SEC Division of Investment Management staff letter: DFA Investment Trust

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON. D.C. 20549
DIVISION OF

INVESTMENT MANAGEMENT

...Març.!L9. ..~ ..

Ms. Lisa A. Duda ICA_. . :~.l_ Stradley Ronon Stevens & Young . ...:
2600 One Commerce Square ,::J,)ction '1'1.
Phiadelphia, PA 19103-7098
'~~~~':1.:A:":: ./';-).r- \ ( a - Î Dear Ms. Duda: ~;,.ù)ii(' ~ I 1C1

'. i I,! 1;.: ': i 1 t t Y ...... . .. . . ,2 \ '.!_~''''''''''~'''''''''':'0i".i''"':. '. .;".,.,-' '," '.On October 17, 1995 the stafíšsûèä a no':action letter to The DFA Investment Trust ("DFA") under rule 17a-7 under theInvestment Company Act of 1940 (the "Act") il connectíon with the conversion of a collective trust fund into a registered ilvestment company. The conversion was accomplished by the sale of portolio securities by three ta￾exempt group trusts ("Group Trusts") to cert series of The DFA Investment Trust

Company ("DFAITC"), il exchange for shares of those series. The sta's letter noted your representatíon that "other than DFA il its capacity as investment adviser, no person who is an affilated person of DF AITC, or an afilated person of an afilated person of DF AITC, within the meang of sectíon 2(a)(3) of the Investment Company Act, has any beneficial interest il the Subtrusts of the Group Trusts paricipating in the proposed trasaction. " Similar representations were noted in prior letters requestig comparble relief. 1/ We recently have received a number of requests for c1arcatíon with respect to that representation. . Rule 17a-7 provides an exemption from section 17(a) of the Act for purchase and sale transactions between affilated registered ilvestment companes, and between registered investment companies and other persons affilated with such companes solely by reason of having a common investment adviser, common directorsandlor common officers. The representation quoted above was intended to ensure that there was no additional affiliation between a registered investment company and another person seekig to reorganie into the

company that would disqualiy the trasaction from relying on rule 17a-7. The representation was not intended . to suggest that the staff would have refused to grat no- action relief had an afilated person of the registered investment company owned less than five percent of the outstading votilg securities of the counterpary to the transaction. 'lj Ownership of five petcentor more of the counterparty would, however, create a disqualifyilg afilation between the parties. 11 See, e.g., Federated Investors (pub. avai. Api. 21, 1994); The First National Bank of Chicago (pub. avaiL. Sept. 22, 1992); Lilcoln National Investment Management Company (pub. avaiL. Api. 25, 1976). 2/ Registered investment companies have sought exemptive orders in connection with

collective trust fund conversions solely because they could not comply with the

representation quoted above. See, e.g., SEI Financial Management Corporation,

IC-21128 (June 9, 1995) (Notice) and IC-21194 -(July 7, 1995) (Order). Provided

that al of the other conditions contailed in the DFA letter are met, this clarcation wil obviate the need for Stich exerrtive orders in the future.

Ms. Lisa Duda
March 21, 1996

If you h~ve any questions regarding this clarcation, please cal me at (202) 942-0660. . Sincerely, ~YU(~ Kare McMilan

Senior Counsel

Offce of Chief Counsel