[Federal Register Volume 65, Number 203 (Thursday, October 19, 2000)]
[Notices]
[Pages 62772-62773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-26800]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-24686; 812-12178]


The Latin American Investment Fund, Inc., et al.; Notice of 
Application

October 12, 2000.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION:  Notice of 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 the Latin 
America Equity Fund, Inc. (``LAQ'') to merge into the Latin America 
Investment Fund, Inc. (``LAM''). Because of certain affiliations, 
applicants may not rely on rule 17a-8 under the Act.
    Applicants: LAM, LAQ, and Credit Suisse Asset Management, LLC 
(``CSAM'').
    Filing Dates: The application was filed on July 17, 2000 and 
amended on August 14, 2000 and October 12, 2000.
    Hearing or Notification of Hearing: An order granting the requested 
relief 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 November 2, 2000 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 Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549-0609. Applicants, 466 Lexington 
Avenue, New York, New York, 10017.

FOR FURTHER INFORMATION CONTACT: Julia Kim Gilmer, Senior Counsel, at 
(202) 942-0528, or Michael W. Mundt, 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, NW, Washington, 
DC 20549-0102 (tel. 202-942-8090).

Applicants' Representations

    1. LAM and LAQ (each, a ``Fund,'' and collectively, the ``Funds'') 
are Maryland corporations registered under the Act as closed-end 
management investment companies. CSAM, an indirect wholly-owned 
subsidiary of Credit Suisse Group, is registered as an investment 
adviser under the Investment Advisers Act of 1940 and serves as 
investment adviser to the Funds. As of June 7, 2000, the President and 
Fellows of Harvard College (``Harvard'') owned more than 5% of the 
outstanding voting securities of each of the Funds.
    2. On July 24, 2000, the Board of Directors of both Funds, 
including the directors who are not ``interested persons,'' as defined 
in section 2(a)(19) of the Act (``Disinterested Directors''), 
unanimously approved a Merger Agreement and Plan of Reorganization (the 
``Plan'') between the Funds. Under the Plan, LAQ will merge into LAM, 
and LAM will succeed to all of the assets and liabilities of LAQ by 
operation of Maryland state law (the ``Merger''). Each share of common 
stock of LAQ will be converted into an equivalent dollar amount of full 
shares of common stock of LAM, based on the net asset value per share 
of each Fund calculated at 4:00 p.m. on the business day preceding the 
effective date of the Merger. LAM will purchase any interests that 
would result in fractional shares at the proportionate amount of the 
current net asset value of the shares and remit the cash proceeds to 
former LAQ shareholders. The value of the assets of the Funds will be 
determined in accordance with the valuation procedures set forth in 
LAM's registration statement, which are the same as LAQ's valuation 
procedures. Applicants state that the application of LAM's valuation 
procedures to LAQ's assets and liabilities was approved by the Board of 
Directors of each Fund and will not result in any difference in the

[[Page 62773]]

valuation that would have resulted from the application of LAQ's 
valuation procedures. After consummation of the Merger, LAQ will 
terminate its registration under the Act. No sales charge or fee of any 
kind will be charged to LAQ shareholders in connection with their 
receipt of common stock of LAM in the Merger.
    3. Applicants state that each Fund seeks long-term capital 
appreciation as its objective. LAQ seeks to meet that objective by 
investing primarily in Latin American equity securities, and LAM seeks 
to meet the same objective by investing primarily in Latin American 
debt and equity securities. After the Merger, LAM will adopt LAQ's 
investment objectives and policies.
    4. The Board of Directors of each Fund, including the Disinterested 
Directors, determined that the Merger is in the best interest of each 
Fund, and that the interests of the existing shareholders of each Fund 
would not be diluted by the Merger. In assessing the Merger, each Board 
considered various factors, including: (a) The possibility that LAM 
would have a lower operating expense ratio than either Fund prior to 
the Merger; (b) the possible benefits in portfolio management with a 
larger asset base; (c) the terms and conditions of the Merger; (d) the 
compatibility of each Fund's investment objective, policies and 
restrictions; (e) the tax-free nature of the Merger; and (f) the 
anticipated expenses of the Merger. The expenses of the Merger will be 
allocated equally between the Funds, as determined by the Board of 
Directors of each Fund.
    5. The Merger is subject to a number of conditions, including that: 
(a) The shareholders of the Funds approve the Merger; (b) LAQ declares 
and distributes to its shareholders all of its net investment company 
taxable income through dividends and substantially all of its net 
capital gain; (c) the Commission grants the requested exemptive relief; 
and (d) the Funds receive an opinion of counsel that the Merger will be 
tax-free. The Plan may be terminated at any time prior to the effective 
date of the Merger by mutual agreement of each Fund's Board of 
Directors or by either Fund if the other has violated a condition of 
the Plan. Applicants agree not to make any material changes to the Plan 
without prior Commission approval.
    6. A registration statement on Form N-14 containing a combined 
proxy statement/prospectus was filed with the Commission on August 1, 
2000, and was declared effective on September 1, 2000. Applicants 
mailed the proxy statement/prospectus to the shareholders of each Fund 
on or about September 7, 2000. The Plan was approved by the 
shareholders of each Fund at a meeting held on October 10, 2000. The 
Merger is expected to take place promptly after the requested relief is 
granted.

Applicants' Legal Analysis

    1. Section 17(a) of the Act provides that it is unlawful for any 
affiliated person of a registered investment company, or an affiliated 
person of such a person, acting as principal, knowingly to sell any 
security to or knowingly to purchase any security from that company. 
Section 2(a)(3) of the Act defines an ``affiliated person'' of another 
person to include (a) 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; (b) any person 5% or 
more of whose outstanding voting securities are directly or indirectly 
owned, controlled, or held with power to vote by the other person; (c) 
any person directly or indirectly controlling, controlled by or under 
common control with the other person; and (d) if the other person is an 
investment company, any investment adviser of that company.
    2. Rule 17a-8 under the Act exempts from the prohibitions of 
section 17(a) mergers, consolidations, or purchases or sales of 
substantially all of the assets of registered investment companies that 
are affiliated persons, or affiliated persons of an affiliated person 
solely by reason of having a common investment adviser, common 
directors, and/or common officers, provided that certain conditions set 
forth in the rule are satisfied. Applicants believe that they may not 
rely on rule 17a-8 because Harvard owns more than 5% of the outstanding 
voting securities of each Fund, and therefore the Funds may be deemed 
affiliated persons of an affiliated person for a reason not set forth 
in the rule.
    3. Section 17(b) of the Act provides that the Commission may exempt 
a transaction from the provisions of section 17(a) if the evidence 
establishes that the terms of the proposed 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 that 
the proposed transaction is consistent with the policy of each 
registered investment company concerned and with the general purposes 
of the Act.
    4. Applicants request an order under section 17(b) of the Act 
exempting them from section 17(a) to the extent necessary to effect the 
Merger. Applicants submit that the terms of the Merger satisfy the 
standards of section 17(b) of the Act. Applicants also state that the 
Board of Directors of each Fund, including the Disinterested Directors, 
determined that the participation of each Fund in the Merger is in the 
best interests of each Fund and that the interests of the existing 
shareholders of each Fund will not be diluted as a result of the 
Merger. In addition, applicants state that the Merger will be based on 
the Funds' relative net asset values.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 00-26800 Filed 10-18-00; 8:45 am]
BILLING CODE 8010-01-M