<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MainStay Institutional Funds Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
October 1, 1997
Dear Shareholder:
We are pleased to announce a Special Meeting of Shareholders of MainStay
Institutional Funds Inc. (the "Company"), which is to be held at 10:00 a.m.
EST on November 17, 1997 at the offices of the Company. Formal notice of the
Meeting appears on the next page, followed by the proxy statement. You are
invited to attend the Meeting, however, if you are unable to be present, we
urge you to vote your shares by completing and returning the enclosed proxy
card in the envelope provided as soon as possible.
WHAT ARE THE PROPOSALS?
At the Meeting, you will be asked to consider election of the Board of
Directors, approval of a Management Agreement between the Company and MainStay
Management, Inc. (the "Manager") and approval of Sub-Advisory Agreements
between the Manager and each of MacKay-Shields Financial Corporation, Monitor
Capital Advisors, Inc. and New York Life Insurance Company for their
respective Funds. Shareholders will also be asked to vote to eliminate or
revise certain fundamental investment restrictions of the Funds, and to ratify
the selection of Price Waterhouse LLP as independent certified public
accountants of the Company. After carefully considering each proposal, the
Board of Directors, which represents your interests in the management of
MainStay Institutional Funds Inc., recommends that you vote FOR each of the
proposals.
YOUR VOTE IS IMPORTANT.
Please take a moment now to sign and return your proxy card(s) in the
enclosed postage paid envelope. You will receive one proxy card for each Fund
you own. PLEASE COMPLETE AND RETURN EACH PROXY CARD YOU RECEIVE.
The Company has retained Shareholder Communications Corporation ("SCC"), a
professional proxy solicitation firm, to assist in the voting process. If we
have not obtained your vote after a reasonable period of time, you may receive
a telephone call from a representative of SCC reminding you to exercise your
right to vote.
Thank you for your cooperation.
Sincerely,
/s/ Alice T. Kane
Alice T. Kane
Chairperson
<PAGE>
MAINSTAY INSTITUTIONAL FUNDS INC.
51 MADISON AVENUE
NEW YORK, NY 10010
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of MainStay Institutional Funds Inc.
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of the following series of MainStay Institutional Funds Inc. (the
"Company"): Bond Fund, EAFE Index Fund, Growth Equity Fund, Indexed Bond Fund,
Indexed Equity Fund, International Bond Fund, International Equity Fund, Money
Market Fund, Multi-Asset Fund, Short-Term Bond Fund and Value Equity Fund
(individually a "Fund" and collectively the "Funds"), will be held at the
offices of the Company, 51 Madison Avenue, New York, NY 10010, on November 17,
1997 at 10:00 a.m. for the following purposes, all of which are more fully
described in the accompanying Proxy Statement dated October 1, 1997.
1. To elect the Directors of the Company, each to hold office for the
lifetime of the Company or until his or her successor is duly elected
and qualified;
2. To approve a Management Agreement between the Company on behalf of
each of the Funds and MainStay Management, Inc. (the "Manager") (the
"Management Agreement");
3. To approve a Sub-Advisory Agreement between the Manager and each of
MacKay-Shields Financial Corporation ("MacKay-Shields") on behalf of
the Bond Fund, Growth Equity Fund, International Bond Fund,
International Equity Fund, Short-Term Bond Fund and Value Equity Fund;
Monitor Capital Advisors, Inc. ("Monitor") on behalf of the EAFE Index
Fund, Indexed Bond Fund, Indexed Equity Fund and Multi-Asset Fund; and
New York Life Insurance Company ("New York Life") on behalf of the
Money Market Fund;
4. To eliminate or revise certain fundamental investment restrictions of
the Funds;
5. To ratify the selection of Price Waterhouse LLP as independent
certified public accountants of the Company for its fiscal year ending
December 31, 1997; and
6. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
<PAGE>
The Directors have fixed the close of business on September 12, 1997 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting or any adjournment thereof. The enclosed proxy is being
solicited on behalf of the Directors.
By order of the Board of Directors,
/s/ Sara L. Badler
Sara L. Badler
New York, New York
October 1, 1997
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD,
SIGN AND DATE IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS
NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO SAVE THE FUND
ANY ADDITIONAL EXPENSE OF FURTHER SOLICITATION, PLEASE MAIL YOUR PROXY
PROMPTLY.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
MAINSTAY INSTITUTIONAL FUNDS INC.
51 MADISON AVENUE
NEW YORK, NY 10010
SPECIAL MEETING OF SHAREHOLDERS
----------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of MainStay Institutional Funds
Inc., a Maryland Corporation (the "Company"), to be voted at the Special
Meeting of Shareholders of the Bond Fund, EAFE Index Fund, Growth Equity Fund,
Indexed Bond Fund, Indexed Equity Fund, International Bond Fund, International
Equity Fund, Money Market Fund, Multi-Asset Fund, Short-Term Bond Fund and
Value Equity Fund (individually a "Fund" and collectively the "Funds"), each a
separate investment series of the Company, to be held at the offices of the
Company, 51 Madison Avenue, New York, New York 10010 on November 17, 1997 at
10:00 a.m., and at any adjournments thereof (the "Meeting"). The cost of the
solicitation (including printing and mailing this Proxy Statement, Notice of
Meeting and Proxy, as well as any necessary supplementary solicitation) will
be borne by the Funds in proportion to their average net assets. The Notice of
Meeting, Proxy Statement and Proxy are being mailed to shareholders on or
about October 1, 1997.
The presence in person or by proxy of the holders of record of a majority of
the shares of a series of the Company entitled to vote thereat shall
constitute a quorum at the Meeting for that Fund. If, however, such quorum
shall not be present or represented at the Meeting or if fewer shares are
present in person or by proxy than the minimum required to take action with
respect to any proposal presented at the Meeting, the holders of a majority of
the shares of the series present in person or by proxy shall have the power to
adjourn the Meeting with respect to that series, from time to time, without
notice other than announcement at the Meeting, until the requisite amount of
shares entitled to vote at the Meeting shall be present. At any such adjourned
Meeting, if the relevant quorum is subsequently constituted, any business may
be transacted which might have been transacted at the Meeting as originally
called. For purposes of determining the presence of a quorum for transacting
business at the Meeting, abstentions and broker "non-votes" (that is, proxies
from brokers or nominees indicating that such persons have not received
instructions from
<PAGE>
the beneficial owner or other persons entitled to vote shares on a particular
matter with respect to which the brokers or nominees do not have discretionary
power) will be treated as shares that are present but which have not been
voted. For this reason, abstentions and broker non-votes will have the effect
of a "no" vote for purposes of obtaining the requisite approval for Proposals
One, Two, Three and Four, for which the required vote is a percentage of the
shares either outstanding or present at the Meeting, and will have no effect
on Proposal Five, for which the required vote is a majority of the votes cast.
The Board of Directors has fixed the close of business on September 12, 1997
as the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting and at any adjournments thereof. Each share is
entitled to one vote. The numbers of outstanding voting Institutional Class
and Institutional Service Class shares of each Fund as of September 12, 1997
are indicated in the following table:
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
CLASS SERVICE CLASS
--------------- --------------
<S> <C> <C>
Bond Fund........................................ 17,711,046.695 144,038.004
EAFE Index Fund.................................. 6,388,396.796 31,758.332
Growth Equity Fund............................... 25,720,322.313 375,215.290
Indexed Bond Fund................................ 10,450,614.576 280,402.840
Indexed Equity Fund.............................. 33,390,705.843 486,803.538
International Bond Fund.......................... 4,703,284.343 21,952.477
International Equity Fund........................ 11,700,752.222 62,365.657
Money Market Fund................................ 190,875,337.650 58,941,522.150
Multi-Asset Fund................................. 24,978,014.666 492,077.961
Short-Term Bond Fund............................. 4,848,957.394 172,997.067
Value Equity Fund................................ 50,698,882.619 991,131.997
</TABLE>
Additional information regarding share ownership of the Funds is included as
Exhibit A.
All properly executed proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked thereon or as otherwise
provided therein. Accordingly, unless instructions to the contrary are marked,
proxies will be voted FOR the matters specified on the proxy card. Any
shareholder may revoke his proxy at any time prior to exercise thereof by
giving written notice to the Secretary of the Company at its offices at 51
Madison Avenue, New York, New York 10010, or by signing another proxy of a
later date or by personally casting his or her vote at the Meeting.
The most recent annual and semi-annual reports of the Funds, including
financial statements, have been previously mailed to shareholders.
2
<PAGE>
IF YOU HAVE NOT RECEIVED THESE REPORTS OR WOULD LIKE TO RECEIVE ADDITIONAL
COPIES FREE OF CHARGE, PLEASE CONTACT THE COMPANY AT 51 MADISON AVENUE, NEW
YORK, NEW YORK 10010, (800) 695-2126 EXT. 2055 AND THEY WILL BE SENT PROMPTLY
BY FIRST-CLASS MAIL.
To obtain the necessary representation at the Meeting, supplementary
solicitations may be made by mail, telephone, telegraph, facsimile or personal
contact by officers of the Company, employees of New York Life Insurance
Company ("New York Life"), MacKay-Shields Financial Corporation ("MacKay-
Shields"), Monitor Capital Advisors, Inc. ("Monitor") or their affiliates, or
proxy solicitation firms. Shareholder Communications Corporation has been
retained to assist proxy solicitation activities. Shareholders' votes may be
taken by telephone by representatives of Shareholder Communications
Corporation, subject to procedures designed to authenticate shareholders'
identities and confirm voting instructions.
VOTES REQUIRED
The election of Directors, as set forth in Proposal One, will require a vote
of the holders of a majority of the total votes present at the Meeting.
Approval of the Management Agreement, as set forth in Proposal Two, will
require a majority vote of the outstanding voting securities of each Fund. The
approval of the Sub-Advisory Agreements between MainStay Management, Inc. (the
"Manager") and MacKay-Shields, the Manager and Monitor and the Manager and New
York Life as set forth in Proposal Three requires a majority vote of the
outstanding voting securities of each Fund. The elimination or revision of
certain fundamental investment restrictions of the Funds, as set forth in
Proposal Four, will require a majority vote of the outstanding voting
securities of each Fund. For purposes of Proposals Two, Three and Four, a
majority of the outstanding voting securities of a Fund means the lesser of
(1) 67% of the shares of that Fund present at a meeting if the holders of more
than 50% of the outstanding shares of that Fund are present in person or by
proxy, or (2) more than 50% of the outstanding shares of that Fund.
Ratification of the selection of the independent certified public accountants,
set forth in Proposal Five, will require a vote of the holders of a majority
of the total votes validly cast at the Meeting.
3
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDERS
PROPOSALS ENTITLED TO VOTE
--------- ----------------
<C> <S> <C>
Proposal One ELECTION OF DIRECTORS All Funds
Proposal Two APPROVAL OF MANAGEMENT AGREEMENT All Funds
Proposal Three A APPROVAL OF SUB-ADVISORY AGREEMENT Bond Fund, Growth
BETWEEN THE MANAGER AND MACKAY-SHIELDS Equity Fund,
International Bond
Fund,
International
Equity Fund,
Short-Term Bond
Fund and Value
Equity Fund
Proposal Three B APPROVAL OF SUB-ADVISORY AGREEMENT EAFE Index Fund,
BETWEEN THE MANAGER AND MONITOR Indexed Bond Fund,
Indexed Equity
Fund and Multi-
Asset Fund
Proposal Three C APPROVAL OF THE SUB-ADVISORY AGREEMENT Money Market Fund
BETWEEN THE MANAGER AND NEW YORK LIFE
Proposal Four A ELIMINATION OF CERTAIN STATE-IMPOSED All Funds
FUNDAMENTAL INVESTMENT RESTRICTIONS
Proposal Four B CHANGE OF CERTAIN INVESTMENT All Funds except
RESTRICTIONS TO MAKE THEM NON- International Bond
FUNDAMENTAL Fund and
International
Equity Fund
Proposal Four C ELIMINATION OR REVISION OF CERTAIN
FUNDAMENTAL INVESTMENT RESTRICTIONS
PERTAINING TO:
1. Industry Concentration All Funds
2. Borrowing Money and Issuing Senior All Funds
Securities
3. Commodities Transactions All Funds
4. Maintaining Short Positions All Funds except
International Bond
Fund and
International
Equity Fund
Proposal Five RATIFICATION OF SELECTION OF INDEPENDENT All Funds
CERTIFIED PUBLIC ACCOUNTANTS
</TABLE>
4
<PAGE>
PROPOSAL ONE -- ELECTION OF DIRECTORS
ALL FUNDS
At the Meeting, five Directors will be elected, each to serve until he or
she resigns, dies or is removed and until his or her successor is duly elected
and qualified. The nominees are Patrick G. Boyle, Lawrence Glacken, Alice T.
Kane, Susan B. Kerley, and Robert P. Mulhearn who, if elected, will each serve
for an indefinite term. It is the intention of the persons named in the
enclosed proxy to nominate and vote in favor of the nominees.
Each of the nominees has consented to serve as a Director. All of the
nominees are currently Directors of the Company. The Board of Directors knows
of no reason why any of the nominees would be unable to serve, but in the
event of such unavailability, the proxies received will be voted for such
substitute nominees as the Board of Directors may recommend.
Certain information concerning the Directors is set forth as follows:
<TABLE>
<CAPTION>
NAME, POSITIONS WITH THE COMPANY, AGE, YEAR APPROXIMATE NUMBER OF SHARES
PRINCIPAL OCCUPATIONS DURING THE FIRST BENEFICIALLY OWNED DIRECTLY OR
PAST FIVE YEARS AND OTHER BECAME INDIRECTLY AS OF
DIRECTORSHIPS/TRUSTEESHIPS A DIRECTOR SEPTEMBER 12, 1997
- -------------------------------------- ---------- --------------------------------
<S> <C> <C> <C>
Patrick G. Boyle, Director* 1990 Value Equity 1,061.043
International Equity 3,006.837
Senior Vice President, Pension
Department, New York Life
Insurance Company, 1991 to
present; Vice President, Pension
Department, New York Life
Insurance Company, 1988 to 1991;
Pension Vice President, Pension
Department, New York Life
Insurance Company, 1986 to 1988;
Assistant Vice President, Pension
Department, New York Life
Insurance Company, 1985 to 1986;
Director, NYLIFE Distributors
Inc., 1993 to 1996; Chairman,
Monitor Capital Advisors, Inc.,
1986 to present, and Director,
1991 to present; Director, New
York Life Benefit Services, Inc.,
1994 to present; Director, New
York Life International
Investment Inc., 1995 to present;
Director, New York Life Trust
Company, 1995 to present;
Director, NYL Capital Management
Limited, 1994 to present; Member,
American Council of Life
Insurance Pension Committee, 1992
to present. Age: 43
Lawrence Glacken, Director 1990 Growth Equity 5,578.426
Retired, 1987 to present; Vice
President, Investment Banking,
The First Boston Corporation,
1964 to 1987. Age: 69
Alice T. Kane, Director and 1994 Money Market 129,846.54
Chairperson of the Board of
Directors*
Executive Vice President, New
York Life Insurance Company, 1992
to present; General Counsel, New
York Life Insurance Company, 1992
to 1995; Senior Vice President
and
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAME, POSITIONS WITH THE COMPANY, AGE, YEAR APPROXIMATE NUMBER OF SHARES
PRINCIPAL OCCUPATIONS DURING THE FIRST BENEFICIALLY OWNED DIRECTLY OR
PAST FIVE YEARS AND OTHER BECAME INDIRECTLY AS OF
DIRECTORSHIPS/TRUSTEESHIPS A DIRECTOR SEPTEMBER 12, 1997
- -------------------------------------- ---------- --------------------------------
<S> <C> <C> <C>
General Counsel, New York Life 1994 Money Market 129,846.54
Insurance Company, 1986 to 1992;
Corporate Secretary, New York Life
Insurance Company, 1989 to 1994;
Vice President and General Counsel,
New York Life Insurance Company,
1985 to 1986; Trustee and
Chairperson, The MainStay Funds,
1994 to present; Director, New York
Life Foundation, 1992 to 1995;
Director, New York Life
International Investment Inc., 1988
to present; Director, NYLIFE Inc.,
1990 to present; Vice President,
NYLIFE Inc., 1989 to present; and
Secretary, NYLIFE Inc., 1989 to
1994; Director, MainStay
Management, Inc., 1997 to present;
Director, MacKay-Shields Financial
Corporation, 1994 to present;
Director, New York Life Benefit
Services, Inc. (pension consultant
and third party administrator),
1994 to present; Director, NYLIFE
Securities, Inc. (registered
broker-dealer), 1994 to present;
Director, Eagle Strategies Corp.
(registered investment adviser),
1994 to present; Director, NYLIFE
Distributors Inc., 1994 to present;
Director, Greystone Realty
Corporation, 1994 to present;
Director, Monitor Capital Advisors,
Inc., 1994 to present; Director,
NYL Management Limited, 1995 to
present; Director, Sanus Corp.
Health Systems, 1984 to 1995;
Director, NYLCare Health Plans,
Inc. (formerly Sanus Corp. Health
Systems), November 1995 to present;
Director, New York Life Trust
Company (a limited purpose trust
company), 1995 to present;
Director, Japan Gamma Asset
Management Limited, 1995 to
present; Director, New York Life
Worldwide Holding, Inc., 1995 to
present; Director, New York Life
and Health Insurance Company, 1996
to present; Director, NYLINK
Insurance Agency Incorporated, 1996
to present; Director, MainStay
Shareholder Services Inc., 1997 to
present; Director, NASD Regulation,
Inc., 1996 to present; Member,
Board of Governors of the National
Association of Securities
Dealers,Inc., 1994 to 1996; Member,
American Council of Life Insurance
Deputies Solvency Oversight
Committee, 1991 to 1995; Board of
Governors, Association of Life
Insurance Counsel, 1992 to 1996.
Age: 49
Susan B. Kerley, Director 1990 None
President, Global Research
Associates, 1990 to present;
Manager, Special Investments,
Rockefeller & Co., 1988 to 1990;
Director of Research, Rogers, Casey
and Barksdale, 1983 to 1988;
Director, Landmark Funds, 1991 to
present. Age: 45
Robert P. Mulhearn, Director 1990 Growth Equity 44,578.170
Indexed Equity 18,559.292
Private Investor, 1987 to present;
Managing Director, Morgan Stanley,
1979 to 1987. Age: 50
</TABLE>
- -----------
* "Interested person," as defined in the Investment Company Act of 1940.
6
<PAGE>
During the Company's fiscal year ended December 31, 1996, the Board of
Directors met five times. The Company's Board of Directors has a standing
Audit Committee which is comprised of the Directors who are not "interested
persons" as defined in the Investment Company Act of 1940 (the "Independent
Directors"). The Board also has a Valuation Committee. The Board does not have
a Nominating Committee. During the Company's fiscal year ended December 31,
1996, the Audit Committee met twice and the Valuation Committee met one time.
Each Board member attended all of the Board and Committee meetings. The Audit
Committee reviews reports prepared by the Company's independent auditors,
recommends approval of audit services and fees, evaluates the independence of
the independent auditors and recommends whether to retain the independent
auditors. The Valuation Committee reviews the valuations of certain of the
Funds' portfolio securities.
As of September 2, 1997, the Directors and officers of the Company as a
group owned less than 1% of the shares of any class of shares of common stock
of each of the Funds. Additional information regarding the Company's executive
officers is included in Exhibit B.
COMPENSATION OF DIRECTORS
The Independent Directors of the Company receive from the Company an annual
retainer of $24,000 and a fee of $1,000 for each Board of Directors meeting
and for each Board Committee meeting attended and are reimbursed for all out-
of-pocket expenses related to attendance at such meetings. Directors who are
affiliated with New York Life do not receive compensation from the Company.
For the fiscal year ended December 31, 1996, the Directors received the
following compensation from the Company:
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
AGGREGATE FROM REGISTRANT
COMPENSATION AND FUND COMPLEX
NAME OF DIRECTOR FROM THE COMPANY PAID TO DIRECTORS
---------------- ---------------- -----------------
<S> <C> <C>
Lawrence Glacken.......................... $30,000 $30,000
Susan B. Kerley........................... $30,000 $30,000
Robert P. Mulhearn........................ $30,000 $30,000
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF THE
COMPANY VOTE FOR THE ELECTION OF THE NOMINEES TO SERVE AS DIRECTORS OF THE
COMPANY.
7
<PAGE>
PROPOSAL TWO -- APPROVAL OF MANAGEMENT AGREEMENT
ALL FUNDS
Management has proposed, and the Board of Directors has approved, a
restructuring of certain entities providing services to the Company. Under the
current structure, MacKay-Shields Financial Corporation, 9 West 57th Street,
New York, NY 10019, is the investment adviser to the Bond Fund, Growth Equity
Fund, International Bond Fund, International Equity Fund, Short-Term Bond Fund
and Value Equity Fund. Monitor Capital Advisors, Inc., 504 Carnegie Center,
Princeton, NJ 80540, is the investment adviser to the EAFE Index Fund, Indexed
Bond Fund, Indexed Equity Fund and Multi-Asset Fund. New York Life Insurance
Company, 51 Madison Avenue, New York, NY 10010, serves as the investment
adviser to the Money Market Fund. Additional information regarding the Funds'
current investment advisory and administrative arrangements is included as
Exhibit C.
Under the proposed structure, a newly formed entity, MainStay Management,
Inc., would serve as manager to each of the Funds pursuant to a Management
Agreement with the Company. The Manager would have responsibility for
oversight of the portfolio management services provided by MacKay-Shields,
Monitor and New York Life and for managing the Funds' business affairs. A copy
of the proposed form of Management Agreement is included as Exhibit D. MacKay-
Shields, Monitor and New York Life (collectively, the "Sub-Advisers") would
serve as sub-advisers of the Funds and thereby retain primary day-to-day
portfolio management responsibility for the Funds and continue to provide the
same services they currently provide.
The Manager, whose address is 300 Interpace Parkway, Parsippany, New Jersey
07054, is a newly-organized Delaware corporation. The Manager, is an indirect,
wholly-owned subsidiary of New York Life and a wholly-owned subsidiary of
NYLIFE Inc. Additional information regarding the principal executive officers
and directors of the Manager is included as Exhibit E.
In addition to engaging the services of the Sub-Advisers, the Manager's
administrative functions pursuant to the proposed Management Agreement would
include furnishing the Company with office facilities and providing ordinary
clerical, recordkeeping and bookkeeping services. The Manager would assume all
the administrative duties performed by New York Life, which currently serves
as administrator of the Funds. Those persons currently associated with New
York Life who perform such duties will continue to perform them on behalf of
the Manager. Accordingly, there should not be any change in, or disruption of,
the administrative services provided to the Funds.
8
<PAGE>
With respect to each Fund, the Manager would be paid a fee equal to the
aggregate of the current investment advisory and administrative fee for that
Fund. Thus, there would be no increase in fees paid for investment advisory
and administrative services under the proposed structure. All applicable
voluntary expense limitations would remain in effect under the proposed
structure. The proposed fees and the current fees are as follows:
PROPOSED MANAGEMENT FEES (INCLUDES FEES FOR INVESTMENT ADVISORY AND
ADMINISTRATIVE SERVICES) AND CURRENT INVESTMENT ADVISORY AND ADMINISTRATIVE
FEES
<TABLE>
<CAPTION>
ADMINISTRATIVE
ADVISORY FEE FEE RATE
RATE PAID FOR PAID FOR
THE YEAR FISCAL YEAR
PROPOSED CURRENT ENDED CURRENT ENDED
MANAGEMENT ADVISORY DECEMBER 31, ADMINISTRATIVE DECEMBER 31,
FUND FEE FEE 1996* FEE 1996*
- ---- ---------- -------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Bond Fund............... 0.75% 0.20% 0.20% 0.55% 0.44%
EAFE Index Fund......... 0.95% 0.15% 0.15% 0.80% 0.51%
Growth Equity Fund...... 0.85% 0.25% 0.25% 0.60% 0.60%
Indexed Bond Fund....... 0.50% 0.10% 0.10% 0.40% 0.25%
Indexed Equity Fund..... 0.50% 0.10% 0.08% 0.40% 0.27%
International Bond
Fund................... 0.80% 0.30% 0.30% 0.50% 0.37%
International Equity
Fund................... 0.85% 0.35% 0.35% 0.50% 0.43%
Money Market Fund....... 0.50% 0.10% 0.10% 0.40% 0.23%
Multi-Asset Fund........ 0.65% 0.15% 0.15% 0.50% 0.45%
Short-Term Bond Fund.... 0.60% 0.15% 0.15% 0.45% 0.26%
Value Equity Fund....... 0.85% 0.25% 0.25% 0.60% 0.60%
</TABLE>
- -----------
* Reflects voluntary expense limitations. New York Life, the Funds' current
administrator (in the case of the Indexed Equity Fund, together with Monitor
Capital, the Fund's current investment adviser) has voluntarily agreed to
limit the total expenses (excluding interest, taxes, brokerage commissions,
litigation and indemnification expenses, and other extraordinary expenses
and any class-specific expenses) of the Institutional Class and
Institutional Service Class of shares of the following Funds to the
following annual rates of average daily net assets until December 31, 1997
(December 31, 1998 for Indexed Equity Fund). For the Institutional Class of
shares, EAFE Index Fund--0.94%; Indexed Equity Fund--30%; International
Equity Fund--1.00%; Bond Fund--0.75%; Indexed Bond Fund--0.50%;
International Bond Fund--0.95%; Money Market Fund--0.50%; and Short-Term
Bond Fund--0.60%. For the Institutional Service Class of shares, EAFE Index
Fund 1.19%; Indexed Equity Fund--0.55%; International Equity Fund--1.25%;
Bond Fund--1.00%; Indexed Bond Fund--0.75%; International Bond Fund--1.20%
Monthly Market Fund--0.75%; and Short-Term Bond Fund--0.85%. All applicable
voluntary expense limitations would remain in effect under the proposed
management structure. The Institutional Service Class has a Shareholder
Services Plan (the "Plan") and therefor incurs the related expenses of the
Plan. For additional information regarding the Plan, see Exhibit C.
BOARD CONSIDERATION
At a meeting held on September 9, 1997, the Board of Directors, including
the Directors who are not interested parties to the Management
9
<PAGE>
Agreement or interested persons of such parties, considered the proposed
restructuring of the entities providing services to the Company and the
services to be provided by the Manager under the Management Agreement. The
Board concluded that it would be in the best interests of the Company and its
shareholders to enter into the Management Agreement with the Manager. In
coming to that conclusion, the Directors examined information which included
the fees and expenses of the Funds under the current investment advisory and
administrative structure and the proposed management structure.
The Board noted in particular that the fees paid by the Funds for advisory
and administrative services would not increase under the proposed management
structure. The Board members also considered the information provided to them
regarding the Manager and its qualifications to act as Manager to the Funds.
The Board reviewed information presented by management regarding the
anticipated benefits to the Funds and their shareholders from the proposed new
management structure. The Board noted that the new structure would centralize
overall management responsibility for the Funds and offer the potential for
more efficient management supervision. The Board also considered that the
proposed new structure would allow for continuity of portfolio management
services provided to the Funds because each Fund's current investment adviser
would continue to be responsible for day-to-day portfolio management of the
Fund as the Fund's Sub-Adviser. The proposed structure would also provide
continuity of administrative services since those persons associated with New
York Life, the Fund's current administrator, would continue to perform the
same services on behalf of the Manager. In addition, the Board noted that the
Funds could benefit from an additional level of oversight of the portfolio
management services provided to the Funds through the Manager without
subjecting the Funds to an increase in the fees paid for investment advisory
and administrative services. Finally, the Board noted that the terms of the
proposed Management Agreement were substantially similar to the terms of the
Funds' current Investment Advisory and Administration Agreements.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS APPROVAL OF THE MANAGEMENT AGREEMENT WITH MAINSTAY MANAGEMENT, INC.
If approved by a majority vote of the outstanding shares of each Fund, the
Management Agreement will become effective on the first business day following
shareholder approval and will remain in force for a period of two years, and
from year to year thereafter, subject to approval annually by the Board of
Directors or by a majority vote of the outstanding shares of each Fund, and
also, in either event, approval by a majority of those Directors who are not
parties to the Management Agreement or interested persons
10
<PAGE>
of any such party at a meeting called for the purpose of voting on such
approval. If the shareholders of any one or more of the Funds should fail to
approve the Management Agreement, that Fund's current investment adviser may
continue to serve as investment adviser under its current Investment Advisory
Agreement with respect to that Fund, and the Manager would, with Board
approval, enter into an administration agreement substantially identical to
the current Administration Agreement with New York Life. the Manager may serve
as Manager under the Management Agreement with respect to those Funds whose
shareholders approve the Management Agreement.
PROPOSAL THREE -- APPROVAL OF SUB-ADVISORY AGREEMENTS BETWEEN THE MANAGER AND
MACKAY-SHIELDS; BETWEEN THE MANAGER AND MONITOR; AND BETWEEN THE MANAGER AND
NEW YORK LIFE
ALL FUNDS
In connection with the restructuring of the entities providing investment
advisory and administrative services to the Funds, it is proposed that the
Manager enter into a Sub-Advisory Agreement with MacKay-Shields on behalf of
each of the Funds for which MacKay-Shields currently serves as Investment
Adviser, i.e., the Bond Fund, Growth Equity Fund, International Bond Fund,
International Equity Fund, Short-Term Bond Fund and Value Equity Fund.
Likewise, it is proposed that with respect to the EAFE Index Fund, Indexed
Bond Fund, Indexed Equity Fund and Multi-Asset Fund, the Manager enter into a
Sub-Advisory Agreement with Monitor, the current investment adviser to these
Funds. It is also proposed that the Manager enter into a Sub-Advisory
Agreement with New York Life, the current investment adviser to the Money
Market Fund. Such an arrangement would provide for continuity of the day-to-
day portfolio management of the Funds with the additional benefit of the
Manager serving in an oversight capacity. A copy of the proposed form of
composite Sub-Advisory Agreement is included as Exhibit F.
Pursuant to the proposed Sub-Advisory Agreements between the Manager and
MacKay-Shields, Monitor or New York Life on behalf of each Fund, the Sub-
Adviser, subject to the supervision of the Board of Directors of the Company
and the Manager, shall manage the investment operations of each Fund and the
composition of the portfolio of each Fund, including the purchase, retention
and disposition of Fund assets, in accordance with the investment objectives,
policies and restrictions of the Fund.
MacKay-Shields, whose address is 9 West 57th Street, New York, New York
10019, formed in 1938, is a wholly-owned subsidiary of NYLIFE Inc. and an
indirect wholly-owned but autonomously managed subsidiary of New York Life. As
of June 30, 1997, MacKay-Shields managed over $26.9
11
<PAGE>
billion in assets. Additional information regarding the principal executive
officers and directors of MacKay-Shields is included as Exhibit G.
Monitor, whose address is 504 Carnegie Center, Princeton, New Jersey 08540,
is a wholly-owned subsidiary of NYLIFE Inc. and an indirect wholly-owned
subsidiary of New York Life. Monitor, a registered investment adviser
incorporated in 1988, specializes in quantitative investment techniques such
as enhanced indexing and asset allocation. As of June 30, 1997, Monitor
managed assets totaling approximately $2.2 billion, mainly of index funds.
Additional information regarding the principal executive officer and directors
of Monitor is included as Exhibit H.
New York Life, whose address is 51 Madison Avenue, New York, New York 10010,
is a mutual life insurance company organized under the laws of the state of
New York. As of June 30, 1997, New York Life had total assets of approximately
$86 billion and managed approximately $24 billion in assets for qualified
retirement plans. Information regarding the principal executive officer and
directors of New York Life is included as Exhibit I.
Under the proposed Sub-Advisory Agreements, the Manager, not the Funds,
would pay MacKay-Shields, Monitor or New York Life fees at the following
annual rates on behalf of each Fund for its services as Sub-Adviser. As shown
below, the annual rates of sub-advisory fees to be paid to MacKay-Shields,
Monitor and New York Life by the Manager under the Proposed Sub-Advisory
Agreements are equal to the annual rates of investment advisory fees which are
currently in effect for each of the Funds with respect to MacKay-Shields,
Monitor and New York Life.
PROPOSED SUB-ADVISORY FEES RATES (TO BE PAID BY THE MANAGER, NOT THE FUNDS)
AND CURRENT INVESTMENT ADVISORY FEE RATES
<TABLE>
<CAPTION>
RATE PAID FOR
PROPOSED CURRENT THE YEAR ENDED
SUB-ADVISORY ADVISORY DECEMBER 31,
FUND FEE RATE FEE RATE 1996
- ---- ------------ -------- --------------
<S> <C> <C> <C>
Bond Fund.................................. 0.20% 0.20% 0.20%
EAFE Index Fund............................ 0.15% 0.15% 0.15%
Growth Equity Fund......................... 0.25% 0.25% 0.25%
Indexed Bond Fund.......................... 0.10% 0.10% 0.10%
Indexed Equity Fund........................ 0.10% 0.10% 0.08%*
International Bond Fund.................... 0.30% 0.30% 0.30%
International Equity Fund.................. 0.35% 0.35% 0.35%
Money Market Fund.......................... 0.10% 0.10% 0.10%
Multi-Asset Fund........................... 0.15% 0.15% 0.15%
Short-Term Bond Fund....................... 0.15% 0.15% 0.15%
Value Equity Fund.......................... 0.25% 0.25% 0.25%
</TABLE>
- -----------
* Reflects voluntary expense limitation. Beginning October 31, 1996, Monitor,
the Indexed Equity Fund's current investment adviser, together
12
<PAGE>
with New York Life, the Fund's current administrator, has voluntarily agreed
to waive its fees to the extent necessary to limit the total operating
expenses of the Institutional Class of shares of the Fund to an annual rate
of 0.30% and the total operating expenses of the Institutional Service Class
of shares of the Fund to 0.55%.
Information regarding comparable funds advised by MacKay-Shields and Monitor
is included as Exhibits J and K, respectively. There are no comparable funds
advised by New York Life.
PORTFOLIO TRANSACTIONS
Pursuant to the proposed Sub-Advisory Agreements, a Fund's Sub-Adviser will
place orders for the purchase and sale of portfolio investments for the Fund's
accounts with brokers or dealers selected by it in its discretion. In
effecting purchases and sales of portfolio securities for the account of a
Fund, the Fund's Sub-Adviser will seek the best price and execution of the
Fund's orders. In doing so, a Fund may pay higher commission rates than the
lowest available when the Fund's Sub-Adviser believes it is reasonable to do
so in light of the value of the brokerage and research services provided by
the broker effecting the transaction. Consistent with the foregoing primary
consideration, the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and such other policies as the Directors may
determine, the Sub-Advisers may consider sales of shares of the respective
Funds as a factor in the selection of broker-dealers to execute each Fund's
portfolio transactions. NYLIFE Securities Inc. may act as a broker for the
Company in accordance with applicable regulations. For the fiscal year ended
December 31, 1996, none of the Funds paid brokerage commissions to affiliated
brokers.
BOARD CONSIDERATION
At a meeting held on September 9, 1997, the Board of Directors, including
the Directors who are not interested parties to the Sub-Advisory Agreements or
interested persons of such parties, considered the Sub-Advisory Agreements in
connection with the proposed restructuring of the entities providing services
to the Funds and determined that it would be in the best interests of the
Funds to approve the Sub-Advisory Agreements with MacKay-Shields, Monitor, and
New York Life. In coming to that conclusion, the Directors examined
information which included the nature and quality of portfolio management
services provided by MacKay-Shields, Monitor, and New York Life and the past
performance of the Funds. The Directors also examined the fees and expenses of
the Funds and the fees to be paid to the Sub-Advisers by the Manager, noting
in particular that the fees to be paid to the Sub-Advisers under the proposed
Sub-Advisory
13
<PAGE>
Agreements would not represent an increase from the current fee arrangements.
The Board noted the continued quality of services provided by MacKay-Shields,
Monitor, and New York Life and the desirability of retaining continuity in the
management of the Funds' assets. The Board also noted that the terms of the
proposed Sub-Advisory Agreements are substantially identical to the terms of
the Funds' current Investment Advisory Agreements.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS APPROVAL OF THE SUB-ADVISORY AGREEMENTS BETWEEN THE MANAGER AND
MACKAY-SHIELDS; BETWEEN THE MANAGER AND MONITOR; AND BETWEEN THE MANAGER AND
NEW YORK LIFE ON BEHALF OF THE FUNDS.
If approved by a majority vote of the outstanding shares of each Fund, the
Sub-Advisory Agreements will become effective on the first business day
following shareholder approval and will remain in force for a period of two
years, and from year to year thereafter, subject to approval annually by the
Board of Directors or by a majority vote of the outstanding shares of each
Fund, and also, in either event, approval by a majority of those Directors who
are not parties to the Sub-Advisory Agreements or interested persons of any
such party at a meeting called for the purpose of voting on such approval.
Approval of Proposal Three is contingent upon shareholders approving Proposal
Two. Accordingly, if the shareholders of one or more of the Funds should fail
to approve the Management Agreement for any Fund, the proposed Sub-Advisory
Agreement will not be put into effect with respect to that Fund, and MacKay-
Shields, Monitor, or New York Life shall continue to serve as investment
adviser to that Fund under its current Investment Advisory contract with the
Company. Similarly, if the shareholders of one or more of the Funds should
fail to approve a Sub-Advisory Contract between the Manager and MacKay-
Shields, between the Manager and Monitor, or between the Manager and New York
Life, Proposal Two relating to the Management Agreement shall not take effect
with respect to that Fund and MacKay-Shields, Monitor, or New York Life shall
continue to serve as investment adviser to that Fund under its current
Investment Advisory Agreement with the Company.
14
<PAGE>
PROPOSAL FOUR -- ELIMINATION OR REVISION OF CERTAIN FUNDAMENTAL INVESTMENT
RESTRICTIONS OF THE FUNDS
ALL FUNDS
(CERTAIN CHANGES ARE PROPOSED FOR ALL FUNDS, BUT SOME CHANGES APPLY ONLY TO
CERTAIN FUNDS AS INDICATED BELOW)
Pursuant to the Investment Company Act of 1940 (the "1940 Act"), each of the
Funds has adopted certain fundamental investment restrictions and policies
("fundamental restrictions"), which are set forth in the Funds' prospectus or
statement of additional information, and which may be changed only with
shareholder approval. Restrictions and policies that a Fund has not
specifically designated as being fundamental are considered to be "non-
fundamental" and may be changed by the Fund's Board without shareholder
approval.
Certain of the fundamental restrictions that the Funds have adopted in the
past reflect regulatory, business or industry conditions, practices or
requirements which at one time, for a variety of reasons, led to the
imposition of restrictions upon the ability of the Funds to manage their
investment operations. With the passage of time and the development of new
practices, these restrictions appear unnecessary or unwarranted. Other
restrictions were imposed by certain states but are no longer required since
the U.S. Congress preempted the States from imposing such restrictions with
the enactment of the National Securities Markets Improvement Act of 1996.
Other fundamental restrictions reflect federal regulatory requirements which
remain in effect, but which are not required to be stated as fundamental
restrictions. Also, as new Funds have been created over a period of years,
substantially similar fundamental restrictions often have been phrased in
different ways, sometimes resulting in minor but unintended differences in
effect or potentially giving rise to unintended differences in interpretation.
Accordingly, the Board has approved revisions to the Funds' fundamental
restrictions in order to simplify, modernize and make more uniform those
investment restrictions that are required to be fundamental, and to eliminate
those fundamental restrictions that are not legally required. Existing
fundamental restrictions that are not required to be fundamental would be
reclassified as non-fundamental restrictions.
The Board believes that eliminating the disparities among the Funds'
fundamental restrictions will enhance management's ability to manage
efficiently and effectively the Funds' assets, particularly in changing
regulatory and investment environments. In addition, by minimizing the number
of policies that can be changed only by shareholder vote, the Board and the
Funds will have greater flexibility to modify Fund policies, as
15
<PAGE>
appropriate, in response to changing markets and in light of new investment
opportunities and instruments. The Funds will then be able to avoid the costs
and delays associated with a shareholder meeting when making changes to its
non-fundamental investment policies that, at a future time, the Board
considers desirable. Although the proposed changes in fundamental restrictions
will allow the Funds greater investment flexibility to respond to future
investment opportunities, the Board does not anticipate that the changes,
individually or in the aggregate, will result at this time in a material
change in the level of investment risk associated with an investment in any
Fund.
The text and a summary description of each proposed change to the Funds'
fundamental restrictions are set forth below.
The text below also describes those non-fundamental restrictions that would
be adopted by the Board in conjunction with the elimination of fundamental
restrictions under this Proposal. Any non-fundamental restriction may be
modified or eliminated by the Board at any future date without any further
approval of shareholders.
If the proposed changes are approved by shareholders of the respective Funds
at the Meeting, the Funds' prospectus and statement of additional information
will be revised, as appropriate, to reflect those changes.
A. STATE-IMPOSED FUNDAMENTAL RESTRICTIONS
Funds to which this change applies: All Funds
One of the provisions of the National Securities Markets Improvement Act of
1996 is the preemption of substantive state regulation of securities issued by
investment companies registered with the Securities and Exchange Commission
under the 1940 Act. States are no longer able to impose their own investment
restrictions or require additional disclosure in offering documents as a
condition of registration in that state. In the past, the Funds have adopted a
number of fundamental investment restrictions in order to comply with
provisions of various state securities laws. In light of the new legislation,
it is proposed that certain of the Funds' fundamental restrictions based on
state securities laws be eliminated.
The following are state-imposed investment restrictions proposed to be
eliminated:
Current Text
1. A Fund may not pledge, mortgage or hypothecate its assets, except
that a Fund may enter into transactions in options, forward currency
contracts, futures and options on futures as described in the
16
<PAGE>
Prospectus and in the SAI (the deposit of assets in escrow in connection
with the writing of secured put and covered call options and the purchase
of securities on a when-issued or delayed delivery basis and collateral
arrangements with respect to initial or variation margin deposits for
future contracts and related options contracts will not be deemed to be
pledges of a Fund's assets).
2. A Fund may not purchase or sell oil, gas or mineral programs or
interests in oil, gas or mineral leases.
3. A Fund may not purchase or sell real estate limited partnership
interests.
Even with the elimination of the above fundamental restrictions, it is not
expected that the Funds will pledge, mortgage or hypothecate their assets,
except to the extent currently permitted; purchase or sell oil, gas or mineral
programs or interests in oil, gas or mineral leases; or invest in limited
partnership interests in real estate. Thus, elimination of these restrictions
should not increase the risk profile of any Fund.
B. FUNDAMENTAL RESTRICTIONS WHICH ARE NOT REQUIRED TO BE FUNDAMENTAL
Funds to which this change applies: All Funds except International Bond Fund
and International Equity Fund
Certain of the Funds' fundamental restrictions are not required to be
fundamental, i.e., they are not required to be designated as restrictions that
can be changed only with shareholder approval. It is proposed that these
fundamental restrictions, which are listed below, be changed from fundamental
to non-fundamental and re-stated as appropriate. This change will provide for
flexibility in revising these restrictions in the future should industry or
regulatory conditions warrant and will enable the Funds to avoid the
additional expense of a shareholder solicitation in connection with future
revisions. Furthermore, in certain cases, the same investment restriction is
fundamental for some Funds and non-fundamental for others. For purposes of
consistency and ease of administration, it is recommended that each of these
investment restrictions be changed to non-fundamental for all of the Funds.
It is proposed that the classification of the following investment
restrictions be changed from fundamental to non-fundamental:
Current Text
1. A Fund may not (except for the International Bond Fund and
International Equity Fund) purchase securities on margin, except for use
of short-term credit necessary for the clearance of purchases and
17
<PAGE>
sales of portfolio securities, but it may make margin deposits in
connection with transactions in options, futures and options on futures.
2. A Fund may not (except for the International Bond Fund and
International Equity Fund) make short sales of securities, except short
sales against the box.
Proposed Text
Restriction 1 above would be restated in the form of the following non-
fundamental restriction:
1. A Fund may not purchase securities on margin, except that the Fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments in connection with futures
contracts and options on futures contracts shall not constitute the
purchase of securities on margin.
Restriction 2 above would be restated in the form of the following non-
fundamental restriction:
1. A Fund may not sell securities short, except for covered short sales
or unless it owns or has the right to obtain securities equivalent in kind
and amount to the securities sold short, and provided that transactions in
options, futures and forward contracts are deemed not to constitute short
sales of securities.
C. FUNDAMENTAL RESTRICTIONS PROPOSED TO BE REVISED OR ELIMINATED IN ORDER TO
INCREASE FLEXIBILITY AND CONSISTENCY AMONG FUNDS
1. Funds to which this change applies: All Funds
Under the requirements of the 1940 Act, and as stated in the Funds'
fundamental restriction below, a Fund, subject to certain exceptions, may not
invest in a security if such investment would cause 25% or more in the
aggregate of the market value of the total assets of a Fund to be invested in
the securities of one or more issuers in any particular industry. It is
proposed that the fundamental restriction be amended to provide that at such
time as the 1940 Act is amended to permit a Fund to elect to be "periodically
industry concentrated" (i.e., a fund that does not concentrate its investments
in a particular industry would be permitted, but not required, to invest 25%
or more of its assets in a particular industry), the Funds would elect to be
so classified. Such a provision would provide flexibility to the Funds should
the 1940 Act be amended and would avoid the cost of a shareholder solicitation
should the Board determine that electing to be periodically industry
concentrated would be appropriate and beneficial for a Fund.
18
<PAGE>
Current Text
1. A Fund may not invest in a security if, as a result of such
investment, more than 25% of its total assets would be invested in the
securities of issuers in any particular industry, except that this
restriction does not apply to securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities (or repurchase agreements
with respect thereto).
Proposed Text
1. A Fund may not invest in a security if, as a result of such
investment, 25% or more of its total assets would be invested in the
securities of issuers in any particular industry, except that this
restriction does not apply to securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities (or repurchase agreements
with respect thereto) and at such time that the 1940 Act is amended to
permit a registered investment company to elect to be "periodically
industry concentrated," (i.e., a fund that does not concentrate its
investments in a particular industry would be permitted, but not required,
to invest 25% or more of its assets in a particular industry) the Funds
elect to be so classified and the foregoing limitation shall no longer
apply with respect to the Funds.
2. Funds to which this change applies: All Funds
Under the 1940 Act and the Funds' fundamental restriction stated below, the
Funds are restricted from issuing senior securities. In order to provide
maximum flexibility to the operations of the Funds while ensuring that the
Funds' policies with respect to issuing senior securities continue to comply
with the provisions of the 1940 Act, it is proposed that the restriction on
issuing senior securities be revised to stated that the Funds may not issue
senior securities, except to the extent permitted by the 1940 Act.
Current Text
1. A Fund may not borrow money, issue senior securities, or pledge,
mortgage or hypothecate its assets, except that a Fund may (i) borrow from
banks or enter into reverse repurchase agreements, but only if immediately
after each borrowing there is asset coverage of 300%, and (ii) enter into
transactions in options, forward currency contracts, futures and options
on futures as described in this Prospectus and in the SAI (the deposit of
assets in escrow in connection with the writing of secured put and covered
call options and the purchase of securities on a when-issued or delayed
delivery basis and collateral arrangements with respect to initial or
variation margin deposits for future contracts and related options
contracts will not be deemed to be pledges of a Fund's assets).
19
<PAGE>
Proposed Text
1. A Fund may not borrow money or issue senior securities, except that a
Fund may (i) borrow from banks or enter into reverse repurchase
agreements, but only if immediately after each borrowing there is asset
coverage of 300%, and (ii) issue senior securities to the extent permitted
under the 1940 Act.
3. Funds to which this change applies: All Funds
Each of the Funds has a fundamental restriction prohibiting it from
purchasing or selling commodities or commodity contracts. With respect to the
International Bond Fund and International Equity Fund, however, the
fundamental restriction provides that those funds may purchase or sell
currencies on a spot or forward basis and may enter into futures contracts on
securities, currencies or on indexes of such securities or currencies, or any
other financial instruments and options on such futures contracts. It is
proposed that this provision be expanded to include the other Funds, subject
to the restrictions on each Fund's investments contained in the Prospectus and
Statement of Additional Information and that the fundamental restriction for
all of the Funds be restated to create a single, uniform restriction. The
proposed revision would provide clarity with respect to the investments
intended to be prohibited by the fundamental restriction and is not intended
to result in a change to the primary investments or investment techniques of
any Fund or the risk characteristics of any Fund.
Current Text
1. A Fund may not purchase or sell commodities, commodities contracts,
or oil, gas or mineral programs or interests in oil, gas or mineral leases
(other than securities of companies that invest in or sponsor those
programs), except that, subject to restrictions described in the
Prospectus and elsewhere in this Statement of Additional Information (i) a
Fund may enter into futures contracts and options on futures contracts;
(ii) a Fund may enter into forward foreign currency contracts and foreign
currency options; and (iii) the International Bond Fund and International
Equity Fund may purchase or sell currencies on a spot or forward basis and
may enter into futures contracts on securities, currencies or on indexes
of such securities or currencies, or any other financial instruments, and
may purchase and sell options on such futures contracts.
Proposed Text
1. A Fund may not purchase or sell commodities or commodities contracts,
except that, subject to restrictions described in the Prospectus and in
the Statement of Additional Information (i) a Fund may enter into futures
contracts on securities, currencies or on indexes
20
<PAGE>
of such securities or currencies, or any other financial instruments and
options on such futures contracts; (ii) a Fund may enter into spot or
forward foreign currency contracts and foreign currency options.
4. Funds to which this change applies: All Funds except International Bond
Fund and International Equity Fund
Each of the Funds, other than the International Bond Fund and International
Equity Fund, has a fundamental restriction prohibiting it from maintaining a
short position. Each of the Funds also is subject to an investment restriction
prohibiting it from making short sales, except short sales against the box.
The Board has determined that it is not necessary to have two restrictions
prohibiting similar investment techniques. Furthermore, there is no regulatory
requirement to have a fundamental restriction prohibiting a Fund from
maintaining a short position, and the International Bond Fund and
International Equity Fund are not subject to this restriction. Consequently,
the Board has determined that the fundamental restriction prohibiting a Fund
from maintaining a short position should be eliminated. As discussed above, it
is proposed that the short sales restriction have continued applicability to
the Funds but that its classification be changed from fundamental to non-
fundamental.
The following is the current text proposed to be eliminated.
Current Text
A Fund (except for the International Bond Fund and International Equity
Fund) may not maintain a short position, or purchase, write or sell puts,
calls, straddles, spreads or combinations thereof, except as set forth in the
Prospectus and in the SAI for transactions in options, futures and options on
futures.
PROPOSAL FIVE -- RATIFICATION OF SELECTION OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
ALL FUNDS
The Board of Directors recommends that the shareholders of the Company
ratify the selection of Price Waterhouse LLP, independent certified public
accountants, to audit the accounts of the Company for the fiscal year ending
December 31, 1997. Their selection was approved by the unanimous vote, cast in
person, of the Directors of the Company, including the Directors who are not
"interested persons" of the Company within the meaning of the 1940 Act, at a
meeting held on March 4, 1997 with respect to each of the Funds. Price
Waterhouse LLP has audited the accounts of the Company since the Company's
commencement of business in 1991
21
<PAGE>
and has informed the Company that Price Waterhouse does not have any direct
financial interest or any material indirect financial interest in the Company.
Representatives of Price Waterhouse LLP are not expected to be present at the
Meeting but have been given the opportunity to make a statement if they so
desire, and will be available should any matters arise requiring their
presence.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY VOTE FOR THE RATIFICATION OF
THE SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS OF THE COMPANY.
OTHER MATTERS
Management does not know of any matters to be presented at the Meeting other
than those mentioned in this Proxy Statement. If any of the persons listed
above is unavailable for election as a Director, an event not now anticipated,
or if any other matters properly come before the Meeting, the shares
represented by proxies will be voted with respect thereto in accordance with
the best judgment of the person or persons voting the proxies.
The Company does not hold annual or regular meetings of its shareholders.
Proposals of shareholders which are intended to be presented at a future
shareholders' meeting must be received by the Company by a reasonable time
prior to the Company's solicitation of proxies relating to such future meeting.
Shareholder proposals must meet certain requirements and there is no guarantee
that any proposal will be presented at a shareholders' meeting.
If the accompanying form of proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. However, if no instructions are specified, shares
will be voted for the election of the Directors and for the other proposals.
By order of the Board of Directors,
/s/ Sara L. Badler
Sara L. Badler
Secretary
October 1, 1997
New York, New York
22
<PAGE>
EXHIBIT A
SHARE OWNERSHIP OF THE FUNDS
The following table sets forth the information concerning beneficial
ownership, as of September 12, 1997, of the Funds' shares by each person who
beneficially owns more than five percent of the voting securities of any Fund:
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIALLY OUTSTANDING
SHAREHOLDER NAME OF FUND OWNED SHARES OWNED
- ------------------------------- -------------------- ------------ -------------
<S> <C> <C> <C>
New York Life Insurance Company EAFE Index 419,009 6.5%
Agents' Health and Life Benefit
Trust--(Health Benefits)
51 Madison Avenue
New York, NY 10010
Frank G and Frieda K Brotz Indexed Bond 794,419 7.4%
Family Foundation Inc.
3518 Lakeshore Road
Sheboygan, WI 53083
Plastics Engineering Company EAFE Index 544,648 8.5%
P.O. Box 758
Sheboygan, WI 53082
Merrill Lynch Trust Company Indexed Equity 2,455,013 7.3%
TTEE FBO Chrysler 401(k) Plan
265 Davidson Ave.
Somerset, NJ 08873
New York Life Trust Company-- Bond 1,572,696 8.8%
Client Accounts Growth Equity 4,052,590 15.5%
51 Madison Avenue, Room 117A Indexed Bond 2,100,768 19.6%
New York, NY 10010 Indexed Equity 5,261,772 15.5%
Money Market 106,550,205 42.7%
Multi-Asset 4,786,086 18.8%
Short-Term Bond 732,849 14.6%
Value Equity 9,408,935 17.5%
Trustees of the Harvest States International Equity 747,555 6.4%
Cooperative Combined Retirement
Fund
P.O. Box 64594
St. Paul, MN 55164
Methodist Home Endowment Fund International Equity 685,751 5.8%
1111 Herring Avenue
Waco, TX 76708
MacKay-Shields Financial Short-Term Bond 1,028,983 20.5%
Corporation
9 West 57th Street
New York, NY 10019
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIALLY OUTSTANDING
SHAREHOLDER NAME OF FUND OWNED SHARES OWNED
- ----------------------------- -------------------- ------------ -------------
<S> <C> <C> <C>
Trustees of the New York Life Bond 5,731,200 32.1%
Insurance
Company Retirement Plan and Growth Equity 4,825,445 18.4%
Pension
Plan (Company Plan) Indexed Bond 3,714,205 34.6%
51 Madison Avenue Indexed Equity 6,253,056 18.5%
New York, NY 10010 International Bond 3,579,303 75.7%
International Equity 1,275,171 10.8%
Value Equity 17,100,865 31.8%
Trustees of the New York Life Bond 1,939,637 10.8%
Insurance Company Retirement Growth Equity 3,293,924 12.6%
Plan (Agents)
51 Madison Avenue Indexed Bond 1,407,656 13.1%
New York, NY 10010 Indexed Equity 6,090,693 18.0%
International Bond 894,825 18.9%
International Equity 2,337,654 19.9%
Value Equity 10,707,828 19.9%
New York Life Insurance EAFE Index 3,545,483 55.2%
Company
51 Madison Avenue Indexed Equity 3,828,817 11.3%
New York, NY 10010 Multi-Asset 7,604,406 29.9%
The Pension Board of the Bond 1,877,135 10.5%
United Food and Commercial
Workers International Union
Retirement Plan for Employers
1775 K Street N.W.
Washington, DC 20006
Trustees of the Lone Star Money Market 15,091,226 6.0%
Hourly
Retirement Plan, Day & Short-Term Bond 289,533 5.8%
Zimmermann, Inc.
1818 Market Street
Philadelphia, PA 19103
Trustees of The New York Life Growth Equity 5,610,799 21.4%
Insurance
Company Employee Progress Indexed Equity 2,231,328 6.6%
Sharing
Investment Plan Trust Multi-Asset 1,862,310 7.3%
51 Madison Avenue Short-Term Bond 378,500 7.5%
New York, NY 10010
Trustees of The New York Life Growth Equity 2,917,808 11.1%
Insurance
Company Agents Progress
Sharing
Investment Plan Trust
51 Madison Avenue
New York, NY 10010
New York Life Insurance EAFE Index 485,908 7.6%
Company Employees' Health and
Life Benefit Trust
51 Madison Avenue
New York, NY 10010
BHC Securities Inc. Corp. Money Market 56,069,670 22.4%
2005 Market Street
1 Commerce Square
Philadelphia, PA 19103
</TABLE>
A-2
<PAGE>
EXHIBIT B
ADDITIONAL INFORMATION REGARDING THE COMPANY'S EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
YEAR
BECAME
POSITION(S) AN PRINCIPAL OCCUPATION(S)
NAME AND AGE WITH COMPANY OFFICER DURING PAST 5 YEARS
------------ ------------ ------- ------------------------
<C> <C> <C> <S>
Linda M. Livornese President 1990 Vice President, Asset Management
Age: 45 Department, New York Life Insurance
Company, 1990 to present; Pension
Vice President, Pension Department,
New York Life Insurance Company,
1988-1990; Assistant Vice President,
Pension Department, New York Life
Insurance Company, 1986-1988; Vice
President NYLIFE Distributors, Inc.,
1993 to present; Vice President,
NYLIFE Securities, Inc., 1992 to
present.
Jefferson C. Boyce Senior 1995 Senior Vice President, New York Life
Age: 40 Vice Insurance Company, 1994 to present;
President Senior Vice President, The MainStay
Funds, 1995 to present; Director,
MainStay Management, Inc., 1997 to
present; Director, Monitor Capital
Advisors, Inc., 1991 to present and
Senior Vice President, 1996 to
present; Director, MSC Holding, Inc.,
1992 to present and Secretary, 1994
to present; Director, Eagle
Strategies Corp., 1993 to 1997;
Director, NYLIFE Equity, Inc., 1993
to present; President and Chief
Executive Officer, NYLIFE
Distributors, Inc., 1996 to 1997 and
Director, 1993 to present; Director,
NYLIFE Inc., 1993 to present;
President, Chief Executive Officer
and Director, NYLIFE Securities Inc.,
1996
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
YEAR
BECAME
POSITION(S) AN PRINCIPAL OCCUPATION(S)
NAME AND AGE WITH COMPANY OFFICER DURING PAST 5 YEARS
------------ ------------ ------- ------------------------
<C> <C> <C> <S>
to 1997; Director, NYLIFE Structured
Asset Management Company Ltd., 1993
to present; Director, CNP Realty
Investments, Inc., 1994 to present;
Director, New York Life Benefit
Services, Inc., 1994 to present;
Director, NYLIFE Depositary
Corporation, 1994 to present;
Director, NYLIFE Realty Inc., 1994 to
present; Director, NYLIFE SFD
Holdings Inc. (formerly NAFCO, Inc.),
1994 to present; Chairman and
Director, MainStay Shareholder
Services, Inc., 1997 to present;
Chief Administrative Officer,
Pension, Mutual Funds, Structured
Finance, Corporate Quality, Human
Resources and Employees' Health
Departments, New York Life Insurance
Company, 1992 to 1994; Vice
President, Pension Department, New
York Life Insurance Company, 1989 to
1992.
Robert S. Fenster Vice 1992 Vice President, Asset Management
Age: 47 President Department, New York Life Insurance
Company, 1988 to present; Director,
New York Life Trust Company, 1995 to
present.
Richard W. Zuccaro Tax Vice 1992 Vice President, New York Life
Age: 47 President Insurance Company, 1995 to present;
Vice President Tax, New York Life
Insurance Company, 1986 to 1995; Tax
Vice President, NYLIFE Securities,
Inc., 1987 to present; Tax Vice
President, NYLIFE SFD Holding Inc.,
1990 to present; Tax Vice
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
YEAR
BECAME
POSITION(S) AN PRINCIPAL OCCUPATION(S)
NAME AND AGE WITH COMPANY OFFICER DURING PAST 5 YEARS
------------ ------------ ------- ------------------------
<C> <C> <C> <S>
President, NYLIFE Depositary Inc.,
1990 to present; Tax Vice President,
NYLIFE Inc., 1990 to present; Tax
Vice President, NYLIFE Insurance
Company of Arizona, 1990 to present;
Tax Vice President, NYLIFE Realty
Inc., 1991 to present; Tax Vice
President, NYLCO Inc., 1991 to
present; Tax Vice President, New York
Life Fund Inc., 1991 to present; Tax
Vice President, New York Life
International Investment, Inc., 1991
to present; Tax Vice President,
NYLIFE Funding Inc., 1991 to present;
Tax Vice President, NYLCO, 1991 to
present; Tax Vice President, NYLIFE
Equity Inc., 1991 to present; Tax
Vice President, MainStay VP Series
Fund, Inc., 1991 to present; Tax Vice
President, CNP Realty Investments,
Inc., 1991 to present; Tax Vice
President, New York Life Worldwide
Holding, Inc., 1992 to present; Tax
Vice President, NYLIFE Structured
Asset Management Company Ltd., 1992
to present; Tax Vice President, The
MainStay Funds, 1991 to present; Tax
Vice President, Eagle Strategies
Corp. (registered investment
adviser), 1993 to present; Tax Vice
President, NYLIFE Distributors Inc.,
1993 to present; Vice President &
Assistant Controller, New York Life
Insurance and Annuity Corp., 1995 to
present, and Assistant Controller,
1991 to 1995; Vice President, NYLCare
Health Plans, Inc.,
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
YEAR
BECAME
POSITION(S) AN PRINCIPAL OCCUPATION(S)
NAME AND AGE WITH COMPANY OFFICER DURING PAST 5 YEARS
------------ ------------ ------- ------------------------
<C> <C> <C> <S>
1995 to present; Vice President--Tax,
New York Life and Health Insurance
Co., 1996 to present; Tax Vice
President, New York Life Trust
Company, 1996 to present; Tax Vice
President, Monitor Capital Advisors,
Inc., 1996 to present; Tax Vice
President, NYLINK Insurance Agency
Incorporated, 1996 to present; Tax
Vice President, MainStay Shareholder
Services, Inc., 1997 to present.
Anthony W. Polis Treasurer 1990 Vice President, New York Life
Age: 53 (Principal Insurance Company, 1988 to present;
Financial Director, Vice President and Chief
and Financial Officer, NYLIFE Securities,
Accounting Inc., 1988 to present; Vice President
Officer) and Chief Financial Officer, NYLIFE
Distributors Inc., 1993 to present;
Vice President and Chief Financial
Officer, Eagle Strategies Corp., 1993
to present; Vice President and Chief
Financial Officer, MainStay
Shareholder Services Inc., 1997 to
present; Vice President and Chief
Financial Officer, The MainStay VP
Series Fund, Inc., 1993 to present;
Assistant Treasurer, MainStay VP
Series Fund, Inc., 1992 to 1993; Vice
President and Treasurer, Eclipse
Financial Asset Trust, 1992 to
present; Vice President, Drexel
Burnham Lambert Incorporated, DBL
Tax-Free Fund Inc., DBL Cash Fund
Inc., The Drexel Burnham Fund, Drexel
Series Trust, Fenimore International
Fund
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
YEAR
BECAME
POSITION(S) AN PRINCIPAL OCCUPATION(S)
NAME AND AGE WITH COMPANY OFFICER DURING PAST 5 YEARS
------------ ------------ ------- ------------------------
<C> <C> <C> <S>
Inc., BT Investment Trust and BT Tax
Free Investment Trust, 1983 to 1988;
Assistant Treasurer, Drexel Bond-
Debenture Trading Fund, 1983 to 1988.
Sara L. Badler Secretary 1997 Assistant General Counsel, New York
Age: 36 Life Insurance Company, 1996 to
present; Associate Counsel, New York
Life Insurance Company, 1994 to 1996;
Secretary, MainStay VP Series Fund,
Inc., 1997 to present; Assistant
Secretary, The MainStay Funds, 1994
to present; Assistant Secretary,
Eclipse Financial Asset Trust, 1994
to present; Teacher, New York City
Board of Education, 1993 to 1994; and
Vice President and Associate Counsel
and Consulting Attorney; Oppenheimer
Management Corporation, 1987 to 1993.
</TABLE>
B-5
<PAGE>
EXHIBIT C
ADDITIONAL INFORMATION REGARDING CURRENT INVESTMENT
ADVISORY AND ADMINISTRATIVE ARRANGEMENTS
CURRENT INVESTMENT ADVISORY AGREEMENTS
MacKay-Shields Financial Corporation ("MacKay-Shields") currently serves as
the investment adviser to the Bond Fund, Growth Equity Fund, Short-Term Bond
Fund and Value Equity Fund, pursuant to a Master Investment Advisory
Agreement, dated December 28, 1990, between the Company and MacKay-Shields,
and to the International Bond Fund and International Equity Fund pursuant to a
supplement thereto dated December 6, 1994. Monitor Capital Advisors, Inc.
("Monitor") currently serves as the investment adviser to the EAFE Index Fund,
Indexed Bond Fund, Indexed Equity Fund and Multi-Asset Fund, pursuant to a
Master Investment Advisory Agreement, dated December 28, 1990, between the
Company and Monitor. New York Life Insurance Company ("New York Life")
currently serves as the investment adviser to the Money Market Fund pursuant
to a Master Investment Advisory Agreement, dated December 28, 1990, between
the Company and New York Life.
Each Master Investment Advisory Agreement was most recently approved by the
Board of Directors, including a majority of the Directors who are not
"interested persons" of the Company or the investment advisers, on March 4,
1997, and by the shareholders of the Company on April 30, 1992.
For the fiscal year ended December 31, 1996, the amount of the advisory fee
paid by each Fund to MacKay-Shields, Monitor or New York Life was as follows:
<TABLE>
<CAPTION>
YEAR ENDED
FUND 12/31/96
---- ----------
<S> <C>
EAFE Index Fund.................................................. $ 124,284
Growth Equity Fund............................................... 1,186,388
Indexed Equity Fund.............................................. 502,686
International Equity Fund........................................ 395,717
Multi-Asset Fund................................................. 461,408
Value Equity Fund................................................ 1,768,836
Bond Fund........................................................ 355,167
Indexed Bond Fund................................................ 123,798
International Bond Fund.......................................... 141,296
Money Market Fund................................................ 100,230
Short-Term Bond Fund............................................. 98,265
</TABLE>
C-1
<PAGE>
CURRENT ADMINISTRATION AGREEMENTS
New York Life currently serves as the Funds' administrator (the
"Administrator") pursuant to the Master Administration Agreement, dated
December 28, 1990, and a supplement thereto for the International Bond Fund
and International Equity Fund dated December 6, 1994, between the Company and
the Administrator. The Master Administration Agreement was most recently
approved by the Board of Directors, including a majority of the Directors who
are not "interested persons" (as defined in the 1940 Act) of the Company or
the Administrator on March 4, 1997.
For the fiscal year ended December 31, 1996, the amount of the
administration fee paid by each Fund to New York Life was as follows:
<TABLE>
<CAPTION>
YEAR ENDED
FUND 12/31/96
---- ----------
<S> <C>
EAFE Index Fund.................................................. $ 662,846
Growth Equity Fund............................................... 2,847,330
Indexed Equity Fund.............................................. 2,010,753
International Equity Fund........................................ 565,311
Multi-Asset Fund................................................. 1,538,025
Value Equity Fund................................................ 4,245,206
Bond Fund........................................................ 976,711
Indexed Bond Fund................................................ 495,190
International Bond Fund.......................................... 235,493
Money Market Fund................................................ 400,921
Short-Term Bond Fund............................................. 294,794
</TABLE>
In connection with the voluntary expense limitations discussed on page 9,
the Administrator assumed the following expenses for the Funds for the fiscal
year ended December 31, 1996:
<TABLE>
<CAPTION>
YEAR ENDED
FUND 12/31/96
---- ----------
<S> <C>
EAFE Index Fund................................................. $238,764
Growth Equity Fund.............................................. N/A(1)
Indexed Equity Fund............................................. 753,575(2)
International Equity Fund....................................... 82,203
Multi-Asset Fund................................................ 164,519(3)
Value Equity Fund............................................... N/A(1)
Bond Fund....................................................... 188,561
Indexed Bond Fund............................................... 189,996
International Bond Fund......................................... 61,961
Money Market Fund............................................... 170,221
Short-Term Bond Fund............................................ 122,335
</TABLE>
- -----------
(1) Fund had no expense limitation during period.
(2) Administrator assumed $676,954; Monitor assumed $76,621.
(3) Fund expense limitation expired December 31, 1996.
C-2
<PAGE>
SHAREHOLDER SERVICES PLAN
The Company has adopted a Shareholder Services Plan with respect to the
Institutional Service Class of shares of each Fund. Under the terms of the
Plan, each Fund is authorized to pay to New York Life, as compensation for
service activities rendered by New York Life, its affiliates or independent
third-party service providers, to the shareholders of the Institutional
Service Class of a Fund, a shareholder services fee at the rate of 0.25% on an
annualized basis of the average daily net asset value of the Institutional
Service Class of the Fund.
C-3
<PAGE>
EXHIBIT D
FORM OF
COMPOSITE
---------
MAINSTAY INSTITUTIONAL FUNDS INC.
[BOND FUND]
[EAFE INDEX FUND]
[GROWTH EQUITY FUND]
[INDEXED BOND FUND]
[INDEXED EQUITY FUND]
[INTERNATIONAL BOND FUND]
[INTERNATIONAL EQUITY FUND]
[MONEY MARKET FUND]
[MULTI-ASSET FUND]
[SHORT-TERM BOND FUND]
[VALUE EQUITY FUND]
MANAGEMENT AGREEMENT
Agreement, made as of the day of , 1997 between MAINSTAY
INSTITUTIONAL FUNDS INC., a Maryland corporation (the "Company"), on behalf of
the [Bond Fund, EAFE Index Fund, Growth Equity Fund, Indexed Bond Fund,
Indexed Equity Fund, International Bond Fund, International Equity Fund, Money
Market Fund, Multi-Asset Fund, Short-Term Bond Fund, and Value Equity Fund]
(the "Fund"), a separate series of the Company, and MainStay Management, Inc.,
a Delaware corporation (the "Manager") (the "Agreement").
WHEREAS, the Company is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the shares of beneficial interest of the Company (the "Shares") are
divided into separate series, each of which is established pursuant to a
written instrument executed by the Board of Directors of the Company and the
Directors may from time to time terminate such series or establish and
terminate additional series;
WHEREAS, the Shares of each Fund are divided into Institutional Class Shares
and Institutional Service Class Shares; and
D-1
<PAGE>
WHEREAS, the Fund desires to retain the Manager to render investment
advisory and related administrative services to the Fund, and the Manager is
willing to render such services on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, the parties agree as follows:
1. Appointment. The Fund hereby appoints MainStay Management, Inc. to act as
manager to the Fund for the period and on the terms set forth in this
Agreement. The Manager accepts such appointment and agrees to render the
services herein described, for the compensation herein provided.
2. Duties as Manager. Subject to the supervision of the Directors of the
Company, the Manager shall administer the Fund's business affairs and manage
the investment operations of the Fund and the composition of the portfolio of
the Fund, including the purchase, retention and disposition thereof, in
accordance with the investment objectives, policies and restrictions of the
Fund, as stated in the Prospectus (as hereinafter defined) and subject to the
following understandings:
(a) The Manager shall (i) furnish the Fund with office facilities; (ii)
be responsible for the financial and accounting records required to be
maintained by the Fund (excluding those being maintained by the Fund's
Custodian and Transfer Agent except as to which the Manager has
supervisory functions) and other than those being maintained by the Fund's
sub-adviser, if any; and (iii) furnish the Fund with ordinary clerical,
bookkeeping and recordkeeping services at such office facilities.
(b) The Manager shall provide supervision of the Fund's investments and
determine from time to time what investments or securities will be
purchased, retained, sold or lent by the Fund, and what portion of the
Fund's assets will be invested or held uninvested as cash.
(c) The Manager shall use its best judgment in the performance of its
duties under this Agreement.
(d) The Manager, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Articles of
Incorporation, By-Laws and Prospectus (each as hereinafter defined) of the
Company and with the instructions and directions of the Directors of the
Company and will conform to and comply with the requirements of the 1940
Act and all other applicable federal and state laws and regulations.
(e) The Manager, and any sub-adviser to whom such authority has been
delegated, shall determine the securities to be purchased or sold by the
Fund and will place orders pursuant to its determination
D-2
<PAGE>
with or through such persons, brokers or dealers (including NYLIFE
Securities Inc.) in conformity with the policy with respect to brokerage
as set forth in the Company's Registration Statement and Prospectus (each
as hereinafter defined) or as the Directors may direct from time to time.
It is recognized that, in providing the Fund with investment supervision
or the placing of orders for portfolio transactions, the Manager or any
sub-adviser will give primary consideration to securing the most favorable
price and efficient execution. Consistent with this policy, the Manager or
any sub-adviser may consider the financial responsibility, research and
investment information and other services provided by brokers or dealers
who may effect or be a party to any such transaction or other transactions
to which other clients of the Manager or any sub-adviser may be a party.
It is understood that neither the Fund, the Company nor the Manager or
sub-adviser has adopted a formula for allocation of the Fund's investment
transaction business. It is also understood that it is desirable for the
Fund that the Manager or any sub-adviser have access to supplemental
investment and market research and security and economic analyses provided
by certain brokers who may execute brokerage transactions at a higher cost
to the Fund than may result when allocating brokerage to other brokers on
the basis of seeking the most favorable price and efficient execution.
Therefore, the Manager or any sub-adviser is authorized to place orders
for the purchase and sale of securities for the Fund with such certain
brokers, subject to review by the Company's Directors from time to time
with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Manager or any sub-adviser in connection with its services to other
clients.
On occasions when the Manager or any sub-adviser deems the purchase or
sale of a security to be in the best interest of the Fund as well as other
clients, the Manager or any sub-adviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be so sold or purchased in order to obtain the
most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or
sold, as well as expenses incurred in the transaction, will be made by the
Manager or any sub-adviser in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Fund and to
such other clients.
(f) The Manager shall maintain all books and records with respect to the
Fund's securities transactions required by sub-paragraphs (b)(5), (6), (9)
and (10) and paragraph (f) of Rule 31a-1 under the 1940 Act and any other
books and records required to be maintained by it under the 1940 Act and
the Rules thereunder and shall render to the
D-3
<PAGE>
Company's Directors such periodic and special reports as the Directors may
reasonably request.
(g) The Manager shall provide the Company's Custodian on each business
day with information relating to the execution of all portfolio
transactions pursuant to standing instructions.
(h) With respect to any or all series of the Company, including the
Fund, the Manager may enter into one or more contracts ("Sub-Advisory or
Sub-Administration Contract") with a sub-adviser or sub-administrator in
which the Manager delegates to such sub-adviser or sub-administrator any
or all its duties specified in this Agreement, provided that each Sub-
Advisory or Sub-Administration Contract meets all requirements of the 1940
Act and rules thereunder.
3. Manager Personnel. The Manager shall authorize and permit any of its
directors, officers and employees who may be elected or appointed as Directors
or officers of the Company to serve in the capacities in which they are
elected or appointed. Services to be furnished by the Manager under this
Agreement may be furnished through the medium of any of such directors,
officers, or employees or affiliates of the Manager.
4. Books and Records. The Manager shall keep the Fund's books and records
required to be maintained by it, pursuant to paragraph 2 hereof. The Manager
agrees that all records which it maintains for the Fund are the property of
the Fund, and it will surrender promptly to the Fund any of such records upon
the Fund's request. The Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 as promulgated by the Commission under the 1940 Act
any such records as are required to be maintained by the Manager pursuant to
paragraph 2 hereof.
5. Services Not Exclusive. The services furnished by the Manager hereunder
are not to be deemed exclusive and the Manager shall be free to furnish
similar services to others so long as its services under this Agreement are
not impaired thereby.
6. Documents. The Company has delivered to the Manager copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) Articles of Incorporation of the Company, filed with the Secretary
of State of Maryland (such Articles of Incorporation, as in effect on the
date hereof and as amended from time to time, are herein called the
"Articles of Incorporation");
(b) By-Laws of the Company (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the "By-Laws");
D-4
<PAGE>
(c) Certified Resolutions of the Directors of the Company authorizing
the appointment of the Manager and approving the form of this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-lA (the "Registration Statement"), as filed
with the Securities and Exchange Commission (the "Commission") relating to
the Fund and the Fund's Shares and all amendments thereto;
(e) Notification of Registration of the Company under the 1940 Act on
Form N-8A as filed with the Commission and all amendments thereto; and
(f) Prospectus and Statement of Additional Information of the Fund (such
Prospectus and Statement of Additional Information, as currently in effect
and as amended or supplemented from time to time, being herein called the
"Prospectus").
7. Expenses. (a) In connection with the services rendered by the Manager
under this Agreement, the Manager will bear all of the following expenses:
(i) the salaries and expenses of all personnel of the Company and the
Manager, except the fees and expenses of Directors who are not interested
persons of the Manager or of the Company; and
(ii) all expenses incurred by the Manager in connection with managing
the investment operations of the Fund and administering the ordinary
course of the Fund's business, other than those assumed by the Fund
herein;
(b) The Fund assumes and will pay its expenses, including but not limited to
those described below (where any such category applies to more than one series
of the Company, the Fund shall be liable only for its allocable portion of the
expenses):
(i) the fees and expenses of Directors who are not interested persons of
the Manager or of the Company;
(ii) the fees and expenses of the Fund's custodian which relate to (A)
the custodial function and the recordkeeping connected therewith, (B) the
required accounting records of the Fund not being maintained by the
Manager, (C) the pricing of the Fund's Shares, including the cost of any
pricing service or services which may be retained pursuant to the
authorization of the Directors of the Company, and (D) for both mail and
wire orders, the cashiering function in connection with the issuance and
redemption of the Fund's Shares;
(iii) the fees and expenses of the Company's transfer and dividend
disbursing agent, which may be the custodian, which relate to the
maintenance of each shareholder account;
D-5
<PAGE>
(iv) the charges and expenses of legal counsel and independent
accountants for the Company;
(v) brokers' commissions and any issue or transfer taxes chargeable to
the Company in connection with its securities transactions on behalf of
the Fund;
(vi) all taxes and business fees payable by the Fund to federal, state
or other governmental agencies;
(vii) the fees of any trade association of which the Company may be a
member;
(viii) the cost of share certificates representing the Fund's Shares;
(ix) the fees and expenses involved in registering and maintaining
registrations of the Company and of its Shares with the Commission,
registering the Company as a broker or dealer and qualifying its Shares
under state securities laws, including the preparation and printing of the
Company's registration statements and prospectuses for filing under
federal and state securities laws for such purposes;
(x) allocable communications expenses with respect to investor services
and all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing reports to shareholders in the amount
necessary for distribution to the shareholders;
(xi) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business; and
(xii) any expenses assumed by the Fund pursuant to a Plan of
Distribution adopted in conformity with Rule 12b-1 under the 1940 Act.
(c) Fees and expenses of legal counsel, registering shares, holding meetings
and communicating with shareholders as described in subparagraph (b) above
include an allocable portion of the cost of maintaining an internal legal and
compliance department.
8. Organization Expenses. The Fund hereby agrees to reimburse the Manager
for the organization expenses of, and the expenses incurred in connection
with, the initial offering of any Shares of a Fund.
D-6
<PAGE>
9. Compensation. For the services provided and the facilities furnished
pursuant to this Agreement, the Company will pay to the Manager as full
compensation therefor a fee at an annual rate of the following percentage of
the average daily net assets of each Fund.
<TABLE>
<S> <C>
[Bond Fund............................................................ 0.75%
EAFE Index Fund....................................................... 0.95%
Growth Equity Fund.................................................... 0.85%
Indexed Bond Fund..................................................... 0.50%
Indexed Equity Fund................................................... 0.50%
International Bond Fund............................................... 0.80%
International Equity Fund............................................. 0.85%
Money Market Fund..................................................... 0.50%
Multi-Asset Fund...................................................... 0.65%
Short-Term Bond Fund.................................................. 0.60%
Value Equity Fund..................................................... 0.85%]
</TABLE>
This fee will be computed daily and will be paid to the Manager monthly.
This fee will be chargeable only to the Fund, and no other series of the
Company shall be liable for the fee due and payable hereunder. The Fund shall
not be liable for any expense of any other series of the Company.
10. Standard of Care. The Manager shall not be liable for any error of
judgment or for any loss suffered by the Fund in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations and duties
under this Agreement.
11. Duration and Termination. This Agreement shall continue in effect with
respect to the Fund for a period of more than two years from the date hereof
only so long as such continuance is specifically approved at least annually
with respect to the Fund in conformity with the requirements of the 1940 Act
and the Rules thereunder; provided, however, that this Agreement may be
terminated with respect to the Fund at any time, without the payment of any
penalty, by the Directors of the Company or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund, or by
the Manager at any time, without the payment of any penalty, on not more than
60 days' nor less than 30 days' written notice to the other party. This
Agreement shall terminate automatically in the event of its assignment (as
defined in the 1940 Act).
12. Other Business. Nothing in this Agreement shall limit or restrict the
right of any of the Manager's directors, officers, or employees who may also
be a Director, officer, or employee of the Company to engage in any other
business or to devote his time and attention in part to the
D-7
<PAGE>
management or other aspects of any business, whether of a similar or
dissimilar nature, nor limit or restrict the Manager's right to engage in any
other business or to render services of any kind to any other corporation,
trust, firm, individual or association.
13. Independent Contractor. Except as otherwise provided herein or
authorized by the Directors of the Company from time to time, the Manager
shall for all purposes herein be deemed to be an independent contractor and
shall have no authority to act for or represent the Fund or the Company in any
way or otherwise be deemed an agent of the Fund or the Company.
14. Company Materials. During the term of this Agreement, the Company agrees
to furnish the Manager at its principal office all Prospectuses, proxy
statements, reports to shareholders, sales literature or other material
prepared for distribution to shareholders of the Fund or to the public, which
refer to the Manager in any way, prior to use thereof and not to use such
material if the Manager reasonably objects in writing within five business
days (or such other time as may be mutually agreed) after receipt thereof. In
the event of termination of this Agreement, the Company will continue to
furnish to the Manager copies of any of the above-mentioned materials which
refer in any way to the Manager. The Company shall furnish or otherwise make
available to the Manager such other information relating to the business
affairs of the Fund as the Manager at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder.
15. Amendment. This Agreement may be amended in writing by mutual consent,
but the consent of the Fund, if required, must be obtained in conformity with
the requirements of the 1940 Act and the Rules thereunder.
16. Notice. Any notice or other communication required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Manager at Morris Corporate
Center I, Building A, 300 Interpace Parkway, Parsippany, New Jersey 07054; or
(2) to the Company at 51 Madison Avenue, New York, NY 10010.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
18. Use of Name. The Fund may use any name including the word "MainStay"
only for so long as this Agreement or any other Investment Advisory Agreement
between the Manager or any other affiliate of New York Life Insurance Company
and the Company or any extension, renewal or amendment thereof remains in
effect, including any similar agreement with any organization which shall have
succeeded to the Manager's business as investment adviser. At such time as
such an agreement shall
D-8
<PAGE>
no longer be in effect, the Fund will (to the extent that it lawfully can)
cease to use such name or any other name indicating that it is advised by or
otherwise connected with the Manager or any organization which shall have so
succeeded to its business.
19. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. As used in this Agreement, terms shall have the same meaning
as such terms have in the 1940 Act. Where the effect of a requirement of the
federal securities laws reflected in any provision of this Agreement is made
less restrictive by a rule, regulation or order of the Commission, whether of
special or general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order. This Agreement may be signed in
counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
MAINSTAY INSTITUTIONAL FUNDS INC.,
on behalf of
FUND, a series
By: _________________________________
Name:
Title:
MAINSTAY MANAGEMENT, INC.
By: _________________________________
Name:
Title:
D-9
<PAGE>
EXHIBIT E
ADDITIONAL INFORMATION REGARDING PRINCIPAL EXECUTIVE OFFICERS AND
DIRECTORS OF MAINSTAY MANAGEMENT, INC.
<TABLE>
<CAPTION>
POSITION WITH MAINSTAY
NAME AND ADDRESS MANAGEMENT, INC. PRINCIPAL OCCUPATION
- ---------------- ----------------------- --------------------
<S> <C> <C>
Ravi Akhoury Director Chairman and Chief
9 West 57th Street Executive Officer,
New York, NY 10019 MacKay-Shields
Financial Corporation
Jefferson C. Boyce Director Senior Vice
51 Madison Avenue President, New York
New York, NY 10010 Life Insurance
Company
Alice T. Kane Director, President and Executive Vice
51 Madison Avenue Chief Executive Officer President, New York
New York, NY 10010 Life Insurance
Company
Frank Mistero Director Senior Vice
51 Madison Avenue President, New York
New York, NY 10010 Life Insurance
Company
Stephen C. Roussin Director, Senior Vice Senior Vice
51 Madison Avenue President and Chief President, New York
New York, NY 10010 Operations Officer Life Insurance
Company
Walter W. Ubl Director Senior Vice
51 Madison Avenue President, New York
New York, NY 10010 Life Insurance
Company
</TABLE>
E-1
<PAGE>
EXHIBIT F
FORM OF
COMPOSITE
---------
[BOND FUND]
[EAFE INDEX FUND]
[GROWTH EQUITY FUND]
[INDEXED BOND FUND]
[INDEXED EQUITY FUND]
[INTERNATIONAL BOND FUND]
[INTERNATIONAL EQUITY FUND]
[MONEY MARKET FUND]
[MULTI-ASSET FUND]
[SHORT-TERM BOND FUND]
[VALUE EQUITY FUND]
SUB-ADVISORY AGREEMENT
Agreement made as of , 1997 between MainStay Management, Inc., a
Delaware corporation (the "Manager"), and [MacKay-Shields Financial
Corporation, a Delaware corporation] [Monitor Capital Advisors, Inc., a
Delaware corporation] [New York Life Insurance Company, a mutual life
insurance company organized under the laws of the state of New York] (the
"Sub-Adviser") (the "Agreement").
WHEREAS, the Manager has entered into a Management Agreement, dated ,
1997 (the "Management Agreement"), with MainStay Institutional Funds Inc. (the
"Company"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), on behalf of the
[Bond Fund, EAFE Index Fund, Growth Equity Fund, Indexed Bond Fund, Indexed
Equity Fund, International Bond Fund, International Equity Fund, Money Market
Fund, Multi-Asset Fund, Short-Term Bond Fund and Value Equity Fund] (the
"Fund"), a series of the Company;
WHEREAS, under the Management Agreement, the Manager has agreed to provide
certain investment advisory and related administrative services to the Fund;
WHEREAS, the Management Agreement permits the Manager to delegate certain of
its investment advisory duties under the Management Agreement to a sub-
adviser; and
F-1
<PAGE>
WHEREAS, the Manager desires to retain the Sub-Adviser to furnish certain
investment advisory services with respect to the fund and the Sub-Adviser is
willing to furnish such services;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Appointment. The Manager hereby appoints the Sub-Adviser as an investment
sub-adviser with respect to the Fund for the period and on the terms set forth
in this Agreement. The Sub-Adviser accepts that appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. Duties as Sub-Adviser. Subject to the supervision of the Board of
Directors of the Company and the Manager, the Sub-Adviser shall manage the
investment operations of the Fund and the composition of the portfolio of the
Fund, including the purchase, retention and disposition thereof, in accordance
with the investment objectives, policies and restrictions of the Fund, as
specified in the currently effective Prospectus (as hereinafter defined) and
statement of additional information and subject to the following
understandings:
(a) The Sub-Adviser shall provide supervision of the Fund's investments
and determine from time to time what investments or securities will be
purchased, retained, sold or lent by the Fund, and what portion of the
Fund's assets will be invested or held uninvested as cash.
(b) The Sub-Adviser shall use its best judgment in the performance of
its duties under this Agreement.
(c) The Sub-Adviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Articles of
Incorporation, By-Laws and Prospectus (each as hereinafter defined) of the
Company and with the instructions and directions of the Board of Directors
and the Manager and will conform to and comply with the requirements of
the 1940 Act and all other applicable federal and state laws and
regulations.
(d) The Sub-Adviser shall determine the securities to be purchased or
sold by the Fund and will place orders pursuant to its determination with
or through such persons, brokers or dealers (including NYLIFE Securities
Inc.) in conformity with the policy with respect to brokerage as set forth
in the Company's Registration Statement and Prospectus (each as
hereinafter defined) or as the Board of Directors may direct from time to
time. It is recognized that, in providing the Fund with investment
supervision or the placing of orders for portfolio transactions, the Sub-
Adviser will give primary consideration to securing the most favorable
price and efficient execution. Consistent with this policy, the Sub-
Adviser may consider
F-2
<PAGE>
the financial responsibility, research and investment information and
other services provided by brokers or dealers who may effect or be a party
to any such transaction or other transactions to which other clients of
the Sub-Adviser may be a party. It is understood that none of the Fund,
the Company, the Manager nor the Sub-Adviser has adopted a formula for
allocation of the Fund's investment transaction business. It is also
understood that it is desirable for the Fund that the Sub-Adviser have
access to supplemental investment and market research and security and
economic analyses provided by certain brokers who may execute brokerage
transactions at a higher cost to the Fund than may result when allocating
brokerage to other brokers on the basis of seeking the most favorable
price and efficient execution. Therefore, the Sub-Adviser is authorized to
place orders for the purchase and sale of securities for the Fund with
such certain brokers, subject to review by the Company's Board of
Directors from time to time with respect to the extent and continuation of
this practice. It is understood that the services provided by such brokers
may be useful to the Sub-Adviser in connection with its services to other
clients.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients,
the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be so sold or purchased in order to obtain the most
favorable price or lower brokerage commissions and efficient execution. In
such event, allocation of the securities so purchased or sold, as well as
expenses incurred in the transaction, will be made by the Sub-Adviser in
the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients.
(e) The Sub-Adviser shall maintain all books and records with respect to
the Fund's securities transactions required by sub-paragraphs (b)(5), (6),
(9) and (10) and paragraph (f) of Rule 31a-1 under the 1940 Act and any
other books and records required to be maintained by it under the 1940 Act
and the Rules thereunder and shall render to the Manager and to the
Company's Directors such periodic and special reports as the Manager or
the Directors may reasonably request.
(f) The Sub-Adviser shall provide the Fund's Custodian on each business
day with information relating to the execution of all portfolio
transactions pursuant to standing instructions.
3. Sub-Adviser Personnel. The Sub-Adviser shall authorize and permit any of
its directors, officers and employees who may be elected or appointed as
Directors or officers of the Company to serve in the capacities
F-3
<PAGE>
in which they are elected or appointed. Services to be furnished by the Sub-
Adviser under this Agreement may be furnished through the medium of any of
such directors, officers, or employees.
4. Books and Records. The Sub-Adviser shall keep the Fund's books and
records required to be maintained by it, pursuant to paragraph 2 hereof. The
Sub-Adviser agrees that all records which it maintains for the Fund are the
property of the Fund, and it will surrender promptly to the Fund any of such
records upon the Fund's request. The Sub-Adviser further agrees to preserve
for the periods prescribed by Rule 31a-2 as promulgated by the Commission
under the 1940 Act any such records as are required to be maintained by the
Sub-Adviser pursuant to paragraph 2 hereof.
5. Services Not Exclusive. The services furnished by the Sub-Adviser
hereunder are not to be deemed exclusive and the Sub-Adviser shall be free to
furnish similar or different services to others so long as its services under
this Agreement are not impaired thereby.
6. Documents. The Manager has delivered to the Sub-Adviser copies of each of
the following documents and will deliver to it all future amendments and
supplements, if any:
(a) Articles of Incorporation of the Company, filed with the Secretary
of State of Maryland (such Articles of Incorporation, as in effect on the
date hereof and as amended from time to time, are herein called the
"Articles of Incorporation");
(b) By-Laws of the Company (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the "By-Laws");
(c) Certified Resolutions of the Board of Directors of the Company
authorizing the appointment of the Sub-Adviser and approving the form of
this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (the "Registration Statement"), as filed
with the Securities and Exchange Commission (the "Commission") relating to
the Fund and the Fund's Shares and all amendments thereto;
(e) Notification of Registration of the Company under the 1940 Act on
Form N-8A as filed with the Commission and all amendments thereto; and
(f) Prospectus and Statement of Additional Information of the Fund (such
Prospectus and Statement of Additional Information, as currently in effect
and as amended or supplemented from time to time, being herein called the
"Prospectus").
F-4
<PAGE>
7. Expenses. During the term of this Agreement, the Sub-Adviser will bear
all expenses incurred by it in connection with its services under this
Agreement. The Sub-Adviser shall not be responsible for any expenses incurred
by the Company, the Fund or the Manager.
8. Compensation. For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, the Manager, not the Company or the
Fund, will pay to the Sub-Adviser a fee, computed daily and payable monthly,
at an annual rate of the following percentage of each Fund's average daily net
assets:
<TABLE>
<S> <C>
[Bond Fund............................................................ 0.20%
EAFE Index Fund....................................................... 0.15%
Growth Equity Fund.................................................... 0.25%
Indexed Bond Fund..................................................... 0.10%
Indexed Equity Fund................................................... 0.10%
International Bond Fund............................................... 0.30%
International Equity Fund............................................. 0.35%
Money Market Fund..................................................... 0.10%
Multi-Asset Fund...................................................... 0.15%
Short-Term Bond Fund.................................................. 0.15%
Value Equity Fund..................................................... 0.25%]
</TABLE>
9. Standard of Care. Subject to the applicable law, the Sub-Adviser shall
not be liable for any error of judgment or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on its part
in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
10. Duration and Termination. This Agreement shall continue in effect for a
period of more than two years from the date hereof only so long as such
continuance is specifically approved at least annually with respect to the
Fund in conformity with the requirements of the 1940 Act and the Rules
thereunder. Notwithstanding the foregoing, this Agreement may be terminated:
(a) at any time without penalty by the Fund upon the vote of a majority of the
Directors or by vote of the majority of the Fund's outstanding voting
securities, upon sixty (60) days' written notice to the Sub-adviser, (b) by
the Manager at any time without penalty upon sixty (60) days' written notice
to the Sub-Adviser or immediately upon material breach by the Sub-Adviser or
immediately if, in the reasonable judgment of the Manager, the Sub-Adviser
becomes unable to discharge its duties and obligations under this Agreement,
or (c) by the Sub-Adviser at any time without penalty, upon sixty (60) days'
written notice to the Fund. This Subadvisory Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act) or
the assignment or termination of the Management Agreement.
F-5
<PAGE>
11. Other Business. Nothing in this Agreement shall limit or restrict the
right of any of the Sub-Adviser's directors, officers, or employees who may
also be a Director, officer, or employee of the Company to engage in any other
business or to devote his or her time and attention in part to the management
or other aspects of any business, whether of a similar or dissimilar nature,
nor limit or restrict the Sub-Adviser's right to engage in any other business
or to render services of any kind to any other corporation, trust, firm,
individual or association.
12. Amendment. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the party against which enforcement of the change, waiver, discharge or
termination is sought. No material amendment of this Agreement shall be
effective until approved (i) by a vote of a majority of those Directors who
are not parties to this Agreement or interested persons of any such party, and
(ii) by a vote of a majority of the Fund's outstanding voting securities
(unless in the case of (ii), the Company receives an SEC order or no-action
letter permitting it to modify the Agreement without such vote).
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. Notice. Any notice or other communication required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Manager at Morris Corporate
Center I, Building A, 300 Interpace Parkway, Parsippany, New Jersey 07054; or
(2) to the Sub-Adviser at [9 West 57th Street, New York, NY 10019] [504
Carnegie Center, Princeton, NJ 08540] [51 Madison Ave., New York, NY 10010].
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. As used in this Agreement, the terms "majority of the
outstanding voting securities," "affiliated person," "interested person,"
"assignment," "broker," "investment adviser," "net assets," "sale," "sell" and
"security" shall have the same meaning as such terms have in the 1940 Act.
Where the effect of a requirement of the federal securities laws reflected in
any provision of this Agreement is made less restrictive by a rule, regulation
or order of the Commission, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation
or order. This Agreement may be signed in counterpart.
F-6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
MAINSTAY MANAGEMENT, INC.
By: _________________________________
Name:
Title:
[MACKAY-SHIELDS FINANCIAL
CORPORATION]
[MONITOR CAPITAL ADVISORS, INC.]
[NEW YORK LIFE INSURANCE COMPANY]
By: _________________________________
Name:
Title:
F-7
<PAGE>
EXHIBIT G
ADDITIONAL INFORMATION REGARDING PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF
MACKAY-SHIELDS FINANCIAL CORPORATION
<TABLE>
<CAPTION>
POSITION WITH
MACKAY-SHIELDS
NAME AND ADDRESS FINANCIAL CORPORATION PRINCIPAL OCCUPATION
- ---------------- --------------------- --------------------
<S> <C> <C>
Ravi Akhoury Chairman and Chairman and Chief
9 West 57th Street Chief Executive Executive Officer,
New York, NY 10019 Officer MacKay-Shields Financial
Corporation
Alice T. Kane Director Executive Vice
51 Madison Avenue President, New York Life
New York, NY 10010 Insurance Company
Richard M. Kernan, Jr. Director Executive Vice President
51 Madison Avenue and Chief Investment
New York, NY 10010 Officer, New York Life
Insurance Company
Denis Laplaige President, President, Managing
9 West 57th Street Managing Director Director and Chief
New York, NY 10019 and Chief Investment Officer,
Investment Officer MacKay-Shields Financial
Corporation
Donald K. Ross Director Retired Chairman and
953 Cherokee Lane Chief Executive Officer,
Franklin Lakes, NJ 07417 New York Life Insurance
Company
Seymour Sternberg Director Chairman, Chief
51 Madison Avenue Executive Officer and
New York, NY 10010 President, New York Life
Insurance Company
</TABLE>
G-1
<PAGE>
EXHIBIT H
ADDITIONAL INFORMATION REGARDING PRINCIPAL EXECUTIVE OFFICER AND
DIRECTORS OF MONITOR CAPITAL ADVISORS, INC.
<TABLE>
<CAPTION>
POSITION WITH MONITOR
NAME AND ADDRESS CAPITAL ADVISORS, INC. PRINCIPAL OCCUPATION
- ---------------- ---------------------- --------------------
<S> <C> <C>
Jefferson C. Boyce Director Senior Vice President,
51 Madison Avenue New York Life
New York, NY 10010 Insurance Company
James Mehling President and Director President and
504 Carnegie Center Director, Monitor
Princeton, NJ 08540 Capital Advisors, Inc.
Patrick G. Boyle Chairman Senior Vice President,
51 Madison Avenue New York Life
New York, NY 10010 Insurance Company
Alice T. Kane Director Executive Vice
51 Madison Avenue President, New York
New York, NY 10010 Life Insurance Company
Richard M. Kernan, Jr. Director Executive Vice
51 Madison Avenue President and Chief
New York, NY 10010 Investment Officer,
New York Life
Insurance Company
</TABLE>
H-1
<PAGE>
EXHIBIT I
ADDITIONAL INFORMATION REGARDING PRINCIPAL EXECUTIVE OFFICERS AND
DIRECTORS OF NEW YORK LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
POSITION WITH NEW YORK
NAME AND ADDRESS LIFE INSURANCE COMPANY PRINCIPAL OCCUPATION
- ---------------- ---------------------- --------------------
<S> <C> <C>
Seymour Sternberg Chairman, Chief Chairman, Chief
51 Madison Avenue Executive Officer and Executive Officer and
New York, NY 10010 President President, New York
Life Insurance Company
Frederick J. Sievert Vice Chairman Vice Chairman and
51 Madison Avenue and Director Director, New York
New York, NY 10010 Life Insurance Company
Howard L. Atkins Executive Vice Executive Vice
51 Madison Avenue President and President and Chief
New York, NY 10010 Chief Financial Financial Officer, New
Officer York Life
Insurance Company
Alice T. Kane Executive Vice Executive Vice
51 Madison Avenue President President, New York
New York, NY 10010 Life Insurance Company
Richard M. Kernan, Jr. Executive Vice Executive Vice
51 Madison Avenue President and President and Chief
New York, NY 10010 Chief Investment Investment Officer and
Officer and Director,
Director New York Life
Insurance
Company
George J. Trapp Executive Vice Executive Vice
51 Madison Avenue President and President and
New York, NY 10010 Secretary Secretary, New York
Life Insurance Company
Richard D. Levy Senior Vice Senior Vice President
51 Madison Avenue President and and Controller, New
New York, NY 10010 Controller York Life Insurance
Company
Marc J. Chalfin Senior Vice Senior Vice President
51 Madison Avenue President and and Chief of Staff
New York NY 10010 Chief of Staff (Finance and
(Finance and Information Information Technology
Technology Group) Group), New York Life
Insurance Company
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH NEW YORK
NAME AND ADDRESS LIFE INSURANCE COMPANY PRINCIPAL OCCUPATION
- ---------------- ---------------------- --------------------
<S> <C> <C>
Michael J. McLaughlin Senior Vice Senior Vice President
51 Madison Avenue President and and General Counsel,
New York, NY 10010 General Counsel New York Life
Insurance
Company
Stephen N. Steinig Senior Vice Senior Vice President
51 Madison Avenue President and and Chief Actuary, New
New York, NY 10010 Chief Actuary York Life Insurance
Company
Thomas J. Warga Senior Vice Senior Vice President
51 Madison Avenue President and and General Auditor,
New York, NY 10010 General Auditor New York Life
Insurance
Company
Robert M. Baylis Director Former Vice Chairman,
72 Cummings Point Road CS First Boston, Inc.
Stamford, CT 06902
William G. Burns Director Former Vice Chairman,
2200 Alaqua Drive NYNEX Corporation
Longwood, FL 32779
Patricia T. Carbine Director President of Ms.
Suite 1B Foundation for
115 East 72nd Street Education and
New York, NY 10021 Communication, Inc.
Paul W. Douglas Director Retired Chairman and
Suite 1900 Chief Executive
250 Park Avenue Officer, The Pittston
New York, NY 10177 Company
Kent B. Foster Director President, GTE
One Stamford Forum Corporation
9th Floor
Stamford, CT 06904
Conrad K. Harper Director Partner, Simpson
425 Lexington Avenue Thatcher & Bartlett
New York, NY 10017
Harry G. Hohn Director Retired Chairman of
51 Madison Avenue the Board and Chief
New York, NY 10010 Executive Officer, New
York Life Insurance
Company
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH NEW YORK
NAME AND ADDRESS LIFE INSURANCE COMPANY PRINCIPAL OCCUPATION
- ---------------- ---------------------- --------------------
<S> <C> <C>
Thomas W. Langfitt, M.D. Director Chairman and Chief
260 Beech Hill Road Executive Officer, The
Wynnewood, PA 19096 Glenmede Corporation
Leslie G. McCraw, Jr. Director Chairman and CEO,
3353 Michelson Drive Fluor Corporation
Irvine, CA 92698
David W. Mitchell Director Retired Chairman of
P.O. Box 1120 the Board and Chief
Julian, CA 92036 Executive Officer,
Avon Products, Inc.
Richard R. Pivirotto Director President, Richard R.
111 Clapboard Ridge Road Pivirotto Co. Inc.;
Greenwich, CT 06840 Retired Chairman,
Associated Dry Goods
Corporation
Robert J. Richardson, PhD. Director Corporate Consultant;
c/o Richardson's (North Bay) 188 Retired President,
Main Street West Bell Canada
North Bay Enterprises Inc.
Ontario, Canada P1B 2T5
</TABLE>
I-3
<PAGE>
EXHIBIT J
INFORMATION REGARDING COMPARABLE FUNDS ADVISED BY
MACKAY-SHIELDS FINANCIAL CORPORATION
<TABLE>
<CAPTION>
SIZE RATE PAID PROPOSED
(IN 000S) CURRENT FOR YEAR SUB-
AS OF ADVISORY ENDED ADVISORY
FUND 6/30/97 FEE 12/31/96 FEE RATE
---- --------- -------- --------- --------
<S> <C> <C> <C> <C>
MAINSTAY INSTITUTIONAL INTERNATIONAL
BOND FUND............................. $ 52,775 0.30% 0.30% 0.30%
MainStay International Bond Fund...... 32,526 0.45%* 0.25% N/A
MAINSTAY INSTITUTIONAL INTERNATIONAL
EQUITY FUND........................... 141,568 0.35% 0.35% 0.35%
MainStay International Equity Fund.... 83,724 0.60% 0.60% N/A
MainStay VP International Equity
Portfolio........................... 29,989 0.60% 0.60% N/A
</TABLE>
- -----------
* NYLIFE Distributors Inc. and MacKay-Shields have jointly agreed to waive a
portion of their fees payable by the International Bond Fund until such time
as the Fund reaches $50 million in assets.
J-1
<PAGE>
EXHIBIT K
INFORMATION REGARDING COMPARABLE FUNDS ADVISED BY
MONITOR CAPITAL ADVISORS, INC.
<TABLE>
<CAPTION>
SIZE RATE PAID PROPOSED
(IN 000S) CURRENT FOR YEAR SUB-
AS OF ADVISORY ENDED ADVISORY
FUND 6/30/97 FEE 12/31/96 FEE RATE
---- --------- -------- --------- --------
<S> <C> <C> <C> <C>
MAINSTAY INSTITUTIONAL INDEXED EQUITY
FUND.................................. $842,619 0.10%* 0.08% 0.10%
MainStay VP Indexed Equity Portfolio.. 352,971 0.10% 0.10% N/A
MainStay Equity Index Fund............ 329,825 0.10% 0.10% N/A
</TABLE>
- -----------
* The Fund's administrator, New York Life Insurance Company, and Monitor
Capital Advisors, Inc. have voluntarily agreed to limit the total expenses
(excluding interest, taxes, brokerage commissions, litigation and
indemnification expenses, and other extraordinary expenses and any class-
specific expenses) of the Fund to an annual rate of 0.30% of the Fund's
Institutional Class shares' average daily net assets and 0.55% of the Fund's
Institutional Service Class shares' average daily net assets as of October
1, 1996.
K-1
<PAGE>
MAINSTAY INSTITUTIONAL FUNDS INC.
[NAME OF FUND]
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR
--- ---
EACH OF THE FOLLOWING PROPOSALS:
Proposal 1 - Election of Directors:
Patrick G. Boyle
Lawrence Glacken
Alice T. Kane
Susan B. Kerley
Robert P. Mulhearn
[ ] FOR ALL [ ] AGAINST ALL
[ ] FOR ALL EXCEPT [to withhold authority
to vote for any nominee
listed above, strike a
line through the name of
the nominee(s)]
Proposal 2 - Approval of Management Agreement
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3A - Approval of Sub-Advisory Agreement Between the Manager and
MacKay-Shields Financial Corporation
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 4 - Elimination or Revision of Certain Fundamental Investment
Restrictions
[ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] To vote against the proposed changes to one or more of the
specific fundamental investment restrictions, but to approve the
others, place an "X" in the box at left AND indicate the
number(s) (as set forth in the proxy statement) of the investment
restriction(s) you do not want to change on this line:
_________________________________________________________________
Proposal 5 - Ratification of the Selection of Price Waterhouse LLP as
Independent Certified Public Accountants of the Company
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
--- ---
YOUR SHAREHOLDER VOTE IS IMPORTANT!
Please vote, sign and mail your proxy ballot (this card) in the enclosed
postage-paid envelope today, no matter how many shares you own. A majority of
each Fund's shares must be represented in person or by proxy. Please vote so
your Fund can avoid the expense of another mailing.
Code 1
<PAGE>
MAINSTAY INSTITUTIONAL FUNDS INC.
[NAME OF FUND]
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 17, 1997
The undersigned hereby appoints A. Thomas Smith III, Sara L. Badler and
Nancy Brenner, and each of them, his or her attorneys and proxies with full
power of substitution to vote and act with respect to all shares of the MainStay
Institutional Funds Inc. [NAME OF FUND] (the "Fund") held by the undersigned at
the Special Meeting of Shareholders of the Fund to be held at 10:00 a.m.,
Eastern Time, on November 17, 1997, at the offices of the MainStay Institutional
Funds Inc. (the "Company"), 51 Madison Avenue, New York, NY 10010, and at any
adjournment thereof (the "Meeting"), and instructs them to vote as indicated on
the matters referred to in the Proxy Statement for the Meeting, receipt of which
is hereby acknowledged, with discretionary power to vote upon such other
business as may properly come before the Meeting.
YOUR SHAREHOLDER VOTE IS IMPORTANT!
PLEASE VOTE BY MARKING YOUR PROXY
ON THE REVERSE SIDE, SIGN AND DATE IT
AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
This proxy must be signed by the beneficial owner
of Fund shares. If signing as attorney, executor,
guardian or in some representative capacity or as
an officer of a corporation, please add title as
such.
Receipt of the Notice of Special Meeting and Proxy
Statement is hereby acknowledged.
Dated ____________________, 1997
______________________________________
Signature(s) of Shareholder(s)
______________________________________
Signature(s) of Shareholder(s)
<PAGE>
MAINSTAY INSTITUTIONAL FUNDS INC.
[NAME OF FUND]
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR
--- ---
EACH OF THE FOLLOWING PROPOSALS:
Proposal 1 - Election of Directors:
Patrick G. Boyle
Lawrence Glacken
Alice T. Kane
Susan B. Kerley
Robert P. Mulhearn
[ ] FOR ALL [ ] AGAINST ALL
[ ] FOR ALL EXCEPT [to withhold authority
to vote for any nominee
listed above, strike a
line through the name of
the nominee(s)]
Proposal 2 - Approval of Management Agreement
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3B - Approval of Sub-Advisory Agreement Between the Manager and
Monitor Capital Advisors, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 4 - Elimination or Revision of Certain Fundamental Investment
Restrictions
[ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] To vote against the proposed changes to one or more of the
specific fundamental investment restrictions, but to approve the
others, place an "X" in the box at left AND indicate the
number(s) (as set forth in the proxy statement) of the investment
restriction(s) you do not want to change on this line:
_________________________________________________________________
Proposal 5 - Ratification of the Selection of Price Waterhouse LLP as
Independent Certified Public Accountants of the Company
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
--- ---
YOUR SHAREHOLDER VOTE IS IMPORTANT!
Please vote, sign and mail your proxy ballot (this card) in the enclosed
postage-paid envelope today, no matter how many shares you own. A majority of
each Fund's shares must be represented in person or by proxy. Please vote so
your Fund can avoid the expense of another mailing.
Code 2
<PAGE>
MAINSTAY INSTITUTIONAL FUNDS INC.
[NAME OF FUND]
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 17, 1997
The undersigned hereby appoints A. Thomas Smith III, Sara L. Badler and
Nancy Brenner, and each of them, his or her attorneys and proxies with full
power of substitution to vote and act with respect to all shares of the MainStay
Institutional Funds Inc. [NAME OF FUND] (the "Fund") held by the undersigned at
the Special Meeting of Shareholders of the Fund to be held at 10:00 a.m.,
Eastern Time, on November 17, 1997, at the offices of the MainStay Institutional
Funds Inc. (the "Company"), 51 Madison Avenue, New York, NY 10010, and at any
adjournment thereof (the "Meeting"), and instructs them to vote as indicated on
the matters referred to in the Proxy Statement for the Meeting, receipt of which
is hereby acknowledged, with discretionary power to vote upon such other
business as may properly come before the Meeting.
YOUR SHAREHOLDER VOTE IS IMPORTANT!
PLEASE VOTE BY MARKING YOUR PROXY
ON THE REVERSE SIDE, SIGN AND DATE IT
AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
This proxy must be signed by the beneficial owner
of Fund shares. If signing as attorney, executor,
guardian or in some representative capacity or as
an officer of a corporation, please add title as
such.
Receipt of the Notice of Special Meeting and Proxy
Statement is hereby acknowledged.
Dated ____________________, 1997
______________________________________
Signature(s) of Shareholder(s)
______________________________________
Signature(s) of Shareholder(s)
<PAGE>
MAINSTAY INSTITUTIONAL FUNDS INC.
[NAME OF FUND]
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR
--- ---
EACH OF THE FOLLOWING PROPOSALS:
Proposal 1 - Election of Directors:
Patrick G. Boyle
Lawrence Glacken
Alice T. Kane
Susan B. Kerley
Robert P. Mulhearn
[ ] FOR ALL [ ] AGAINST ALL
[ ] FOR ALL EXCEPT [to withhold authority
to vote for any nominee
listed above, strike a
line through the name of
the nominee(s)]
Proposal 2 - Approval of Management Agreement
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3C - Approval of Sub-Advisory Agreement Between the Manager and
New York Life Insurance Company
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 4 - Elimination or Revision of Certain Fundamental Investment
Restrictions
[ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] To vote against the proposed changes to one or more of the
specific fundamental investment restrictions, but to approve the
others, place an "X" in the box at left AND indicate the
number(s) (as set forth in the proxy statement) of the investment
restriction(s) you do not want to change on this line:
_________________________________________________________________
Proposal 5 - Ratification of the Selection of Price Waterhouse LLP as
Independent Certified Public Accountants of the Company
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
---- ---
YOUR SHAREHOLDER VOTE IS IMPORTANT!
Please vote, sign and mail your proxy ballot (this card) in the enclosed
postage-paid envelope today, no matter how many shares you own. A majority of
each Fund's shares must be represented in person or by proxy. Please vote so
your Fund can avoid the expense of another mailing.
Code 3
<PAGE>
MAINSTAY INSTITUTIONAL FUNDS INC.
[NAME OF FUND]
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 17, 1997
The undersigned hereby appoints A. Thomas Smith III, Sara L. Badler and
Nancy Brenner, and each of them, his or her attorneys and proxies with full
power of substitution to vote and act with respect to all shares of the MainStay
Institutional Funds Inc. [NAME OF FUND] (the "Funds") held by the undersigned at
the Special Meeting of Shareholders of the Fund to be held at 10:00 a.m.,
Eastern Time, on November 17, 1997, at the offices of the MainStay Institutional
Funds Inc. (the "Company"), 51 Madison Avenue, New York, NY 10010, and at any
adjournment thereof (the "Meeting"), and instructs them to vote as indicated on
the matters referred to in the Proxy Statement for the Meeting, receipt of which
is hereby acknowledged, with discretionary power to vote upon such other
business as may properly come before the Meeting.
YOUR SHAREHOLDER VOTE IS IMPORTANT!
PLEASE VOTE BY MARKING YOUR PROXY
ON THE REVERSE SIDE, SIGN AND DATE IT
AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
This proxy must be signed by the beneficial owner
of Fund shares. If signing as attorney, executor,
guardian or in some representative capacity or as
an officer of a corporation, please add title as
such.
Receipt of the Notice of Special Meeting and Proxy
Statement is hereby acknowledged.
Dated ____________________, 1997
______________________________________
Signature(s) of Shareholder(s)
______________________________________
Signature(s) of Shareholder(s)
