[Federal Register Volume 63, Number 223 (Thursday, November 19, 1998)]
[Notices]
[Pages 64289-64292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30949]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-23533; File No. 812-11142]


The Mutual Life Insurance Company of New York, et al.

November 13, 1998.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of Application for Approval and Exemption under the 
Investment Company Act of 1940 (``1940 Act''). Order requested pursuant 
to Section 26(b) of the 1940 Act

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approving the proposed substitution of securities and pursuant to 
Section 17(b) of the 1940 Act exempting the proposed transaction from 
the provisions of Section 17(a) of the 1940 Act.

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SUMMARY OF APPLICATION: Applicants seek an Order approving the 
substitution of shares of the Money Market Portfolio Series (the ``MONY 
Money Market Portfolio'') of the MONY Series Fund, Inc. for shares of 
the Money Market Series (``OCC Money Market Portfolio'') of the OCC 
Accumulation Trust (the ``Trust''). Applicants also seek an Order 
exempting them from Section 17(a) of the 1940 Act to the extent 
necessary to permit Applicants to carry out the above-referenced 
substitution by redeeming shares of the OCC Money Market Portfolio in-
kind or partly in-kind and using the redemption proceeds to purchase 
shares of the MONY Money Market Portfolio.

APPLICANTS: The Mutual Life Insurance Company of New York (``MONY'') 
and MONY Life Insurance Company of America (``MONY America'', and 
collectively with MONY ``the Companies''), their respective separate 
accounts, MONY Variable Account A (``MONY Account'') and MONY America 
Variable Account A (``MONY America Account'', and collectively with the 
MONY Account ``the Accounts''), OCC Accumulation Trust and MONY Series 
Fund (collectively with OCC Accumulation Trust, the Companies and the 
Accounts ``the Applicants'').

FILING DATE: The Application was filed on May 8, 1998, and amended and 
restated on September 16, 1998.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing on this application by writing to the 
Commission's Secretary and serving the Applicants with a copy of the 
request, personally or by mail. Hearing requests must be received by 
the Commission by 5:30 p.m., on December 8, 1998, and should be 
accompanied by proof of service on Applicants in the form of an 
affidavit or, for lawyers, a certificate of service. Hearing requests 
should state the nature of the writer's interest, the reason for the 
request, and the issues contested. Persons may request notification of 
a hearing by writing to the Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549. Applicants, c/o Frederick C. 
Tedeschi, Esq., The Mutual Life Insurance Company of New York, 1740 
Broadway, New York, NY 10019. Copies to Deborah Kaback, Esq., 
Oppenheimer Capital, Two World Financial Center, New York, N.Y. 10281-
1698.

FOR FURTHER INFORMATION CONTACT:
Lorna MacLeod, Attorney, or Mark Amorosi, Special Counsel, Office of 
Insurance Products, Division of Investment Management, at (202) 942-
0670.

SUPPLEMENTARY INFORMATION: Following is a summary of the Application. 
The complete Application is available for a fee from the Public 
Reference Branch of the Commission.

Applicants' Representations

    1. MONY is a mutual life insurance company organized in the state 
of New York in 1842. MONY America is a stock insurance company 
organized in the state of Arizona. MONY America is the corporate 
successor of VICO Credit Life Insurance Company, incorporated in 
Arizona on March 6, 1969. MONY America is a wholly owned subsidiary of 
MONY. MONY and MONY America serve as sponsor and depositor of the MONY 
Account and MONY America Account, respectively.
    2. MONY and MONY America established the MONY Account and MONY 
America Account on November 28, 1990 and March 27, 1987, respectively. 
The Accounts are segregated asset accounts registered with the 
Commission as unit investment trusts pursuant to the provisions of the 
1940 Act and are used to fund certain individual and group flexible 
payment variable annuity contracts issued by the Companies and sold 
under the name ``ValueMaster'' (``ValueMaster Contracts'').
    3. The Accounts are currently divided into various sub-accounts 
(``Sub-Accounts''), five of which are available to owners of 
ValueMaster Contracts (``ValueMaster Contractowners'') and which 
reflect the investment performance of the Bond, Equity, Managed, Money 
Market and Small Cap Series of the Trust, a registered investment 
company. ValueMaster Contractowners may transfer account values among 
the Sub-Accounts without any charge up to four times a year. For any 
additional transfers, a transfer charge is not currently imposed, 
however the Companies reserve the right to impose a charge, which will 
not exceed $25 per transfer. The ValueMaster Contracts are offered 
exclusively by agents of Oppenheimer Life Agency, Ltd., (``Oppenheimer 
Life''), which is not an affiliate of OpCap Advisors, a registered 
investment adviser and the Trust's investment manager. Neither 
Oppenheimer Life nor OpCap Advisors are affiliates of the Applicants. 
As of December 31, 1997, there were under 800 ValueMaster 
Contractowners with allocations totaling $2,166,258 to the OCC Money 
Market Portfolio, representing only 3% of the total assets invested in 
the Accounts by ValueMaster Contractowners. Oppenheimer Life is no 
longer actively selling the ValueMaster Contracts.
    4. The Trust was established on May 12, 1994 and is a registered 
open-end management investment company consisting of seven separate 
series (``Portfolios'') with differing investment objectives, policies 
and restrictions. The Trust currently also offers shares of its 
Portfolios to accounts of other unaffiliated life insurance companies, 
to serve as the investment vehicle for their respective variable 
annuity and life insurance contracts.
    5. The OCC Money Market Portfolio seeks maximum current income 
consistent with stability of principal and liquidity through investment 
in a portfolio of high quality money market instruments. Shares of the 
OCC Money Market Portfolio are purchased, without sales charge, by the 
Money Market Sub-Accounts of the respective Accounts at the net asset 
value per share next determined following receipt of a purchase payment 
by the Sub-Accounts. Any dividend or capital gain distributions 
received from the Portfolio is reinvested in additional shares of the 
Portfolio and retained as assets of the Sub-Accounts. Shares are 
redeemed without any charge or fee to the Accounts to the extent 
necessary for the Companies to make annuity or other payments under the 
ValueMaster Contracts. As of December 31, 1997, the OCC Money Market 
Portfolio had assets of $2,166,067 all of which were attributable to 
ValueMaster Contractowners. For the calendar year 1997, net redemptions 
by the Accounts of shares of the OCC Money Market Portfolio, not 
including dividend or capital gain reinvestments, totaled $3,312,805.
    6. Like the OCC Money Market Portfolio, the MONY Money Market 
Portfolio seeks maximum current income consistent with stability of 
principal and liquidity through investment in a portfolio of high 
quality money market instruments. Shares of the MONY Money Market 
Portfolio are currently offered by the Companies as a funding vehicle 
for their variable products and, as such, are held by a segregated 
account of each insurance

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company. As of December 31, 1997, the MONY Money Market Portfolio had 
assets of $158,286,237. For the calendar year 1997, net sales of shares 
of the MONY Money Market Portfolio, not including dividend or capital 
gain reinvestments, totaled $5,418,168.
    7. Under the Investment Advisory Agreement (``Advisory Agreement'') 
between the Trust and OpCap Advisors, OpCap Advisors provide management 
and investment advisory services to the Trust and its Portfolios and is 
compensated by the Trust for services rendered to the OCC Money Market 
Portfolio on a monthly basis at the annual rate of .40 percent of the 
average daily net assets of the OCC Money Market Portfolio. Under the 
Advisory Agreement, OpCap Advisors has contractually agreed to limit 
the total expenses of the Portfolio to 1.00 percent of its average 
daily net assets. Pursuant to an Investment Advisory Agreement between 
the MONY Series Fund, Inc. and MONY America, MONY America provides 
management and investment advisory services to the MONY Money Market 
Portfolio of the MONY Series Fund, Inc. for an annual fee at the rate 
of .40% of the first $400 million of the aggregate average daily net 
assets of the portfolio; .35% of the next $400 million of the aggregate 
average daily net assets of the portfolio and .30% of the aggregate 
average daily net assets of the portfolio in excess of $800 million. 
For the year ended December 31, 1997, the ratio of net operating 
expenses to average net assets for the OCC Money Market Portfolio was 
.98% as compared to .46% for the MONY Money Market Portfolio for the 
year ended December 31, 1997.
    8. The ValueMaster Contracts reserve to the Companies the right to 
replace the shares of the Portfolios held by the Accounts with shares 
of another portfolio, such as the MONY Money Market Portfolio, if (i) 
shares of the Portfolio should no longer be available for investment by 
the Accounts; or (ii) in the judgment of the Companies, further 
investment in the Portfolio should become inappropriate in view of the 
purpose of the ValueMaster Contracts, provided any such substitution is 
approved by the Commission and is in compliance with applicable rules 
and regulations. The Companies believe that further investment in 
shares of the OCC Money Market Portfolio is no longer appropriate in 
view of the purposes of the ValueMaster Contracts.
    9. The decreasing asset base of the OCC Money Market Portfolio, 
based upon lack of interest by ValueMaster Contractowners in the 
Portfolio as evidenced by net redemption of Portfolio shares, has made 
it difficult for the Portfolio to retain current investors and attract 
new investors. Moreover, Oppenheimer Life Agency's limited effort in 
actively selling the ValueMaster Contract, coupled with a constant 
amount of fixed costs incurred by the Portfolio, can reasonably be 
expected to lead to an increase in the actual expenses of the OCC Money 
Market Portfolio in the future.
    10. The relative small asset size of the OCC Money Market Portfolio 
hampers the ability to maintain optimal diversification. The MONY Money 
Market Portfolio can be expected to achieve greater diversification and 
more readily react to changes in market conditions. ValueMaster 
Contractowners will benefit through the more effective management of a 
larger portfolio such as the MONY Money Market Portfolio.
    11. The Companies on their own behalf and on behalf of the Accounts 
respectively, propose to substitute shares of the MONY Money Market 
Portfolio for all shares of the OCC Money Market Portfolio attributable 
to the ValueMaster Contracts (``Substitution''). The Substitution will 
occur as soon as practicable after receipt of the Order. As of the 
effective date of the Substitution, the Companies will redeem shares of 
the OCC Money Market Portfolio. Simultaneously, the Companies will use 
the proceeds to purchase the appropriate number of shares of the MONY 
Money Market Portfolio. The Substitution will take place at relative 
net asset values of the Portfolios, with no change in the amount of any 
ValueMaster Contractowner's account value.
    12. To alleviate the impact of brokerage fees and expenses upon the 
OCC Money Market Portfolio and ultimately OpCap Advisors, the Trust and 
OpCap Advisors propose that the redemption of the OCC Money Market 
Portfolio shares be accomplished, in part, by ``in kind'' transactions. 
Under the proposal, the Trust would transfer to the Companies their 
proportionate interest in cash and/or securities held by the OCC Money 
Market Portfolio on the date of the Substitution, and the Companies 
will then use such cash and/or securities to purchase shares of the 
MONY Money Market Portfolio. The valuation of any ``in kind'' transfers 
will be on a basis consistent with the valuation procedures of the OCC 
Money Market and MONY Money Market Portfolios.

Terms and Conditions

    Applicants agree to the following terms and conditions:
    1. The OCC Money Market and MONY Money Market Portfolios have 
substantially similar investment objectives, policies and restrictions.
    2. The Substitution will take place at the net asset value of the 
respective shares, which both portfolios seek to maintain at $1.00 per 
share, with no change in the amount of any ValueMaster Contractowner's 
account value and without the imposition of any transfer or similar 
charge.
    3. The valuation of any ``in kind'' transfer will be on a basis 
consistent with the valuation procedures of the OCC Money Market and 
MONY Money Market Portfolios.
    4. ValueMaster Contractowners will not incur any fees or charges as 
a result of the proposed substitution. OpCap Advisors will assume any 
expenses and transaction costs, including legal and accounting fees and 
any brokerage commissions, relating to the Substitution. To the extent 
the OCC Money Market Portfolio incurs brokerage fees and expenses in 
connection with the redemption by the Companies of its shares, these 
expenses would be charged to the applicable Portfolio but borne by 
OpCap Advisors.
    5. The proposed substitution will not cause the contract fees and 
charges currently being paid by existing contractowners to be greater 
after proposed substitution than before the substitution.
    6. Before the Substitution occurs, the prospectuses for the 
Accounts will be supplemented to reflect the proposed Substitution (the 
``Application Supplements'') and distributed to all ValueMaster 
Contractowners.
    7. Within five days after the Substitution, the Companies will send 
to ValueMaster Contractowners written notice of the Substitution (the 
``Notice'') stating that shares of the OCC Money Market Portfolio have 
been eliminated and that the shares of the MONY Money Market Portfolio 
have been substituted. The Companies will include in such mailing a 
second supplement to the prospectuses of the Accounts which discloses 
that the Substitution has occurred. The Notice will also advise 
ValueMaster Contractowners that for a period of thirty days from the 
mailing of the Notice, they may transfer all assets, as substituted, to 
any other available Sub-Account, without limitation and without the 
transfer being deemed a transfer for purposes of determining any 
transfer charge (the period from the date of the Application 
Supplements to

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thirty days from the mailing of the Notice is the ``Free Transfer 
Period'').
    8. The Substitution will not in any way alter the insurance 
benefits or contractual obligations of the Companies to ValueMaster 
Contractowners or tax benefits and consequences to ValueMaster 
Contractowners. Following the Substitution, ValueMaster Contractowners 
will be afforded the same surrender and other transfer rights as they 
currently have. Any applicable surrender (contingent deferred sales) 
charges will continue to be imposed but will not be affected in any way 
by the Substitution.

Applicants' Legal Analysis

    1. Section 26(b) of the 1940 Act provides, in pertinent part, that 
``[i]t shall be unlawful for any depositor or trustee of a registered 
unit investment trust holding the security of a single issuer to 
substitute another security for such security unless the Commission 
shall have approved such substitution.'' Section 26(b) of the 1940 Act 
further provides that the Commission shall issue an order approving 
such substitution if the evidence establishes that the substitution is 
consistent with the protection of investors and the purposes fairly 
intended by the policies and provisions of the 1940 Act.
    2. The purpose of Section 26(b) is to protect the expectation of 
investors in a unit investment trust that the unit investment trust 
will accumulate the share of a particular issuer and to prevent 
unscrutinized substitutions which might, in effect, force shareholders 
dissatisfied with the substituted security to redeem their shares, 
thereby possibly incurring either a loss of the sales load deducted 
from initial purchase payments, an additional sales load upon 
reinvestment of the redemption proceeds, or both. Section 26(b) affords 
this protection to investors by preventing a depositor or trustee of a 
unit investment trust holding the shares of one issuer from 
substituting for those shares the shares of another issuer, unless the 
Commission approves that substitution.
    3. Applicants assert that the purposes, terms and conditions of the 
proposed Substitution are consistent with the principles and purposes 
of Section 26(b) and do not entail any of the abuses that Section 26(b) 
is designed to prevent. Applicants further assert that the Substitution 
will not result in the type of costly forced redemption that Section 
26(b) was intended to guard against and is consistent with the 
protection of investors and the purposes fairly intended by the 
1940Act.
    4. Section 17(a)(1) of the 1940 Act prohibits an affiliated person 
of a registered investment company or an affiliated person of such 
person, acting as principal, from selling any security or other 
property to such registered investment company. Section 17(a)(2) of the 
1940 Act prohibits any of such affiliated persons, acting as principal, 
from purchasing any security or other property from such registered 
investment company. The transfer or proceeds emanating out of the 
redemption of share in-kind of the OCC Money Market Portfolio to the 
Money Market Sub-Account and the purchase by the Money Market Sub-
Account of shares of the MONY Money Market Portfolio could be deemed to 
involve a sale between the OCC Money Market Portfolio and the Money 
Market Sub-Account (which may be considered to be affiliates of each 
other because all the shares of the OCC Money Market Portfolio are held 
by the Money Market Sub-Account), and a purchase between the Money 
Market Sub-Account and the MONY Money Market Portfolio, each of which 
is affiliated person of the other.
    5. Section 17(b) provides that the Commission may grant an order 
exemption a proposed transaction provided: (a) the terms of the 
proposed transaction, including the consideration to be paid or 
received, are reasonable and fair and do not involve overreaching on 
the part of any person; (b) the proposed transaction is consistent with 
the policy of each registered investment company concerned, as recited 
in its registration statement and reports filed under the 1940 Act; and 
(c) the proposed transaction is consistent with the general purposes of 
the 1940 Act.
    6. Applicants assert that the terms of the proposed transaction are 
reasonable and fair and do not involve overreaching; the transaction is 
consistent with the policy of each investment company concerned and 
with the purposes of the 1940 Act; and 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.
    7. Applicants assert that the Substitution is an appropriate 
solution to the limited ValueMaster Contractowner interest or 
investment in the OCC Money Market Portfolio, which is currently and in 
the future may be expected to be, of insufficient size to promote 
consistent investment performance or to reduce operating expenses.

Conclusion

    Applicants assert that, for the reasons summarized above, the 
requested order approving the substitution and related transactions 
involving in-kind redemptions and purchases should be granted.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-30949 Filed 11-18-98; 8:45 am]
BILLING CODE 8010-01-M