What is the “reverse share split” that occurs at the end of the year on MainStay Equity Index Fund?
The reverse share split is an annual adjustment to keep the number of shares constant within the account to simplify tracking the guarantee. In a normal mutual fund distribution, the NAV will drop by the amount of the distribution, but will be reinvested to purchase more shares at the lower NAV. The account balance does not change, but the investor owns more shares that are worth less. In MainStay Equity Index Fund, the reverse share split brings the number of shares and the share value to where they were before the distribution. Either way, the account is worth the same dollar amount.
