[Federal Register Volume 62, Number 38 (Wednesday, February 26, 1997)]
[Notices]
[Pages 8807-8808]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4750]


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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-22521; 813-152]


Partners Income Fund; Notice of Application

February 20, 1997.
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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APPLICANT: Partners Income Fund (the ``Initial Partnership'').

RELEVANT ACT SECTIONS: Order requested under section 6(b).

SUMMARY OF APPLICATION: Applicant requests an order that would amend a 
prior order to permit the employer of certain employees' securities 
companies to invest in those companies on terms no more favorable than 
those available to eligible employees.

FILING DATES: The application was filed on August 6, 1996 and amended 
on November 26, 1996.

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 
applicant with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on March 17, 1997 
and should be accompanied by proof of service on the applicant, 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 5th Street, N.W., Washington, D.C. 
20549. Applicant, c/o McKinsey & Company,

[[Page 8808]]

Inc., Park Avenue Plaza, 55 East 52nd Street, New York, New York 10022.

FOR FURTHER INFORMATION CONTACT: Mary T. Geffroy, Staff Attorney, at 
(202) 942-0553, 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 from 
the SEC's Public Reference Branch.

Applicant's Representations

    1. McKinsey & Co., Inc. (``McKinsey''), a New York corporation, is, 
together with its majority owned subsidiaries, an internationally known 
business consulting and management firm that, with its affiliated 
companies, is engaged in various facets of the consulting business. The 
Initial Partnership, a general partnership organized under the laws of 
the State of New York, was organized by management group members of 
McKinsey. The Initial Partnership and other existing and future 
partnerships sponsored by McKinsey (collectively, the ``Partnerships'') 
are, or will be, employees' securities companies within the meaning of 
section 2(a)(13) of the Act and operate, or will operate, as closed-end 
management investment companies.
    2. In an order issued on September 14, 1992 (the ``Original 
Order''), the SEC granted the Partnerships an exemption from all 
provisions of the Act except sections 7, 8(a), (9), certain provisions 
of section 17, sections 36 through 53, and the rules and regulations 
relating to those sections.\1\ The Initial Partnership is currently the 
only entity relying on the Original Order. Applicant requests that the 
Original Order be amended to permit McKinsey to invest in a Partnership 
on terms no more favorable than those on which Eligible Employees \2\ 
may invest. Applicant states that the purpose of the Partnerships, 
their operation and the other relevant facts remain materially as 
described in the original application (``Original Application'').
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    \1\ See Investment Company Act Release No. 18897 and Investment 
Advisers Act Release No. 1323 (August 17, 1992) (notice), and 
Investment Company Act Release No. 18948 and Investment Advisers Act 
Release No. 1335 (September 14, 1992) (order). The Original Order 
also granted an exemption under section 206A of the Investment 
Advisers Act from one disclosure requirement of Form ADV.
    \2\ The Original Application stated that the opportunity to 
become a partner in the Partnerships would be offered only to 
``Eligible Employees'' of McKinsey. Eligible Employees were defined 
as: (i) Directors, Principals and Administrative Shareholders, all 
of whom are owners of common shares of McKinsey, (ii) ``retired'' 
Directors, Principals and Administrative Shareholders subject to 
certain limitations, (iii) a very small number, not more than ten at 
any one time (i.e., for all Partnerships in existence), of non-
management group members responsible for administering the 
Partnerships and employee benefit plans for McKinsey, and (iv) a 
very small number of other employees (i.e., for all Partnerships in 
existence), determined to have the degree of sophistication, access 
to the management of the partnerships and financial resources 
comparable to the individuals in clause (i).
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    3. Condition 2(a) of the notice of the Original Order states that 
``the Partnership will not make any investment in which McKinsey is a 
participant * * * other than (i) as general partnership in a 
Partnership organized as a limited partnership, to the limited and pro 
rata extent described in the application.'' \3\ Applicant believes that 
this condition could be read as prohibiting McKinsey from investing at 
all in general partnerships (such as the Initial Partnership) and 
limiting McKinsey's ability to invest in limited partnerships to 1% of 
capital accounts.
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    \3\ The Original Application stated that the general partner in 
a limited partnership generally must invest at least 1% of total 
positive capital account balances in each Partnership organized as a 
limited partnership (up to $500,000 per Partnership), and must 
maintain this investment at a specified level for the life of each 
such Partnership.
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    4. Applicant explains that, at the time of the Original 
Application, it was not contemplated that McKinsey would invest in the 
Partnerships other than as stated in condition 2(a)(i). Applicant 
states that McKinsey has now determined that, from time to time, it 
will have excess funds available for investment, and would like to be 
able to invest in the Initial Partnership and Subsequent Partnerships 
on terms no more favorable than those available to other investors 
therein. Applicant contends that investments by McKinsey in a 
Partnership should promote the community of interests among the 
employer and employee investors in the Partnership.
    5. Applicant represents that McKinsey would invest in a Partnership 
only where it had determined that the Partnership's investment 
objective was consistent with its own investment plans for its funds. A 
Partnership will permit McKinsey to invest in such Partnership only if 
(1) The Fairness Determining Body \4\ of such Partnership determines, 
at the time of each such investment by the McKinsey entity, that the 
terms of such investment are no more favorable to the McKinsey entity 
than to other investors and that such Partnership will be able to 
invest such funds in accordance with the Partnership's investment 
objective and policies without any material adverse effect on the other 
partners in such Partnership, and such Partnership will refuse to 
accept any such McKinsey investment to the extent such determination 
cannot be made; (2) the McKinsey entity proposing to make the 
investment sends a notice of the proposed investment and its 
approximate amount to the partners of such Partnership a reasonable 
time before the relevant deadline for partners or other Eligible 
Employees to invest (or, if later, the deadline to cancel an investment 
commitment already made); and (3) the McKinsey entity making the 
investment commits not to redeem any portion of its investment in a 
Partnership unless it has given reasonable (but not less than 7 days') 
notice to the other partners in such Partnership prior to the date any 
similar redemption notice from such other partners is due.
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    \4\ The Original Application describes the Fairness Determining 
Body as ``consisting of members of the Advisory Committee or 
Management Committee [as such terms are defined in the Original 
Application], as the case may be, of that Partnership.''
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    6. Applicant requests an order amending the Original Order to 
permit McKinsey to invest in a Partnership on terms no more favorable 
than those available to the Eligible Employees and pursuant to the same 
relief from the act and the rules and regulations thereunder as in the 
Original Order, but subject to a modification of one condition. The 
requested modification would be accomplished by deleting from condition 
2(a) the phrase ``(i) as general partner in a Partnership organized as 
a limited partnership, to the limited and pro rata extent described in 
the application'' and replacing it with ``(i) to the extent McKinsey 
may be a partner in a Partnership''.

Applicant's Condition

    Applicant agrees to comply with all of the terms and conditions of 
the Original Order except that condition 2(a) of the notice of the 
Original Order is amended and restated to read: ``(i) to the extent 
McKinsey may be a partner in a Partnership''.

    For the SEC, by the Division of Investment Management, pursuant 
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-4750 Filed 2-25-97; 8:45 am]
BILLING CODE 8010-01-M