March 4,
2021
Eric S. Purple, Esq.
Stradley Ronon Stevens & Young, LLP
2000 K Street, N.W., Suite 700
Washington, DC 20006-1871
Re: DGI Investment Trust
File Nos. 333-252816 and 811-23637
Dear Mr. Purple:
On February 5, 2021, you filed a registration statement on Form N-1A
for DGI
Investment Trust (the Trust ) to register shares of the DGI Balanced Fund
(the Fund ). Our
comments are set forth below. For convenience, we generally organized our
comments using the
headings and terms from the registration statement. Where a comment is made in
one location, it
is applicable to all similar disclosure appearing elsewhere in the registration
statement.
PROSPECTUS COMMENTS
Cover Page
1. Please include the exchange ticker symbol of the Fund s shares. See Item
1(a)(2) of Form N-
1A.
2. Please add prominent cover page disclosure that the Fund is intended for
residents of Puerto
Rico and that if you are not a resident of Puerto Rico, your tax
consequences will be
significantly different from other mutual funds. In addition, provide a
cross-reference to the
"Tax Information" section later in the prospectus.
Fees and Expenses of the Fund (page 5)
3. Please include the following sentence immediately preceding the fee table:
You may pay
other fees, such as brokerage commissions and other fees to financial
intermediaries, which
are not reflected in the tables and examples below. See Item 3 of Form
N-1A.
4. The fee table includes a line item for Fee Waivers and/or Expense
Reimbursement. Please
confirm if the fee waiver will be subject to recoupment. If so, please
disclose the terms of
recoupment and ensure the recoupment period is limited to three years from
the date of the
waiver/reimbursement. Please also disclose that any recoupments would be
limited to the
Eric S. Purple, Esq.
March 4, 2021
Page 2
lesser of (1) the expense limitation in effect at the time of waiver, and
(2) the expense
limitation in effect at the time of recapture.
5. Please disclose if the Fund plans to do any borrowing and, if so, please
include interest
expense in the fee table.
Principal Investment Strategies (page 6)
6. Please include the type or types of securities in which the Fund invests or
will invest
principally. For example, it is not sufficient to merely state that (T)he
investment objectives
of the Fund are to seek for the shareholders long-term capital appreciation
and current
income consistent with the investment policies of the Fund and prudent
investment
management. See Item 4(a) of Form N-1A. Specifically:
a. Please provide the types of equity and fixed income securities in
which the Fund
will invest. Also, include the credit rating criteria for the
debt investments.
b. Please describe the other type of securities the Fund will
principally invest.
c. Please provide disclosure that includes the Fund's intent to
invest significantly in
investments of the in the Commonwealth of Puerto Rico and operate
as a
balanced fund.
d. Please provide a market capitalization policy in this section for
the common
stocks that will be held by the Fund s portfolio. If the Fund
will invest in mid- or
small-capitalization stocks, please provide corresponding risk
disclosure in the
discussions of the Fund s risks, if applicable.
e. Please include any policy to concentrate in securities or issuers
in a particular
industry or group of industries.
Principal Risks (pages 6-8)
7. The Fund describes in the Principal Risks section various risks that are not
covered in the
principal strategies section. For example, current disclosure may be
inconsistent because the
following risks are set forth as principal risks, but not as principal
investment strategies.
a. Mortgage-Related and Other Asset-Backed Securities Risk
b. U.S. Government Securities Risk
c. Investment Company and ETF Risk
d. Derivatives Risk
e. Municipal Securities Risk
f. Leverage Risk
g. Long/Short Strategy Risk
h. Portfolio Turnover Risk
i. Smaller Companies Risk
Eric S. Purple, Esq.
March 4, 2021
Page 3
Please ensure that all risks disclosed are covered by a respective
corresponding principal
investment strategy. Alternatively, please explain to us why each of these
risks do not
constitute a respective principal investment strategy. See Instruction 2 to
Item 9 of Form N-
1A.
8. Under the heading, Investment Company and ETF Risk, please include
that the Fund plans
to invest in business development companies as is currently disclosed in
footnote 2 of the fee
table.
9. Under the heading, Derivatives Risk, please note that disclosure for
any principal
investment related to derivatives should be tailored specifically to how a
fund expects to be
managed and should address those strategies that the fund expects to be the
most important
means of achieving its objectives and that it anticipates will have a
significant effect on its
performance. Disclosure of the Fund s principal strategies and principal
risks discussing
derivatives should not be generic and should discuss each derivative type.
See Barry Miller
letter to ICI located here:
https://www.sec.gov/divisions/investment/guidance/ici073010.pdf.
Performance (page 8)
10. Please tell us the appropriate broad-based securities market index the Fund
intends to use in
its average annual total return table. We may have more comments after
reviewing your
response. See Instruction 5 to Item 27(b)(7) of Form N-1A.
11. The disclosure says that performance information can be found by visiting a
website. Please
disclose the website and tell us in your response letter the website
address.
Tax Information (page 9)
12. Please disclose that the Fund does not intend to qualify as a regulated
investment company
under Subchapter M of the IRC, and expand upon the tax consequences to
non-residents of
Puerto Rico that purchase shares of the Fund. Also, prominently disclose
that shareholders
that are not residents of Puerto Rico may have adverse tax consequences for
U.S federal
income tax purposes.
13. Disclosure currently says that Fund distributions may be subject to U.S.
federal income taxes
if made to shareholders who are not individual residents of Puerto Rico.
Please also disclose
the treatment of distributions from the Fund for U.S. federal income tax
for residents of
Puerto Rico.
Investment Policy and Eligible Securities (page 10)
14. Please summarize the investments described in this section in the Principal
Investment
Strategies section. Please note that Item 9 of Form N-1A requires a more
comprehensive
discussion of both the principal strategies and principal risks that affect
the Fund s portfolio
Eric S. Purple, Esq.
March 4, 2021
Page 4
in this section than the earlier Principal Investment Strategies and
Principal Risks sections
required in response to Item 4 of Form N-1A.
15. Please add disclosure explaining the concept of an implied equivalent
rating.
Additional Principal Risk Information (page 12-29)
16. We note that the Principal Investment Risks appear to be in alphabetical
order. Please reorder
the risks to prioritize the risks that are most likely to adversely affect
the Fund s net asset
value, yield, and total return. Please note that after listing the most
significant risks of the
Fund, the remaining risks may be alphabetized. See speech of Dalia Blass to
the ICI, Oct.
25, 2018.
17. This section includes risks that appear to be both principal and
non-principal to the Fund.
Please revise the disclosure to clarify which risks are non-principal to
the Fund as required
by Item 16(b) of Form N-1A.
18. Under the heading, Convertible Securities Risk:
a. We note that the Fund invests in convertible securities. Since
the Fund invests in
contingent convertible securities ( CoCos ), the Fund should
consider what, if
any, disclosure is appropriate. The type and location of
disclosure will depend on,
among other things, the extent to which the Fund invests in
CoCos, and the
characteristics of the CoCos, (e.g., the credit quality, the
conversion triggers). If
CoCos are or will be a principal type of investment, the Fund
should provide a
description of them and should provide appropriate risk
disclosure.
b. Disclosure in this section states that many convertible
securities have credit
ratings that are below investment grade. Please disclose whether
the Fund will
invest in high yield securities (junk bonds) and include
disclosure in the Principal
Risks section, if applicable.
19. Under the heading, Corporate Loan Risk, it appears that some of the
loans held by the
Fund may pay interest based on LIBOR, which is expected to be discontinued
after 2021.
Please either disclose the risks associated with the discontinuation of
LIBOR or explain to us
why the discontinuation of LIBOR is not a principal risk of the Fund.
20. Under the heading, Tax Risks, the disclosure states that the Fund is
a foreign corporation.
Please correct this to clarify that the Fund is incorporated in Puerto
Rico.
Management of the Fund (page 30)
21. Please confirm whether Oriental Trust is registered as an investment
adviser under the
Investment Advisers Act of 1940, as is required. If Oriental Trust is not
registered, please
explain when it expects to register.
Eric S. Purple, Esq.
March 4, 2021
Page 5
Fund Expenses (page 30)
22. Please confirm all applicable fees and expenses are included in fee table.
See Item 3 and all
instructions thereto in Form N-1A.
STATEMENT OF ADDITIONAL INFORMATION
The Trust (Page B-2 to B-3)
23. Please disclose the date of organization of the Fund. See Item 15(a) of
Form N-1A.
24. Please disclose whether the Fund has been engaged in any business other
than that of an
investment company. See Item 15 of Form N-1A.
Fundamental Policies (Page B-34)
25. The Fund s concentration policy appears to reserve discretion as to when
or whether the
Fund would concentrate. It has been the staff s longstanding position
that a fund may not
change its policies with respect to concentration without a shareholder
vote, whether or not
the fund previously disclosed that it may do so, unless the statement of
investment policy
clearly indicates when and under what conditions any changes between
concentration and
non-concentration would be made. Therefore, please revise the Fund s
policy to remove this
discretion (e.g., the Fund may classify and re-classify companies in a
particular industry and
define and re-define industries in any reasonable manner ) or clearly
indicate when and under
what conditions those changes would be made. See Statements of Investment
Policies of
Money Market Funds Relating to Industry Concentration, Investment Company
Act Release
No. 9011 (Oct. 30, 1975).
Trustees and Executive Officers (page B-37)
26. We note that much of the information required by this section has been left
blank. Please
ensure that the Trust s pre-effective amendment provides all of the
information required by
Item 17(b)(10) of Form N-1A for each Trustee, including the specific
experience,
qualifications, attributes, or skills that led to the conclusion that the
person should serve as a
Trustee of the Fund.
Financial Statements (Page B-54)
27. Please include one year of financial statements for the Original Trust in
the Prospectus and
ensure these financial statements have been audited in accordance with U.S.
GAAP and
Article 12 of Regulation S-X as required by Article 6-11 of Regulation S-X.
Supplementally,
please confirm if the Original Trust was audited and, if so, under which
auditing standards.
28. Please explain in correspondence how the registrant plans to present their
financial
statements, including the Statement of Changes in Net Asset and Financial
Highlights, in the
first N-CSR filed after the effective date of the registration statement.
Eric S. Purple, Esq.
March 4, 2021
Page 6
Part C
29. The paragraph titled Insofar as indemnification... is missing the
following: In the event
that a claim for indemnification against such liabilities (other than the
payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such
director, officer or controlling person in connection with the securities
being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by
the final adjudication of such issue. See Rule 484 of under the
Securities Act of 1933
( Securities Act ).
Signature Page
30. We note that only one Trustee has signed the registration statement. Please
ensure that all
future amendments to the registration statement are signed by a majority of
Trustees, as
required by Section 6(a) of the Securities Act.
General Comments
31. Please complete or update all information that is currently in brackets or
missing in the
registration statement (e.g., fee table, expense example, sub-adviser,
portfolio managers,
purchase and sale of Fund shares, information in the statement of
additional information, and
exhibits). We may have additional comments on such portions when you
complete them in
pre-effective amendments, on disclosures made in response to this letter,
on information
supplied supplementally, or on exhibits added in any pre-effective
amendment.
32. Please advise us if you have submitted or expect to submit any exemptive
applications or no-
action requests in connection with your registration statement. Please also
tell us whether the
registrant is relying on no-action relief. The staff may have additional
comments.
33. Response to this letter should be in the form of a pre-effective amendment
filed pursuant to
Rule 472 under the Securities Act. Where no change will be made in the
filing in response to
a comment, please indicate this fact in a supplemental letter and briefly
state the basis for
your position. Where changes are made in response to our comments, provide
information
regarding the nature of the change and, if appropriate, the location of
such new or revised
disclosure in the amended filing. As required by the rule, please insure
that you mark new or
revised disclosure to indicate the change.
We remind you that the company and its management are responsible for the
accuracy and
adequacy of their disclosures, notwithstanding any review, comments, action or
absence of
action by the staff.
* * * * *
Eric S. Purple, Esq.
March 4, 2021
Page 7
If you have any questions prior to filing a pre-effective amendment,
please call me at
(202) 551-6478.
Sincerely,
/s/ Ashley
Vroman-Lee
Ashley Vroman-Lee
Senior Counsel
cc: Michael J. Spratt, Assistant Director
Michael J. Shaffer, Branch Chief