[Federal Register Volume 65, Number 154 (Wednesday, August 9, 2000)]
[Notices]
[Pages 48767-48769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20096]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 24590; 812-12064]


Investment Company Act; Hillview Investment Trust II, et al.; 
Notice of Application

August 3, 2000.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 17(b) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from section 17(a) 
of the Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit a limited 
partnership to transfer all of its assets to a corresponding new series 
of a

[[Page 48768]]

registered open-end management investment company in exchange for 
shares of the new series.
    Applicants: Hillview Investment Trust II (``Trust''), Hillview 
Capital Advisors, LLC (``Adviser'') and CMS Concentrated Equity Fund, 
L.P. (``Partnership'').
    Filing Dates: The application was filed on April 14, 2000. 
Applicants have agreed to file an amendment during the notice period, 
the substance of which is reflected in this notice.
    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 August 28, 2000, and should be accompanied by proof of 
service on the 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, Commission, 450 Fifth Street, N.W., Washington, 
D.C. 20549-0609; Applicants, c/o M. Kathleen Wood, Hillview Capital 
Advisors, LLC, 1055 Washington Boulevard, Stamford, CT 06901.

FOR FURTHER INFORMATION CONTACT:  Jean E. Minarick, Senior Counsel, at 
(202) 942-0527, or Christine Y. Greenlees, 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 
Commission's Public Reference Branch, 450 Fifth Street, N.W., 
Washington, D.C. 20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. The Trust, a Delaware business trust, is registered under the 
Act as an open-end management investment company. The Trust is 
organized as a series investment company and initially will offer two 
series, one of which, the Hillview Alpha Fund (``Alpha Fund''), will 
correspond to the Partnership in terms of investment objectives and 
policies.
    2. The Partnership was organized as a Delaware limited partnership 
in 1997 and is not registered under the Act in reliance on section 
3(c)(1) of the Act. MSPS/Feeders, Inc. (``General Partner''), a 
Delaware corporation, serves as the sole general partner of the 
Partnership and has exclusive responsibility for its overall management 
and business. The General Partner is exempt from registration under the 
Investment Advisers Act of 1940 (``Advisers Act''). The General Partner 
is owned by two officers of the Adviser, who also own more than 5% of 
the Adviser's outstanding voting securities.\1\
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    \1\ The Partnership currently invests all of its assets in the 
Concentrated Equity Portfolio (``Portfolio''), a series of Hillview 
Investment Trust, a Delaware business trust advised by the Adviser 
that is not registered under the Act in reliance on section 3(c)(1) 
of the Act. On or about September 1, 2000, the Portfolio expects to 
liquidate by distributing all of its assets to its two investors, 
the Partnership and the General Partner.
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    3. The Adviser, registered under the Advisers Act, will serve as 
the investment adviser to the Alpha Fund under an investment management 
agreement with the Trust.
    4. Applicants propose that, pursuant to an Agreement and Plan of 
Exchange (``Plan''), the Partnership will transfer to the Alpha Fund 
its assets, less any funds required to pay the liabilities of the 
Partnership, in exchange for Class Y shares (the ``Shares'') of the 
Alpha Fund (the ``Exchange''). Under the Plan, Shares of the Alpha Fund 
delivered to the Partnership will have an aggregate net asset value 
(``NAV'') equal to the NAV of the assets transferred by the Partnership 
to the Alpha Fund. Upon the consummation of the Exchange, the Shares of 
the Alpha Fund will be credited to the account of each partner of the 
Partnership (``Partner''), pro rata, according to the Partner's 
interest in the Partnership immediately prior to the Exchange. The 
Exchange is scheduled to occur on or about September 1, 2000. 
Thereafter, the Partnership will be dissolved. The Adviser will pay the 
expenses incurred in connection with the Exchange.
    5. On June 12, 2000, the board of trustees of the Trust (the 
``Board''), including a majority of the trustees who are not 
``interested persons,'' as defined in section 2(a)(19) of the Act 
(``Independent Trustees''), approved the Exchange. In approving the 
Exchange, the Board concluded that: (a) the terms of the Exchange have 
been designed to meet the criteria contained in Section 17(b) of the 
Act, and (b) participation by the Alpha Fund in the Exchange is in the 
best interests of the Alpha Fund and its shareholders and the interests 
of existing shareholders in the Alpha Fund will not be diluted as a 
result of the Exchange. These findings, and the basis upon which such 
findings were made, will be recorded in the minute book of the Trust 
upon the approval of the minutes of the meeting.
    6. The General Partner has determined that it would be in the best 
interests of the Partnership to enter into the Exchange. The General 
Partner is authorized by the Partnership Agreement to approve and cause 
the Partnership to enter into the Exchange. Accordingly, the General 
Partner will execute the Plan on behalf of the Partnership and will 
provide each Partner with detailed information concerning the terms of 
the proposed Exchange before the Exchange is effected.
    7. The Exchange will not be effected until: (a) the Trust's 
registration statement on Form N-1A is effective; (b) the Commission 
has issued the requested order; and (c) the Trust and the Partnership 
have received an opinion of counsel that no gain or loss will be 
recognized by the Alpha Fund upon the transfer of the Partnership's 
assets.

Applicants' Legal Analysis

    1. Section 17(a) of the Act prohibits any affiliated person of a 
registered investment company, or any affiliated person of that 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 owning, controlling, or holding with 
power to vote 5% or more of the outstanding voting securities of the 
other person; any person controlling, controlled by, or under common 
control with, the other person; any officer, director, copartner or 
employee of the other person; and, if the other person is an investment 
company, its investment adviser.
    2. Applicants state that the Partnership could be deemed to be an 
affiliated person of an affiliated person of the Alpha Fund because the 
Partnership and the Alpha Fund might be deemed to be under the common 
control of the Adviser. Thus, applicants state that the proposed 
Exchange may be prohibited under section 17(a) of the Act.
    3. Rule 17a-7 exempts certain purchase and sale transactions 
otherwise prohibited by section 17(a) of the Act if an affiliation 
exists solely by reason of having a common investment adviser, common 
directors, and/or common officers or directors, provided, among other 
requirements, the transaction involves a cash payment against prompt 
delivery of a security.

[[Page 48769]]

Applicants state that the relief provided by rule 17a-7 may not be 
available for the Exchange because the Exchange will be effected on a 
basis other than cash. Applicants also state that the General Partner 
and the Partnership may be deemed an affiliated person of an affiliated 
person of the Alpha Fund because all of the interests of the General 
Partner are owned by two officers of the Adviser, who also own more 
than 5% of the Adviser. Thus, the Alpha Fund and the Partnership may be 
affiliated in a manner other than allowed under rule 17a-7.
    4. Section 17(b) of the Act authorizes the Commission to exempt a 
transaction from the provisions of section 17(a) of the Act 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.
    5. Applicants submit that the terms of the Exchange meet the 
criteria contained in section 17(b) of the Act. Applicants state that 
the Shares issued by the Alpha Fund will have an aggregate NAV equal to 
the NAV of the assets acquired from the Partnership, and that because 
the Shares will be issued to the Partners at NAV, the Partners' 
interests will not be diluted. Applicants also state that the 
investment objective and policies of the Alpha Fund are substantially 
similar to those of the Partnership, and that after the Exchange the 
Partners will hold substantially the same assets as Alpha Fund 
shareholders as they held as Partners. Applicants further state that 
the board, including a majority of the Independent Trustees, has 
approved the Exchange and that the Exchange will comply with rule 17a-
7(b) through (f).

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. The Exchange will comply with the terms of rule 17a-7(b) through 
(f).
    2. The Exchange will not occur unless and until the Board 
(including a majority of the Independent Trustees) finds that 
participation by the Alpha Fund in the Exchange is in the best 
interests of the Alpha Fund and its shareholders and that the interests 
of existing shareholders will not be diluted as a result of the 
Exchange. These findings, and the basis upon which they are made, will 
be recorded fully in the minute books of the Trust.
    3. The Exchange will not occur unless and until the General Partner 
of the Partnership has determined in accordance with its fiduciary 
duties that the Exchange is in the best interests of the Partners of 
the Partnership.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 00-20096 Filed 8-8-00; 8:45 am]
BILLING CODE 8010-01-M