Federal Register / Vol. 62, No. 197 / Friday, October 10, 1997 / Notices 53037

1For example, assuming a one-year Trust with a

$1,000 price for 100 Units and a 2.95% DSC, the

Sponsor would collect $10.00 (1.00%) up-front, and

the remaining balance of $19.50 (1.95%) in 10 equal

monthly payments of $1.95.

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22840; 812–10550]

Reich & Tang Distributors L.P., et al.,

Notice of Application

October 3, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application under

section 6(c) of the Investment Company

Act of 1940 (the ‘‘Act’’) for an

exemption from sections 2(a)(32),

2(a)(35), 22(d), and 26(a)(2) of the Act

and rule 22c–1 under the Act.

SUMMARY OF APPLICATION: Applicants

request an order to permit certain unit

investment trusts to impose sales

charges on a deferred basis and waive

the deferred sales charge in certain

cases.

APPLICANTS: Reich & Tang Distributors

L.P. (the ‘‘Sponsor’’), Equity Securities

Trust, Mortgage Securities Trust,

Municipal Securities Trust, New York

Municipal Trust, A Corporate Trust,

Schwab Trusts, any future unit

investment trust sponsored or cosponsored by the Sponsor or an entity

controlled by or under common control

with the Sponsor (collectively, the

‘‘Trusts’’), and any future series of the

Trusts.

FILING DATE: The application was filed

on March 7, 1997, and amended on

April 26, 1997, and September 30, 1997.

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

October 28, 1997, 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 request, 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, c/o Reich & Tang

Distributors L.P., 600 Fifth Avenue,

New York, New York 10022, Attention:

Peter J. DeMarco.

FOR FURTHER INFORMATION CONTACT:

Lawrence W. Pisto, Senior Attorney, at

(202) 942–0527 or Mercer E. Bullard,

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 of the Trusts is a unit

investment trust consisting of one or

more series (‘‘Series’’) registered under

the Act and sponsored, co-sponsored or

to be sponsored by the Sponsor. Each

Series is created by a trust indenture

among the Sponsor, a banking

institution or trust company as a trustee,

and, as the case may be, an evaluator.

The Sponsor acquires a portfolio of

securities which it deposits with the

trustee in exchange for certificates

representing units of fractional

undivided interest in the portfolio

(‘‘Units’’). The Units are offered to the

public by the Sponsor, underwriters,

and dealers at a public offering price

which, during the initial offering period,

is based upon the aggregate market

value of the underlying securities plus

a front-end sales charge. The sales

charge currently ranges from 2.95% to

5.5% of the public offering price,

generally depending on the terms of the

underlying securities. The maximum

charge is usually subject to reduction in

compliance with rule 22d–1 under the

Act under certain stated circumstances

disclosed in the prospectus, such as for

volume purchases.

2. Applicants request an order to the

extent necessary to permit them to

impose a deferred sales charge (‘‘DSC’’)

instead of a front-end sales charge, and

waive the DSC under certain

circumstances. Under applicants’

proposal, a portion of the DSC will be

collected ‘‘up-front,’’ i.e., immediately

upon purchase of Units, and the balance

will be collected subsequently in equal

installments (‘‘Installment Payments’’).1

In order to ensure that sufficient cash is

available to make Installment Payments,

the Trust may hold securities the

proceeds from the maturity or sale of

which may be used to make the

Payments. Installment Payments will be

collected from unitholders by

withholding the Payment amount from

unitholders’ distributions on the Units,

from proceeds of Unit redemptions or

sales by the unitholder, or by reducing

the number of Units held by the

unitholder. The Installment Payments

will be passed by the trustee to the

Sponsor at the time they are collected.

The trustee may advance an Installment

Payment if, for example, it is due

immediately before a dividend or

interest payment is due on portfolio

securities. The trustee will be

reimbursed when the Installment

Payment is collected from the

unitholder.

3. When a unitholder redeems or sells

Units, the balance of the unitholder’s

Installment Payments on the redeemed

Units will be deducted from the

proceeds of the redemption or sale.

When calculating the amount due, it

will be assumed that Units on which the

DSC has been paid in full are redeemed

first. With respect to Units on which the

DSC has not been fully paid, the DSC

will be applied on the assumption that

Units held for the longest time are

redeemed or sold first. Under certain

circumstances, the sponsor may waive

the DSC in connection with

redemptions or sales of Units. These

circumstances will be disclosed in the

prospectus for the relevant Series and

implemented in accordance with rule

22d–1, under the Act.

4. Each Series offering Units subject to

a DSC will include in its prospectus the

disclosure required in Form N–1A

relating to deferred sales charges,

modified as appropriate to reflect the

differences between unit investment

trusts and open-end investment

companies. The prospectus also will

disclose any security that may be

included in the portfolio for purposes of

paying the DSC from the maturity or

sale proceeds, and that the securities

will be sold pro rata or that a specific

security will be designated for sale.

Applicants’ Legal Analysis

1. Section 4(2) of the Act defines a

‘‘unit investment trust’’ as an

investment company which ‘‘issues

only redeemable securities.’’ Section

2(a)(32) defines a redeemable security as

a security that, upon its presentation to

the issuer, entitles the unitholder to

receive approximately his or her

proportionate share of the issuer’s

current net assets, or the cash equivalent

of those assets. Rule 22c–1, promulgated

under section 22(c) of the Act, requires

that the price of a redeemable security

issued by a registered investment

company for purposes of sale,

redemption, and repurchase be based on

the security’s current net asset value. To

the extent that an Installment Payment

may be deemed to cause unitholders to

receive less than net asset value upon
53038 Federal Register / Vol. 62, No. 197 / Friday, October 10, 1997 / Notices

redemption, applicants request relief

from section 2(a)(32) and rule 22c–1.

2. Section 22(d) and rule 22d-1

require an investment company and its

principal underwriter and dealer to sell

securities only at a current public

offering price described in the

investment company’s prospectus, with

the exeception of sales of redeemable

securities at prices which reflect

scheduled variations in the ‘‘sales load.’’

Section 2(a)(35) defines the term sales

load as the difference between the sales

price and the portion of the proceeds

invested by the depositor or trustee.

Applicants request relief from sections

2(a)(35) and 22(d) to the extent that the

DSC may be paid in installements rather

than upon purchase.

3. Applicants believe that the

provisions of section 22(d), rule 22d-1

and section 2(a)(35), taken together, are

intended to prevent (1) riskless trading

in investment company securities due to

backward pricing, (2) disruption of

orderly distribution by dealers selling

shares at a discount, and (3)

discrimination among investors

resulting from different prices charged

to different investors. Applicants

believe the proposed DSC program will

present none of these abuses.

Applicants contend that the deduction

of the Installment Payments is

consistent with the policy of forward

pricing. Applicants also contend that

the amount, computation and timing of

the DSC will promote fair treatment of

all unithholders, while permitting the

Trusts to offer unitholders the advantage

of having a larger portion of their

purchase amount invested immediately.

Applicants further note that the DSC

program will be disclosed in the

prospectus of each Series and available

on the same terms to all investors.

Finally, applicants state that any waiver

of the DSC will be disclosed in the

prospectus of each Series and

implemented in accordance with rule

22d–1.

4. Section 26(a)(2), in relevant part,

prohibits a trustee or custodian of a unit

investment trust from collecting from

the trust as an expense any payment to

the trust’s depositor or principal

underwriter. Because the trustee’s

payment of the DSC to the Sponsor may

be deemed to be an expense under

section 26(a)(2)(C), applicants request

relief from that section to the extent

necessary to permit the trustee to collect

DSC payments and disburse them to the

Sponsor. Applicants believe that the

relief is appropriate because the DSC is

more properly characterized as a sales

load than as an ‘‘expense.’’

5. Section 6(c) authorizes the SEC to

exempt any person or transaction from

any provision of the Act or any rule

under the Act to the extent that the

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. Applicants

believe that their proposal meets this

standard.

Applicants’ Conditions

Applicants agree that any order

granting the requested relief will be

subject to the following conditions:

1. Any DSC imposed on Units issued

by a Series will comply with the

requirements of rule 6c–10(a) (1)

through (3) under the Act.

2. Each Series offering Units subject to

a DSC will include in its prospectus the

disclosure required in Form N–1A

relating to deferred sales charges,

modified as appropriate to reflect the

differences between unit investment

trusts and open-end investment

companies.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–26904 Filed 10–9–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22839; 812–10672]

TCW International Equity Limited

Partnership, et al.; Notice of

Application

October 3, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for an

order under section 17(b) of the

Investment Company Act of 1940 (the

‘‘Act’’) granting an exemption from

section 17(a) of the Act.

SUMMARY OF APPLICATION: Applicants

request an order to permit certain

limited partnerships to transfer all of

their assets to corresponding series of a

registered investment company in

exchange for the series’ shares, which

then will be distributed pro rata to

partners of the partnerships.

APPLICANTS: TCW International Equity

Limited Partnership, TCW Japan

Limited Partnership, TCW Value

Opportunities Fund (collectively, the

‘‘Partnerships’’), TCW Galileo Funds,

Inc. (the ‘‘Company’’), TCW Asset

Management Company (‘‘TAMCO’’),

and TCW Funds Management, Inc. (the

‘‘Adviser’’).

FILING DATES: The application was filed

on May 16, 1997, and amendments to

the application were filed on August 15,

1997, and October 2, 1997.

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

October 28, 1997, 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 5th

Street, N.W., Washington, DC 20549.

Applicants, 865 South Figueroa Street,

Suite 1800, Los Angeles, California

90017.

FOR FURTHER INFORMATION CONTACT:

Brian T. Hourihan, Senior Counsel, at

(202) 942–0526, or Mary Kay Frech,

Branch Chief, (202) 942–0564 (Office of

Investment Company Regulation,

Division of Investment Management).

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. TCW International Equity Limited

Partnership was organized as a

California limited partnership on

August 19, 1993: TCW Japan Limited

Partnership was organized as a

Delaware limited partnership on May 2,

1995; and TCW Value Opportunities

Fund was organized as a California

limited partnership on May 16, 1996.

The Partnerships permit investors to

purchase and redeem Partnership

interests (‘‘Units’’) at net asset value on

a monthly basis. The Partnerships are

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 (the

‘‘Securities Act’’), and Regulation D

promulgated under the Securities Act.

Units are sold to institutional investors

and high net worth individuals.

2. TAMCO, a wholly owned

subsidiary of the TCW Group, Inc.,

serves as the sole general partner of the