[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).


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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