95-14438. Dean Witter Select Equity Trust  

  • [Federal Register Volume 60, Number 113 (Tuesday, June 13, 1995)]
    [Notices]
    [Pages 31173-31175]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 95-14438]
    
    
    
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    SECURITIES AND EXCHANGE COMMISSION
    [Rel. No. IC-21111; 812-9584]
    
    
    Dean Witter Select Equity Trust
    
    June 6, 1995.
    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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    applicant: Dean Witter Select Equity Trust.
    
    Relevant Act Sections: Order requested under section 6(c) of the Act 
    that would exempt applicant from section 12(d)(3) of the Act.
    
    SUMMARY OF APPLICATION: Applicant requests an order on behalf of its 
    series (the ``Series'') to permit each Series to invest up to twenty 
    percent of its total assets in securities of issuers that derived more 
    than fifteen percent of their gross revenues in their most recent 
    fiscal year from securities related activities.
    
    FILING DATE: The application was filed on May 2, 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 
    applicant with a copy of the request, personally or by mail. Hearing 
    requests should be received by the SEC by 5:30 p.m. on July 3, 1995 and 
    should be accompanied by proof of service on the applicant, 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 may request 
    notification of a hearing by writing to the SEC's Secretary.
    
    [[Page 31174]] ADDRESSES: Secretary, SEC, 450 5th Street NW., 
    Washington, D.C. 20549. Applicant c/o Dean Witter Reynolds Inc., Unit 
    Trust Department, Two World Trade Center, New York, NY 10048, Attn: 
    Thomas Hines.
    
    FOR FURTHER INFORMATION CONTACT:
    Sarah A. Buescher, Staff Attorney, at (202) 942-0573, or Robert A. 
    Robertson, Branch Chief, at (202) 942-0564 (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 from 
    the SEC's Public Reference Branch.
    
    Applicant's Representations
    
        1. Each Series will be a series of applicant, a unit investment 
    trust registered under the Act. Dean Witter Reynolds Inc. is 
    applicant's depositor (the ``Sponsor''). The Sponsor currently intends 
    to offer a new Series four times a year at about the beginning of each 
    calendar quarter.
        2. Each Series will invest approximately 20%, but in no event more 
    than 20.5%,\1\ of the value of its total assets in each of the five 
    lowest dollar price per share stocks of the ten common stocks in the 
    Dow Jones industrial Average (``DJIA'') with the highest dividend 
    yields either on or shortly before the initial date of deposit (the 
    ``Select Five''), and hold those stocks over the life of the Series 
    (presently anticipated to be approximately one year).
    
        \1\ The Sponsor will attempt to purchase equal values of each of 
    the five common stocks in a Series' portfolio and may choose to 
    purchase the securities in odd lots in order to achieve this goal. 
    However, it is more efficient if securities are purchased in 100 
    share lots and 50 share lots. As a result, the Sponsor may choose to 
    purchase securities of a securities related issuer which represent 
    over 20%, but in no event more than 20.5% percent, of a Series' 
    assets on the initial date of deposit to the extent necessary to 
    enable the Sponsor to meet its purchase requirements and to obtain 
    the best price for the securities.
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        3. The DJIA comprises 30 common stocks chosen by the editors of The 
    Wall Street Journal. The DJIA is the property of Dow Jones & Company, 
    Inc., which is not affiliated with any Series or the Sponsor and does 
    not participate in any way in the creation of any Series or the 
    selection of its stocks.
        4. The portfolio securities deposited in each Series will be chosen 
    solely according to the formula described above, and will not 
    necessarily reflect the research opinions or buy or sell 
    recommendations of the Sponsor. The Sponsor will have no discretion as 
    to which securities are purchased. Securities deposited in a Series may 
    include securities of issuers that derived more than fifteen percent of 
    their gross revenues in their most recent fiscal year from securities 
    related activities.
        5. During the 90-day period following the initial date of deposit, 
    the Sponsor may deposit additional securities while maintaining to the 
    extent practicable the original proportionate relationship among the 
    number of shares of each stock in the portfolio. Deposits made after 
    this 90-day period generally must replicate exactly the proportionate 
    relationship among the face amounts of the securities comprising the 
    portfolio at the end of the initial 90-day period, whether or not a 
    stock continues to be among the Select Five.
        6. A Series' portfolio will not be actively managed. Sales of 
    portfolio securities will be made in connection with redemptions of 
    units issued by a Series and at termination of the Series. The Sponsor 
    has no discretion as to when securities will be sold except that it is 
    authorized to direct the trustee to sell securities in extremely 
    limited circumstances, namely, upon failure of the issuer of a security 
    in a Series to declare or pay anticipated cash dividends, institution 
    of certain materially adverse legal proceedings, default under certain 
    documents materially and adversely affecting future declaration or 
    payment of dividends, or the occurrence of other market or credit 
    factors that, in the opinion of the Sponsor, would make the retention 
    of such securities in a Series detrimental to the interests of the 
    unitholders. The adverse financial condition of an issuer will not 
    necessarily require the sale of its securities from a Series' 
    portfolio.
    
    Applicant's Legal Analysis
    
        1. Section 12(d)(3) of the Act, with limited exceptions, prohibits 
    an investment company from acquiring any security issued by any person 
    who is a broker, dealer, underwriter, or investment adviser. Rule 12d3-
    1(b) under the Act exempts the purchase of securities of an issuer that 
    derived more than fifteen percent of its gross revenues in its most 
    recent fiscal year from securities related activities, provided that, 
    among other things, immediately after such acquisition, the acquiring 
    company has invested not more than five percent of the value of its 
    total assets in securities of the issuer. Section 6(c) of the Act 
    provides that the SEC may exempt a person from any provision of the Act 
    or any rule thereunder, if and to the extent that the 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.
        2. Applicant requests an exemption under section 6(c) from section 
    12(d)(3) to permit any Series to invest up to approximately 20%, but in 
    no event more than 20.5%, of the value of its total assets in 
    securities of an issuer that derives more than fifteen percent of its 
    gross revenues from securities related activities. Applicant and each 
    Series will comply with all provisions of rule 12d3-1, except for the 
    five percent limitation in paragraph (b)(3) of the rule.
        3. Section 12(d)(3) was intended to prevent investment companies 
    from exposing their assets to the entrepreneurial risks of securities 
    related businesses, to prevent potential conflicts of interest, and to 
    eliminate certain reciprocal practices between investment companies and 
    securities related business. One potential conflict could occur if an 
    investment company purchased securities or other interests in a broker-
    dealer to reward that broker-dealer for selling fund shares, rather 
    than solely on investment merit. Applicant believes that this concern 
    does not arise in connection with its application because neither 
    applicant nor the Sponsor has discretion in choosing the portfolio 
    securities or percentage amount purchased. The security must first be 
    included in the DJIA, which is unaffiliated with the Sponsor and 
    applicant, and must also qualify as one of the five lowest dollar price 
    per share stocks of the ten highest dividend yielding securities in the 
    DJIA.
        4. Applicant also believes that the effect of a Series' purchase on 
    the stock of parents of broker-dealers would be de minimis. Applicant 
    asserts that the common stocks of securities related issuers 
    represented in the DJIA are widely held, have active markets, and that 
    potential purchases by any Series would represent an insignificant 
    amount of the outstanding common stock and the trading volume of any of 
    these issues. Accordingly, applicant believes that it is highly 
    unlikely that Series purchases of these securities would have any 
    significant impact on the securities' market value.
        5. Another potential conflict of interest could occur if an 
    investment company brokerage to a broker-dealer in which the company 
    has invested to enhance the broker-dealer's profitability or to assist 
    it during financial difficulty, even though that broker-dealer may not 
    offer the best price and execution. To preclude this type of conflict, 
    applicant and each Series agree, as a condition of this application, 
    that no company held in the portfolio of a Series nor any affiliate 
    thereof will act as a broker for [[Page 31175]] any Series in the 
    purchase or sale of any security for its portfolio. In light of the 
    above, applicant believes that its proposal meets the section 6(c) 
    standards.
    
    Condition
    
        The Applicant and each Series agree that any order granted under 
    this Application may be conditioned upon no company held in the Series' 
    portfolio nor any affiliate thereof acting as broker for any Series in 
    the purchase or sale of any security for the Series' portfolio.
    
        For the Commission, by the Division of Investment Management, 
    pursuant to delegated authority.
    Margaret H. McFarland,
    Deputy Secretary.
    [FR Doc. 95-14438 Filed 6-12-95; 8:45 am]
    BILLING CODE 8010-01-M
    
    

Document Information

Published:
06/13/1995
Department:
Securities and Exchange Commission
Entry Type:
Notice
Action:
Notice of application for exemption under the Investment Company Act of 1940 (the ``Act'').
Document Number:
95-14438
Dates:
The application was filed on May 2, 1995.
Pages:
31173-31175 (3 pages)
Docket Numbers:
Rel. No. IC-21111, 812-9584
PDF File:
95-14438.pdf