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 taexempt 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
 

Page 2
 

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