[Federal Register Volume 62, Number 197 (Friday, October 10, 1997)]
[Notices]
[Pages 53038-53040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26903]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-22839; 812-10672]
TCW International Equity Limited Partnership, et al.; Notice of
Application
October 3, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for an order under section 17(b) of the
Investment Company Act of 1940 (the ``Act'') granting an exemption from
section 17(a) of the Act.
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SUMMARY OF APPLICATION: Applicants request an order to permit certain
limited partnerships to transfer all of their assets to corresponding
series of a registered investment company in exchange for the series'
shares, which then will be distributed pro rata to partners of the
partnerships.
APPLICANTS: TCW International Equity Limited Partnership, TCW Japan
Limited Partnership, TCW Value Opportunities Fund (collectively, the
``Partnerships''), TCW Galileo Funds, Inc. (the ``Company''), TCW Asset
Management Company (``TAMCO''), and TCW Funds Management, Inc. (the
``Adviser'').
FILING DATES: The application was filed on May 16, 1997, and amendments
to the application were filed on August 15, 1997, and October 2, 1997.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on October 28,
1997, 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
SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 5th Street, N.W., Washington, DC 20549.
Applicants, 865 South Figueroa Street, Suite 1800, Los Angeles,
California 90017.
FOR FURTHER INFORMATION CONTACT:
Brian T. Hourihan, Senior Counsel, at (202) 942-0526, or Mary Kay
Frech, Branch Chief, (202) 942-0564 (Office of Investment Company
Regulation, Division of Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington D.C.
20549 (tel. (202) 942-8090).
Applicants' Representations
1. TCW International Equity Limited Partnership was organized as a
California limited partnership on August 19, 1993: TCW Japan Limited
Partnership was organized as a Delaware limited partnership on May 2,
1995; and TCW Value Opportunities Fund was organized as a California
limited partnership on May 16, 1996. The Partnerships permit investors
to purchase and redeem Partnership interests (``Units'') at net asset
value on a monthly basis. The Partnerships are not registered under the
Act in reliance on section 3(c)(1) of the Act. The offerings of the
Units were structured as private placements under section 4(2) of the
Securities Act of 1933 (the ``Securities Act''), and Regulation D
promulgated under the Securities Act. Units are sold to institutional
investors and high net worth individuals.
2. TAMCO, a wholly owned subsidiary of the TCW Group, Inc., serves
as the sole general partner of the
[[Page 53039]]
Partnerships and has exclusive responsibility for their overall
management, control, and administration. TAMCO, an investment adviser
registered under the Investment Advisers Act of 1940, also serves as
investment manager with respect to the Partnerships' assets.
3. The Company, a Maryland corporation, is an open-end investment
company registered under the Act. Currently, the Company offers
thirteen series (the ``Existing Funds''). The Company proposes to offer
three additional series (the ``New Funds''), each of which will
correspond to a Partnership in terms of investment objective and
policies.
4. The Company has entered into an advisory agreement with the
Adviser, a wholly-owned subsidiary of the TCW Group, Inc., pursuant to
which the Adviser, an investment adviser registered under the
Investment Advisers Act of 1940, will render advisory services to the
New Funds. The Adviser will provide services that are substantially the
same as those TAMCO currently renders to the corresponding Partnership.
The officers of TAMCO serving as portfolio managers of the Partnerships
also serve as officers of the Adviser and will serve as portfolio
managers of the corresponding New Funds.
5. Applicants propose that, pursuant to an Agreement and Plan of
Exchange (the ``Plan''), each of the New Funds will acquire assets from
its corresponding Partnership in exchange for New Fund shares (the
``Exchanges''). New Fund shares delivered to the Partnerships in the
Exchanges will have an aggregate net asset value equivalent to the net
asset value of the assets transferred by the Partnerships to the
Company (except for the effect of certain organizational expenses paid
by each New Fund, as discussed below). Upon consummation of the
Exchanges, each Partnership will distribute the New Fund shares to its
respective partners, with each partner receiving shares having an
aggregate net asset value equivalent to the net asset value of the
Units held by the partner prior to the Exchange (except for the effect
of certain organizational expenses paid by the New Funds and the effect
of any assets retained by a Partnership to pay accrued expenses). Each
Plan permits the Partnership to retain sufficient assets to pay any
Partnership-accrued expenses and retain any assets that a New Fund is
not permitted to purchase or that are reasonably determined to be
unsuitable for it. No liabilities of a Partnership will be transferred
to its corresponding New Fund; all known liabilities, other than
accrued expenses discussed above, will be paid by each Partnership
prior to the transfer of its assets to the corresponding New Fund. The
general partner, TAMCO, will be responsible for any unknown liabilities
of each Partnership. Assets retained by each Partnership that are not
needed to pay expenses will be distributed pro rata to the partners.
After payment of any accrued expenses from retained assets, each
Partnership will be liquidated and dissolved.
6. The expenses of the Exchanges will be borne by TAMCO.
Organizational expenses, up to a maximum of $50,000 per New Fund, will
be paid by the New Funds and amortized over five years. Organizational
expenses in excess of $50,000 per New Fund will be paid by the Adviser.
Any unamortized organizational expenses associated with the
organization of the New Funds at the time the Adviser withdraws its
initial investment in the Company will be borne by the Adviser, not the
New Funds. Through October 31, 1998, the Adviser will place a limit on
the annual expenses of each New fund. This limit is generally intended
to cap New Fund expense ratios at levels projected to be incurred
during 1997 and 1998 by the Partnerships.
7. The board of directors of the Company (the ``Board'') and TAMCO
have considered the desirability of the Exchanges from the respective
points of view of the Company and the Partnerships, and all members of
the Board (including all of the independent directors) and TAMCO have
approved the Exchanges and concluded that: (i) the terms of the
Exchanges have been designed to meet the criteria contained in section
17(b) of the Act; (ii) the Exchanges are desirable as a business matter
from the respective points of view of the Company and the Partnerships;
(iii) the Exchanges are in the best interests of the Company and the
Partnerships; (iv) the Exchanges are reasonable and fair, do not
involve overreaching, and are consistent with the policies of the Act:
(v) the Exchanges are consistent with the policies of the Company and
the Partnerships; and (vi) the interests of existing shareholders in
the Company and existing partners in the Partnerships will not be
diluted as a result of the exchanges. These findings, and the basis
upon which the findings were made, have been fully recorded in the
minute books of the Company and TAMCO.
8. The Exchanges will not be effected until(i) the Company's
registration statement has been filed; (ii) the Company and the
Partnerships have received a favorable opinion of counsel with respect
to the tax consequences of the Exchanges; and (iii) the SEC has issued
the requested order.
Applicants' Legal Analysis
1. Section 17(a) of the Act prohibits any affiliated person of a
registered investment company, or any affiliated person of such a
person, acting as principal from selling to or purchasing from the
registered investment company any security or other property. Section
2(a)(3) of the Act defines an affiliated person as, among other things,
any person directly or indirectly controlling, controlled by, or under
common control with, such other person; any officer, director, partner,
copartner or employee of such other person; or, if such other person is
an investment company, any investment adviser of the investment
company. Each Partnership is an affiliated person of an affiliated
person of the Company because TAMCO, the general partner of the
Partnerships, and the Adviser are under common control. Thus, the
proposed Exchanges may be deemed to be prohibited under section 17(a)
of the Act.
2. Section 17(b) of the Act authorizes the SEC to exempt any person
from one or more of the provisions of section 17(a) if the terms of the
transaction, including the consideration to be paid or received, are
reasonable and fair and do not involve overreaching on the part of any
person concerned and the proposed transaction is consistent with the
policy of each registered investment company concerned and the general
purposes of the Act.
3. Applicants believe that the proposed Exchanges satisfy the
requirements of section 17(b). Applicants state that Shares issued by
each New Fund will have an aggregate net asset value equal to the value
of the assets acquired from its corresponding Partnership. Applicants
also state that because Shares will be issued at their net asset value
and only nominal Shares will be outstanding when the Exchanges are
effected, the Company shareholders will not be diluted. In addition,
applicants state that the investment objective and policies of each New
Fund are substantially similar to its corresponding Partnership and
that after the Exchanges, the limited partners will hold substantially
the same assets as Company shareholders as they held as limited
partners. In this sense, applicants submit that the Exchanges can be
viewed as a change in the form in which assets are held, rather than a
disposition giving rise to section 17(a) concerns.
[[Page 53040]]
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-26903 Filed 10-9-97; 8:45 am]
BILLING CODE 8010-01-M