[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