Securities and Exchange Commission (“Commission”).
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.
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 Start Printed Page 48768registered 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.
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.Start Further Info
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).End Further Info End Preamble Start Supplemental 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).
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.
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. Start Printed Page 48769Applicants 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 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.Start Signature
For the Commission, by the Division of Investment Management, under delegated authority.
Jonathan G. Katz,
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.Back to Citation
[FR Doc. 00-20096 Filed 8-8-00; 8:45 am]
BILLING CODE 8010-01-M