[Federal Register Volume 66, Number 139 (Thursday, July 19, 2001)]
[Notices]
[Pages 37711-37712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18003]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25063; 812-12232]


Morgan Grenfell Investment Trust et al., Notice of Application

July 13, 2001.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 12(d)(1)(J) of the 
Investment Company Act of 1940 (``Act'') for an exemption from section 
12(d)(1)(G)(i)(II) of the Act.

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SUMMARY OF APPLICATION:  Applicants request an order to permit funds of 
funds relying on section 12(d)(1)(G) of the Act to invest in securities 
and other financial instruments.

APPLICANTS: Morgan Grenfell Investment Trust (``MG Trust''), BT 
Investment Portfolios (``BT Trust'') (collectively ``the Trusts''), 
Deutsche Asset Management, Inc. (``DeAM, Inc.'') and Deutsche Asset 
Management Investment Services Limited (``DeAMIS'') (together with 
DeAM, Inc., the ``Adviser'').

FILING DATES: The application was filed on August 21, 2000, and amended 
on June 29, 2001.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
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 August 7, 2001 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, Commission 450 Fifth Street, N.W., Washington, 
D.C. 20549-0609; Applicants, c/o Christopher P. Harvey, Esq. and Susan 
M. Tobin, Esq., Hale and Dorr LLP, 60 State Street, Boston MA 02109.

FOR FURTHER INFORMATION CONTACT: Lidian Pereira, Senior Counsel, at 
(202) 942-0524 (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 (telephone (202) 942-8090).

Applicant's Representation

    1. The MG Trust is registered under the Act as an open-end 
management investment company and is organized as a Delaware business 
trust. The MG Trust consists of fifteen investment portfolios, 
including Emerging Markets Debt Fund (``Emerging Markets Debt''), 
Global Fixed Income Fund (``Global Fixed Income''), High Yield Bond 
Fund (``High Yield Bond'') and Total Return Bond Fund (``Total Return 
Bond''). The BT Trust is registered under the Act as an open-end 
management investment company and is organized as a New York trust. The 
BT Trust is part of a master-feeder structure in which BT Trust is the 
master portfolio and certain series of BT Investment Funds, an open-
management investment company registered under the Act, among others, 
are feeders in a corresponding portfolio of BT Trust. The BT Trust 
consists of ten investment portfolio, including PreservationPlus Income 
Portfolio (``PreservationPlus'').
    2. DeAM, Inc. and DeAMIS are each registered as an investment 
adviser under the Investment Advisers Act of 1940, and are under the 
common control of Deutsche Bank AG. DeAM, Inc. serves as investment 
adviser for High Yield Bond, Total Return Markets Debt and Global Fixed 
Income. Applicants request that the relief also apply to any existing 
or future registered open-end management investment company or series 
thereof advised by DeAM, Inc., De AMIS or any entity controlling, 
controlled by, or under common control with DeAM, Inc. or DeAMIS 
(together with Global Fixed Income, Total Return Bond and 
PreservationPlus, the ``Upper Tier Funds'') that wishes to invest in a 
registered open-management investment company or series thereof that is 
advised by DeAM, Inc., DeAMIS or any entity controlling, controlled by 
or under common control with DeAM, Inc. and DeAMIS and is part of the 
same ``group of investment companies'' (as defined in section 
12(d)(1(G)(ii) of the Act) as the investing Upper Tier Fund (together 
with High Yield Bond and Emerging Markets Debt, the ``Underlying 
Funds'').\1\
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    \1\ All existing entities that currently intend to rely on the 
order are named as applicants. Any Upper Tier fund and any 
Underlying Fund that may rely on this order in the future will do so 
only in accordance with the terms and conditions of the application.
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    3. Total Return Bond is a series of the Trust that seeks total 
return. To achieve this objective, Total Return Bond proposes to invest 
in shares of High Yield Bond and Emerging Markets Debt while also 
investing in other securities and financial instruments, including 
fixed income securities, futures, options, forward currency 
transactions and other derivative investments (``Other 
Securities'').\2\ Similarly, Global Fixed Income seeks total return and 
proposes to invest in shares of High Yield Bond and Emerging Markets 
Debt while also investing in Other Securities. PreservationPlus seeks a 
high level of current income while seeking to maintain a stable value 
per share.

[[Page 37712]]

PreservationPlus proposes to invest in shares of High Yield Bond while 
also investing in Other Securities. High Yield Bond seeks high current 
income and, as a secondary objective, capital appreciation by investing 
primarily in U.S. dollar-denominated high yield bonds of U.S. and 
foreign issuers. Emerging Markets Debt seeks total return by investing 
primarily in high yield bonds of issuers in countries with new or 
emerging securities markets.
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    \2\ These investments will not include shares of any registered 
investments companies that are not in the same group of investment 
companies as the Upper Tier Funds.
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    4. Applicants state that in the event an Underlying Fund is 
organized in a master-feeder structure, the Upper Tier Fund would not 
invest in shares of the feeder fund, but in interests of the master 
portfolio. In all such cases, the master portfolio would be part of the 
same group of investment companies (as defined in Section 
12(d)(1)(G)(ii) of the Act) as the Upper Tier Fund. Such master 
portfolio is included in the term Underlying Fund.

Applicant's Legal Analysis

    1. Section 12(d)(1)(A) of the Act provides that no registered 
investment company (``acquiring company'') may acquire securities of 
another investment company (``acquired company'') if such securities 
represent more than 3% of the acquired company's outstanding voting 
stock or more than 5% of the acquiring company's total assets, or if 
such securities, together with the securities of other investment 
companies, represent more than 10% of the acquiring company's total 
assets. Section 12(d)(1)(B) of the Act provides that no registered open 
end-investment company may sell its securities to another investment 
company if the sale will cause the acquiring company to own more than 
3% of the acquired company's voting stock, or cause more than 10% of 
the acquired company's voting stock to be owned by investment 
companies.
    2. Section 12(d)(1)(G) of the Act provides that section 12(d)(1) 
will not apply to securities of an acquired company purchased by an 
acquiring company if: (i) The acquiring company and the acquired 
company are part of the same group of investment companies; (ii) the 
acquiring company holds only securities of acquired companies that are 
part of the same group of investment companies, government securities, 
and short-term paper; (iii) the aggregate sales loads and distribution-
related fees of the acquiring company and the acquired company are not 
excessive under rules adopted pursuant to section 22(b) or section 
22(c) of the Act by a securities association registered under section 
15A of the Securities Exchange Act of 1934 or by the Commission; and 
(iv) the acquired company has a policy that prohibits it from acquiring 
securities of registered open-end management investment companies or 
registered unit investment trusts in reliance on section 
12(d)(1)(F)(G). Applicants state that the proposed arrangement would 
comply with the provisions of section 12(d)(1)(G), but for the fact 
that an Upper Tier Fund's investments will include shares of one or 
more Underlying Funds as well as Other Securities.
    3. Section 12(d)(1)(J) of the Act provides that the Commission may 
exempt persons or transactions from any provision of section 12(d)(1) 
if, and to the extent that, the exemption is consistent with the public 
interest and the protection of investors. Applicants requests an order 
under section 12(d)(1)(J) exempting them from section 
12(d)(1)(G)(i)(II). Applicants assert that permitting Total Return Bond 
and other Upper Tier Funds to invest in the Underlying Funds and Other 
Securities as described in the application would not raise any of the 
concerns that the requirements of section 12(d)(1)(G) were designed to 
address.

Applicants' Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:
    1. Before approving any advisory contract under section 15 of the 
Act, the board of trustees of each of the MG Trust (on behalf of Total 
Return Bond and Global Fixed Income) and the BT Trust (on behalf of 
PreservationPlus) or other Upper Tier Fund, including a majority of the 
trustees who are not ``interested persons'' as defined in section 
2(a)(19) of the Act, will find that advisory fees, if any, charged 
under the contract are based on services provided that are in addition 
to, rather than duplicative of, services provided pursuant to any 
Underlying Fund's advisory contract. Such finding, and the basis upon 
which it was made, will be recorded fully in the minute books of Total 
Return Bond, Global Fixed Income, PreservationPlus or other Upper Tier 
Fund.
    2. Applicants will comply with all provisions of section 
12(d)(1)(G), except for section 12(d)(1)(G)(i)(II) to the extent that 
it restricts Global Fixed Income, Total Return Bond, PreservationPlus 
or other Upper Tier Fund from investing in Other Securities as 
described in this application.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 01-18003 Filed 7-18-01; 8:45 am]
BILLING CODE 8010-01-M