to establish a distribution rate that approximates
the Fund'’s
projected total return that can reasonably be expected to be generated by the Fund over an extended period of time, although the distribution
rate will not be solely dependent on the amount of income earned or capital gains realized by the Fund for the year. Under the Distribution
Policy of a Fund, the Fund would distribute periodically (as frequently as twelve times in any taxable year) to its respective common
stockholders a fixed percentage of the market price of the Fund'’s
shares of common stock at a particular point in time or a fixed percentage of NAV at a particular time or a fixed amount per share of
common stock, any of which may be adjusted from time to time. It is anticipated that under a Distribution Policy, the minimum annual distribution
rate with respect to the Fund'’s
shares of common stock would be independent of the Fund'’s
performance during any particular period but would be expected to correlate with the Fund'’s
performance over time. Except for extraordinary distributions and potential increases or decreases in the final dividend periods in light
of the Fund'’s
performance for an entire calendar year and to enable the Fund to comply with the distribution requirements of Subchapter M of the Code
for the calendar year, each distribution on the Fund'’s
common stock would be at the stated rate then in effect. The Board will periodically review the amount of potential distributions in light
of the investment experience of the Fund, and may modify or terminate a Distribution Policy at any time.
V. JUSTIFICATION
FOR REQUESTED RELIEF
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V.
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JUSTIFICATION FOR REQUESTED RELIEF
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Section
6(c) of the 1940 Act provides that the Commission may exempt any person, security or transaction from any provision of the 1940 Act
or of any rule or regulation thereunder, if and to the extent that the 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 1940 Act. For
the reasons set forth below, Applicants submit that the requested exemption from Section 19(b) of the 1940 Act and Rule 19b-1
thereunder would be consistent with the standards set forth in Section 6(c) of the 1940 Act and in the best interests of the Funds
and their respective stockholders.
A. Receipt
of the Order would serve stockholders interests
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A.
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Receipt of the Order would serve stockholders interests
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Applicants
believe that closed-end fund investors may prefer an investment vehicle that provides regular current income through fixed distribution
policies that would be available through a Distribution Policy. Allowing a Distribution Policy to operate in the manner described in this
Application would help fill current investor demand and foster competition in the registered fund market.
An exemption from Rule
19b-1 would benefit stockholders in another way. Shares of common stock of closed-end funds often trade in the marketplace at a discount
to their NAV. Applicants believe that this discount may be reduced if a Fund is
permitted
to pay relatively frequent dividends on its common stock at a consistent rate, whether or not those dividends contain an element of long-term
capital gains. Any reduction in the discount at which Fund shares of common stock trade in the market would benefit the holders of the
Fund'’s
common stock along with the Fund.
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D.
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The Fund’s stockholders would
receive information sufficient to clearly inform them of the nature of the distributions they are receiving
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B.
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The Fund's stockholders would receive information sufficient to clearly inform them of the nature of the distributions they are receiving
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One
of the concerns leading to the enactment of Section 19(b) and adoption of Rule 19b-1 was that stockholders might be unable to
distinguish between frequent distributions of capital gains and dividends from investment income.[3]4 However,
Rule 19a-1 under the 1940 Act effectively addresses this concern by requiring that distributions (or the confirmation of the
reinvestment thereof) estimated to be sourced in part from capital gains or capital be accompanied by a separate statement showing
the sources of the distribution (e.g., estimated net income, net short-term capital gains, net long-term capital gains and/or return
of capital). The same information will be included in each Fund'’s
annual report to stockholders and on its Internal Revenue Service ("“IRS"”)
Form 1099-DIV, which will be sent to each common and preferred stockholder who received distributions during a particular year
(including stockholders who have sold shares during the year).
In addition, each of the
Funds will make the additional disclosures required by the conditions set forth in Part VI below, and each of them will adopt compliance
policies and procedures in accordance with Rule 38a-1 under the 1940 Act to ensure that all required notices and disclosures are sent
to stockholders.
4
See Securities and Exchange Commission 1966 Report to Congress on Investment Company Growth (H.R. Rep.
No. 2337, 89th Cong. 2d Sess. 190-95 (1966)); S. Rep. No. 91-184, 91st Cong., 1st Sess. 29 (1969); H.R. Rep. No. 91-1382, 91st Cong.,
2d Sess. 29 (1970).
The
information required by Section 19(a), Rule 19a-1, the Distribution Policy, the Section 19 Compliance Policies and the conditions listed
below will help to ensure that each Fund'’s
stockholders are provided sufficient information to understand that their periodic distributions are not tied to the Fund'’s
net investment income (which for this purpose is the Fund'’s
taxable income other than from capital gains) and realized capital gains to date, and may not represent yield or investment return. Accordingly,
subjecting the Funds to Section 19(b) and Rule 19b-1 would afford stockholders no extra protection. In addition, the Funds will undertake
to request intermediaries, or their agent(s), to forward 19(a) Notices to their customers and to reimburse them for the costs of forwarding.
Such forwarding may occur in any manner permitted by statute, rule or order or by the staff of the Commission.
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E.
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Under certain circumstances, Rule
19b-1 gives rise to improper influence on portfolio management decisions, with no offsetting benefit to stockholders
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C.
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Under certain circumstances, Rule 19b-1 gives rise to improper influence on portfolio management decisions, with no offsetting benefit to stockholders
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Rule
19b-1, when applied to a Distribution Policy, actually gives rise to one of the concerns that Rule 19b-1 was intended to avoid: inappropriate
influence on portfolio
[3]
See Securities and Exchange Commission 1966 Report to Congress on Investment Company Growth (H.R.
Rep. No. 2337, 89th Cong. 2d Sess. 190-95 (1966)); S. Rep. No. 91-184, 91st Cong., 1st Sess. 29 (1969); H.R. Rep. No. 91-1382, 91st Cong.,
2d Sess. 29 (1970).
management
decisions. Funds that pay long-term capital gains distributions only once per year in accordance with Rule 19b-1 impose no pressure
on management to realize capital gains at any time when purely investment considerations do not dictate doing so. In the absence of
an exemption from Rule 19b-1, the adoption of a periodic distribution plan imposes pressure on management (i) not to realize any net
long-term capital gains until the point in the year that the fund can pay all of its remaining distributions in accordance with Rule
19b-1 and (ii) not to realize any long-term capital gains during any particular year in excess of the amount of the aggregate
pay-out for the year (since as a practical matter excess gains must be distributed and accordingly would not be available to satisfy
pay-out requirements in following years), notwithstanding that purely investment considerations might favor realization of long-term
gains at different times or in different amounts.
No
purpose is served by the distortion in the normal operation of a periodic distribution plan required in order to comply with Rule 19b-1.
There is no benefit in requiring any fund that adopts a periodic distribution plan either to retain (and pay taxes on) long-term capital
gains (with the resulting additional tax return complexities for the fund'’s
stockholders) or to avoid designating its distributions of long-term gains as capital gains dividends for tax purposes (thereby avoiding
a Rule 19b-1 problem but providing distributions taxable at ordinary income rates rather than the much lower long-term capital gains rates).
The desirability of avoiding these anomalous results creates pressure to limit the realization of long-term capital gains that otherwise
would be taken for purely investment considerations.
The Order requested by
Applicants would minimize these anomalous effects of Rule 19b-1 by enabling the Funds to realize long-term capital gains as often as investment
considerations dictate without fear of violating Rule 19b-1.
D. Other
concerns leading to adoption of Rule 19b-1 are not applicable
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D.
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Other concerns leading to adoption of Rule 19b-1 are not applicable
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Another
concern that led to the enactment of Section 19(b) of the 1940 Act and adoption of Rule 19b-1 was that frequent capital gains distributions
could facilitate improper fund share sales practices, including, in particular, the practice of urging an investor to purchase shares
of a fund on the basis of an upcoming capital gains dividend ("“selling
the dividend"”),
where the dividend would result in an immediate corresponding reduction in NAV and would be in effect a taxable return of the investor'’s
capital. Applicants submit that this concern should not apply to closed-end investment companies, such as the Funds, that do not continuously
distribute shares. Furthermore, if the underlying concern extends to secondary market purchases of shares of closed-end funds that are
subject to a large upcoming capital gains dividend, adoption of a periodic distribution plan may help minimize the concern by avoiding,
through periodic distributions, any buildup of large end-of-the-year distributions.
Applicants
also submit that the "“selling
the dividend"”
concern is not applicable to preferred stock, which entitles a holder to no more than a specified periodic dividend and, like a debt security,
is initially sold at a price based upon its liquidation preference, credit quality, dividend rate and frequency of payment. Investors
buy preferred stock for
the purpose of receiving
specific payments at the frequency bargained for, and any application of Rule 19b-1 to preferred stock would be contrary to the expectation
of investors. There is also currently a tax rule that provides that any loss realized by a stockholder upon sale of shares of a regulated
investment company that were held for six months or less will be treated as a long-term capital loss, to the extent of any long-term capital
gains paid on such shares, to avoid the selling of dividends.
E. Further
limitations of Rule 19b-1
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E.
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Further limitations of Rule 19b-1
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Subparagraphs
(a) and (f) of Rule 19b-1 limit the number of capital gains dividends, as defined in Section 852(b) (3)(C) of the Code, that a fund may
make with respect to any one taxable year to one, plus a supplemental distribution made pursuant to Section 855 of the Code not exceeding
10% of the total amount distributed for the year, plus one additional capital gain dividend made in whole or in part to avoid the excise
tax under Section 4982 of the Code.
Applicants
assert that by limiting the number of capital gain dividends that a Fund may make with respect to any one year, Rule 19b-1 may prevent
the normal and efficient operation of a periodic distribution plan whenever that Fund'’s
realized net long-term capital gains in any year exceed the total of the periodic distributions that may include such capital gains under
the rule. Rule 19b-1 thus may force the fixed regular periodic distributions to be funded with returns of capital[4]5
(to the extent net investment income and realized short term capital gains are insufficient to fund the
distribution), even though realized net long-term capital gains otherwise would be available. To distribute all of a Fund'’s
long-term capital gains within the limits in Rule 19b-1, a Fund may be required to make total distributions in excess of the annual amount
called for by its periodic distribution plan or to retain and pay taxes on the excess amount. Applicants believe that the application
of Rule 19b-1 to a Fund'’s
periodic distribution plan may create pressure to limit the realization of long-term capital gains based on considerations unrelated to
investment goals.
Revenue
Ruling 89-81[5]6 under
the Code requires that a fund that seeks to qualify as a regulated investment company under the Code and that has both common stock
and preferred stock outstanding designate the types of income, e.g., investment income and capital gains, in the same proportion as
the total distributions distributed to each class for the tax year. To satisfy the proportionate designation requirements of Revenue
Ruling 89-81, whenever a fund has realized a long-term capital gain with respect to a given tax year, the fund must designate the
required proportionate share of such capital gain to be included in common and preferred stock dividends. Although Rule 19b-1 allows
a fund some flexibility with respect to the frequency of capital gains distributions, a fund might use all of the exceptions
available under Rule 19b-1 for a tax year and still need to distribute additional capital gains allocated to the preferred stock to
comply with Revenue Ruling 89-81.
[4]
These would be returns of capital for financial accounting purposes and not for tax accounting purposes.
[5]
1989-1 C.B. 226.
5
These would be returns of capital for financial accounting purposes and not for tax accounting purposes.
6
1989-1 C.B. 226.
The
potential abuses addressed by Section 19(b) and Rule 19b-1 do not arise with respect to preferred stock issued by a closed-end fund. Such
distributions generally are either fixed or are determined in periodic auctions or remarketings or are periodically reset by reference
to short term interest rates rather than by reference to performance of the issuer, and Revenue Ruling 89-81 determines the proportion
of such distributions that are comprised of the long-term capital gains. The Applicants also submit that the "“selling
the dividend"”
concern is not applicable to preferred stock, which entitles a holder to no more than a periodic dividend at a fixed rate or the rate
determined by the market, and, like a debt security, is priced based upon its liquidation value, dividend rate, credit quality, and frequency
of payment. Investors buy preferred stock for the purpose of receiving payments at the frequency bargained for and do not expect the liquidation
value of their shares to change.
The proposed Order will assist the Funds in avoiding these
Rule 19b-1 problems.
F. General
The
relief requested is that the Commission permit the Funds to make periodic distributions in respect of their common stock as frequently
as twelve times in any one taxable year and in respect of their preferred stock as specified by or determined in accordance with the terms
thereof. Granting this relief would provide the Funds with flexibility in meeting investor interest in receiving more frequent distributions.
Implementation of the relief would actually ameliorate the concerns that gave rise to Section 19(b) and Rule 19b-1 and help avoid the
"“selling
of dividends"”
problem, which Section 19(b) and Rule 19b-1 are not effective in preventing.
The
potential issues under Rule 19b-1 are not relevant to distributions on preferred stock. Not only are such distributions fixed or
determined by the market rather than by reference to the performance of the issuer but also the long-term capital gain component is
mandated by the IRS to be the same proportion as the proportion of long-term gain dividends bears to the total distributions in
respect of the common stock and consequently the long-term gain component cannot even be known until the end of the fund'’s
fiscal year. In these circumstances it would be very difficult for any of the potential abuses reflected in Rule 19b-1'’s
restrictions to occur.
In
summary, Rule 19b-1, in the circumstances referred to above, is likely to distort the effective and proper functioning of a Fund'’s
Distribution Policy and gives rise to the very pressures on portfolio management decisions that Rule 19b-1 was intended to avoid. These
distortions forced by Rule 19b-1 serve no purpose and are not in the best interests of stockholders.
VI. APPLICANTS’
CONDITIONS
|
VI.
|
APPLICANTS' CONDITIONS
|
Applicants
agree that, with respect to each Fund seeking to rely on the Order, the Order will be subject to each of the following conditions:
1. Compliance
Review and Reporting
|
1.
|
Compliance Review and Reporting
|
The
Fund'’s
chief compliance officer will: (a) report to the Fund'’s
Board, no less frequently than once every three months or at the next regularly scheduled quarterly Board meeting, whether (i) the Fund
and its Adviser have complied with the conditions of the Order and (ii) a material compliance matter (as defined in Rule 38a-1(e)(2) under
the 1940 Act) has occurred with respect to such conditions; and (b) review the adequacy of the policies and procedures adopted by the
Board no less frequently than annually.
2. Disclosures
to Fund Stockholders
|
2.
|
Disclosures to Fund Stockholders
|
|
(a)
|
Each 19(a) Notice disseminated to the holders of the Fund's common stock, in addition to the information required by Section 19(a) and Rule 19a-1:
|
|
(i)
|
will provide, in a tabular or graphical format:
|
(1)
a) Each 19(a) Notice disseminated to the holders
of the Fund’s common stock, in addition to the information required by Section 19(a) and Rule 19a-1:
(i) will
provide, in a tabular or graphical format:
(5)
the amount of the distribution, on a per share of common stock basis, together with the amounts of such distribution amount, on
a per share of common stock basis and as a percentage of such distribution amount, from estimated: (A) net investment income; (B) net
realized short-term capital gains; (C) net realized long-term capital gains; and (D) return of capital or other capital source;
(6)
(2) the fiscal year-to-date cumulative
amount of distributions, on a per share of common stock basis, together with the amounts of such cumulative amount, on a per share of
common stock basis and as a percentage of such cumulative amount of distributions, from estimated: (A) net investment income; (B) net
realized short-term capital gains; (C) net realized long-term capital gains; and (D) return of capital or other capital source;
(7)
(3) the average annual total return
in relation to the change in NAV for the 5-year period (or, if the Fund'’s
history of operations is less than five years, the time period commencing immediately following the Fund'’s
first public offering) ending on the last day of the month ended immediately prior to the most recent distribution record date compared
to the current fiscal period'’s
annualized distribution rate expressed as a percentage of NAV as of the last day of the month prior to the most recent distribution record
date; and
(8)
(4) the cumulative total return in
relation to the change in NAV from the last completed fiscal year to the last day of the month prior to the most recent distribution record
date compared to the fiscal year-to-date cumulative distribution rate expressed as a percentage of NAV as of the last day of the month
prior to the most recent distribution record date.
Such disclosure
shall be made in a type size at least as large and as prominent as the estimate of the sources of the current distribution; and
|
(ii)
|
will include the following disclosure:
|
(1)
"ii) will include the following disclosure:
(4)
“You should not draw any conclusions about the Fund'’s
investment performance from the amount of this distribution or from the terms of the Fund'’s
Distribution Policy."”;
(5) (2)
"“The Fund estimates that it has
distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of
capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to
you. A return of capital distribution does not necessarily reflect the Fund'’s
investment performance and should not be confused with '‘yield'’ or '‘income'"’”;[6]7 and
(6)
(3) "“The
amounts and sources of distributions reported in this 19(a) Notice are only estimates and are not being provided for tax reporting purposes.
The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund'’s
investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send
you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes."”
Such disclosure shall
be made in a type size at least as large as and as prominent as any other information in the 19(a) Notice and placed on the same page
in close proximity to the amount and the sources of the distribution.
|
(b)
|
On the inside front cover of each report to stockholders under Rule 30e-1 under the 1940 Act, the Fund will:
|
|
(i)
|
describe the terms of the Distribution Policy (including the fixed amount or fixed percentage of the distributions and the frequency of the distributions);
|
|
(ii)
|
include the disclosure required by condition 2(a)(ii)(1) above;
|
7 The disclosure in this condition 2(a)(ii)(2) will be included only if the current distribution or the fiscal year-to-date cumulative
distributions are estimated to include a return of capital.
|
(iii)
|
state, if applicable, that the Distribution Policy provides that the Board may amend or terminate the Distribution Policy at any time without prior notice to Fund stockholders; and
|
|
(iv)
|
describe any reasonably foreseeable circumstances that might cause the Fund to terminate the Distribution Policy and any reasonably foreseeable consequences of such termination.
|
|
(c)
|
Each report provided to stockholders of a Fund under Rule 30e-1 under the 1940 Act and each prospectus filed with the Commission on Form N-2 under the 1940 Act, will provide the Fund's total return in relation to
|
[6]
The disclosure in this condition 2(a)(ii)(2) will be included only if the current distribution or
the fiscal year-to-date cumulative distributions are estimated to include a return of capital.
|
(b)
|
On the inside front cover of each
report to stockholders under Rule 30e-1 under the 1940 Act, the Fund will:
|
|
(v)
|
describe the terms of the Distribution
Policy (including the fixed amount or fixed percentage of the distributions and the frequency of the distributions);
|
|
(vi)
|
include the disclosure required by condition 2(a)(ii)(1)
above;
|
|
(vii)
|
state, if applicable, that the Distribution
Policy provides that the Board may amend or terminate the Distribution Policy at any time without prior notice to Fund stockholders; and
|
|
(viii)
|
describe any reasonably foreseeable
circumstances that might cause the Fund to terminate the Distribution Policy and any reasonably foreseeable consequences of such termination.
|
(c) Each
report provided to stockholders of a Fund under Rule 30e-1 under the 1940 Act and each prospectus filed with the Commission on Form N-2
under the 1940 Act, will provide the Fund’s total return in relation to changes in NAV in the financial highlights table
and in any discussion about the Fund'’s
total return.
3. Disclosure
to Stockholders, Prospective Stockholders and Third Parties
|
(d)
|
The Fund will include the information
contained in the relevant 19(a) Notice, including the disclosure required by condition 2(a)(ii) above, in any written communication (other
than a communication on Form 1099) about the Distribution Policy or distributions under the Distribution Policy by the Fund, or agents
that the Fund has authorized to make such communication on the Fund’s behalf, to any Fund stockholder, prospective stockholder or
third-party information provider;
|
|
(e)
|
The Fund will issue, contemporaneously
with the issuance of any 19(a) Notice, a press release containing the information in the 19(a) Notice and will file with the Commission
the information contained in such 19(a) Notice, including the disclosure required by condition 2(a)(ii) above, as an exhibit to its next
filed Form N-CSR; and
|
|
(f)
|
The Fund will post prominently a statement
on its (or the Adviser’s) website containing the information in each 19(a) Notice, including the disclosure required by condition
2(a)(ii) above, and maintain such information on such website for at least 24 months.
|
4. Delivery
of 19(a) Notices to Beneficial Owners
|
3.
|
Disclosure to Stockholders, Prospective Stockholders and Third Parties
|
|
(a)
|
The Fund will include the information contained in the relevant 19(a) Notice, including the disclosure required by condition 2(a)(ii) above, in any written communication (other than a communication on Form 1099) about the Distribution Policy or distributions under the Distribution Policy by the Fund, or agents that the Fund has authorized to make such communication on the Fund's behalf, to any Fund stockholder, prospective stockholder or third-party information provider;
|
|
(b)
|
The Fund will issue, contemporaneously with the issuance of any 19(a) Notice, a press release containing the information in the 19(a) Notice and will file with the Commission the information contained in such 19(a) Notice, including the disclosure required by condition 2(a)(ii) above, as an exhibit to its next filed Form N-CSR; and
|
|
(c)
|
The Fund will post prominently a statement on its (or the Adviser's) website containing the information in each 19(a) Notice, including the disclosure required by condition 2(a)(ii) above, and maintain such information on such website for at least 24 months.
|
|
4.
|
Delivery of 19(a) Notices to Beneficial Owners
|
If
a broker, dealer, bank or other person ("“financial
intermediary"”)
holds common stock issued by the Fund in nominee name, or otherwise, on behalf of a beneficial owner, the Fund:
|
(d)
|
will request that the financial intermediary,
or its agent, forward the 19(a) Notice to all beneficial owners of the Fund’s stock held through such financial intermediary;
|
|
(e)
|
will provide, in a timely manner,
to the financial intermediary, or its agent, enough copies of the 19(a) Notice assembled in the form and at the place that the financial
intermediary, or its agent, reasonably requests to facilitate the financial intermediary’s sending of the 19(a) Notice to each beneficial
owner of the Fund’s stock; and
|
|
(f)
|
upon the request of any financial
intermediary, or its agent, that receives copies of the 19(a) Notice, will pay the financial intermediary, or its agent, the reasonable
expenses of sending the 19(a) Notice to such beneficial owners.
|
|
(a)
|
will request that the financial intermediary, or its agent, forward the 19(a) Notice to all beneficial owners of the Fund's stock held through such financial intermediary;
|
|
(b)
|
will provide, in a timely manner, to the financial intermediary, or its agent, enough copies of the 19(a) Notice assembled in the form and at the place that the financial intermediary, or its agent, reasonably requests to facilitate the financial intermediary's sending of the 19(a) Notice to each beneficial owner of the Fund's stock; and
|
|
(c)
|
upon the request of any financial intermediary, or its agent, that receives copies of the 19(a) Notice, will pay the financial intermediary, or its agent, the reasonable expenses of sending the 19(a) Notice to such beneficial owners.
|
|
5.
|
Additional Board Determinations for Funds Whose Common Stock Trades at a Premium
|
If: 5. Additional
Board Determinations for Funds Whose Common Stock Trades at a Premium If:
|
(c)
|
The Fund’s common stock has
traded on the stock exchange that they primarily trade on at the time in question at an average premium to NAV equal to or greater than
10%, as determined on the basis of the average of the discount or premium to NAV of the Fund’s shares of common stock as of the
close of each trading day over a 12-week rolling period (each such 12-week rolling period ending on the last trading day of each week);
and
|
|
(d)
|
The Fund’s annualized distribution
rate for such 12-week rolling period, expressed as a percentage of NAV as of the ending date of such 12-week rolling period, is greater
than the Fund’s average annual total return in relation to the change in NAV over the 2-year period ending on the last day of such
12-week rolling period;
|
|
(a)
|
The Fund's common stock has traded on the stock exchange that they primarily trade on at the time in question at an average premium to NAV equal to or greater than 10%, as determined on the basis of the average of the discount or premium to NAV of the Fund's shares of common stock as of the close of each trading day over a 12-week rolling period (each such 12-week rolling period ending on the last trading day of each week); and
|
|
(b)
|
The Fund's annualized distribution rate for such 12-week rolling period, expressed as a percentage of NAV as of the ending date of such 12-week rolling period, is greater than the Fund's average annual total return in relation to the change in NAV over the 2-year period ending on the last day of such 12-week rolling period;
|
then:
|
(i)
|
At the earlier of the next regularly
scheduled meeting or within four months of the last day of such 12-week rolling period, the Board, including a majority of its Independent
Board Members:
|
(1)
will request and evaluate, and the Fund’s Adviser will furnish, such information as may be reasonably necessary to make an informed
determination of whether the
Distribution
Policy should be continued or continued after amendment;
(2)
will determine whether continuation, or continuation after amendment, of the Distribution Policy is consistent with the Fund’s investment
objective(s) and policies and is in the best interests of the Fund and its stockholders, after considering the information in condition
5(b)(i)(1) above; including, without limitation:
|
(D)
|
whether the Distribution Policy is accomplishing its purpose(s);
|
|
(E)
|
the reasonably foreseeable material
effects of the Distribution Policy on the Fund’s long-term total return in relation to the market price and NAV of the Fund’s
common stock; and
|
|
(F)
|
the Fund’s current distribution
rate, as described in condition 5(b) above, compared with the Fund’s average annual taxable income or total return over the 2-year
period, as described in condition 5(b), or such longer period as the Board deems appropriate; and
|
(3)
based upon that determination, will approve or disapprove the continuation, or continuation after amendment, of the Distribution Policy;
and
|
(ii)
|
The Board will record the information
considered by it, including its consideration of the factors listed in condition 5(b)(i)(2) above, and the basis for its approval or disapproval
of the continuation, or continuation after amendment, of the Distribution Policy in its meeting minutes, which must be made and preserved
for a period of not less than six years from the date of such meeting, the first two years in an easily accessible place.
|
6. Public
Offerings
|
(i)
|
At the earlier of the next regularly scheduled meeting or within four months of the last day of such 12-week rolling period, the Board, including a majority of its Independent Board Members:
|
|
(1)
|
will request and evaluate, and the Fund's Adviser will furnish, such information as may be reasonably necessary to make an informed determination of whether the Distribution Policy should be continued or continued after amendment;
|
|
(2)
|
will determine whether continuation, or continuation after amendment, of the Distribution Policy is consistent with the Fund's investment objective(s) and policies and is in the best interests of the Fund and its stockholders, after considering the information in condition 5(b)(i)(1) above; including, without limitation:
|
|
(A)
|
whether the Distribution Policy is accomplishing its purpose(s);
|
|
(B)
|
the reasonably foreseeable material effects of the Distribution Policy on the Fund's long-term total return in relation to the market price and NAV of the Fund's common stock; and
|
|
(C)
|
the Fund's current distribution rate, as described in condition 5(b) above, compared with the Fund's average annual taxable income or total return over the 2-year period, as described in condition 5(b), or such longer period as the Board deems appropriate; and
|
|
(3)
|
based upon that determination, will approve or disapprove the continuation, or continuation after amendment, of the Distribution Policy; and
|
|
(ii)
|
The Board will record the information considered by it, including its consideration of the factors listed in condition 5(b)(i)(2) above, and the basis for its approval or disapproval of the continuation, or continuation after amendment, of the Distribution Policy in its meeting minutes, which must be made and preserved for a period of not less than six years from the date of such meeting, the first two years in an easily accessible place.
|
The
Fund will not make a public offering of the Fund'’s
common stock other than:
|
(d)
|
a rights offering below NAV to holders of the Fund’s common stock;
|
|
(e)
|
an offering in connection with a dividend
reinvestment plan, merger, consolidation, acquisition, spin off or reorganization of the Fund; or
|
|
(f)
|
an offering other than an offering
described in conditions 6(a) and 6(b) above, provided that, with respect to such other offering:
|
|
(iii)
|
the Fund’s annualized distribution
rate for the six months ending on the last day of the month ended immediately prior to the most recent distribution record date,8
expressed as a percentage of NAV as of such date, is no more than 1 percentage point greater than the Fund’s average annual total
return for the 5-year period ending on such date;9 and
|
|
(iv)
|
the transmittal letter accompanying
any registration statement filed with the Commission in connection with such offering discloses that the Fund has received an order under
Section 19(b) to permit it to make periodic distributions of long-term capital gains with respect to its shares of common stock as frequently
as twelve times each year, and as frequently as distributions are specified by or determined in accordance with the terms of any outstanding
shares of preferred stock as the Fund may issue.
|
7. Amendments
to Rule 19b-1
|
(a)
|
a rights offering below NAV to holders of the Fund's common stock;
|
|
(b)
|
an offering in connection with a dividend reinvestment plan, merger, consolidation, acquisition, spin off or reorganization of the Fund; or
|
|
(c)
|
an offering other than an offering described in conditions 6(a) and 6(b) above, provided that, with respect to such other offering:
|
|
(i)
|
the Fund's annualized distribution rate for the six months ending on the last day of the month ended immediately prior to the most recent distribution record date,[7] expressed as a percentage of NAV as of such date, is no more than 1 percentage point greater than the Fund's average annual total return for the 5-year period ending on such date;[8] and
|
|
(ii)
|
the transmittal letter accompanying any registration statement filed with the Commission in connection with such offering discloses that the Fund has received an order under Section 19(b) to permit it to make periodic distributions of long-term capital gains with respect to its shares of common stock as frequently as twelve times each year, and as frequently as distributions are specified by or determined in accordance with the terms of any outstanding shares of preferred stock as the Fund may issue.
|
|
7.
|
Amendments to Rule 19b-1
|
The
requested Order will expire on the effective date of any amendment to Rule 19b-1 that provides relief permitting certain closed-end investment
companies to make periodic distributions of long-term capital gains with respect to their outstanding common stock as frequently as twelve
times each year.
8
If the Fund has been in operation fewer than six months, the measured period will begin immediately following the Fund’s
first public offering.
9
If the Fund has been in operation fewer than five years, the measured period will begin immediately following the Fund’s
first public offering.
[7]
If the Fund has been in operation fewer than six months, the measured
period will begin immediately following the Fund’s first public offering.
[8]
If the Fund has been in operation fewer than five years, the measured period will begin immediately
following the Fund’s first public offering.
X.
APPLICABLE PRECEDENT
|
VII.
|
APPLICABLE PRECEDENT
|
The
Commission has recently granted substantially the same relief as that sought herein in Vertical
Capital Income Fund and Oakline Advisors LLC, Investment Company Act Release Nos. 33505 (June 12, 2019) (notice) and 33548 (July 9, 2019)
(order); Putnam Managed Municipal Income Trust et al., Investment Company Act Release Nos. 33449 (April 17, 2019) (notice) and 33474 (May
14, 2019) (order); Macquarie Global Infrastructure Total Return Fund Inc., et al., Investment Company Act Release Nos. 33389 (March 5,
2019) (notice) and (April 2, 2019) (order); Special Opportunities Fund, Inc. and Bulldog Investors, LLC, Investment Company Act Release
Nos. 33367 (April 4, 2016) (notice) and 33386 (Mach 4, 2019) (order); Vivaldi Opportunities Fund and Vivaldi Asset Management,
LLC, Investment Company Act Release Nos. 33147 (July 3, 2018) (notice) and 33185 (July 31, 2018) (order); The Swiss Helvetia Fund, Inc.,
et al., Investment Company Act Release Nos. 33075 (April 23, 2018) (notice) and 33099 (May 21, 2018) (order); The Mexico Equity &
Income Fund, Inc. and Pichardo Asset Management, S.A. de C.V., Investment Company Act Release Nos. 32640 (May 18, 2017) (notice) and 32676
(June 13, 2017) (order); RiverNorth DoubleLine Strategic Opportunity Fund, Inc. and RiverNorth Capital Management LLC, Investment Company
Act Release Nos. 32635 (May 12, 2017)(notice) and 32673 (June 7, 2017) (order); Brookfield Global Listed Infrastructure Income Fund Inc.,
et al., Investment Company Act Release Nos. 31802 (September 1, 2015) (notice) and 31855 (September 30, 2015) (order); and Ares Dynamic
Credit Allocation Fund, Inc., et al., Investment Company Act Release Nos. 31665 (June 9, 2015) (notice) and 31708 (July 7, 2015) (order).
XI.
PROCEDURAL MATTERS
All
of the requirements for execution and filing of this Application on behalf of the Applicants have been complied with in accordance
with the applicable organizational documents of the Applicants, and the undersigned officers of the Applicants are fully authorized
to execute this Application. The resolutions of the Board
of DirectorsBoards of
the FundFunds authorizing
the filing of this Application, required by Rule 0-2(c) under the 1940 Act, are included as Exhibit A to this Application. The
verifications required by Rule 0-2(d) under the 1940 Act are included as Exhibit B to this Application.
Pursuant
to Rule 0-2(f) under the 1940 Act, the Applicants state that
their respective addresses are 80 Arkay Drive, Suite 110,
Hauppauge, NY 11788 (for the Fund) and 14675 Dallas Parkway, Suite 600, Dallas, TX 75254 (for the Adviser)address
is: 51 Madison Avenue, New York, New York 10010; and that all written communications regarding this Application should be directed
to the individuals and addresses indicated on the first page of this Application.
Applicants desire that
the Commission issue the requested order pursuant to Rule 0-5 under the 1940 Act without conducting a hearing.
XII.
CONCLUSION
For
the foregoing reasons, Applicants respectfully request that the Commission issue an order under Section 6(c) of the 1940 Act
exempting the Funds from the provisions of Section 19(b) of the
1940 Act and Rule 19b-1 thereunder to permit each Fund to make distributions on its common stock consisting in whole or
in part of capital gain dividends as frequently as twelve times in any one taxable year so long as it complies with the conditions
of the Order and maintains in effect a Distribution Policy with respect to its common stock as described in this Application. In
addition, Applicants request that the Order permit each Fund to make distributions on its preferred stock (if any) that it has
issued or may issue in the future consisting in whole or in part of capital gain
dividends as frequently
as specified by or determined in accordance with the terms thereof. Applicants submit that the requested exemption is necessary or appropriate
in the public interest, consistent with the protection of investors and consistent with the purposes fairly intended by the policy and
provisions of the 1940 Act.
[Signature Page Follows]
Dated:
July 30, 2021
Dated:
July 30, 2021
|
|
MainStay
CBRE Global Infrastructure Megatrends Fund
By:
/s/ Kirk C. Lehneis
Name: Kirk C. Lehneis
Title: President
MainStay
MacKay DefinedTerm Municipal Bond Opportunities Fund
By:
/s/ Kirk C. Lehneis
Name:
Kirk C. Lehneis
Title:
President
|
|
|
|
Dated:
July 30, 2021
|
|
New
York Investment Management LLC
By:
/s/ Yie-Hsin Hung
Name:
Yie-Hsin Hung
Title:
Chief Executive Officer
|
Dated: May 28, 2019
Dated: May 28, 2019
|
Vertical Capital Income Fund
By: /s/ Stanton Eigenbrodt
Name: Stanton Eigenbrodt
Title: Secretary
Oakline Advisors, LLC
By: /s/ Stanton Eigenbrodt
Name: Stanton Eigenbrodt
Title: Executive Vice President
|
EXHIBITS TO APPLICATION
The following materials are made a part of the Application
and are attached hereto:
DESIGNATION
|
|
DOCUMENT
|
Exhibit A
|
|
Resolutions of the Board of Trustees of Vertical Capital Income Fund
|
Exhibit B
|
|
Verifications
|
DESIGNATION
|
|
DOCUMENT
|
|
|
|
Exhibit A
|
|
Resolutions of the Board
|
Exhibit B
|
|
Verifications
|
Exhibit C
|
|
Marked copies of the Application against two substantially identical applications pursuant to 17 CFR 270.0-5(e)(2) and (3) and the initial exemptive application
|
EXHIBIT A
Resolutions
of the Trustees of Vertical Capital Income FundBoards
of MainStay CBRE Global Infrastructure Megatrends Fund and MainStay MacKay DefinedTerm Municipal Opportunities Fund
Resolved,
that the officers and agents of Vertical Capital Income Fund (the "Fund") be, and hereby are, authorized and directed to file
with the Commission the Application for an order under Section 6(c) of the 1940 Act for an exemption from Section 19(b) and Rule 19b-1
thereunder, in substantially the form presented to the Board of Trustees, and that each of the officers and agents of the Fund, acting
alone, hereby is authorized, empowered and directed on behalf of the Fund, to cause to be prepared, executed and filed with the Commission
any and all amendments of and exhibits to said Application, to be in such form as the officers or agents of the Fund shall approve, such
approval to be conclusively evidenced by their filing thereof; and it was further
Resolved,
that each officer and agent of the Fund, acting with advice of counsel, be, and hereby is, authorized and empowered to make such changes
as may be necessary by reason of any comment on such materials by the Commission or for any other reason deemed appropriate by the officers
or agents of the Fund; and it was further
RESOLVED,
that the officers of the MainStay CBRE Global Infrastructure Megatrends Fund be, and they hereby are, authorized in the name and on behalf
of the MainStay CBRE Global Infrastructure Megatrends Fund, to file an exemptive application with the U.S. Securities and Exchange Commission
to seek relief under Section 19 of the Investment Company Act of 1940, as amended, to implement a managed distribution policy, as presented
and discussed at this meeting, with such changes as an officer of the MainStay CBRE Global Infrastructure Megatrends Fund, with the advice
of the MainStay CBRE Global Infrastructure Megatrends Fund’s legal counsel, may deem appropriate.
RESOLVED,
that the officers of the MainStay MacKay DefinedTerm Municipal Opportunities Fund be, and they hereby are, authorized in the name and
on behalf of MainStay MacKay DefinedTerm Municipal Opportunities Fund, to file an exemptive application with the U.S. Securities and
Exchange Commission to seek relief under Section 19 of the Investment Company Act of 1940, as amended, to implement a managed distribution
policy, as presented and discussed at this meeting, with such changes as an officer of MainStay MacKay DefinedTerm Municipal Opportunities
Fund, with the advice of MainStay MacKay DefinedTerm Municipal Opportunities Fund’s legal counsel, may deem appropriate.
ResolvedFURTHER
RESOLVED, that each officer and agent of
the Fund, acting alone,’s
officers be, and each hereby is, authorized,
empowered and directed, in consultation with the
Fund’s legal counsel, to take any and
all additional actssuch steps and to prepare,
execute and deliver any and all other
agreements, documents, instruments and certificates, as they, or any of them acting alone deemsfile
with necessary authorities such documents as he or she may deem necessary, or
appropriate or convenient to carry out the intent and
purposes ofto effect the foregoing
resolutions, such determination to be conclusively
evidenced by the taking of such actions and the preparation, execution and delivery of such agreements, documents, instruments and
certificates adopted at this
meeting.
EXHIBIT B
Verifications
of Vertical Capital Income Fund and Oakline Advisors,MainStay
CBRE Global Infrastructure Megatrends Fund, MainStay MacKay DefinedTerm Municipal Opportunities Fund and New York Life Investment Management
LLC
The
undersigned states that he has duly executed the attached amended application
dated May 28, 2019July
30, 2021, for and on behalf of Vertical Capital
IncomeMainStay CBRE Global Infrastructure Megatrends
Fund in his capacity as SecretaryPresident
of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument
have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts
therein set forth are true to the best of his knowledge, information and belief.
By:
/s/ Stanton EigenbrodtKirk
C. Lehneis
Name: Kirk C. Lehneis
Title: President
Name: Stanton Eigenbrodt
Title: Secretary
The
undersigned states that he has duly executed the attached application dated July 30, 2021, for and on behalf of MainStay MacKay DefinedTerm
Municipal Opportunities Fund in his capacity as President of such entity and that all actions by the holders and other bodies necessary
to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with
such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and
belief.
By:
/s/ Kirk C. Lehneis
Name: Kirk C. Lehneis
Title: President
The
undersigned states that he has duly executed the attached amended application
dated May 28, 2019July
30, 2021, for and on behalf of Oakline Advisors,New
York Life Investment Management LLC in hisher
capacity as anChief
Executive Vice PresidentOfficer
of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument
have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts
therein set forth are true to the best of his knowledge, information and belief.
By:
/s/ Stanton EigenbrodtYie-Hsin
Hung
Name: Stanton EigenbrodtYie-Hsin
Hung
Title: Chief Executive Vice
PresidentOfficer
EXHIBIT
C
UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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In
the Matter of:
MainStay
CBRE Global Infrastructure Megatrends Fund
MainStay
MacKay DefinedTerm Municipal Opportunities Fund
and
New
York Life Investment Management LLC
Investment
Company Act of 1940
File
No. 812-15242
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APPLICATION
PURSUANT TO SECTION 6(C) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “ACT”) FOR AN ORDER GRANTING EXEMPTIONS FROM
SECTION 19(B) OF THE ACT AND RULE 19B-1 THEREUNDER
EXPEDITED
REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)
---------------------------------------------------------------------------------------------------------
IN THE MATTER OF:
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PUTNAM MANAGED MUNICIPAL INCOME TRUST
PUTNAM MASTER INTERMEDIATE INCOME TRUST
PUTNAM MUNICIPAL OPPORTUNITIES TRUST
PUTNAM PREMIER INCOME TRUST
PUTNAM INVESTMENT MANAGEMENT, LLC
and
PUTNAM INVESTMENTS LIMITED
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AMENDMENT NO. 1 TO AN APPLICATION PURSUANT TO SECTION 6(C) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “ACT”) FOR AN ORDER GRANTING EXEMPTIONS FROM SECTION 19(B) OF THE ACT AND RULE 19B-1 THEREUNDER
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Investment Company Act of
1940
File No. 812-14970
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PLEASE SEND ALL COMMUNICATIONS AND ORDERS TO:
Bryan
Chegwidden, Esq.
Ropes & Gray LLP
1211 Avenue of the Americas
J.
Kevin Gao, Esq
New York Investment Management LLC
51 Madison Avenue
New York, New York 1003610010
WITH A COPY TO:
Robert T. Burns, Vice President
Putnam Investment Management,
LLC
100 Federal Street
Boston, Massachusetts 02110
Thomas
C. Bogle, Esq
Corey F. Rose, Esq
Dechert LLP
1900 K Street
Washington D.C. 20006
This
Application (including Exhibits) consists of 1719
pages.
The Exhibit Index is on page 14.17.
Putnam
Managed Municipal Income Trust (“PMM”), Putnam Master Intermediate Income Trust (“PIM”), PutnamMainStay
CBRE Global Infrastructure Megatrends Fund (“MainStay CBRE Fund”), MainStay MacKay DefinedTerm Municipal Opportunities
Trust (“PMO”), Putnam Premier Income Trust (“PPT”), PutnamFund
(“MainStay MMD Fund”) (each a “Fund, ” and together, the “Funds”) and New York Life Investment
Management, LLC (“Putnam Management”)
and PutnamNew York Life Investments Limited
(“Putnam Investments””
and together with PMM, PIM, PMO, PPT and Putnam Managementthe
Funds, the “Applicants”) hereby submit this amended application
for an order (the “Order”) of the Securities and Exchange Commission (the “Commission”) pursuant to Section 6(c)
of the Investment Company Act of 1940, as amended (the “1940 Act”), providing PMM, PIM, PMO,
PPT,the Funds and each other closed-end management
investment company registered under the 1940 Act advised or to be
advised
in the future by Putnam Management, PutnamNew
York Life Investments, or by an entity controlling, controlled by or under
common control (within the meaning of Section 2(a)(9) of the 1940 Act) with Putnam Management or PutnamNew
York Life Investments (including any successor in interest1)
(each such entity, including Putnam Management and PutnamNew
York Life Investments, an “Adviser”) that in the future seeks to rely on the Order (such
investment companies, together with PMM, PIM, PMO, and PPT, are collectively referred
to herein as the “Funds” and each separately aseach,
a “Future Fund”), an exemption from the provisions of
Section 19(b) of the 1940 Act and Rule 19b-1 thereunder, as more fully set forth below (the “Application”).2
The Funds and the Future Funds are hereinafter collectively
referred to as the “Funds” and separately as a “Fund.”
II. THE
APPLICANTS
PMM
is organized as a Massachusetts business trust, which is registered under the 1940
Act as a diversified, closed-end management investment company, and commenced operations on February 24,
1989. Shares of common stock of PMM are currently listed and traded
on the New York Stock Exchange, a national securities exchange as defined in Section 2(a)(26) of the 1940 Act, under the symbol “PMM.”
As of September 30, 2018, PMM has total net assets of $493,479,293.66. PMM’s investment objective is to
seek a high level of current income exempt from federal income tax. PMM intends to achieve its objective
by investing in a diversified portfolio of tax-exempt municipal securities, which Putnam Management believes does not involve undue risk
to income or principal.The Funds are, and any Future Fund will
be, closed-end management investment companies registered under the 1940 Act. MainStay CBRE Fund is a Delaware statutory trust and intends
to operate as a non-diversified, closed-end management investment company. It is currently contemplated that the common stock of the MainStay
CBRE Fund (when and if issued) and common stock of Funds that may rely on the Order in the future will be listed on the New York Stock
Exchange, the Nasdaq or another national securities exchange as defined in Section 2(a)(26) of the 1940 Act (each, an “Exchange”). It is currently anticipated that MainStay CBRE Fund’s investment objective will be to seek a high level oftotal return with an emphasis on current income.
Moreover, it is expected that, under normal circumstances, MainStay CBRE Fund will invest at least 80% of its assets (net assets plus
borrowings for investment purposes) in securities issued by infrastructure companies. The investment objective and policies for MainStay
CBRE Fund will be set forth in its registration statement and may be modified from time to time. The Funds and any Future Fund may incur
leverage through the issuance of preferred stock and debt securities, by entering into a credit agreement or otherwise as permitted by
applicable law. MainStay CBRE Fund does not currently intend to issue preferred shares. The Board of Trustees of the Funds (the “Board”)
may authorize the issuance of preferred shares in the future. Each Future Fund may have issued or may issue preferred shares.
1
For the purposes of the requested order, “successor” is limited to an entity that results from a reorganization into
another jurisdiction or a change in the type of business organization.
2
The only registered closed-end investment companies that currently intend to rely on the Order have been named as Applicants. Any
Fund that may rely on the Order in the future will comply with the terms and conditions of the Application
PIM
is organized as a Massachusetts business trust, which is registered under the 1940 Act as a diversified, closed-end management investment
company, and commenced operations on April 29, 1988. Shares of common stock of PIM are currently listed and traded on the New York Stock
Exchange under the symbol “PIM.” As of September 30, 2018, PIM has total net assets of $262,558,568.00. PIM’s investment
objective is to seek with equal emphasis high
current income and relative
stability of net asset value by allocating its investments among fixed income securities in the U.S. investment grade sector, high-yield
sector, and international sector.
PMO
is organized as a Massachusetts business trust, which is registered under the 1940 Act as a non-diversified, closed-end management investment
company, and commenced operations on May 28, 1993. PMO is currently operating as a diversified fund but, to the extent permitted by applicable
law, may operate as a non-diversified fund in the future. Shares of common stock of PMO are currently listed and traded on the New York
Stock Exchange under the symbol “PMO.” As of September 30, 2018, PMO has total net assets of $603,769,088.74. PMO’s
investment objective is to seek as high a level of
MainStay
MMD Fund is organized as a Delaware Statutory Trust, which is
registered under the 1940 Act as a diversified, closed-end management investment company, and commenced operations on June
26, 2012. Shares of common stock of MainStay
MMD Fund are currently listed and traded on the New York Stock Exchange under the symbol “MMD.” As of March 31, 2021, MainStay
MMD Fund has total net assets of $582,002,768 and on that date 27,761,315.602 common stock were issued and outstanding.3
MainStay MMD Fund’s primary investment objective
is to seek current income exempt from federal income tax
as Putnam Management believes is consistent with the preservation of capital. PMO intends to achieve its objective by investing in a
portfolio of investment-grade and some below investment-grade municipal bonds selected by Putnam Management.
PPT
is organized as a Massachusetts business trust, which is registered under the 1940 Act as a non-diversified, closed-end management investment
company, and commenced operations on February 29, 1988. PPT is currently operating as a diversified fund but, to the extent permitted
by applicable law, may operate as a non-diversified fund in the future. Shares of common stock of PPT are currently listed and traded
on the New York Stock Exchange under the symbol “PPT.” As of September 30, 2018, PPT has total net assets of $588,360,382.95.
PPT’s investment objective is to seek high current income consistent with the preservation of capital by allocating its investments
among the U.S. government sector, high yield sector and international sector of the fixed-income securities markets.
1
For the purposes of the requested order, “successor” is limited to an entity that results
from a reorganization into another jurisdiction or a change in the type of business organization.
2
The only registered closed-end investment companies that currently intend to rely on the Order have
been named as Applicants. Any Fund that may rely on the Order in the future will comply with the terms and conditions of the Application.
regular
U.S. Federal income taxes (but which may be includable in taxable income for the purpose of the Federal alternative minimum tax). Total
return is a secondary objective. MainStay MMD Fund seeks to achieve its investment objectives by investing in municipal bonds, the interest
on which is, in the opinion of bond counsel to the issuers, generally excludable from gross income for regular U.S. Federal income tax
purposes (except that the interest may be includable in taxable income for purposes of the Federal alternative minimum tax).
3
On October 4, 2012, MMD Fund issued and has outstanding, two series of Fixed Rate Municipal Term Preferred Shares.
Putnam
Management isNew York Life Investments, a limited
liability company organized under the laws of the state of Massachusetts. Putnam Investments is a private
limited company organized under the laws of the United Kingdom. Both Putnam Management and Putnam Investments areState
of Delaware and an investment adviser registered with the Commission as investment advisers
under the Investment Advisers Act of 1940, as amended (the "“Advisers
Act"”),
andserves, or will
serve, as investment adviser and
investment sub-adviser, respectively, to PMM, PIM, PMO and PPT. Putnam Management is an indirect wholly-owned subsidiary of Putnam Investments,
LLC. Putnam Investments is directly owned by Putnam Advisory Holdings II, LLC, which is a registered investment adviser, and is owned
indirectly by Putnam Investments, LLC. Great-West Lifeco Inc., a financial services holding company with interests in life insurance,
health insurance, retirement and investment services, asset management and reinsurance businesses, indirectly owns a majority interest
in, and all of the voting shares of, Putnam Investments, LLC through a series of subsidiaries.PMM, PIM, PMO and PPT have each entered
into an investment management agreement pursuant to which Putnam Management, in accordance with the Fund's statedto
the Funds. Each Fund and New York Life Investments have entered, or will enter, into an investment management agreement pursuant to which
New York Life Investments will be responsible for, among other things, managing all aspects of the advisory operations of the Fund and
the composition of the investment portfolio according to the Fund’s investment objective, policies and
limitations, and subject to the supervision of the Fund's Board of Trustees, provides investment management services for the Fund's portfolio
and supervises and oversees the investment and reinvestment of the Fund's assets. Putnam Management and Putnam Investments have entered
into a sub-advisory agreement pursuant to which Putnam Investments, subject to the supervision and oversight of Putnam Management and
each Fund's officers and Board of Directors and in compliance with each Fund's stated investment objective, policies and limitations,
may provide day-to-day management of a portion of each Fund's assets. Any Adviser to a Fund,
and restrictions, subject to the general oversight of the Board. The Adviser intends to enter into a subadvisory agreement with CBRE Clarion
Securities LLC (“CBRE Clarion or “Subadvisor”), pursuant to which New York Life Investments will delegate its day-to-day
portfolio management responsibilities of the MainStay CBRE Fund to CBRE Clarion. The Adviser has entered into a subadvisory agreement
with MacKay Shields LLC “MacKay Shields”), pursuant to which New York Life Investments has delegated its day-to-day portfolio
management responsibilities of the MainStay MMD Fund to MacKay Shields. Any Adviser to a Future Fund or future Adviser to the Funds also
will be registered under the Advisers Act. The portfolio of athe
Funds or a Future Fund may be managedsubadvised
by one or more investment sub-adviserssubadvisors
(each, a "“Future
Sub-Adviser"Subadvisor”).
A Future Sub-AdviserSubadvisor
may be an affiliate of Putnam Management or PutnamNew
York Life Investments. Any Future Sub-AdviserSubadvisor
will be registered under the Advisers Act.
VII.
REQUEST FOR EXEMPTIVE RELIEF
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III.
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REQUEST FOR EXEMPTIVE RELIEF
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Section
19(b) of the 1940 Act provides that it shall be unlawful in contravention of such rules, regulations, or orders as the Commission
may prescribe as necessary or appropriate in the public interest or for the protection of investors for any registered investment
company to distribute long-term capital gains, as defined in the Internal Revenue Code of 1986, as amended (the “Code”),
more often than once every twelve months. Rule 19b-1 under the 1940 Act provides that no registered investment company which is a
“regulated investment company” as defined in Section 851 of the Code may make more than (i) one “capital gain
dividend,” as defined in Section 852(b)(3)(C) of the Code, in any one taxable year of the company, (ii) one additional capital
gain distribution made in whole or in part to avoid payment of excise tax under Section 4982 of the Code plus (iii) one supplemental
capital gain dividend pursuant to Section 855 of the Code (provided that it does not exceed 10% of the total amount distributed for
the taxable year).
Applicants believe that
Rule 19b-1 should be interpreted to permit a Fund to pay an unlimited number of distributions on its common and preferred stock (if any)
so long as it makes the designation necessary under the Code and Rule 19b-1 to characterize those distributions as “capital gain
dividends” restricted by Rule 19b-1 only as often as is permitted by Rule 19b-1, even if the Code would then require retroactively
spreading the capital gain resulting from that designation over more than the permissible number of distributions. However, to obtain
certainty for a Fund’s proposed distribution policies (each, a “Distribution Policy”), in the absence of such an interpretation,
Applicants hereby request an order pursuant to Section 6(c) of the 1940 Act granting an exemption from Section 19(b) of the 1940 Act and
Rule 19b-1 thereunder. The Order would permit each Fund to make periodic capital gain dividends (as defined in Section 852(b)(3)(C) of
the Code) that include long-term capital gains as frequently as twelve times in any one taxable year in respect of its common stock and
as often as specified by, or determined in accordance with the terms of, any preferred stock issued by the Fund.
VIII.
REPRESENTATIONS OF APPLICANTS
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IV.
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REPRESENTATIONS OF APPLICANTS
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Prior
to a Fund’s implementing a Distribution Policy in reliance on the Order, the board of directors
or trustees (the “Board”)
of each Fund seeking to rely on the Order, including a majority of the directors or trustees who are not interested persons of the Fund,
as defined in Section 2(a)(19) of the 1940 Act (the “Independent Board Members”), will request, and the Adviser will provide,
such information as is reasonably necessary to make an informed determination of whether the Board should adopt a proposed Distribution
Policy. In particular, the Board and the Independent Board Members will review information regarding (i) the purpose and terms of the
proposed
Distribution Policy;
(ii) the likely effects of the proposed Distribution Policy on the Fund’s long-term total return (in relation to market price and
net asset value per share of common stock (“NAV”)); (iii) the expected relationship between the Fund’s distribution
rate on its shares of common stock under the proposed Distribution Policy and the Fund’s total return (in relation to NAV); (iv)
whether the rate of distribution is anticipated to exceed the Fund’s expected total return in relation to its NAV; and (v) any foreseeable
material effects of the proposed Distribution Policy on the Fund’s long-term total return (in relation to market price and NAV).
The Independent Board
Members will also consider what conflicts of interest the Adviser and the affiliated persons of the Adviser and the Fund might have with
respect to the adoption or implementation of the proposed Distribution Policy.
Following this review,
the Board, including the Independent Board Members, of each Fund will, before adopting or implementing any proposed Distribution Policy,
make a determination that the proposed Distribution Policy is consistent with the Fund’s investment objective(s) and in the best
interests of the holders of the Fund’s common stock. The Distribution Policy will be consistent with the Fund’s policies and
procedures and will be described in the Fund’s registration statement.
In addition, prior to
implementation of a Distribution Policy for any Fund pursuant to the Order requested by this Application, the Board of the Fund shall
have adopted policies and procedures (the “Section 19 Compliance Policies”) pursuant to Rule 38a-1 under the 1940 Act that:
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(v)
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1. are reasonably designed to ensure
that all notices required to be sent to the Fund’s stockholders pursuant to Section 19(a) of the 1940 Act, Rule 19a-1 thereunder
and by condition 4 below (each, a “19(a) Notice”) include the disclosure required by Rule 19a-1 and by condition 2(a) below,
and that all other written communications by the Fund or its agents regarding distributions under the Distribution Policy include the
disclosure required by condition 3(a) below; and
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(vi)
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2. require the Fund to keep records
that demonstrate its compliance with all of the conditions of the Order and that are necessary for the Fund to form the basis for, or
demonstrate the calculation of, the amounts disclosed in its 19(a) Notices.
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The records of the actions
of the Board of each Fund will summarize the basis for the Board’s approval of the Distribution Policy, including its consideration
of the factors described above. These records will be maintained for a period of at least six years from the date of the applicable meeting,
the first two years in an easily accessible place, or for such longer period as may otherwise be required by law.
Generally, the
purpose of a Distribution Policy would be to permit a Fund to distribute periodically, over the course of each year, an amount
closely approximating the total taxable income of the Fund during the year through distributions in relatively equal amounts (plus
any required special distributions) that are composed of payments received from portfolio companies, supplemental amounts generally
representing realized capital gains or, possibly, returns of capital that may represent unrealized capital gains. The Fund seeks to
establish a distribution rate that approximates the Fund’s projected total return that can reasonably be expected to be
generated by the Fund over an extended period of time, although the distribution rate will not be solely dependent on the amount of
income earned or capital gains realized by the Fund for the year. Under the Distribution Policy of a Fund, the Fund would distribute
periodically (as frequently as twelve times in any taxable year) to its respective common stockholders a fixed percentage of the
market price of the Fund’s shares of common stock at a particular point in time or a fixed percentage of NAV at a particular
time or a fixed amount per share of common stock, any of which may be adjusted from time to time. It is anticipated that under a
Distribution Policy, the minimum annual distribution rate with respect to the Fund’s shares of common stock would be
independent of the Fund’s performance during any particular period but would be expected to correlate with the Fund’s
performance over time. Except for extraordinary distributions and potential increases or decreases in the final dividend periods in
light of the Fund’s performance for an entire calendar year and to enable the Fund to comply with the distribution
requirements of Subchapter M of the Code for the calendar year, each distribution on the Fund’s common stock would be at the
stated rate then in effect. The Board will periodically review the amount of potential distributions in light of the investment
experience of the Fund, and may modify or terminate a Distribution Policy at any time.
V. JUSTIFICATION
FOR REQUESTED RELIEF
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V.
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JUSTIFICATION FOR REQUESTED RELIEF
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Section
6(c) of the 1940 Act provides that the Commission may exempt any person, security or transaction from any provision of the 1940 Act or
of any rule or regulation thereunder, if and to the extent that the 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 1940 Act. For the reasons set forth
below, Applicants submit that the requested exemption from Section 19(b) of the 1940 Act and Rule 19b-1 thereunder would be consistent
with the standards set forth in Section 6(c) of the 1940 Act and in the best interests of the Funds and their respective stockholders.
A. Receipt
of the Order would serve stockholders interests
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A.
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Receipt of the Order would serve stockholders interests
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Applicants
believe that closed-end fund investors may prefer an investment vehicle that provides regular current income through fixed distribution
policies that would be available through a Distribution Policy. Allowing a Distribution Policy to operate in the manner described in this
Application would help fill current investor demand and foster competition in the registered fund market.
An exemption from Rule
19b-1 would benefit stockholders in another way. Shares of common stock of closed-end funds often trade in the marketplace at a discount
to their NAV. Applicants believe that this discount may be reduced if a Fund is permitted to pay relatively frequent dividends on its
common stock at a consistent rate, whether or not those dividends contain an element of long-term capital gains. Any reduction in the
discount at which Fund shares of common stock trade in the market would benefit the holders of the Fund’s common stock along with
the Fund.
F. The Fund’s stockholders would receive information sufficient to clearly inform
them of the nature of the distributions they are receiving
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B.
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The Fund’s stockholders would receive information sufficient to clearly inform them of the nature of the distributions they are receiving
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One
of the concerns leading to the enactment of Section 19(b) and adoption of Rule 19b-1 was that stockholders might be unable to distinguish
between frequent distributions of capital gains and dividends from investment income.34
However, Rule 19a-1 under the 1940 Act effectively addresses this concern by requiring that distributions (or the confirmation of the
reinvestment thereof) estimated to be sourced in part from capital gains or capital be accompanied by a separate statement showing the
sources of the distribution (e.g., estimated net income, net short-term capital gains, net long-term capital gains and/or return of capital).
The same information will be included in each Fund’s annual report to stockholders and on its Internal Revenue Service (“IRS”)
Form 1099-DIV, which will be sent to each common and preferred stockholder who received distributions during a particular year (including
stockholders who have sold shares during the year).
In addition, each of the
Funds will make the additional disclosures required by the conditions set forth in Part VI below, and each of them will adopt compliance
policies and procedures in accordance with Rule 38a-1 under the 1940 Act to ensure that all required notices and disclosures are sent
to stockholders.
The information required
by Section 19(a), Rule 19a-1, the Distribution Policy, the Section 19 Compliance Policies and the conditions listed below will help to
ensure that each Fund’s stockholders are provided sufficient information to understand that their periodic distributions are not
tied to the Fund’s net investment income (which for this purpose is the Fund’s taxable income other than from capital gains)
and realized capital gains to date, and may not represent yield or investment return. Accordingly, subjecting the Funds to Section 19(b)
and Rule 19b-1 would afford stockholders no extra protection. In addition, the Funds will undertake to request intermediaries, or their
agent(s), to forward 19(a) Notices to their customers and to reimburse them for the costs of forwarding. Such forwarding may occur in
any manner permitted by statute, rule or order or by the staff of the Commission.
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C.
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Under certain circumstances, Rule 19b-1 gives rise to improper influence on portfolio management decisions, with no offsetting benefit to stockholders
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3
See Securities and Exchange Commission 1966 Report to Congress on Investment Company Growth (H.R.
Rep. No. 2337, 89th Cong. 2d Sess. 190-95 (1966)); S. Rep. No. 91-184, 91st Cong., 1st Sess. 29 (1969); H.R. Rep. No. 91-1382, 91st Cong.,
2d Sess. 29 (1970).
G.
Under certain circumstances, Rule 19b-1 gives rise to improper influence on portfolio
management decisions, with no offsetting benefit to stockholders
Rule
19b-1, when applied to a Distribution Policy, actually gives rise to one of the concerns that Rule 19b-1 was intended to avoid: inappropriate
influence on portfolio management decisions. Funds that pay long-term capital gains distributions only once per year in accordance with
Rule 19b-1 impose no pressure on management to realize capital gains at any time when purely investment considerations do not dictate
doing so. In the absence of an exemption from Rule 19b-1, the adoption of a periodic distribution plan imposes pressure on management
(i) not to realize any net long-term capital gains until the point in the year that the fund can pay all of its remaining distributions
in accordance with Rule 19b-1 and (ii) not to realize any long-term capital gains during any particular year in excess of the amount of
the aggregate pay-out for the year (since as a practical matter excess gains must be distributed and accordingly would not be available
to satisfy pay-out requirements in following years), notwithstanding that purely investment considerations might favor realization of
long-term gains at different times or in different amounts.
4
See Securities and Exchange Commission 1966 Report to Congress on Investment Company Growth
(H.R. Rep. No. 2337, 89th Cong. 2d Sess. 190-95 (1966)); S. Rep. No. 91-184, 91st Cong., 1st Sess. 29 (1969); H.R. Rep. No. 91-1382, 91st
Cong., 2d Sess. 29 (1970).
No purpose is served by
the distortion in the normal operation of a periodic distribution plan required in order to comply with Rule 19b-1. There is no benefit
in requiring any fund that adopts a periodic distribution plan either to retain (and pay taxes on) long-term capital gains (with the resulting
additional tax return complexities for the fund’s stockholders) or to avoid designating its distributions of long-term gains as
capital gains dividends for tax purposes (thereby avoiding a Rule 19b-1 problem but providing distributions taxable at ordinary income
rates rather than the much lower long-term capital gains rates). The desirability of avoiding these anomalous results creates pressure
to limit the realization of long-term capital gains that otherwise would be taken for purely investment considerations.
The Order requested by
Applicants would minimize these anomalous effects of Rule 19b-1 by enabling the Funds to realize long-term capital gains as often as investment
considerations dictate without fear of violating Rule 19b-1.
D. Other
concerns leading to adoption of Rule 19b-1 are not applicable
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D.
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Other concerns leading to adoption of Rule 19b-1 are not applicable
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Another
concern that led to the enactment of Section 19(b) of the 1940 Act and adoption of Rule 19b-1 was that frequent capital gains distributions
could facilitate improper fund share sales practices, including, in particular, the practice of urging an investor to purchase shares
of a fund on the basis of an upcoming capital gains dividend (“selling the dividend”), where the dividend would result in
an immediate corresponding reduction in NAV and would be in effect a taxable return of the investor’s capital. Applicants submit
that this concern should not apply to closed-end investment companies, such as the Funds, that do not continuously distribute shares.
Furthermore, if the underlying concern extends to secondary market purchases of shares of closed-end funds that are subject to a large
upcoming capital gains dividend, adoption of a periodic distribution plan may help minimize the concern by avoiding, through periodic
distributions, any buildup of large end-of-the-year distributions.
Applicants
also submit that the “selling the dividend” concern is not applicable to preferred stock, which entitles a holder to no
more than a specified periodic dividend and, like a debt security, is initially sold at a price based upon its liquidation
preference, credit quality, dividend rate and frequency of payment. Investors buy preferred stock for the purpose of receiving
specific payments at the frequency bargained for, and any application of Rule 19b-1 to preferred stock would be contrary to the
expectation of investors. There is also currently a tax rule that provides that any loss realized by a stockholder upon sale of
shares of a regulated investment company that were held for six months or less will be treated as a long-term capital loss, to the
extent of any long-term capital gains paid on such shares, to avoid the selling of dividends.
E. Further
limitations of Rule 19b-1
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E.
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Further limitations of Rule 19b-1
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Subparagraphs (a) and
(f) of Rule 19b-1 limit the number of capital gains dividends, as defined in Section 852(b) (3)(C) of the Code, that a fund may make with
respect to any one taxable year to one, plus a supplemental distribution made pursuant to Section 855 of the Code not exceeding 10% of
the total amount distributed for the year, plus one additional capital gain dividend made in whole or in part to avoid the excise tax
under Section 4982 of the Code.
Applicants
assert that by limiting the number of capital gain dividends that a Fund may make with respect to any one year, Rule 19b-1 may prevent
the normal and efficient operation of a periodic distribution plan whenever that Fund’s realized net long-term capital gains in
any year exceed the total of the periodic distributions that may include such capital gains under the rule. Rule 19b-1 thus may force
the fixed regular periodic distributions to be funded with returns of capital45
(to the extent net investment income and realized short term capital gains are insufficient to fund the distribution), even though realized
net long-term capital gains otherwise would be available. To distribute all of a Fund’s long-term capital gains within the limits
in Rule 19b-1, a Fund may be required to make total distributions in excess of the annual amount called for by its periodic distribution
plan or to retain and pay taxes on the excess amount. Applicants believe that the application of Rule 19b-1 to a Fund’s periodic
distribution plan may create pressure to limit the realization of long-term capital gains based on considerations unrelated to investment
goals.
Revenue
Ruling 89-815816 under
the Code requires that a fund that seeks to qualify as a regulated investment company under the Code and that has both common stock
and preferred stock outstanding designate the types of income, e.g., investment income and capital gains, in the same proportion as
the total distributions distributed to each class for the tax year. To satisfy the proportionate designation requirements of Revenue
Ruling 89-81, whenever a fund has realized a long-term capital gain with respect to a given tax year, the fund must designate the
required proportionate share of such capital gain to be included in common and preferred stock dividends. Although Rule 19b-1 allows
a fund some flexibility with respect to the frequency of capital gains distributions, a fund might use all of the exceptions
available under Rule 19b-1 for a tax year and still need to distribute additional capital gains allocated to the preferred stock to
comply with Revenue Ruling 89-81.
5
These would be returns of capital for financial accounting purposes and not for tax accounting
purposes.
6
1989-1 C.B. 226.
The potential abuses addressed
by Section 19(b) and Rule 19b-1 do not arise with respect to preferred stock issued by a closed-end fund. Such distributions generally
are either fixed or are determined in periodic auctions or remarketings or are periodically reset by reference to short term interest
rates rather than by reference to performance of the issuer, and Revenue Ruling 89-81 determines the proportion of such distributions
that are comprised of the long-term capital gains. The Applicants also submit that the “selling the dividend” concern is not
applicable to preferred stock, which entitles a holder to no more than a periodic dividend at a fixed rate or the rate determined by the
market, and, like a debt security, is priced based upon its liquidation value, dividend rate, credit quality, and frequency of payment.
Investors buy preferred stock for the purpose of receiving payments at the frequency bargained for and do not expect the liquidation value
of their shares to change.
The proposed Order will assist the Funds in avoiding these
Rule 19b-1 problems.
F. General
The
relief requested is that the Commission permit the Funds to make periodic distributions in respect of their common stock as frequently
as twelve times in any one taxable year and in respect of their preferred stock as specified by or determined in accordance with the terms
thereof. Granting this relief would provide the Funds with flexibility in meeting investor interest in receiving more frequent distributions.
Implementation of the relief would actually ameliorate the concerns that gave rise to Section 19(b) and Rule 19b-1 and help avoid the
“selling of dividends” problem, which Section 19(b) and Rule 19b-1 are not effective in preventing.
The potential issues under
Rule 19b-1 are not relevant to distributions on preferred stock. Not only are such distributions fixed or determined by the market rather
than by reference to the performance of the issuer but also the long-term capital gain component is mandated by the IRS to be the same
proportion as the proportion of long-term gain dividends bears to the total distributions in respect of the common stock and consequently
the long-term gain component cannot even be known until the end of the fund’s fiscal year. In these circumstances it would be very
difficult for any of the potential abuses reflected in Rule 19b-1’s restrictions to occur.
In summary, Rule 19b-1,
in the circumstances referred to above, is likely to distort the effective and proper functioning of a Fund’s Distribution Policy
and gives rise to the very pressures on portfolio management decisions that Rule 19b-1 was intended
to avoid. These distortions forced by Rule 19b-1 serve no purpose and are not in the best interests of stockholders.
4
These would be returns of capital for financial accounting purposes and not for tax accounting purposes.
5
1989-1 C.B. 226.
VI. APPLICANTS’
CONDITIONS
|
VI.
|
APPLICANTS’ CONDITIONS
|
Applicants
agree that, with respect to each Fund seeking to rely on the Order, the Order will be subject to each of the following conditions:
1. Compliance
Review and Reporting
|
1.
|
Compliance Review and Reporting
|
The
Fund’s chief compliance officer will: (a) report to the Fund’s Board, no less frequently than once every three months or at
the next regularly scheduled quarterly Board meeting, whether (i) the Fund and its Adviser have complied with the conditions of the Order
and (ii) a material compliance matter (as defined in Rule 38a-1(e)(2) under the 1940 Act) has occurred with respect to such conditions;
and (b) review the adequacy of the policies and procedures adopted by the Board no less frequently than annually.
2. Disclosures
to Fund Stockholders
|
2.
|
Disclosures to Fund Stockholders
|
|
(a)
|
Each 19(a) Notice disseminated to the holders of the Fund’s common stock, in addition to the information required by Section 19(a) and Rule 19a-1:
|
|
(i)
|
will provide, in a tabular or graphical format:
|
(1)
a) Each 19(a) Notice disseminated to the holders of the
Fund’s common stock, in addition to the information required by Section 19(a) and Rule 19a-1:
(i) will
provide, in a tabular or graphical format:
(9)
the amount of the distribution, on a per share of common stock basis, together with the amounts of such distribution amount, on
a per share of common stock basis and as a percentage of such distribution amount, from estimated: (A) net investment income; (B) net
realized short-term capital gains; (C) net realized long-term capital gains; and (D) return of capital or other capital source;
(10)
(2) the fiscal year-to-date cumulative amount of distributions, on a per share
of common stock basis, together with the amounts of such cumulative amount, on a per share of common stock basis and as a percentage
of such cumulative amount of distributions, from estimated: (A) net investment income; (B) net realized short-term capital gains; (C)
net realized long-term capital gains; and (D) return of capital or other capital source;
(11)
(3) the average annual total return in relation to the change in NAV for the 5-year
period (or, if the Fund’s history of operations is less than five years, the time period commencing immediately following the Fund’s
first public offering) ending on the last day of the month ended immediately prior to the most recent distribution record date compared
to the current fiscal period’s annualized distribution rate expressed as a percentage of NAV as of the last day of the month prior
to the most recent distribution record date; and
(12)
(4) the cumulative total return in relation to the change in NAV from the last
completed fiscal year to the last day of the month prior to the most recent distribution record date compared to the fiscal year-to-date
cumulative distribution rate expressed as a percentage of NAV as of the last day of the month prior to the most recent distribution record
date.
Such disclosure
shall be made in a type size at least as large and as prominent as the estimate of the sources of the current distribution; and
|
(ii)
|
will include the following disclosure:
|
(1)
ii) will include the following disclosure:
(7)
“You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or
from the terms of the Fund’s Distribution Policy.”;
(8)
(2) “The Fund estimates that it has distributed more than its income and
net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may
occur,
for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not
necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income’”;67
and
(9)
(3) “The amounts and sources of distributions reported in this 19(a) Notice
are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting
purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes
based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions
for federal income tax purposes.”
7 The disclosure in this condition 2(a)(ii)(2) will be included only
if the current distribution or the fiscal year-to-date cumulative distributions are estimated to include a return of capital.
Such
disclosure shall be made in a type size at least as large as and as prominent as any other information in the 19(a) Notice and placed
on the same page in close proximity to the amount and the sources of the distribution.
Such
disclosure shall be made in a type size at least as large as and as prominent as any other information in the 19(a) Notice and placed
on the same page in close proximity to the amount and the sources of the distribution.
|
(b)
|
On the inside front cover of each report to stockholders under Rule 30e-1 under the 1940 Act, the Fund will:
|
|
(i)
|
describe the terms of the Distribution Policy (including the fixed amount or fixed percentage of the distributions and the frequency of the distributions);
|
|
(ii)
|
include the disclosure required by condition 2(a)(ii)(1) above;
|
|
(iii)
|
state, if applicable, that the Distribution Policy provides that the Board may amend or terminate the Distribution Policy at any time without prior notice to Fund stockholders; and
|
|
(iv)
|
describe any reasonably foreseeable circumstances that might cause the Fund to terminate the Distribution Policy and any reasonably foreseeable consequences of such termination.
|
|
(c)
|
Each report provided to stockholders of a Fund under Rule 30e-1 under the 1940 Act and each prospectus filed with the Commission on Form N-2 under the 1940 Act, will provide the Fund’s total return in relation to changes in NAV in the financial highlights table and in any discussion about the Fund’s total return.
|
|
3.
|
Disclosure to Stockholders, Prospective Stockholders and Third Parties
|
|
(a)
|
The Fund will include the information contained in the relevant 19(a) Notice, including the disclosure required by condition 2(a)(ii) above, in any written communication (other than a communication on Form 1099) about the Distribution Policy or distributions under the Distribution Policy by the Fund, or agents that the Fund has authorized to make such communication on the Fund’s behalf, to any Fund stockholder, prospective stockholder or third-party information provider;
|
|
(b)
|
The Fund will issue, contemporaneously with the issuance of any 19(a) Notice, a press release containing the information in the 19(a) Notice and will file with the Commission the information contained in such 19(a) Notice, including the disclosure required by condition 2(a)(ii) above, as an exhibit to its next filed Form N-CSR; and
|
|
(c)
|
The Fund will post prominently a statement on its (or the Adviser’s) website containing the information in each 19(a) Notice, including the disclosure required by condition 2(a)(ii) above, and maintain such information on such website for at least 24 months.
|
|
4.
|
Delivery of 19(a) Notices to Beneficial Owners
|
6
The disclosure in this condition 2(a)(ii)(2) will be included only if the current distribution or
the fiscal year-to-date cumulative distributions are estimated to include a return of capital.
|
(b)
|
On the inside front cover of each
report to stockholders under Rule 30e-1 under the 1940 Act, the Fund will:
|
(ix)
describe the terms of the Distribution Policy (including the fixed amount or fixed
percentage of the distributions and the frequency of the distributions);
(x)
include the disclosure required by condition 2(a)(ii)(1) above;
(xi)
state, if applicable, that the Distribution Policy provides that the Board may amend
or terminate the Distribution Policy at any time without prior notice to Fund stockholders; and
(xii)
describe any reasonably foreseeable circumstances that might cause the Fund to terminate
the Distribution Policy and any reasonably foreseeable consequences of such termination.
|
(c)
|
Each report provided to stockholders
of a Fund under Rule 30e-1 under the 1940 Act and each prospectus filed with the Commission on Form N-2 under the 1940 Act, will provide
the Fund’s total return in relation to changes in NAV in the financial highlights table and in any discussion about the Fund’s
total return.
|
3. Disclosure
to Stockholders, Prospective Stockholders and Third Parties
(g)
The Fund will include the information contained in the relevant 19(a) Notice, including
the disclosure required by condition 2(a)(ii) above, in any written communication (other than a communication on Form 1099) about the
Distribution Policy or distributions under the Distribution Policy by the Fund, or agents that the Fund has authorized to make such communication
on the Fund’s behalf, to any Fund stockholder, prospective stockholder or third-party information provider;
(h) The
Fund will issue, contemporaneously with the issuance of any 19(a) Notice, a press release containing the information in the 19(a)
Notice and will file with the Commission the information contained in such 19(a) Notice, including the disclosure
required by condition 2(a)(ii) above, as an exhibit to its next filed Form N-CSR; and
(i)
The Fund will post prominently a statement on its (or the Adviser’s) website
containing the information in each 19(a) Notice, including the disclosure required by condition 2(a)(ii) above, and maintain such information
on such website for at least 24 months.
4. Delivery
of 19(a) Notices to Beneficial Owners
If a broker,
dealer, bank or other person (“financial intermediary”) holds common stock issued by the Fund in nominee name, or otherwise,
on behalf of a beneficial owner, the Fund:
(g)
will request that the financial intermediary, or its agent, forward the 19(a) Notice
to all beneficial owners of the Fund’s stock held through such financial intermediary;
(h)
will provide, in a timely manner, to the financial intermediary, or its agent, enough
copies of the 19(a) Notice assembled in the form and at the place that the financial intermediary, or its agent, reasonably requests to
facilitate the financial intermediary’s sending of the 19(a) Notice to each beneficial owner of the Fund’s stock; and
(i)
upon the request of any financial intermediary, or its agent, that receives copies
of the 19(a) Notice, will pay the financial intermediary, or its agent, the reasonable expenses of sending the 19(a) Notice to such beneficial
owners.
|
(a)
|
will request that the financial intermediary, or its agent, forward the 19(a) Notice to all beneficial owners of the Fund’s stock held through such financial intermediary;
|
|
(b)
|
will provide, in a timely manner, to the financial intermediary, or its agent, enough copies of the 19(a) Notice assembled in the form and at the place that the financial intermediary, or its agent, reasonably requests to facilitate the financial intermediary’s sending of the 19(a) Notice to each beneficial owner of the Fund’s stock; and
|
|
(c)
|
upon the request of any financial intermediary, or its agent, that receives copies of the 19(a) Notice, will pay the financial intermediary, or its agent, the reasonable expenses of sending the 19(a) Notice to such beneficial owners.
|
|
5.
|
Additional Board Determinations for Funds Whose Common Stock Trades at a Premium
|
If: 5. Additional
Board Determinations for Funds Whose Common Stock Trades at a Premium If:
|
(e)
|
The Fund’s common stock has
traded on the stock exchange that they primarily trade on at the time in question at an average premium to NAV equal to or greater than
10%, as determined on the basis of the average of the discount or premium to NAV of the Fund’s shares of common stock as of the
close of each trading day over a 12-week rolling period (each such 12-week rolling period ending on the last trading day of each week);
and
|
|
(f)
|
The Fund’s annualized distribution
rate for such 12-week rolling period, expressed as a percentage of NAV as of the ending date of such 12-week rolling period, is greater
than the Fund’s average annual total return in relation to the change in NAV over the 2-year period ending on the last day of such
12-week rolling period;
|
|
(a)
|
The Fund’s common stock has traded on the stock exchange that they primarily trade on at the time in question at an average premium to NAV equal to or greater than 10%, as determined on the basis of the average of the discount or premium to NAV of the Fund’s shares of common stock as of the close of each trading day over a 12-week rolling period (each such 12-week rolling period ending on the last trading day of each week); and
|
|
(b)
|
The Fund’s annualized distribution rate for such 12-week rolling period, expressed as a percentage of NAV as of the ending date of such 12-week rolling period, is greater than the Fund’s average annual total return in relation to the change in NAV over the 2-year period ending on the last day of such 12-week rolling period;
|
then:
|
(i)
|
At the earlier of the next regularly scheduled meeting or within four months of the last day of such 12-week rolling period, the Board, including a majority of its Independent Board Members:
|
|
(1)
|
will request and evaluate, and the Fund’s Adviser will furnish, such information as may be reasonably necessary to make an informed determination of whether the Distribution Policy should be continued or continued after amendment;
|
|
(2)
|
will determine whether continuation, or continuation after amendment, of the Distribution Policy is consistent with the Fund’s investment objective(s) and policies and is in the best interests of the Fund and its stockholders, after considering the information in condition 5(b)(i)(1) above; including, without limitation:
|
|
(A)
|
whether the Distribution Policy is accomplishing its purpose(s);
|
|
(B)
|
the reasonably foreseeable material effects of the Distribution Policy on the Fund’s long-term total return in relation to the market price and NAV of the Fund’s common stock; and
|
|
(C)
|
the Fund’s current distribution rate, as described in condition 5(b) above, compared with the Fund’s average annual taxable income or total return over the 2-year period, as described in condition 5(b), or such longer period as the Board deems appropriate; and
|
|
|
|
|
(i)
|
At the earlier of the next regularly
scheduled meeting or within four months of the last day of such 12-week rolling period, the Board, including a majority of its Independent
Board Members:
|
(1) will request and evaluate, and the Fund’s Adviser will furnish, such information as may be reasonably necessary to make an informed
determination of whether the
Distribution
Policy should be continued or continued after amendment;
(2) will determine whether continuation, or continuation after amendment, of the Distribution Policy is consistent with the Fund’s investment
objective(s) and policies and is in the best interests of the Fund and its stockholders, after considering the information in condition
5(b)(i)(1) above; including, without limitation:
|
(G)
|
whether the Distribution Policy is accomplishing its purpose(s);
|
|
(H)
|
the reasonably foreseeable material
effects of the Distribution Policy on the Fund’s long-term total return in relation to the market price and NAV of the Fund’s
common stock; and
|
|
(I)
|
the Fund’s current distribution
rate, as described in condition 5(b) above, compared with the Fund’s average annual taxable income or total return over the 2-year
period, as described in condition 5(b), or such longer period as the Board deems appropriate; and
|
(3) based upon that determination, will approve or disapprove the continuation, or continuation after amendment, of the Distribution Policy;
and
|
(ii)
|
The Board will record the information
considered by it, including its consideration of the factors listed in condition 5(b)(i)(2) above, and the basis for its approval or disapproval
of the continuation, or continuation after amendment, of the Distribution Policy in its meeting minutes, which must be made and preserved
for a period of not less than six years from the date of such meeting, the first two years in an easily accessible place.
|
6. Public
Offerings
|
(3)
|
based upon that determination, will approve or disapprove the continuation, or continuation after amendment, of the Distribution Policy; and
|
|
(ii)
|
The Board will record the information considered by it, including its consideration of the factors listed in condition 5(b)(i)(2) above, and the basis for its approval or disapproval of the continuation, or continuation after amendment, of the Distribution Policy in its meeting minutes, which must be made and preserved for a period of not less than six years from the date of such meeting, the first two years in an easily accessible place.
|
The Fund will
not make a public offering of the Fund’s common stock other than:
|
(g)
|
a rights offering below NAV to holders of the Fund’s common stock;
|
|
(h)
|
an offering in connection with a dividend
reinvestment plan, merger, consolidation, acquisition, spin off or reorganization of the Fund; or
|
|
(i)
|
an offering other than an offering
described in conditions 6(a) and 6(b) above, provided that, with respect to such other offering:
|
(v)
the Fund’s annualized distribution rate for the six months ending on the last
day of the month ended immediately prior to the most recent distribution record date,8
expressed as a percentage of NAV as of such date, is no more than 1 percentage point greater than the Fund’s average annual total
return for the 5-year period ending on such date;9 and
(vi)
the transmittal letter accompanying any registration statement filed with the Commission
in connection with such offering discloses that the Fund has received an order under Section 19(b) to permit it to make periodic distributions
of long-term capital gains with respect to its shares of common stock as frequently as twelve times each year, and as frequently as distributions
are specified by or determined in accordance with the terms of any outstanding shares of preferred stock as the Fund may issue.
8 If the Fund has been in operation fewer than six months, the measured period will begin immediately
following the Fund’s first public offering.
9 If the Fund has been in operation fewer than five years, the measured period will begin immediately
following the Fund’s first public offering.
7. Amendments
to Rule 19b-1
|
(a)
|
a rights offering below NAV to holders of the Fund’s common stock;
|
|
(b)
|
an offering in connection with a dividend reinvestment plan, merger, consolidation, acquisition, spin off or reorganization of the Fund; or
|
|
(c)
|
an offering other than an offering described in conditions 6(a) and 6(b) above, provided that, with respect to such other offering:
|
|
(i)
|
the Fund’s annualized distribution rate for the six months ending on the last day of the month ended immediately prior to the most recent distribution record date,7 expressed as a percentage of NAV as of such date, is no more than 1 percentage point greater than the Fund’s average annual total return for the 5-year period ending on such date;8 and
|
|
(ii)
|
the transmittal letter accompanying any registration statement filed with the Commission in connection with such offering discloses that the Fund has received an order under Section 19(b) to permit it to make periodic distributions of long-term capital gains with respect to its shares of common stock as frequently as twelve times each year, and as frequently as distributions are specified by or determined in accordance with the terms of any outstanding shares of preferred stock as the Fund may issue.
|
|
7.
|
Amendments to Rule 19b-1
|
The
requested Order will expire on the effective date of any amendment to Rule 19b-1 that provides relief permitting certain closed-end investment
companies to make periodic distributions of long-term capital gains with respect to their outstanding common stock as frequently as twelve
times each year.
XIII.
APPLICABLE PRECEDENT
|
VII.
|
APPLICABLE PRECEDENT
|
The
Commission has recently granted substantially the same relief as that sought herein in Vertical
Capital Income Fund and Oakline Advisors LLC, Investment Company Act Release Nos. 33505 (June 12, 2019) (notice) and 33548 (July 9, 2019)
(order); Putnam Managed Municipal Income Trust et al., Investment Company Act Release Nos. 33449 (April 17, 2019) (notice) and 33474 (May
14, 2019) (order); Macquarie Global Infrastructure Total Return Fund Inc., et al., Investment Company Act Release Nos. 33389 (March 5,
2019) (notice) and (April 2, 2019) (order); Special Opportunities Fund, Inc. and Bulldog Investors, LLC, Investment Company Act Release
Nos. 33367 (April 4, 2016) (notice) and 33386 (Mach 4, 2019) (order); Vivaldi Opportunities Fund and Vivaldi Asset Management,
LLC, Investment Company Act Release Nos. 33147 (July 3, 2018) (notice) and 33185 (July 31, 2018) (order); The Swiss Helvetia Fund, Inc.,
et al., Investment Company Act Release Nos. 33075 (April 23, 2018) (notice) and 33099 (May 21, 2018) (order); The Mexico Equity &
Income Fund, Inc. and Pichardo Asset Management, S.A. de C.V., Investment Company Act Release Nos. 32640 (May 18, 2017) (notice) and 32676
(June 13, 2017) (order); RiverNorth DoubleLine Strategic Opportunity Fund, Inc. and RiverNorth Capital Management LLC, Investment Company
Act Release Nos. 32635 (May 12, 2017)(notice) and 32673 (June 7, 2017) (order); Brookfield Global Listed Infrastructure Income Fund Inc.,
et al., Investment Company Act Release Nos. 31802 (September 1, 2015) (notice) and 31855 (September 30, 2015) (order); and Ares
7
If the Fund has been in operation fewer than six months, the measured period will begin immediately
following the Fund’s first public offering.
8
If the Fund has been in operation fewer than five years, the measured period will begin immediately
following the Fund’s first public offering.
Dynamic Credit
Allocation Fund, Inc., et al., Investment Company Act Release Nos. 31665 (June 9, 2015) (notice) and 31708 (July 7, 2015) (order).
XIV.
PROCEDURAL MATTERS
All
of the requirements for execution and filing of this Application on behalf of the Applicants have been complied with in accordance with
the applicable organizational documents of the Applicants, and the undersigned officers of the Applicants are fully authorized to execute
this Application. The resolutions of the Board of Trustees of PMM, PIM, PMO, and PPTBoards
of the Funds authorizing the filing of this Application, required by Rule 0-2(c) under the 1940 Act, are included as Exhibit
A to this Application. The verifications required by Rule 0-2(d) under the 1940 Act are included as Exhibit B to this Application.
Pursuant
to Rule 0-2(f) under the 1940 Act, the Applicants state that
their address is 100 Federal Street, Boston, Massachusetts 02110:
51 Madison Avenue, New York, New York 10010; and that all written communications regarding this Application should be directed
to the individuals and addresses indicated on the coverfirst
page of this Application.
Applicants desire that
the Commission issue the requested order pursuant to Rule 0-5 under the 1940 Act without conducting a hearing.
XV.
CONCLUSION
For
the foregoing reasons, Applicants respectfully request that the Commission issue an order under Section 6(c) of the 1940 Act exempting
the Funds from the provisions of Section 19(b) of the 1940 Act and Rule 19b---1
thereunder to permit each Fund to make distributions on its common stock consisting in whole or in part of capital gain dividends as frequently
as twelve times in any one taxable year so long as it complies with the conditions of the Order and maintains in effect a Distribution
Policy with respect to its common stock as described in this Application. In addition, Applicants request that the Order permit each Fund
to make distributions on its preferred stock (if any) that it has issued or may issue in the future consisting in whole or in part of
capital gain dividends as frequently as specified by or determined in accordance with the terms thereof. Applicants submit that the requested
exemption is necessary or appropriate in the public interest, consistent with the protection of investors and consistent with the purposes
fairly intended by the policy and provisions of the 1940 Act.
[Signature Page Follows]
|
Putnam Managed Municipal Income Trust
|
|
|
Dated: March 18, 2019
|
By:
|
/s/ Jonathan S. Horwitz
|
|
|
Name: Jonathan S. Horwitz
|
|
|
Title: Executive Vice President and Principal Executive Officer
|
|
|
|
Putnam Master Intermediate Income Trust
|
Dated: March 18, 2019
|
|
|
By: /s/ Jonathan S. Horwitz
Name: Jonathan S. Horwitz
Title: Executive
Vice President and Principal Executive Officer
|
|
|
|
Putnam Municipal Opportunities Trust
|
Dated: March 18, 2019
|
|
|
By: /s/ Jonathan S. Horwitz
Name: Jonathan S.
Horwitz
Title: Executive
Vice President and Principal Executive Officer
|
|
|
|
Putnam Premier Income Trust
|
Dated: March 18, 2019
|
|
|
By: /s/ Jonathan S. Horwitz
Name: Jonathan S. Horwitz
Title: Executive
Vice President and Principal Executive Officer
|
|
|
|
Putnam Investment Management, LLC
|
Dated: March 18, 2019
|
|
|
By: /s/ Robert T. Burns
Name: Robert T. Burns
Title: Vice President and
Chief Legal Officer
|
|
|
|
Putnam Investments Limited
|
|
|
Dated: March 18, 2019
|
By:
|
/s/ Alan McCormack
|
|
|
Name: Alan McCormack
|
|
|
Title: Director and Head of Quantitative Equities & Risk
|
Dated: July 30, 2021
|
MainStay CBRE Global Infrastructure Megatrends Fund
By: /s/ Kirk C. Lehneis
Name: Kirk C. Lehneis
Title: President
|
Dated: July 30, 2021
|
MainStay MacKay DefinedTerm Municipal Bond Opportunities
Fund
By: /s/ Kirk C. Lehneis
Name: Kirk C. Lehneis
Title: President
|
Dated: July 30, 2021
|
New York Investment Management LLC
By: /s/ Yie-Hsin Hung
Name: Yie-Hsin Hung
Title: Chief Executive Officer
|
EXHIBITS TO APPLICATION
The following materials are made a part of the Application
and are attached hereto:
DESIGNATION
|
|
DOCUMENT
|
Exhibit A
|
|
Resolutions of the Board of Trustees of Putnam Managed Municipal Income Trust, Putnam Master Intermediate Income Trust, Putnam Municipal Opportunities Trust, and Putnam Premier Income Trust
|
|
|
|
Exhibit B
|
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Verifications
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DESIGNATION
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DOCUMENT
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Exhibit A
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Resolutions of the Board
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Exhibit B
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Verifications
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Exhibit C
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Marked copies of the Application against two substantially identical applications pursuant to 17 CFR 270.0-5(e)(2) and (3) and the initial exemptive application
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EXHIBIT A
Votes of the Board of Trustees
of Putnam Managed Municipal Income Trust, Putnam Master Intermediate Income Trust, Putnam Municipal Opportunities Trust and Putnam Premier
Income Trust
Voted:
That the officers and agents of Putnam Managed Municipal Income Trust, Putnam Master Intermediate Income Trust, Putnam Municipal Opportunities
Trust, and Putnam Premier Income Trust (collectively, the “Funds”) be, and they are, authorized and directed to file
with the Securities and Exchange Commission the Application for an order under Section 6(c) of the 1940 Act for an exemption from Section
19(b) and Rule 19b-1 thereunder, in substantially the form presented to the Board of Trustees, and that each of the officers and agents
of the Funds, acting alone, is authorized, empowered, and directed on behalf of the Funds to cause to be prepared, executed and filed
with the Securities and Exchange Commission any and all amendments of and exhibits to the Application, to be in such form as the officers
or agents of the Funds shall approve, such approval to be conclusively evidenced by their filing thereof.
Voted:
That each officer and agent of the Funds, acting with advice of counsel, be, and is, authorized and empowered to make such changes as
may be necessary by reason of any comment on such materials by the Securities and Exchange Commission or for any other reason deemed appropriate
by the officers or agents of the Funds
Resolutions
of the Boards of MainStay CBRE Global Infrastructure Megatrends Fund and MainStay MacKay DefinedTerm Municipal Opportunities Fund
RESOLVED,
that the officers of the MainStay CBRE Global Infrastructure Megatrends Fund be, and they hereby are, authorized in the name and on behalf
of the MainStay CBRE Global Infrastructure Megatrends Fund, to file an exemptive application with the U.S. Securities and Exchange Commission
to seek relief under Section 19 of the Investment Company Act of 1940, as amended, to implement a managed distribution policy, as presented
and discussed at this meeting, with such changes as an officer of the MainStay CBRE Global Infrastructure Megatrends Fund, with the advice
of the MainStay CBRE Global Infrastructure Megatrends Fund’s legal counsel, may deem appropriate.
RESOLVED,
that the officers of the MainStay MacKay DefinedTerm Municipal Opportunities Fund be, and they hereby are, authorized in the name and
on behalf of MainStay MacKay DefinedTerm Municipal Opportunities Fund, to file an exemptive application with the U.S. Securities and
Exchange Commission to seek relief under Section 19 of the Investment Company Act of 1940, as amended, to implement a managed distribution
policy, as presented and discussed at this meeting, with such changes as an officer of MainStay MacKay DefinedTerm Municipal Opportunities
Fund, with the advice of MainStay MacKay DefinedTerm Municipal Opportunities Fund’s legal counsel, may deem appropriate.
Voted:
ThatFURTHER
RESOLVED, that each officer
and agent of the Funds, acting alone,Fund’s
officers be, and each
hereby is, authorized, empowered and directed,
in consultation with the Fund’s legal counsel, to take any and all additional actssuch
steps and to prepare, execute and deliver any and all other agreements, documents, instruments
and certificates, as they, or any of them acting alone deemsfile
with necessary authorities such documents as he or she may deem necessary,
or
appropriate or convenient to carry out the intent and purposes ofto
effect the foregoing resolutions, such determination to be conclusively evidenced by the
taking of such actions and the preparation, execution and delivery of such agreements, documents, instruments and certificates
adopted
at this meeting.
EXHIBIT B
Verifications
of Putnam Managed Municipal Income Trust, Putnam Master Intermediate Income Trust, Putnam
Municipal Opportunities Trust, Putnam Premier Income Trust, Putnam Investment Management, LLC, and Putnam Investments LimitedMainStay
CBRE Global Infrastructure Megatrends Fund, MainStay MacKay DefinedTerm Municipal Opportunities Fund and New York Life Investment Management
LLC
The undersigned states that
he has duly executed the attached application dated March 18, 2019 for and on behalf of Putnam Managed Municipal Income Trust in his capacity
as Executive Vice President and Principal Executive Officer of such entity and that all actions by the holders and other bodies necessary
to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with
such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and
belief.
By:
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/s/ Jonathan S. Horwitz
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Name: Jonathan S. Horwitz
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Title: Executive Vice President and Principal Executive Officer
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The undersigned states that
he has duly executed the attached application dated March 18, 2019 for and on behalf of Putnam Master Intermediate Income Trust in his
capacity as Executive Vice President and Principal Executive Officer of such entity and that all actions by the holders and other bodies
necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is
familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information
and belief.
By:
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/s/ Jonathan S. Horwitz
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Name: Jonathan S. Horwitz
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Title: Executive Vice President and Principal Executive Officer
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The undersigned states that
he has duly executed the attached application dated March 18, 2019 for and on behalf of Putnam
The
undersigned states that he has duly executed the attached application dated July 30, 2021, for and on behalf of MainStay CBRE Global Infrastructure
Megatrends Fund in his capacity as President of such entity and that all actions by the holders and other bodies necessary to authorize
the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument,
and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
By:
/s/ Kirk C. Lehneis
Name: Kirk C. Lehneis
Title: President
The
undersigned states that he has duly executed the attached application dated July 30, 2021, for and on behalf of MainStay MacKay DefinedTerm
Municipal Opportunities Trust in his capacity as Executive Vice President and Principal Executive
Officer of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file
such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents
thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
By:
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/s/ Jonathan S. Horwitz
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Name: Jonathan S. Horwitz
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Title: Executive Vice President and Principal Executive Officer
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The undersigned states that
he has duly executed the attached application dated March 18, 2019 for and on behalf of Putnam Premier Income Trust in his capacity as
Executive Vice President and Principal Executive Officer of such entity and that all actions by the holders and other bodies necessary
to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with
such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and
belief.
By:
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/s/ Jonathan S. Horwitz
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Name: Jonathan S. Horwitz
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Title: Executive Vice President and Principal Executive Officer
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Fund in
his capacity as President of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to
execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents
thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
By:
/s/ Kirk C. Lehneis
Name: Kirk C. Lehneis
Title: President
The
undersigned states that he has duly executed the attached application dated March 18, 2019July
30, 2021, for and on behalf of PutnamNew
York Life Investment Management, LLC in hisher
capacity as Vice President and Chief LegalExecutive
Officer of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file
such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and
that the facts therein set forth are true to the best of his knowledge, information and belief.
By:
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/s/ Robert T. Burns
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Name: Robert T. Burns
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Title: Vice President and Chief Legal Officer
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The undersigned states that
he has duly executed the attached application dated March 18, 2019 for and on behalf of Putnam Investments Limited in his capacity as
Director and Head of Quantitative Equities & Risk of such entity and that all actions by the holders and other bodies necessary to
authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with
such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and
belief.
By:
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/s/ Alan McCormack
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Name: Alan McCormack
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Title: Director and Head of Quantitative Equities & Risk
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By:
/s/ Yie-Hsin Hung
Name: Yie-Hsin Hung
Title: Chief Executive Officer
EXHIBIT
C
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