[Federal Register Volume 63, Number 24 (Thursday, February 5, 1998)]
[Notices]
[Pages 5979-5981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2882]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-23012; 812-10776]


Weiss, Peck & Greer Funds Trust, et al.; Notice of Application

January 30, 1998.
AGENCY: Securities and Exchange Commission (the ``SEC'').

ACTION: Notice of application for an exemption under sections 6(c) and 
17(b) of the Investment Company Act of 1940 (the ``Act'') from section 
17(a) of the Act to permit in-kind redemptions of shares of certain 
registered open-end management investment companies held by 
shareholders who are affiliated persons of the investment companies.

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[[Page 5980]]

    Applicants: Weiss, Peck & Greer Funds Trust, Weiss, Peck & Greer 
International Fund, WPG Growth and Income Fund, WPG Growth Fund, WPG 
Tudor Fund, Tomorrow Funds Retirement Trust, RWB/WPG U.S. Large Stock 
Fund (collectively, the ``Funds''), and Weiss, Peck & Greer, L.L.C. 
(the ``Adviser'').
    Filing Date: The application was filed on September 10, 1997, and 
amended on January 2, 1998. Applicants have agreed to file an amendment 
to the application during the notice period, the substance of which is 
included in this notice.
    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 February 
24, 1998 and should be accompanied by proof of service on applicants, 
in the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549. Applicants, One New York Plaza, New York, New York 10004.

FOR FURTHER INFORMATION CONTACT:
Joseph B. McDonald, Jr., Senior Counsel, at (202) 942-0533, or Mary Kay 
Frech, Branch Chief, at (202) 942-0564 (Division of Investment 
Management, Office of Investment Company Regulation).

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. Each Fund is an open-end management investment company 
registered under the Act. Weiss, Peck and Greer Funds Trust currently 
consists of the following series: WPG Government Money Market Fund, WPG 
Tax-Free Money Market Fund, WPG Government Securities Fund, WPG 
Intermediate Municipal Bond Fund, WPG Institutional Short Duration Fund 
and WPG Quantitative Equity Fund. Tomorrow Funds Retirement Trust 
currently consists of the following series: Tomorrow Long-Term 
Retirement Fund, Tomorrow Medium-term Retirement Fund, Tomorrow Short-
Term Retirement Fund and Tomorrow Post-Retirement Fund. Each other Fund 
is a single series investment company. Each Fund is organized as a 
Massachusetts business trust, except Tomorrow Funds Retirement Trust 
and RWB/WPG U.S. Large Stock Fund, which are organized as Delaware 
business trusts. The overall management of each Fund rests with its 
board of trustees (collectively, the ``Boards''). A majority of the 
trustees of each Fund are not ``interested persons'' (as defined in 
section 2(a)(19) of the Act) (the ``Non-Interested Trustees'') of such 
Fund. The Adviser, registered as an investment adviser under the 
Investment Advisers Act of 1940, serves as the investment adviser to 
the Funds.
    2. Shares of each Fund may be redeemed at the net asset value 
(``NAV'') per share next determined after the Fund's transfer agent 
receives a proper redemption request. The Funds' prospectuses and 
statements of additional information (together, the ``Prospectus'') 
provide that, in limited circumstances, any Fund may satisfy all or 
part of a redemption request by delivering portfolio securities to a 
redeeming shareholder. The Boards, including a majority of the Non-
Interested Trustees, have determined that the Funds should retain the 
discretion to effect redemptions in-kind to protect a Fund from the 
potentially adverse impact of liquidating a significant amount of 
portfolio securities in order to satisfy in cash a redemption request 
by a Covered Shareholder (as defined below).
    3. Applicants request relief pursuant to sections 6(c) and 17(b) of 
the Act to exempt applicants from the provisions of section 17(a) of 
the Act to permit a shareholder who is an ``affiliated person'' of the 
Fund solely as a consequence of the shareholder's ownership of 5% or 
more of the outstanding voting securities of the Fund (``Covered 
Shareholder'') to redeem shares of beneficial interest of the Fund in-
kind (collectively, ``Covered Shareholder Redemptions''). Applicants 
request that the relief extend to any registered open-end management 
investment company created in the future and each series thereof as 
well as each series of the Fund created in the future for which the 
Adviser, or a person controlling, controlled by, or under common 
control with the Adviser, acts as adviser of principal underwriter 
(collectively, ``Future Funds''). Accordingly, with respect to Covered 
Shareholder Redemptions, references to the terms ``Fund'' or ``Funds'' 
include Future Funds. All registered open-end management investment 
companies that intend currently to rely on the order requested are 
named as applicants. Any Future Fund that relies on the order requested 
will do so only in accordance with the terms and conditions contained 
in the application.
    4. Securities distributed to Covered Shareholders in connection 
with redemptions in-kind will be valued by the same method as used to 
calculate a Fund's NAV per share.
    5. In connection with a redemption in-kind by a Covered 
Shareholder, portfolio securities of a Fund may be distributed pro rata 
after excluding: (a) Securities which may not be publicly offered or 
sold without registration under the Securities Act of 1933; (b) 
securities issued by entities in countries which (i) Restrict or 
prohibit the holding of securities by non-nationals other than through 
qualified investment vehicles, such as the Funds, or (ii) permit 
transfers of ownership of securities to be effected only by 
transactions conducted on a local stock exchange; (c) certain portfolio 
positions (such as forward foreign currency contracts, futures and 
options contracts, swap transactions and repurchase agreements) that, 
although they may be liquid and marketable, involve the assumption of 
contractual obligations, require special trading facilities or can only 
be traded with the counterparty to the transaction to effect a change 
in beneficial ownership; (d) cash equivalents (such as certificates of 
deposit, commercial paper and repurchase agreements); and (e) other 
assets which are not readily distributable (including receivables and 
prepaid expenses). In addition, portfolio securities representing 
fractional shares, odd lot securities and accruals on such securities 
may be excluded from portfolio securities distributed in-kind to a 
Covered Shareholder. Collectively all such assets are ``Excluded 
Assets.''
    6. Each Fund has elected to be governed by the provisions of rule 
18f-1 under the Act committing the Funds to pay in cash all requests 
for redemption by any shareholder of record, limited in amount with 
respect to each shareholder during any 90-day period to the lesser of 
$250,000 or 1% of the applicable Fund's NAV at the beginning of such 
period. Thus, the Funds may only satisfy redemption requests in-kind in 
accordance with rule 18f-1.\1\
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    \1\ With respect to a Fund created in the future, the Adviser 
does not expect that such Fund will make an election pursuant to 
rule 18f-1 under the Act. Therefore, such Fund will not be limited 
by the requirements of the rule 18f-1 with respect to the amount of 
a redemption request that may be satisfied in-kind.

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[[Page 5981]]

    7. If a Fund subject to an election under rule 18f-1 determines to 
satisfy a redemption request of a Covered Shareholder in-kind, it will 
pay the first $250,000 or 1% of the Fund's NAV, whichever is less, in 
cash or cash equivalents and the remainder in the form of a 
proportionate distribution of the portfolio securities held by the 
Fund, other than Excluded Assets. If a Fund not subject to an election 
under rule 18f-1 determines to satisfy a redemption request by a 
Covered Shareholder in-kind, it will pay all redemption proceeds in the 
form of a proportionate distribution of the portfolio securities held 
by the Fund, other than Excluded Assets. Cash will be paid for the 
portion of the in-kind distribution represented by Excluded Assets.

Applicants' Legal Analysis

    1. Section 17(a)(2) of the Act makes it unlawful for an affiliated 
person of a registered investment company, or an affiliated person of 
such a person, acting as principal, to knowingly purchase from the 
registered investment company any security or other property (except 
securities of which the seller is the issuer). Section 2(a)(3)(A) of 
the Act defines ``affiliated person'' to include any person owning 5% 
or more of the outstanding voting securities of the other person. Each 
Covered Shareholder of a Fund will own beneficially 5% or more of a 
Fund's shares and, thus, will be an affiliated person of that Fund. To 
the extent that a proposed in-kind redemption would involve the 
``purchase'' of portfolio securities (of which the affected Fund is not 
the issuer) by a Covered Shareholder, the proposed in-kind redemption 
would be prohibited by section 17(a)(2).
    2. Section 17(b) of the Act provides that, notwithstanding section 
17(a), the SEC shall exempt a proposed transaction from section 17(a) 
if evidence establishes that: (a) The terms of the proposed transaction 
are reasonable and fair and do not involve overreaching; (b) the 
proposed transaction is consistent with the policy of each registered 
investment company involved; and (c) the proposed transaction is 
consistent with the general purposes of the Act.
    3. Section 6(c) of the Act provides, in part, that the SEC, by 
order upon application may conditionally or unconditionally exempt any 
person, security or transaction, or any class or classes of persons, 
securities or transactions, from the provisions of the Act, if and to 
the extent that such exemption is necessary or appropriate in the 
public interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act.
    4. Applicants submit that the terms of the proposed in-kind 
redemptions by Covered Shareholders meet the standards set forth in 
sections 6(c) and 17(b) of the Act. Applicants believe that the use of 
an objective, verifiable standard for the selection and valuation of 
any securities to be distributed in connection with a redemption in-
kind will ensure that the redemption will be on terms that are 
reasonable and fair to the Funds, their shareholders and the Covered 
Shareholders and will not involve overreaching on the part of any 
person. Similarly, the proposed in-kind redemptions are consistent with 
the investment policies of the Funds, as set forth in the Funds' 
Prospectuses, which expressly disclose the Funds' ability to redeem 
shares in-kind. Finally, applicants believe that the terms of the 
proposed transactions are reasonable and fair to all parties and are 
consistent with the protection of investors and the provisions, 
policies and purposes of the Act.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. The securities distributed to both Covered Shareholders and 
nonaffiliated shareholders pursuant to a redemption in-kind (the ``In-
Kind Securities'') will be limited to securities that are traded on a 
public securities market or for which market quotations are available.
    2. The In-Kind Securities will be distributed by each Fund on a pro 
rata basis after excluding: (a) Securities which may not be publicly 
offered or sold without registration under the Securities Act of 1933; 
(b) securities issued by entities in countries which: (i) Restrict or 
prohibit the holding of securities by non-nationals other than through 
qualified investment vehicles, such as the Funds or (ii) permit 
transfers of ownership of securities to be effected only by 
transactions conducted on a local stock exchange; (c) certain portfolio 
positions (such as forward foreign currency contracts, futures and 
options contracts, swap transactions and repurchase agreements) that, 
although they may be liquid and marketable, involve the assumption of 
contractual obligations, require special trading facilities or can only 
be traded with the counterparty to the transaction to effect a change 
in beneficial ownership; (d) cash equivalents (such as certificates of 
deposit, commercial paper and repurchase agreements); and (e) other 
assets which are not readily distributable (including receivables and 
prepaid expenses). In addition, portfolio securities representing 
fractional shares, odd lot securities and accruals on such securities 
may be excluded from portfolio securities distributed in-kind to a 
Covered Shareholder. Cash will be paid for the portion of the in-kind 
distribution represented by the Excluded Assets set forth above less 
liabilities (including accounts payable).
    3. The In-Kind Securities distributed to the Covered Shareholders 
will be valued in the same manner as they would be valued for purposes 
of computing each Fund's net asset value.
    4. The Funds' Boards, including a majority of the Non-Interested 
Trustees, will determine no less frequently than annually: (a) Whether 
the In-Kind Securities, if any, have been distributed in accordance 
with conditions 1 and 2; (b) whether the In-Kind Securities, if any, 
have been valued in accordance with condition 3; and (c) whether the 
distribution of any such In-Kind Securities is consistent with the 
policies of each affected Fund as reflected in its Prospectus. In 
addition, the Boards will make and approve such changes as they deem 
necessary in the procedures for monitoring the Funds' compliance with 
the terms and conditions of this application.
    5. Each Fund will maintain and preserve for a period of not less 
than six years from the end of the fiscal year in which a Proposed In-
Kind Redemption by a Covered Shareholder occurs, the first two years in 
an easily accessible place, a written record of such redemption setting 
forth a description of each security distributed in-kind, the identity 
of the Covered Shareholder, the terms of the in-kind distribution, and 
the information or materials upon which the valuation was made.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-2882 Filed 2-4-98; 8:45 am]
BILLING CODE 8010-01-M