[Federal Register Volume 59, Number 167 (Tuesday, August 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21342]
[[Page Unknown]]
[Federal Register: August 30, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20501; 812-9148]
TCW Earnings Momentum Limited Partnership, et al.; Notice of
Application
August 24, 1994.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of Application for Exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: TCW Earnings Momentum Limited Partnership (the
``Partnership''), TCW Funds, Inc. (the ``Company''), TCW Asset
Management Company (``TAMCO''), and TCW Funds Management, Inc. (the
``Adviser'').
RELEVANT ACT SECTIONS: Order requested under section 17(b) of the Act
for an exemption from section 17(a) of the Act.
SUMMARY OF APPLICATION: Applicants request an order that would permit
the Partnership to transfer substantially all of its assets and
liabilities to a series of the Company in exchange for the series'
shares, which then would be distributed pro rata to partners of the
Partnership.
FILING DATE: The application was filed on August 8, 1994.
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 September 19,
1994, 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 Fifth Street, N.W., Washington, D.C.
20549. Applicants, 865 South Figueroa Street, Suite 1800, Los Angeles,
California 90017.
FOR FURTHER INFORMATION CONTACT: Elaine M. Boggs, Staff Attorney, at
(202) 942-0572, or Robert A. Robertson, 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.
Applicants' Representations
1. The Partnership is a California limited partnership with an
investment objective of seeking capital appreciation through investment
in publicly-traded equity securities. It allows investors to purchase
and redeem Partnership interests (the ``Units'') at net asset value on
a monthly basis. The Partnership is 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, and Regulation D promulgated thereunder. Units are sold to
institutional investors and high net worth individuals.
2. TAMCO and the Adviser are wholly-owned subsidiaries of The TCW
Group, Inc. TAMCO serves as the sole general partner and administrator
of the Partnership. TAMCO also manages the Partnership's investments.
3. The Company, a Maryland corporation, is a registered open-end
investment company formed as a series company. Currently, the Company
offers ten portfolios. The Company proposes to offer a new investment
portfolio (the ``Fund''), whose investment objectives and policies will
be substantially similar to those of the Partnership. The Company has
entered into an advisory agreement with the Adviser who will provide
investment management services to the Fund that are substantially the
same as the services that TAMCO currently provides to the Partnership.
4. Applicants propose that, pursuant to an agreement and plan of
exchange, the Fund acquire substantially all of the assets and assume
substantially all of the liabilities of the Partnership in exchange for
Fund shares (the ``Exchange''). Prior to the Exchange, information and
a prospectus will be delivered to the Partnership's limited partners.
5. Fund shares received by the Partnership will have an aggregate
net asset value equivalent to the net asset value of the assets
transferred by the Partnership (except for the effect of organizational
expenses paid by the Fund). Upon consummation of an Exchange, the
Partnership will distribute the Fund shares to its partners, with each
partner receiving shares having an aggregate net asset value equivalent
to the net asset value of the Units held by such partner prior to the
Exchange (except for the effect of organizational expenses paid by the
Fund). The Partnership may retain assets needed to pay any accrued
expenses. The Partnership also may retain assets that the Fund is not
permitted to purchase, or that would be unsuitable for the Fund. Assets
retained by the Partnership that are not needed to pay accrued expenses
will be distributed pro rata to the partners of the Partnership. The
Partnership will be liquidated and dissolved following the
distribution.
6. The agreement governing the Partnership provides that the
Partnership may be converted into a registered investment company if
the general partner determines that a conversion is in the best
interest of the Partnership. The agreement expressly provides that no
further approval or consent of the limited partners is required for
such conversion, so long as at least 60 days' advance written notice is
provided to the limited partners. Limited partners who do not wish to
participate in the conversation of the Partnership will have adequate
opportunity to redeem their Partnership interests before the conversion
occurs.
7. The expenses of the Exchange will be borne by TAMCO. No
brokerage commission, fee, or other remuneration will be paid in
connection with the Exchange. Fund organizational expenses, up to a
maximum of $50,000, will be paid by the Fund and amortized over five
years. Fund organizational expenses in excess of $50,000 will be paid
by the Adviser. Any unamortized organizational expenses associated with
the organization of a Fund at the time the Adviser withdraws its
initial investment in the Company will be borne by the Adviser and not
the Fund.
8. The management fees for the Fund will not exceed the maximum
fees currently paid by the Partnership. Applicants expect that other
Fund expenses will be relatively higher than Partnership expenses. This
is primarily because of the increased operating costs of a registered
investment company and compliance with additional regulatory
requirements. Through the end of calendar 1994, however, the Adviser
will limit annual Fund expenses with the intention of capping fund
expense ratios at levels which would have been incurred during 1994 by
the partnership.
9. Prior to an Exchange, certain limited partners may withdraw from
the Partnership and participate in a new limited partnership with
similar investment objectives. The new limited partnership will not be
registered under the Act in reliance on section 3(c)(1) thereof, and
the new partnership interests will not be registered under the
Securities Act of 1933 in reliance on section 4(2) thereof.
10. The Fund's board of directors and TAMCO have considered whether
the Exchange will be in the best interests of the Company and the
Partnership, respectively. All of the members of the Fund's board and
TAMCO have approved the Exchange and have concluded that: (a) the
Exchange is desirable as a business matter for both the Company and the
Partnership; (b) the Exchange is in the best interests of the Company
and the Partnership; (c) the Exchange is reasonable and fair, does not
involve overreaching, and is consistent with the policies of the Act;
(d) the Exchange is consistent with the policies of the Company and the
Partnership; and (e) the interests of existing shareholders in the
Company and existing partners will not be diluted as a result of the
Exchange. The Exchange will not be effected until the Company has
received a favorable opinion of counsel with respect to the tax
consequences of the Exchange.
Applicants' Legal Analysis
1. Section 17(a) prohibits affiliated persons of a registered
investment company, or affiliated persons of such persons, from selling
to or purchasing from such company any security or other property. The
Partnership may be an affiliated person of the Company because TAMCO
and the Adviser are under common control. Thus, the proposed Exchange
may be prohibited by section 17(a).
2. Section 17(b) of the Act permits the SEC to exempt a proposed
transaction from section 17(a) if evidence establishes that (a) 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; (b) the proposed transaction is
consistent with the policy of the registered investment company
concerned; and (c) the proposed transaction is consistent with the
general purposes of the Act.
3. The Exchange will permit partners to pursue the same investment
objectives and policies as shareholders of the Fund without sacrificing
the pass-through tax features of the Partnership. In addition,
shareholders of the Fund will be able to purchase and redeem shares on
each business day, as opposed to only once per month as is currently
provided under the Partnership agreement, providing greater liquidity.
The Fund expects that operating as a registered investment company will
help encourage net asset growth. For these reasons, among others,
applicants believe that the proposed Exchange meets the section 17(b)
standards.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-21342 Filed 8-29-94; 8:45 am]
BILLING CODE 8010-01-M