[Federal Register Volume 61, Number 13 (Friday, January 19, 1996)]
[Notices]
[Pages 1420-1422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-512]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21662; 812-9636]
Brinson Relationship Funds and Brinson Partners, Inc.; Notice of
Application
January 5, 1996.
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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APPLICANTS: Brinson Relationship Funds (the ``Trust'') and Brinson
Partners, Inc. (the ``Adviser'').
RELEVANT ACT SECTIONS: Order requested under sections 6(c) and 17(b)
granting an exemption from section 17(a).
[[Page 1421]]
SUMMARY OF APPLICATION: Applicants request relief from section 17(a) to
permit series of the Trust to invest in other series of the Trust.
FILING DATES: The application was filed on June 20, 1995, and was
amended on September 5, 1995 and December 1, 1995.
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 January 30,
1996, and should be accompanied by proof of service on the applicants,
in the form of an affidavit or, for lawyers, a certificate or 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 Fifth Street NW., Washington, DC 20549.
Applicants, 209 South LaSalle Street, Chicago, Illinois 60604-1295.
FOR FURTHER INFORMATION CONTACT:
Sarah A. Wagman, Staff Attorney, at (202) 942-0654, or Alison E. Baur,
Branch Chief, at (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.
Applicants' Representations
1. The Trust is a Delaware business trust registered under the Act
as an open-end management investment company. The Trust is comprised of
six series (the ``Series''): Brinson Global Securities Fund, Brinson
Short-Term Fund, Brinson Post-Venture Fund, Brinson High Yield Fund,
Brinson Emerging Markets Equity Fund, and Brinson Emerging Markets Debt
Fund. Applicants request that any relief granted pursuant to this
application also apply to any subsequently created Series of the Trust
for which the Adviser, any entity resulting from the Adviser changing
its jurisdiction or form of organization, or any entity controlling,
controlled by, or under common control with the Adviser serves as
investment adviser.
2. Shares of the Trust may only be purchased by ``accredited
investors'' within the meaning of Regulation D under the Securities Act
of 1933. The Trust does not impose any sales charge, redemption fee,
advisory fee, or distribution fee under a plan adopted in accordance
with rule 12b-1 under the Act (a ``12b-1 Fee'').
3. The Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940. The Adviser provides investment
advisory services to each Series of the Trust, but it does not receive
any compensation for these services under its investment advisory
agreement with the Trust.
4. Fund/Plan Services, Inc. (the ``Administrator'') provides
general administrative, accounting, pricing, and transfer agency
services to each Series of the Trust pursuant to a multiple services
agreement. Bankers Trust Company (the ``Custodian'') serves as the
custodian for the securities and cash of each Series pursuant to a
custodial agreement.
5. Applicants propose that, subject to certain limitations, each
Series of the Trust be permitted to purchase and redeem shares of each
of the other Series of the Trust (``Investing Series''), and that each
Series be permitted to sell shares to, and redeem shares from, each of
the other Series (``Target Series''). Each Investing Series would be
permitted to invest a portion of its assets in Target Series that
primarily invest in certain securities.
6. For example, in seeking to achieve its objective, a portion of
Brinson Global Securities Fund's assets may be invested in the debt and
equity securities of emerging market issuers. Brinson Emerging Markets
Equity Fund invests in the equity securities of issuers in emerging
markets, and Brinson Emerging Markets Debt Fund invests in the debt
securities of issuers in emerging markets. Applicants propose that if
the requested order is granted, Brinson Global Securities Fund could
invest that portion of its assets designated for investment in the
equity securities and debt securities of issuers in emerging markets in
Brinson Emerging Markets Equity Fund and Brinson Emerging Markets Debt
Fund, respectively. These investments would be made in accordance with
the Investing Series' investment objectives and policies, and would be
within the limitations of section 12(d)(1) of the Act.
7. The Investing Series will retain the ability to invest their
assets directly in securities as authorized by their respective
investment objectives and policies. Thus, if the Adviser believes that
it could more economically invest a Series' assets directly in a
particular type of security, then such direct investment would be made.
In addition, each Target Series reserves the right to discontinue
selling shares to any Investing Series if the Trust's board of trustees
determines that sales of Target Series shares to the Investing Series
would adversely affect the Target Series' portfolio management and
operations.
Applicants' Legal Analysis
1. Section 17(a), in pertinent part, prohibits an affiliated person
of a registered investment company, or any affiliated person of such a
person, acting as principal, from selling to or purchasing from such
registered company, or any company controlled by such registered
company, any security or other property. The Series may be deemed to be
affiliated persons within the meaning of section 2(a)(3) of the Act
because they are each advised by the Adviser, and could thus be
considered under common control.
2. Section 17(b) provides that the SEC may exempt a transaction
from the provisions of section 17(a) if evidence establishes that the
terms of the proposed transaction, including the consideration to be
paid, 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 the registered investment company
concerned and with the general purposes of the Act. Section 6(c)
provides that the SEC may exempt persons or transactions if, and to the
extent that, such 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.
3. Applicants request an exemption under sections 6(c) and 17(b)
granting relief from section 17(a) to permit the proposed transactions.
Applicants state that the terms of the proposed transactions are fair
and reasonable, and do not involve overreaching. The consideration paid
and received for the sale and redemption of shares of a Target Series
will be based on the net asset value of the Target Series' shares. In
addition, shares of the Series are not subject to any sales loads,
redemption fees, 12b-1 Fees, or advisory fees. Under the conditions to
the requested order, there will be no duplication of administrative or
custodial fees, since the Administrator, Custodian, and their
respective affiliates will remit to an Investing Series, or waive, an
amount equal to all fees received by them or their affiliates to the
extent such fees are based upon assets of the Investing Series invested
in a Target Series. Any of these fees remitted or waived will not be
subject to recoupment by the
[[Page 1422]]
Administrator, Custodian, nor their affiliates.
4. Applicants assert that the proposed transactions are consistent
with the policies of each Series, as an Investing Series' investment in
shares of a Target Series will be effected in accordance with each
Investing Series' investment restrictions. Applicants also assert that
permitting an Investing Series to invest that portion of its assets
allocated to a particular type of security in the corresponding Target
Series of the Trust would produce greater diversification, lower costs,
and administrative efficiency for the Investing Series.
5. Applicants state that, for any particular Investing Series, the
percentage of the Series' assets allocated to a particular type of
security at a particular time may not be large enough to make direct
investments in such securities economical.
Further, where a Series only allocates a small percentage of its
assets to a particular type of security, applicants argue that it is
inefficient to burden portfolio managers of the Investing Series with
studying and following numerous issuers. Applicants assert that, where
an Investing Series invests in a Target Series rather than directly
investing in shares of certain securities, the Investing Series is able
to invest in, and be exposed to, a greater range of issuers. Applicants
asserts that this greater diversification decreases the risk and
volatility of investing in particular securities.
6. Applicants assert that the proposed transactions are consistent
with protection of investors and the general purposes of the Act.
Applicants' Conditions
Applicants' agree that any order of the SEC granting the requested
relief shall be subject to the following conditions:
1. Each Investing Series' investment in shares of any Target Series
will be in accordance with the percentage limitations set forth in
section 12(d)(1)(A) of the Act.
2. Shares of each Series will not be subject to a sales load,
redemption fee, advisory fee, or distribution fee under a plan adopted
in accordance with rule 12b-1 under the Act.
3. Investment in shares of a Target Series will be in accordance
with each Investing Series' respective investment restrictions and will
be consistent with its policies as recited in its registration
statement.
4. Applicants will cause the Adviser, Administrator, Custodian, and
their respective affiliates, in their capacities as service providers
for the Target Series, to remit to the respective Investing Series, or
waive, an amount equal to all fees received by them or their affiliates
under their respective agreements with the Trust on behalf of the
Target Series to the extent such fees are based upon the Investing
Series' assets invested in the shares of a Target Series. Any of these
fees remitted or waived will not be subject to recoupment by the
Adviser, Administrator, Custodian, or their respective affiliates at a
later date.
5. If the Adviser waives any portion of a Target Series' fees or
bears any portion of the expenses of a Target Series (an ``Expense
Waiver''), the adjusted fees for a Target Series (gross fees minus
Expense Waiver) will be calculated without reference to the amounts
waived or remitted pursuant to condition 4. Adjusted fees then will be
reduced by the amount waived pursuant to condition 4. If the amount
waived pursuant to condition 4 exceeds adjusted fees, the Adviser also
will reimburse the Investing Series in an amount equal to such excess.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-512 Filed 1-18-96; 8:45 am]
BILLING CODE 8010-01-M
