30144 Federal Register / Vol. 65, No. 91 / Wednesday, May 10, 2000 / Notices

will operate and which will be

reasonably designed to provide that the

requirements set forth in the application

are met. The directors or trustees will

make and approve such changes that

they deem necessary to ensure that such

procedures are followed. In addition,

the directors or trustees will determine,

no less frequently than annually, that

the Joint Accounts have been operated

in accordance with the proposed

procedures, and will permit a Fund to

continue to participate therein only if it

determines that there is a reasonable

likelihood that the Fund and its

shareholders will benefit from the

Fund’s continued participation.

13. Investments held in a Joint

Account generally will not be sold prior

to maturity except: (a) If CSAM believes

that the investment no longer presents

minimal credit risk; (b) if, as a result of

a credit downgrading or otherwise, the

investment no longer satisfies the

investment criteria of all Funds

participating in the investment; or (c) if

the counterparty defaults. A Fund may,

however, sell its fractional portion of an

investment in a Joint Account prior to

the maturity of the investment in such

Joint Account if the cost of such

transaction will be borne solely by the

selling Fund and the transaction will

not adversely affect the other Funds

participating in that Joint Account. In

no case will an early termination by less

than all participating Funds be

permitted if it will reduce the principal

amount or yield received by other

Funds participating in a particular Joint

Account or otherwise adversely affect

the other participating Funds. Each

Fund participating in such Joint

Account will be deemed to have

consented to such sale and partition of

the investment in such Joint Account.

14. Repurchase Agreements held

through a Joint Account with a

remaining maturity of more than seven

days, as calculated pursuant to rule 2a–

7 under the Act, will be considered

illiquid and will be subject to the

restriction that a Fund may not invest

more than 10%, in the case of a money

market fund, or 15%, in the case of a

non-money market fund (or such other

percentages as set forth by the

Commission from time to time) if its net

assets in illiquid securities, and any

similar restriction set forth in the Fund’s

investment restrictions and policies, if

CSAM cannot sell the instrument, or the

Fund’s fractional interest in such

instrument, pursuant to the preceding

condition.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–11681 Filed 5–9–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. IC–24440; File No. 812–12000]

New York Life Insurance and Annuity

Corporation, et al., Notice of

Application

May 3, 2000.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’).

ACTION: Notice of Application for an

order under Section 6(c) of the

Investment Company Act of 1940

(‘‘1940 Act’’), as amended granting

exemptions from the provisions of

Sections 2(a)(32), 22(c), and 27(i)(2)(A)

of the 1940 Act and Rule 22c–1

thereunder to permit the recapture of

credits applied to premium payments

made under certain deferred variable

annuity policies and certificates.

SUMMARY OF APPLICATION: Applicants

seek an order under Section 6(c) of the

1940 Act, to permit, under specified

circumstances, the recapture of credits

applied to premium payments made

under: (i) Certain deferred variable

annuity policies and certificates that

NYLIAC will issue through SA III (the

policies and certificates, including

certain certificate data pages and

endorsements, are referred to as

‘‘Mainstay Policies’’ or ‘‘LifeStages

Policies,’’ collectively, the ‘‘SA III

Policies’’), and (ii) policies and

certificates, including certain certificate

data pages and endorsements, the

NYLIAC may issue in the future through

SA III or any Future Account

(collectively, the ‘‘Accounts’’) which

policies and certificates, including

certain certificate data pages and

endorsements, are substantially similar

to the SA III Policies in all material

respects (the ‘‘Future Policies’’ together

with the SA III Policies, ‘‘Policies’’).

Applicants also request that the order

being sought extend to any National

Association of Securities Dealers, Inc.

(‘‘NASD’’) member broker-dealer

controlling or controlled by, or under

common control with NYLIAC, whether

existing or created in the future, that

serves as a distributor or principal

underwriter of the Policies offered

through the Accounts (collectively,

‘‘NYLIAC Broker-Dealers’’).

APPLICANTS: New York Life Insurance

and Annuity Corporation (‘‘NYLIAC’’)

and its NYLIAC Variable Annuity

Separate Account—III (‘‘SA III’’), any

other separate accounts of NYLIAC

(‘‘Future Accounts’’) that support in the

future variable annuity policies and

certificates that are substantially similar

in all material respects to the SA III

policies, and NYLife Distributors, Inc.

(‘‘NYLIFE Distributors’’) (collectively

referred to herein as ‘‘Applicants’’).

FILING DATES: The Application was filed

with the Commission on February 24,

2000, and amended and restated on May

3, 2000.

HEARING OR NOTIFICATION OF HEARING: An

order granting the Application will be

issued unless the Commission orders a

hearing. Interested persons may request

a hearing by writing to the

Commission’s Secretary and serving

Applicants with a copy of the request,

personally or by mail. Hearing requests

should be received by the Commission

by 5:30 p.m., on May 26, 2000, and

should be accompanied by proof of

service on Applicants, in the form of an

affidavit, or, for lawyers, a certificate of

service. Hearing requests should state

the nature of the writer’s interest, the

reason for the request, and the issues

contested. Persons who wish to be

notified of a hearing may request

notification by writing to the

Commission’s Secretary.

ADDRESSES: Secretary, Securities and

Exchange Commission, 450 Fifth Street,

N.W., Washington, DC 20549–0609.

Applicants, c/o Linda M. Reimer, Esq.,

New York Life Insurance and Annuity

Corporation, 51 Madison Avenue, New

York, New York 10010.

FOR FURTHER INFORMATION CONTACT:

Ronald A. Holinsky, Attorney, or Susan

M. Olson, Branch Chief, Office of

Insurance Products, Division of

Investment Management, at (202) 942–

0670.

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee from the

Public Reference Branch of the SEC, 450

Fifth Street, N.W., Washington, D.C.

20549–0102 (tel. (202) 942–8090).

Applicant’s Representations

1. NYLIAC is a stock life insurance

company organized under the laws of

the State of Delaware. NYLIAC is

licensed to sell life, accident and health

insurance and annuities in the District

of Columbia and all states. NYLIAC

serves as depositor for SA III, which was

established in 1994 pursuant to

authority granted under a resolution of

NYLIAC’s Board of Directors. NYLIAC

Federal Register / Vol. 65, No. 91 / Wednesday, May 10, 2000 / Notices 30145

also serves as depositor for several

existing Future Accounts, one or more

of which may support obligations under

Future Policies. NYLIAC may establish

additional Future Accounts for which it

will serve as depositor.

2. NYLIFE Distributors is the

principal underwriter of SA III. NYLIFE

Distributors is registered with the

Commission as a broker-dealer under

the Securities Exchange Act of 1934, as

amended, and is a member of the NASD.

The SA III Policies are distributed by

NYLIFE Distributors and sold by

registered representatives of NYLIFE

Securities, Inc., and registered

representatives of unaffiliated brokerdealers that have entered into selling

agreements with NYLIAC and NYLIFE

Distributors. The SA III Policies also are

distributed and sold by banking and

financial institutions that have entered

into selling agreements with NYLIAC or

NYLIFE Distributors. NYLIFE

Securities, Inc. and NYLIFE Distributors

are wholly-owned subsidiaries of

NYLIFE, LLC, which is a wholly-owned

subsidiary of New York Life Insurance

Company. NYLIFE Distributors may

enter into similar arrangements for

Future Policies. NYLIFE Distributors

may act as principal underwriter for

Future Accounts and distributor for

Future Policies. A successor entity also

may act as principal underwriter for any

of the Accounts and distributor for any

of the Policies.

3. SA III is a segregated asset account

of NYLIAC. SA III is registered with the

Commission as a unit investment trust

under the 1940 Act. SA III will fund the

variable benefits available under the SA

III Policies. Units of interest in SA III

under the SA III Policies it funds will

be registered under the Securities Act of

1933 (‘‘1933 Act’’). NYLIAC may issue

Future Policies through SA III or

through Future Accounts. That portion

of assets of SA III that is equal to the

reserves and other SA III Policy

liabilities with respect to SA III is not

chargeable with liabilities arising out of

any other business of NYLIAC. Any

income, gains or losses, realized or

unrealized, from assets allocated to SA

III are, in accordance with the SA III

Policies, credited to or charged against

SA III, without regard to other income,

gains or losses of NYLIAC. The same

will be true of any Future Account.

4. Future Policies funded by SA III or

any Future Accounts will be

substantially similar to the SA III

Policies in all material respects. Certain

anticipated differences between SA III

Policies and Future Policies are

summarized below. SA III Policies will

be sold by registered representatives of

NYLIFE Securities, Inc., and unaffiliated

broker-dealers that have entered into

selling agreements with NYLIAC or

NYLIFE Distributors. SA III Policies also

will be sold by banking and financial

institutions that have entered into

selling agreements with NYLIAC and

NYLIFE Distributors. NYLIAC may issue

SA III Policies as individual or group

flexible premium tax deffered variable

annuity policies. NYLIAC may issue SA

III Policies in connection with

retirement plans that qualify for

favorable federal income tax treatment

under Sections 403, 408, or 457 of the

Internal Revenue Code of 1986, as

amended (‘‘Code’’). NYLIAC also may

issue SA III Policies on a non-tax

qualified basis. SA III Policies may be

used for other purposes in the future, or

offered only as qualified policies or nonqualified policies.

5. The minimum initial and

subsequent premium payment for a nonqualified policy is $5,000 for Mainstay

Policies and $2,000 for LifeStages

Policies. The minimum initial and

subsequent premium for a qualified

policy is $2,000 for both the Mainstay

and LifeStages Policies. The maximum

aggregate premium payments without

prior approval of NYLIAC is $1,000,000.

The maximum age of any annuitant as

of issue date is 80. NYLIAC does not

accept subsequent premium payments

after the annuity date unless otherwise

agreed to

6. An owner call allocate premium

payments or account value to one or

more investment division of SA III, each

of which will invest in a corresponding

portfolio of a mutual fund. In addition,

SA III Policies will permit premium

payments to be allocated to fixed

interest options funded through the

fixed account (‘‘Fixed Account’’) which

provides a guarantee of the premium

payment allocated thereto and interest

for specified periods. Policy owners

may receive annuity payments after

annuitization on a fixed basis.

7. SA III currently consists of 26

investment divisions, all of which will

be available under the SA III Policies.

However, a policy owner may not

allocate money to more than 18 variable

investment divisions at any given time.

Each investment division will invest in

shares of a corresponding portfolio of an

open-end, diversified series

management investment company

registered under the 1940 Act and

whose shares are offered under the 1933

Act (each a ‘‘Fund’’ and collectively,

‘‘Funds’’). The Funds currently

available under the SA III Policies are

managed by various entities affiliated

and unaffiliated with NYLIAC. The

investment divisions and the fixed

interest options will comprise the initial

‘‘Allocation Alternatives’’ under the SA

III Policies.

8. NYLIAC, at a later date, may

determine to create additional

investment divisions of SA III to invest

in any additional portfolios of the

Funds, or other portfolios or

investments as may now or in the future

be available. Similarly, investment

divisions of SA III may be combined or

eliminated from time to time. Future

Policies may offer Funds managed by

the same as well as other investment

advisers.

9. SA III Policies provide for various

withdrawal options, annuity benefits

and payout annuity option; transfer

privileges among Allocation

Alternatives; dollar cost averaging;

death benefits; and other features.

Mainstay Policies have the following

charges: (i) A surrender charge as a

percentage of premium payments

declining from 8% in years one, two,

three and four to 0% in year nine and

thereafter, with a specified free

withdrawal amount; and (ii) separate

account annual expenses at the annual

rate of 1.6% assessed against the net

assets of each investment division. Also,

each year during the accumulation

phase and on full surrender, an annual

policy service charge of $30 is deducted

proportionately from each Allocation

Alternative. The annual maintenance

fee will be waived if the Policy owner’s

account value is $100,000 or greater on

the date this fee is due. The Funds each

impose investment management fees

and charges for other expenses.

LifeStages Policies have the same

charges as listed above except that

under LifeStages Policies, the surrender

charge as a percentage of premium

payments declines from 8% in years

one, two and three to 0% in year nine

and thereafter.

10. Mainstay Policies have the

following death benefit. If the

policyholder or annuitant dies prior to

the annuity commencement date, the

designated beneficiary will receive,

upon the receipt of proof of death, the

greatest of: (1) The accumulation value,

less any outstanding loan balance, less

Credits (as defined below) applied

within the 12 months immediately

preceding death; (ii) the sum of all

premium payments made, less any

outstanding loan balance, partial

withdrawals, and surrender charges on

those partial withdrawals; or (iii) the

reset value plus any additional premium

payments made since the most recent

reset anniversary, less any outstanding

loan balance, proportional withdrawals

made since the most recent reset

anniversary, any surrender charges

applicable to such proportional

30146 Federal Register / Vol. 65, No. 91 / Wednesday, May 10, 2000 / Notices

withdrawals, and Credits applied within

the 12 months immediately preceding

death.

11. NYLIAC will apply a premium

credit (‘‘Credit’’) to the account of an SA

III Policy owner whenever the owner

makes a premium payment. The amount

of the Credit will equal a percentage

(‘‘Credit Rate’’) of the premium payment

according to the premium credit

schedule then in effect. The Credit Rate

applicable to a premium payment will

depend on the total amount of

premiums received under a Policy

(‘‘Total Accumulated Premiums’’). In

addition, if NYLIAC receives more than

one premium payment within 180 days

of the policy date (as defined in the

Policy), NYLIAC will adjust the Credits

applied to such payments using the

Credit Rate applicable to the later

payment(s) made during that period.

NYLIAC will apply any additional

Credit amounts resulting from such

adjustments as of the date it receives the

later premium payment(s).

NYLIAC proposes to use the following

premium credit schedule for initial

premium payments under the SA III

Policies:

Total accumulated

premiums at least

But less

than—

Credit

rate1

Minimum ................... $50,000 3.0

$50,000 ..................... 100,000 3.25

100,000 ..................... 500,000 4.5

500,000 ..................... 1,000,000 4.5

1,000,000 .................. 2,500,000 4.5

2,500,000 .................. 5,000,000 5.0

5,000,000 .................. Unlimited 5.0

1 Credit rate as a percentage of premium

payment.

NYLIAC may apply Credits for

subsequent premium payments under

SA III Policies using the same or a

different credit schedule. In addition,

NYLIAC may apply Credits for initial

and subsequent premium payments

under Future Policies using the same or

a different premium credit schedule.

The Credit Rate under future premium

credit schedules will range between

2.0% to 6.0%. NYLIAC will notify

Policy owners of any change in the

premium credit schedule prior to

implementing such change. NYLIAC

currently does not expect to change the

premium credit schedule more often

than five times a year. Any change in

the premium credit schedule will apply

to all premium payments received after

the schedule becomes effective.

12. NYLIAC will determine the

premium breakpoint and credit

percentages of future premium credit

schedules based on several factors,

including product expense levels,

policy experience, and competitive

position. NYLIAC expects to incur

certain expenses, such as those related

to policy issue, maintenance and

servicing, that will affect the

profitability of the policy. As premiums

paid under a policy increase, these

expenses should have less of an

unfavorable impact on profitability.

NYLIAC generally expects to be able to

afford to apply larger Credits on larger

policies. Accordingly, depending on

future expense levels, NYLIAC may

change future premium amount

breakpoints or credit percentages to

maintain a consistent level of

profitability. In addition, NYLIAC

expects different size policies to reflect

different persistency or mortality

experience that will affect the

profitability of the policies. Poor

persistency or high mortality experience

will adversely affect profitability.

NYLIAC generally expects to be able to

afford to apply a larger Credit on

policies with higher persistency or

lower mortality experience.

Accordingly, depending on whether

future persistency or mortality

experience is favorable or unfavorable,

NYLIAC may change future premium

amount breakpoints or credit

percentages to maintain a consistent

level of profitability. Finally, NYLIAC

will monitor changes in the marketplace

for policies with credit or similar

features, and may change future

premium amount breakpoints or credit

percentages to maintain a competitive

position in the marketplace.

13. NYLIAC will allocate Credits

among the Allocation Alternatives in

the same proportion as the

corresponding premium payments are

allocated by the owner. NYLIAC will

fund Credits from its general account

assets. The Credits are vested when

applied, except under the following

circumstances: (i) NYLIAC will

recapture all Credits if the owner

returns a SA III Policy to NYLIAC for a

refund during the 10-day (or longer, if

required) ‘‘free-look’’ period; and (ii) the

amount of any death benefit will not

include any Credit applied to an

owner’s account within 12 months of

the date of death.

14. Applicants seek exemption

pursuant to Section 6(c) of the 1940 Act

from Sections 2(a)(32), 22(c), and

27(i)(2)(A) of the 1940 Act, and Rule

22c–1 thereunder, to the extent deemed

necessary to permit NYLIAC to issue

policies that provide for Credits upon

the receipt of premium payments, and

to recapture Credits in the following

instances: (i) If the Policy owner returns

the Policy to NYLIAC for a refund

during the 10-day (or longer, if required)

‘‘free-look’’ period; and (ii) the amount

of any death benefit will not include

any Credit applied to an owner’s

account within 12 months of the date of

death.

Applicants’ Legal Analysis

1. Section 6(c) of the 1940 Act

authorizes the Commission to exempt

any person, security, or transaction, or

any class or classes of persons,

securities or transactions from the

provisions of the 1940 Act and the rules

promulgated thereunder if and to the

extent that such exemption is necessary

or appropriate in the public interest and

consist with the provisions of investors

and the purposes fairly intended by the

policy and provisions of the 1940 Act.

Applicants request that the

Commission, pursuant to Section 6(c) of

the 1940 Act grant the exemptions

requested below with respect to SA III

Policies, and any Future Policies funded

by SA III or Future Accounts, that are

issued by NYLIAC and underwritten or

distributed by NYLIFE Distributors or

any other NYLIAC Broker-Dealers.

Applicants undertake that Future

Policies funded by SA III or any Future

Account will be substantially similar in

all material respects to the SA III

Policies. Applicants believe that the

requested exemptions are appropriate in

the public interest and consistent with

the protection of investors and the

purposes fairly intended by the policy

and provisions of the 1940 Act.

2. Applicants represent that it is not

administratively feasible to track the

Credit amount in the Accounts after the

Credit is applied. Accordingly, the

asset-based charges applicable to the

Accounts will be assessed against the

entire amounts held in the respective

Accounts, including the Credit amount,

during the period when the owner’s

interest in the Credit is not completely

vested. As a result, during such periods,

the aggregate asset-based charges

assessed against an owner’s annuity

account value will be higher than those

that would be charged if the owner’s

annuity account value did not include

the Credit.

3. Subsection (i) of Section 27 of the

1940 Act provides that Section 27 does

not apply to any registered separate

account funding variable insurance

policies, or to the sponsoring insurance

company and principal underwriter of

such account, except as provided in

paragraph (2) of that subsection.

Paragraph (2) provides that it shall be

unlawful for such a separate account or

sponsoring insurance company to sell a

policy funded by the registered separate

account unless ‘‘(A) such contract is a

redeemable security.’’ Section 2(a)(32)

of the 1940 Act defines ‘‘redeemable

Federal Register / Vol. 65, No. 91 / Wednesday, May 10, 2000 / Notices 30147

security’’ as any security, other than

short-term paper, under the terms of

which the holder, upon presentation to

the issuer, is entitled to receive

approximately his or her proportionate

shares of the issuer’s current net assets,

or the cash equivalent thereof.

4. Applicants submit that the Credit

recapture provisions summarized herein

would not deprive a Policy owner of his

or her proportionate share of the issuer’s

current net assets. An owner’s interest

in the amount of the Credit applied to

his or her annuity account value upon

receipt of an initial premium payment is

not vested until the applicable free-look

period has expired without return of the

Policy. Similarly, an owner’s interest in

the amount of any Credits applied upon

receipt of premium payments made

during the 12 months prior to the date

of death also is not vested. Until or

unless the amount of any Credit is

vested, NYLIAC retains the right and

interest in the Credit amount, although

not in any earnings attributable to that

amount. Thus, Applicants argue that,

when NYLIAC recaptures any Credit, it

is simply retrieving its own assets, and

because an owner’s interest in the Credit

is not vested, the owner has not been

deprived of a proportionate share of the

applicable Account’s assets.

5. In addition, with respect to Credit

recaptures upon the exercise of the freelook privilege, Applicants state that it

would be patently unfair to allow an

owner exercising that privilege to retain

a Credit amount under a Policy that has

been returned for a refund after a period

of only a few days. Applicants state that

if NYLIAC could not recapture the

Credit, individuals could purchase a

Policy with no intention of retaining it,

and simply return it for a quick profit.

6. Furthermore, Applicants state that

the recapture of Credits relating to

premium payments made within 12

months of death is designed to provide

NYLIAC with a measure of protection

against ‘‘anti-selection.’’ Applicants

state that the risk here is that, rather

than spreading premium payments over

a number of years, an owner will make

very large payments shortly before

death, thereby leaving NYLIAC less time

to recover the cost of the Credits

applied, to its financial detriment.

NYLIAC intends to recover the costs of

the Credits applied through a portion of

the early surrender charge and the

separate account charge imposed under

the Policies. NYLIAC may use any

excess to recover distribution costs

relating to the Policy and as a source of

profit. The amounts recaptured equal

the Credits provided by NYLIAC from

its own general account assets, and any

gain would remain as part of the

Policy’s value.

7. Applicants represent that the Credit

will be attractive to and in the interest

of investors because it will permit

owners to put an amount greater than

their premium payments to work for

them in the selected Allocation

Alternatives. Also, owners will retain

any earnings attributable to the Credit

and, unless any of the contingencies

summarized above apply, the principal

amount of the Credit.

8. Applicants submit that the

provisions for recapture of any Credits

under the SA III Policies do not, and

any such Future Policy provisions will

not, violate Sections 2(a)(32) and

27(i)(2)(A) of the 1940 Act.

Nevertheless, to avoid any uncertainties,

Applicants request an exemption from

Sections 2(a)(32) and 27(i)(2)(A), to the

extent deemed necessary, to permit the

recapture of any Credit under the

circumstances described herein with

respect to SA III Policies and any Future

Policies, without the loss of the relief

from Section 27 provided by Section

27(i).

9. Section 22(c) of the 1940 Act

authorizes the Commission to make

rules and regulations applicable to

registered investment companies and to

principal underwriters of, and dealers

in, the redeemable securities of any

registered investment company,

whether or not members of any

securities association, to the same

extent, covering the same subject matter,

and for the accomplishment of the same

ends as are prescribed in Section 22(a)

of the 1940 Act in respect of the rules

which may be made by a registered

securities association governing its

members. Rule 22c–1 thereunder

prohibits a registered investment

company issuing a redeemable security,

a person designated in such issuer’s

prospectus as authorized to

consummate transactions in such

security, and a principal underwriter of,

or dealer in, such security, from selling,

redeeming, or repurchasing any such

security except at a price based on the

current net asset value of such security

which is next computed after receipt of

a tender of such security for redemption

or of an order to purchase or sell such

security.

10. Arguably, NYLIAC’s recapture of

the Credit might be viewed as resulting

in the redemption of redeemable

securities for a price other than one

based on the current net asset value of

the Accounts. Applicants contend,

however, that the recapture of the Credit

is not violative of Section 22(c) and Rule

22c–1. Applicants argue that the

recapture of the Credit does not involve

either of the evils that Rule 22c–1 was

intended to eliminate or reduce as far as

reasonable practicable, namely: (i) The

dilution of the value of outstanding

redeemable securities of registered

investment companies through their

sale at a price below net asset value or

their redemption or repurchase at a

price above it, and (ii) other unfair

results, including speculative trading

practices. To effect a recapture of the

Credit, NYLIAC will redeem interests in

an owner’s annuity account at a price

determined on the basis of the current

net asset value of the respective

Accounts. The amount recaptured will

equal the amount of the Credit that

NYLIAC paid out of its general account

assets. Although owners will be entitled

to retain any investment gain

attributable to the Credit, the amount of

such gain will be determined on the

basis of the current net asset value of the

respective Accounts. Thus, Applicants

assert that no dilution will occur upon

the recapture of a Credit. Applicants

also submit that the second harm that

Rule 22c–1 was designed to address,

namely, speculative trading practices

calculated to take advantage of

backward pricing, will not occur as a

result of the recapture of the Credit.

However, to avoid any uncertainty as to

full compliance with the 1940 Act,

Applicants request an exemption from

the provisions of Section 22(c) and Rule

22c–1 to the extent deemed necessary to

permit them to recapture the Credit

under the SA III Policies and Future

Policies.

Conclusion

Applicants submit, based on the

grounds summarized above, that their

exemptive request meets the standards

set out in Section 6(c) of the 1940 Act,

namely, that the exemptions requested

are necessary or appropriate in the

public interest and consistent with the

protection of investors and the purposes

fairly intended by the policy and

provisions of the 1940 Act, and that,

therefore, the Commission should grant

the requested order.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–11606 Filed 5–9–00; 8:45 am]

BILLING CODE 8010–01–M