[Federal Register Volume 60, Number 2 (Wednesday, January 4, 1995)]
[Notices]
[Pages 513-515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30]



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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20798; 812-9330]


Dean Witter Select Equity Trust, Select 10 International Series

December 27, 1994.
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, Select 10 International 
Series.

Relevant Act Sections: Order requested under section 6(c) of the Act 
that would [[Page 514]] exempt applicant from section 12(d)(3) of the 
Act.

Summary of Application: Applicant requests an order on behalf of its 
series (the ``Series'') and the Series' component trusts (the 
``Trusts'') to permit each Trust to invest up to ten 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 November 17, 1994. Applicants 
agree to file an additional amendment, the substance of which is 
incorporated herein, during the notice period.

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 January 23, 1995 
and should be accomplished 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 issue contested. Persons may request 
notification of a hearing by writing to the SEC's Secretary.

Addresses: Secretary, SEC, 450 5th Street, N.W., Washington, D.C. 
20549. Applicant, c/o Dean Witter Reynolds Inc., Two World Trade 
Center, New York, NY 10048, Attn.: Thomas Hines.

For Further Information Contact: Sarah A. Buescher, Law Clerk, 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 Dean Witter Select Equity Trust, 
Select 10 International Series, a unit investment trust registered 
under the Act, composed of one or more separate Trusts. Dean Witter 
Reynolds Inc. is applicant's depositor (the ``Sponsor'').
    2. Each Trust will invest approximately 10%, but in no event more 
than 10.5%,\1\ of the value of its total assets in each of the ten 
common stocks in the Financial Times Index or the Hang Seng Index with 
the highest dividend yields as of its initial date of deposit, and hold 
those stocks over the life of the Trust (presently anticipated to be 
approximately one year).

    \1\The Sponsor will attempt to purchase equal values of each of 
the ten common stocks in a Trusts' 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 10%, but in no event more than 10.5% percent, of a Trust's 
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 Financial Times Index comprises 30 common stocks chosen by 
the editors of the Financial Times (London) as representative of 
British industry and commerce. The companies are major factors in their 
industries and their stocks are widely held by individuals and 
institutional investors. The Hang Seng Index comprises 33 of the stocks 
listed on the Hong Kong Stock Exchange and includes companies intended 
to represent four major market sectors: commerce and industry, finance, 
properties, and utilities. The Hang Seng Index is a recognized 
indicator of stock market performance in Hong Kong.
    4. The portfolio securities deposited in each Trust 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 Sponsors. The Sponsor will have no discretion as 
to which securities are purchased. Securities deposited in a Trust 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 ten highest divided yielding stocks.
    6. A Trust's portfolio will not be actively managed. Sales of 
portfolio securities will be made in connection with redemptions of 
units issued by a Trust and at termination of the Trust. The Sponsor 
has no discretion as to when securities will be sold except that it is 
authorized to sell securities in extremely limited circumstances, 
namely, upon failure of the issuer of security in a Trust 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 Trust 
detrimental to the interests of the unit holders. The adverse financial 
condition of an issuer will not necessarily require the sale of its 
securities from a Trust's 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 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 Trust to invest up to approximately 10%, but in 
no event more than 10.5%, 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 
Trust 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 businesses. One potential conflict could occur if an 
investment company purchased securities or other interests in a broker-
dealer to reward [[Page 515]] 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 Financial Times Index or the Hang Seng Index, 
which indexes are unaffiliated with the Sponsor and applicant, and must 
also qualify as one of the ten highest dividend yielding securities.
    4. Applicant also believes that the effect of a Trust's 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 Financial Times Index of the Hang Seng Index are 
widely held, have active markets, and that potential purchases by any 
Trust 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 Trust 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 directed 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 Trust nor any 
affiliate thereof will act as a broker for any Trust in the purchase or 
sale of any security for its portfolio. In light of the above, 
applicant believes that its proposals meets the section 6(c) standards.

Condition

    Applicant and each Series agree that any order granted under this 
application may be conditioned upon no company held in a Trust's 
portfolio nor any affiliate thereof acting as broker for any Trust in 
the purchase or sale of any security for a Trust's portfolio.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-30 Filed 1-3-95; 8:45 am]
BILLING CODE 8010-01-M