DWS Advisor Funds, et al.; Notice of Application, 33857-33861 [2010-14356]
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Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Notices
Securities and Exchange Commission,
C/O Shirley Martinson, 6432 General
Green Way, Alexandria, VA 22312; or
send an e-mail to:
PRA_Mailbox@sec.gov.
Dated: June 7, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–14355 Filed 6–14–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
29295; 812–13539]
DWS Advisor Funds, et al.; Notice of
Application
June 9, 2010.
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AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 12(d)(1)(J) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from sections
12(d)(1)(A) and (B) of the Act, and
under sections 6(c) and 17(b) of the Act
for an exemption from section 17(a) of
the Act.
SUMMARY OF THE APPLICATION:
Applicants request an order that would
permit certain registered open-end
management investment companies to
acquire shares of other registered openend management investment companies
and unit investment trusts that are
within and outside the same group of
investment companies.
APPLICANTS: (a) DWS Advisor Funds,
DWS Blue Chip Fund, DWS
Communications Fund, Inc., DWS
Equity Trust, DWS Global/International
Fund, Inc., DWS High Income Series,
DWS Income Trust, DWS Institutional
Funds, DWS International Fund, Inc.,
DWS Investment Trust, DWS
Investments VIT Funds, DWS Money
Funds, DWS Money Market Trust, DWS
Mutual Funds, Inc., DWS Portfolio
Trust, DWS Securities Trust, DWS
Strategic Income Fund, DWS Target
Fund, DWS Target Date Series, DWS
Technology Fund, DWS Value Equity
Trust, DWS Value Series, Inc., DWS
Variable Series I, and DWS Variable
Series II (each, a ‘‘DWS Investment
Company’’ and collectively, the ‘‘DWS
Investment Companies’’); and (b)
Deutsche Investment Management
Americas Inc. (‘‘DIMA’’ or the
‘‘Adviser’’).
FILING DATES: The application was filed
on May 28, 2008, and amended on
January 9, 2009, and May 11, 2010.
Applicants have agreed to file an
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amendment during the notice period,
the substance of which is reflected in
this notice.
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 July 6, 2010, 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, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090. Applicants, 345 Park Avenue,
New York, NY 10154.
FOR FURTHER INFORMATION CONTACT:
Christine Y. Greenlees, Senior Counsel,
at (202) 551–6879, or Mary Kay Frech,
Branch Chief, at (202) 551–6821
(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 via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. Each DWS Investment Company is
organized as a Massachusetts business
trust or a Maryland corporation and is
registered as an open-end management
investment company under the Act.1
Each DWS Investment Company is
comprised of separate DWS Funds that
pursue distinct investment objectives
and strategies. The series of DWS
Variable Series I, DWS Variable Series II
1 Applicants request that the order also extend to
existing and future series of the DWS Investment
Companies, and any existing or future registered
open-end management investment companies and
any series thereof that are part of the same ‘‘group
of investment companies,’’ as defined in section
12(d)(1)(G)(ii) of the Act, as the DWS Investment
Companies and that are, or may in the future be,
advised by DIMA (together with series of the DWS
Investment Companies, the ‘‘DWS Funds’’). All
entities that currently intend to rely on the
requested order are named as applicants, and any
other entity that relies on the order in the future
will comply with the terms and conditions of the
application.
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and DWS Investments VIT Funds are
offered to registered separate accounts
(‘‘Registered Separate Accounts’’) and
unregistered separate accounts
(‘‘Unregistered Separate Accounts,’’
collectively with Registered Separate
Accounts, ‘‘Separate Accounts’’) of
affiliated and unaffiliated insurance
companies (collectively, ‘‘Insurance
Companies’’) as the underlying
investment vehicles for the variable life
insurance and variable annuity
contracts (‘‘Variable Contracts’’) issued
by the Insurance Companies. Shares of
the above funds may be offered to
qualified pension and retirement plans.
The Adviser, an investment adviser
registered under the Investment
Advisers Act of 1940 (‘‘Advisers Act’’), is
the investment adviser for each DWS
Fund and will serve as investment
adviser to each DWS Fund of Funds (as
defined below).2
2. Applicants request relief to permit
certain DWS Funds (each such DWS
Fund, a ‘‘DWS Fund of Funds’’) to invest
in: (a) Other DWS Funds (‘‘Affiliated
Underlying Funds’’), and (b) registered
open-end management investment
companies (‘‘Unaffiliated Funds’’) and
registered unit investment trusts
(‘‘Unaffiliated Trusts,’’ and together with
Unaffiliated Funds, ‘‘Unaffiliated
Underlying Funds’’) that are not part of
the same ‘‘group of investment
companies’’ (as defined in section
12(d)(1)(G)(ii) of the Act) as the DWS
Funds (Unaffiliated Underlying Funds
and Affiliated Underlying Funds are
collectively referred to as the
‘‘Underlying Funds’’). The relief also
would permit the Underlying Funds,
their principal underwriters and any
broker or dealer registered under the
Securities Exchange Act of 1934
(‘‘Broker’’) to sell shares of the
Underlying Funds to the DWS Fund of
Funds. Each DWS Fund of Funds may
invest in Unaffiliated Underlying Funds
that have received exemptive relief to
list and trade their shares on a national
securities exchange at negotiated prices
(‘‘ETFs’’). Applicants state that the DWS
Funds of Funds will offer investors a
range of investment objectives generally
designed to either provide diversified
exposure to specific asset classes or
meet long-term objectives.
Applicants’ Legal Analysis
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act, in
relevant part, prohibits a registered
investment company from acquiring
2 The term ‘‘DIMA’’ or ‘‘Adviser’’ includes any
existing or future entity controlling, controlled by
or under common control with Deutsche
Investment Management Americas Inc.
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shares of an investment company if the
securities represent more than 3% of the
total outstanding voting stock of the
acquired company, more than 5% of the
total assets of the acquiring company,
or, together with the securities of any
other investment companies, more than
10% of the total assets of the acquiring
company. Section 12(d)(1)(B) of the Act
prohibits a registered open-end
investment company, its principal
underwriter, and any broker or dealer
from selling the investment company’s
shares 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 if
the sale will cause more than 10% of the
acquired company’s voting stock to be
owned by investment companies
generally.
2. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Applicants seek an exemption under
section 12(d)(1)(J) of the Act to permit
the DWS Fund of Funds to acquire
shares of the Underlying Funds in
excess of the limits in section
12(d)(1)(A), and the Underlying Funds,
their principal underwriters and any
Broker to sell shares of the Underlying
Funds to the DWS Fund of Funds in
excess of the limits in section
12(d)(1)(B) of the Act.
3. Applicants state that the proposed
arrangement will not give rise to the
policy concerns underlying sections
12(d)(1)(A) and (B), which include
concerns about undue influence by a
fund of funds over underlying funds,
excessive layering of fees, and overly
complex fund structures. Accordingly,
applicants believe that the requested
exemption is consistent with the public
interest and the protection of investors.
4. Applicants believe that neither a
DWS Fund of Funds nor its affiliate
would be able to exert undue influence
over the Unaffiliated Underlying Funds.
The concern about undue influence
does not arise in connection with a
DWS Fund of Funds investing in
Affiliated Underlying Funds since they
are part of the same group of investment
companies. To limit the control that a
DWS Fund of Funds or its affiliate may
have over an Unaffiliated Underlying
Fund, applicants propose a condition
prohibiting the Adviser, any person
controlling, controlled by, or under
common control with the Adviser, any
investment company and any issuer that
would be an investment company but
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for section 3(c)(1) or 3(c)(7) of the Act
that is advised or sponsored by the
Adviser or any person controlling,
controlled by, or under common control
with the Adviser (the ‘‘Group’’) from
controlling (individually or in the
aggregate) an Unaffiliated Underlying
Fund within the meaning of section
2(a)(9) of the Act. The same prohibition
would apply to any other investment
adviser within the meaning of section
2(a)(20)(B) of the Act to a DWS Fund of
Funds (‘‘Subadviser’’), any person
controlling, controlled by or under
common control with the Subadviser,
any investment company and any issuer
that would be an investment company
but for section 3(c)(1) or 3(c)(7) of the
Act (or portion of such investment
company or issuer) advised or
sponsored by the Subadviser or any
person controlling, controlled by or
under common control with the
Subadviser (the ‘‘Subadviser Group’’).
Applicants propose other conditions to
limit the potential for undue influence
over the Unaffiliated Underlying Funds,
including that no DWS Fund of Funds
or DWS Fund of Funds Affiliate 3
(except to the extent it is acting in its
capacity as an investment adviser to an
Unaffiliated Fund or sponsor to an
Unaffiliated Trust) will cause an
Unaffiliated Underlying Fund to
purchase a security in an offering of
securities during the existence of an
underwriting or selling syndicate of
which a principal underwriter is an
Underwriting Affiliate (‘‘Affiliated
Underwriting’’). An ‘‘Underwriting
Affiliate’’ is a principal underwriter in
any underwriting or selling syndicate
that is an officer, director, advisory
board member, Adviser, Subadviser, or
employee of a DWS Fund of Funds, or
a person of which any such officer,
director, Adviser, Subadviser, member
of an advisory board, or employee is an
affiliated person. An Underwriting
Affiliate does not include any person
whose relationship to an Unaffiliated
Underlying Fund is covered by section
10(f) of the Act.
5. To further ensure that an
Unaffiliated Fund understands the
implications of a DWS Fund of Funds’
investment under the requested relief,
prior to an investment in the shares of
the Unaffiliated Fund in excess of the
3 A ‘‘DWS Fund of Funds Affiliate’’ is a DWS
Fund of Funds Adviser, DWS Fund of Funds
Subadviser, promoter and principal underwriter of
a DWS Fund of Funds and any person controlling,
controlled by, or under common control with any
of those entities. An ‘‘Unaffiliated Underlying Fund
Affiliate’’ is an investment adviser(s), sponsor,
promoter and principal underwriter of an
Unaffiliated Underlying Fund and any person
controlling, controlled by, or under common
control with any of those entities.
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limit in section 12(d)(1)(A)(i), a DWS
Fund of Funds and the Unaffiliated
Fund will execute an agreement stating,
without limitation, that their boards of
directors or trustees and their
investment advisers understand the
terms and conditions of the order and
agree to fulfill their responsibilities
under the order (‘‘Participation
Agreement’’). Applicants note that an
Unaffiliated Underlying Fund (other
than an ETF whose shares are
purchased by a DWS Fund of Funds in
the secondary market) will retain the
right to reject any investment by a DWS
Fund of Funds.4
6. Applicants do not believe that the
proposed arrangement will involve
excessive layering of fees. The board of
directors or trustees (‘‘Board’’) of each
DWS Fund of Funds, including a
majority of the directors or trustees who
are not ‘‘interested persons’’ (within the
meaning of section 2(a)(19) of the Act)
(‘‘Disinterested Trustees’’), will find that
the advisory fees charged under the
advisory contract are based on services
provided that will be in addition to,
rather than duplicative of, the services
provided under the advisory contracts
of any Underlying Funds in which a
DWS Fund of Funds may invest. In
addition, the Adviser will waive fees
otherwise payable to it by the DWS
Fund of Funds in an amount at least
equal to any compensation (including
fees received pursuant to a plan adopted
by an Unaffiliated Fund under rule 12b–
1 under the Act) received from an
Unaffiliated Underlying Fund by the
Adviser or an affiliated person of the
Adviser, other than any advisory fees
paid to the Adviser or an affiliated
person of the Adviser by an Unaffiliated
Fund, in connection with the
investment by the DWS Fund of Funds
in the Unaffiliated Underlying Fund.
7. Applicants state that with respect
to Registered Separate Accounts that
invest in a DWS Fund of Funds, no sales
load will be charged at the DWS Fund
of Funds level or at the Underlying
Fund level. Other sales charges and
service fees, as defined in Rule 2830 of
the Conduct Rules of the NASD (‘‘NASD
Conduct Rule 2830’’), will only be
charged at the DWS Fund of Funds level
or at the Underlying Fund level, not
both. With respect to other investments
in a DWS Fund of Funds, any sales
charges and/or service fees charged with
respect to shares of the DWS Fund of
Funds will not exceed the limits
4 An Unaffiliated Fund, including an ETF, would
retain its right to reject an initial investment by a
DWS Fund of Funds in excess of the limit in section
12(d)(1)(A)(i) of the Act by declining to execute the
Participation Agreement with the DWS Fund of
Funds.
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applicable to a fund of funds as set forth
in NASD Conduct Rule 2830.5
8. Applicants represent that each
DWS Fund of Funds will represent in
the Participation Agreement that no
Insurance Company sponsoring a
Registered Separate Account funding
variable insurance contracts will be
permitted to invest in the DWS Fund of
Funds unless the Insurance Company
has certified to the DWS Fund of Funds
that the aggregate of all fees and charges
associated with each contract that
invests in the DWS Fund of Funds,
including fees and charges at the
Separate Account, DWS Fund of Funds,
and Underlying Fund levels, are
reasonable in relation to the services
rendered, the expenses expected to be
incurred, and the risks assumed by the
Insurance Company.
9. Applicants submit that the
proposed arrangement will not create an
overly complex fund structure.
Applicants note that no Underlying
Fund will acquire securities of any
investment company or company
relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
in section 12(d)(1)(A) of the Act, except
in certain circumstances identified in
condition 11 below.
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B. Section 17(a)
1. Section 17(a) of the Act generally
prohibits sales or purchases of securities
between a registered investment
company and its affiliated persons or
affiliated persons of such persons.
Section 2(a)(3) of the Act defines an
‘‘affiliated person’’ of another person to
include (a) any person directly or
indirectly owning, controlling, or
holding with power to vote, 5% or more
of the outstanding voting securities of
the other person; (b) any person 5% or
more of whose outstanding voting
securities are directly or indirectly
owned, controlled, or held with power
to vote by the other person; and (c) any
person directly or indirectly controlling,
controlled by, or under common control
with the other person.
2. Applicants state that the DWS
Funds of Funds and the Affiliated
Underlying Funds may be deemed to be
under common control and therefore
affiliated persons of one another.
Applicants also state that the DWS
Funds of Funds and an Underlying
Fund may be deemed to be affiliated
persons of one another if a DWS Fund
of Funds acquires 5% or more of an
Underlying Fund’s outstanding voting
5 Any references to NASD Conduct Rule 2830
include any successor or replacement rule to NASD
Conduct Rule 2830 that may be adopted by the
Financial Industry Regulatory Authority, Inc.
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securities. In light of these and other
possible affiliations, section 17(a) could
prevent an Underlying Fund from
selling shares to and redeeming shares
from a DWS Fund of Funds.6
3. Section 17(b) of the Act authorizes
the Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (i) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (ii) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (iii)
the proposed transaction is consistent
with the general purposes of the Act.
Section 6(c) of the Act permits the
Commission to exempt any person or
transactions from any provision of the
Act if 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.
4. Applicants submit that the
proposed transactions satisfy the
standards for relief under sections 17(b)
and 6(c) of the Act. Applicants state that
the terms upon which an Underlying
Fund will sell its shares to or purchase
its shares from a DWS Fund of Funds
will be based on the net asset value of
each Underlying Fund.7 Applicants
state that the proposed investment will
be consistent with the policies of each
DWS Fund of Funds and Underlying
Fund, and with the general purposes of
the Act.
6 Applicants acknowledge that receipt of
compensation by (a) an affiliated person of a DWS
Fund of Funds, or an affiliated person of such
person, for the purchase by the DWS Fund of Funds
of shares of an Underlying Fund or (b) an affiliated
person of an Underlying Fund, or an affiliated
person of such person, for the sale by the
Underlying Fund of its shares to a DWS Fund of
Funds may be prohibited by section 17(e)(1) of the
Act. The Participation Agreement also will include
this acknowledgment.
7 Applicants note that a DWS Fund of Funds
generally would purchase and sell shares of an
Unaffiliated Underlying Fund that operates as an
ETF through secondary market transactions at
market prices rather than through principal
transactions with the Unaffiliated Underlying Fund
at net asset value. Applicants would not rely on the
requested relief from section 17(a) for such
secondary market transactions. To the extent that a
DWS Fund of Funds purchases or redeems shares
from an Unaffiliated Underlying Fund that is an
ETF and an affiliated person of the DWS Fund of
Funds in exchange for a basket of specified
securities as described in the application for the
exemptive order upon which the ETF relies,
applicants also request relief from section 17(a) for
those transactions.
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Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. The members of the Group will not
control (individually or in the aggregate)
an Unaffiliated Underlying Fund within
the meaning of section 2(a)(9) of the Act.
The members of a Subadviser Group
will not control (individually or in the
aggregate) an Unaffiliated Underlying
Fund within the meaning of section
2(a)(9) of the Act. If, as a result of a
decrease in the outstanding voting
securities of an Unaffiliated Underlying
Fund, the Group or the Subadviser
Group, each in the aggregate, becomes a
holder of more than 25 percent of the
outstanding voting securities of the
Unaffiliated Underlying Fund, then the
Group or the Subadviser Group (except
for any member of the Group or
Subadviser Group that is a Separate
Account) will vote its shares of the
Unaffiliated Underlying Fund in the
same proportion as the vote of all other
holders of the Unaffiliated Underlying
Fund’s shares. This condition will not
apply to the Subadviser Group with
respect to an Unaffiliated Underlying
Fund for which the Subadviser or a
person controlling, controlled by, or
under common control with the
Subadviser acts as the investment
adviser within the meaning of section
2(a)(20)(A) of the Act (in the case of an
Unaffiliated Fund) or the sponsor (in the
case of an Unaffiliated Trust). A
Registered Separate Account will seek
voting instructions from its Variable
Contract holders and will vote its shares
of an Unaffiliated Underlying Fund in
accordance with the instructions
received and will vote those shares for
which no instructions were received in
the same proportion as the shares for
which instructions were received. An
Unregistered Separate Account will
either (a) vote its shares of the
Unaffiliated Underlying Fund in the
same proportion as the vote of all other
holders of the Unaffiliated Underlying
Fund’s shares, or (b) seek voting
instructions from its Variable Contract
holders and vote its shares in
accordance with the instructions
received and vote those shares for
which no instructions were received in
the same proportion as the shares for
which instructions were received.
2. No DWS Fund of Funds or DWS
Fund of Funds Affiliate will cause any
existing or potential investment by the
DWS Fund of Funds in shares of an
Unaffiliated Underlying Fund to
influence the terms of any services or
transactions between the DWS Fund of
Funds or a DWS Fund of Funds Affiliate
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and the Unaffiliated Underlying Fund or
an Unaffiliated Underlying Fund
Affiliate.
3. Each DWS Fund of Funds Board,
including a majority of the Disinterested
Trustees, will adopt procedures
reasonably designed to ensure that the
Adviser and any Subadviser are
conducting the investment program of
the DWS Fund of Funds without taking
into account any consideration received
by the DWS Fund of Funds or a DWS
Fund of Funds Affiliate from an
Unaffiliated Underlying Fund or an
Unaffiliated Underlying Fund Affiliate
in connection with any services or
transactions.
4. Once an investment by a DWS
Fund of Funds in the securities of an
Unaffiliated Fund exceeds the limit
contained in section 12(d)(1)(A)(i) of the
Act, the Board of the Unaffiliated Fund,
including a majority of the Disinterested
Trustees, will determine that any
consideration paid by the Unaffiliated
Fund to a DWS Fund of Funds or a DWS
Fund of Funds Affiliate in connection
with any services or transactions: (a) Is
fair and reasonable in relation to the
nature and quality of the services and
benefits received by the Unaffiliated
Fund; (b) is within the range of
consideration that the Unaffiliated Fund
would be required to pay to another
unaffiliated entity in connection with
the same services or transactions; and
(c) does not involve overreaching on the
part of any person concerned. This
condition does not apply with respect to
any services or transactions between an
Unaffiliated Fund and its investment
adviser(s) or any person controlling,
controlled by, or under common control
with such investment adviser(s).
5. No DWS Fund of Funds or DWS
Fund of Funds Affiliate (except to the
extent it is acting in its capacity as an
investment adviser to an Unaffiliated
Fund or sponsor to an Unaffiliated
Trust) will cause an Unaffiliated
Underlying Fund to purchase a security
in an Affiliated Underwriting.
6. The Board of an Unaffiliated Fund,
including a majority of the Disinterested
Trustees, will adopt procedures
reasonably designed to monitor any
purchases of securities by the
Unaffiliated Fund in an Affiliated
Underwriting once an investment by a
DWS Fund of Funds in the securities of
the Unaffiliated Fund exceeds the limit
contained in section 12(d)(1)(A)(i) of the
Act, including any purchases made
directly from an Underwriting Affiliate.
The Board of the Unaffiliated Fund will
review these purchases periodically, but
no less frequently than annually, to
determine whether the purchases were
influenced by the investment by the
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DWS Fund of Funds in shares of the
Unaffiliated Fund. The Board of the
Unaffiliated Fund will consider, among
other things, (a) whether the purchases
were consistent with the investment
objectives and policies of the
Unaffiliated Fund; (b) how the
performance of securities purchased in
an Affiliated Underwriting compared to
the performance of comparable
securities purchased during a
comparable period of time in
underwritings other than Affiliated
Underwritings or to a benchmark such
as a comparable market index; and (c)
whether the amount of securities
purchased by the Unaffiliated Fund in
Affiliated Underwritings and the
amount purchased directly from an
Underwriting Affiliate have changed
significantly from prior years. The
Board of the Unaffiliated Fund will take
any appropriate actions based on its
review, including, if appropriate, the
institution of procedures designed to
assure that purchases of securities in
Affiliated Underwritings are in the best
interests of shareholders.
7. Each Unaffiliated Fund will
maintain and preserve permanently in
an easily accessible place a written copy
of the procedures described in the
preceding condition, and any
modifications to such procedures, and it
will maintain and preserve for a period
of not less than six years from the end
of the fiscal year in which any purchase
in an Affiliated Underwriting occurred,
the first two years in an easily accessible
place, a written record of each purchase
of securities in an Affiliated
Underwriting once an investment by a
DWS Fund of Funds in the securities of
an Unaffiliated Fund exceeds the limit
contained in section 12(d)(1)(A)(i) of the
Act, setting forth from whom the
securities were acquired, the identities
of the underwriting syndicate’s
members, the terms of the purchase, and
the information or materials upon
which the determinations of the Board
of the Unaffiliated Fund were made.
8. Before making an investment in
shares of an Unaffiliated Fund in an
amount in excess of the limit contained
in section 12(d)(1)(A)(i) of the Act, the
DWS Fund of Funds and the
Unaffiliated Fund will execute a
Participation Agreement stating,
without limitation, that their boards of
directors or trustees and their
investment advisers understand the
terms and conditions of the order and
agree to fulfill their responsibilities
under the order. At the time of making
its investment in shares of an
Unaffiliated Fund in an amount in
excess of the limit contained in section
12(d)(1)(A)(i), the DWS Fund of Funds
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
will notify the Unaffiliated Fund of the
investment. At such time, the DWS
Fund of Funds will also transmit to the
Unaffiliated Fund a list of the names of
each DWS Fund of Funds Affiliate and
Underwriting Affiliate. The DWS Fund
of Funds will notify the Unaffiliated
Fund of any changes to the list as soon
as reasonably practicable after a change
occurs. The Unaffiliated Fund and the
DWS Fund of Funds will maintain and
preserve a copy of the order, the
Participation Agreement, and the list
with any updated information for the
duration of the investment and for a
period of not less than six years
thereafter, the first two years in an
easily accessible place.
9. Prior to approving any advisory
contract under section 15 of the Act,
each DWS Fund of Funds Board,
including a majority of the Disinterested
Trustees, will be required to find that
the advisory fees charged under the
advisory contract are based on services
provided that are in addition to, rather
than duplicative of, the services
provided under the advisory contract(s)
of any Underlying Funds in which the
DWS Fund of Funds may invest. This
finding, and the basis upon which the
finding was made, will be recorded fully
in the minute books of the appropriate
DWS Fund of Funds.
10. The Adviser will waive fees
otherwise payable to it by the DWS
Fund of Funds in an amount at least
equal to any compensation (including
fees received pursuant to a plan adopted
by an Unaffiliated Fund under rule 12b–
1 under the Act) received from an
Unaffiliated Underlying Fund by the
Adviser, or an affiliated person of the
Adviser, other than any advisory fees
paid to the Adviser or an affiliated
person of the Adviser by an Unaffiliated
Fund, in connection with the
investment by the DWS Fund of Funds
in the Unaffiliated Underlying Fund.
Any Subadviser will waive fees
otherwise payable to the Subadviser,
directly or indirectly, by the DWS Fund
of Funds in an amount at least equal to
any compensation received from an
Unaffiliated Underlying Fund by the
Subadviser, or any affiliated person of
the Subadviser, other than any advisory
fees paid to the Subadviser or an
affiliated person of the Subadviser by an
Unaffiliated Fund, in connection with
the investment by the DWS Fund of
Funds in the Unaffiliated Underlying
Fund made at the direction of the
Subadviser. In the event that the
Subadviser waives such fees, the benefit
of the waiver will be passed through to
the DWS Fund of Funds.
11. No Underlying Fund will acquire
securities of any other investment
E:\FR\FM\15JNN1.SGM
15JNN1
Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Notices
company or company relying on section
3(c)(1) or 3(c)(7) of the Act in an amount
in excess of the limits contained in
section 12(d)(1)(A) of the Act, except to
the extent that such Underlying Fund:
(a) Receives securities of another
investment company as a dividend or as
a result of a plan of reorganization of a
company (other than a plan devised for
the purpose of evading section 12(d)(1)
of the Act); or (b) acquires (or is deemed
to have acquired) securities of another
investment company pursuant to
exemptive relief from the Commission
permitting such Underlying Fund to (i)
acquire securities of one or more
investment companies for short-term
cash management purposes, or (ii)
engage in interfund borrowing and
lending transactions.
12. With respect to Registered
Separate Accounts that invest in a DWS
Fund of Funds, no sales load will be
charged at the DWS Fund of Funds level
or at the Underlying Fund level. Other
sales charges and service fees, as
defined in NASD Conduct Rule 2830, if
any, will be charged at the DWS Fund
of Funds level or at the Underlying
Fund level, not both. With respect to
other investments in a DWS Fund of
Funds, any sales charges and/or service
fees charged with respect to shares of a
DWS Fund of Funds will not exceed the
limits applicable to a fund of funds set
forth in NASD Conduct Rule 2830.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62237; File No. SR–
NYSEArca–2010–44]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Relating to the United
States Commodity Index Fund
mstockstill on DSKH9S0YB1PROD with NOTICES
June 7, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that, on May 25,
2010, NYSE Arca, Inc. (‘‘Exchange’’ or
‘‘NYSE Arca’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
2 17
U.S.C.78s(b)(1).
CFR 240.19b–4.
VerDate Mar<15>2010
17:15 Jun 14, 2010
Jkt 220001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the United States
Commodity Index Fund under NYSE
Arca Equities Rule 8.200, Commentary
.02. The text of the proposed rule
change is available at the Exchange, the
Commission’s Public Reference Room,
and https://www.nyse.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NYSE Arca Equities Rule 8.200,
Commentary .02 permits the trading of
Trust Issued Receipts (‘‘TIRs’’) either by
listing or pursuant to unlisted trading
privileges (‘‘UTP’’).3 The Exchange
proposes to list and trade shares
(‘‘Units’’) of the United States
Commodity Index Fund (‘‘USCI’’ or
‘‘Fund’’) pursuant to NYSE Arca Equities
Rule 8.200.4 The Fund is a commodity
[FR Doc. 2010–14356 Filed 6–14–10; 8:45 am]
1 15
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
3 Commentary .02 to NYSE Arca Equities Rule
8.200 applies to TIRs that invest in ‘‘Financial
Instruments.’’ The term ‘‘Financial Instruments,’’ as
defined in Commentary .02(b)(4) to NYSE Arca
Equities Rule 8.200, means any combination of
investments, including cash; securities; options on
securities and indices; futures contracts; options on
futures contracts; forward contracts; equity caps,
collars and floors; and swap agreements.
4 The Commission previously has approved
listing on the Exchange under Commentary .02 to
NYSE Arca Equities Rule 8.200 of certain securities
issuers holding commodities-related instruments.
See, e.g., Securities Exchange Act Release No.
58457 (September 3, 2008), 73 FR 52711 (September
10, 2008) (SR–NYSEArca–2008–91) (order granting
accelerated approval to list on NYSE Arca of 14
ProShares funds). The Commission also has
approved issues of Partnership Units based on
commodities, which are listed on the Exchange
pursuant to NYSE Arca Equities Rule 8.300 and
which have certain characteristics similar to the
Units. See, e.g., Securities Exchange Act Release
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
33861
pool that is a series of United States
Commodity Index Funds Trust (‘‘Trust’’),
a Delaware statutory trust.5
Overview of USCI
According to the Registration
Statement, the investment objective of
USCI is to have the daily changes in
percentage terms of the Units’ net asset
value (‘‘NAV’’) reflect the daily changes
in percentage terms of the
SummerHaven Dynamic Commodity
Index (‘‘SDCI’’) Total Return (the
‘‘Index’’), less USCI’s expenses. The
Index is designed to reflect the
performance of a diversified group of
commodities. The Index is owned and
maintained by SummerHaven Index
Management, LLC (‘‘SummerHaven
Indexing’’), and calculated and
published by Bloomberg, L.P.
(‘‘Bloomberg’’). The Index was
developed based upon academic
research by Yale University professors
Gary B. Gorton and K. Geert
Rouwenhorst, and Hitotsubashi
University professor Fumio Hayashi.
USCI’s sponsor is United States
Commodity Funds LLC (‘‘USCF’’ or the
‘‘Sponsor’’), a Delaware limited liability
company that is registered as a
commodity pool operator with the
Commodity Futures Trading
Commission (‘‘CFTC’’) and a member of
the National Futures Association
(‘‘NFA’’). The Sponsor controls the
operations of USCI. USCI’s trading
advisor is SummerHaven Investment
Management, LLC (‘‘SummerHaven’’), a
Delaware limited liability company that
is registered as a commodity trading
advisor and a commodity pool operator
with the CFTC and is a member of the
NFA. SummerHaven provides advisory
services to the Sponsor with respect to
the Index and the investment decisions
of USCI. The Sponsor, SummerHaven
Indexing, SummerHaven, and
Bloomberg are not affiliated with a
broker-dealer and are subject to
procedures designed to prevent the use
and dissemination of material
Nos. 59173 (December 29, 2008), 74 FR 490
(January 6, 2009) (SR–NYSEArca–2008–125) (order
approving listing and trading of United States Short
Oil Fund, LP); and 61881 (April 9, 2010), 75 FR
20028 (April 16, 2010) (SR–NYSEArca–2010–14)
(order approving listing on the Exchange of United
States Brent Oil Fund).
5 The Fund has filed Amendment No. 3 to Form
S–1, dated May 25, 2010 (File No. 333–164024)
(‘‘Registration Statement’’). The description of the
Fund and the Units contained herein are based on
the Registration Statement. See E-mail from Michael
Cavalier, Chief Counsel, NYSE Euronext, to Edward
Cho, Special Counsel, Division of Trading and
Markets, Commission, dated June 2, 2010
(‘‘Exchange Confirmation’’).
E:\FR\FM\15JNN1.SGM
15JNN1
]]>Agencies
[Federal Register Volume 75, Number 114 (Tuesday, June 15, 2010)]
[Notices]
[Pages 33857-33861]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-14356]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29295; 812-13539]
DWS Advisor Funds, et al.; Notice of Application
June 9, 2010.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application for an order under section 12(d)(1)(J)
of the Investment Company Act of 1940 (the ``Act'') for an exemption
from sections 12(d)(1)(A) and (B) of the Act, and under sections 6(c)
and 17(b) of the Act for an exemption from section 17(a) of the Act.
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Summary of the Application: Applicants request an order that would
permit certain registered open-end management investment companies to
acquire shares of other registered open-end management investment
companies and unit investment trusts that are within and outside the
same group of investment companies.
Applicants: (a) DWS Advisor Funds, DWS Blue Chip Fund, DWS
Communications Fund, Inc., DWS Equity Trust, DWS Global/International
Fund, Inc., DWS High Income Series, DWS Income Trust, DWS Institutional
Funds, DWS International Fund, Inc., DWS Investment Trust, DWS
Investments VIT Funds, DWS Money Funds, DWS Money Market Trust, DWS
Mutual Funds, Inc., DWS Portfolio Trust, DWS Securities Trust, DWS
Strategic Income Fund, DWS Target Fund, DWS Target Date Series, DWS
Technology Fund, DWS Value Equity Trust, DWS Value Series, Inc., DWS
Variable Series I, and DWS Variable Series II (each, a ``DWS Investment
Company'' and collectively, the ``DWS Investment Companies''); and (b)
Deutsche Investment Management Americas Inc. (``DIMA'' or the
``Adviser'').
Filing Dates: The application was filed on May 28, 2008, and amended on
January 9, 2009, and May 11, 2010. Applicants have agreed to file an
amendment during the notice period, the substance of which is reflected
in this notice.
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 July 6, 2010, 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, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090. Applicants, 345 Park Avenue,
New York, NY 10154.
FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior
Counsel, at (202) 551-6879, or Mary Kay Frech, Branch Chief, at (202)
551-6821 (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 via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. Each DWS Investment Company is organized as a Massachusetts
business trust or a Maryland corporation and is registered as an open-
end management investment company under the Act.\1\ Each DWS Investment
Company is comprised of separate DWS Funds that pursue distinct
investment objectives and strategies. The series of DWS Variable Series
I, DWS Variable Series II and DWS Investments VIT Funds are offered to
registered separate accounts (``Registered Separate Accounts'') and
unregistered separate accounts (``Unregistered Separate Accounts,''
collectively with Registered Separate Accounts, ``Separate Accounts'')
of affiliated and unaffiliated insurance companies (collectively,
``Insurance Companies'') as the underlying investment vehicles for the
variable life insurance and variable annuity contracts (``Variable
Contracts'') issued by the Insurance Companies. Shares of the above
funds may be offered to qualified pension and retirement plans. The
Adviser, an investment adviser registered under the Investment Advisers
Act of 1940 (``Advisers Act''), is the investment adviser for each DWS
Fund and will serve as investment adviser to each DWS Fund of Funds (as
defined below).\2\
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\1\ Applicants request that the order also extend to existing
and future series of the DWS Investment Companies, and any existing
or future registered open-end management investment companies and
any series thereof that are part of the same ``group of investment
companies,'' as defined in section 12(d)(1)(G)(ii) of the Act, as
the DWS Investment Companies and that are, or may in the future be,
advised by DIMA (together with series of the DWS Investment
Companies, the ``DWS Funds''). All entities that currently intend to
rely on the requested order are named as applicants, and any other
entity that relies on the order in the future will comply with the
terms and conditions of the application.
\2\ The term ``DIMA'' or ``Adviser'' includes any existing or
future entity controlling, controlled by or under common control
with Deutsche Investment Management Americas Inc.
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2. Applicants request relief to permit certain DWS Funds (each such
DWS Fund, a ``DWS Fund of Funds'') to invest in: (a) Other DWS Funds
(``Affiliated Underlying Funds''), and (b) registered open-end
management investment companies (``Unaffiliated Funds'') and registered
unit investment trusts (``Unaffiliated Trusts,'' and together with
Unaffiliated Funds, ``Unaffiliated Underlying Funds'') that are not
part of the same ``group of investment companies'' (as defined in
section 12(d)(1)(G)(ii) of the Act) as the DWS Funds (Unaffiliated
Underlying Funds and Affiliated Underlying Funds are collectively
referred to as the ``Underlying Funds''). The relief also would permit
the Underlying Funds, their principal underwriters and any broker or
dealer registered under the Securities Exchange Act of 1934
(``Broker'') to sell shares of the Underlying Funds to the DWS Fund of
Funds. Each DWS Fund of Funds may invest in Unaffiliated Underlying
Funds that have received exemptive relief to list and trade their
shares on a national securities exchange at negotiated prices
(``ETFs''). Applicants state that the DWS Funds of Funds will offer
investors a range of investment objectives generally designed to either
provide diversified exposure to specific asset classes or meet long-
term objectives.
Applicants' Legal Analysis
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act, in relevant part, prohibits a
registered investment company from acquiring
[[Page 33858]]
shares of an investment company if the securities represent more than
3% of the total outstanding voting stock of the acquired company, more
than 5% of the total assets of the acquiring company, or, together with
the securities of any other investment companies, more than 10% of the
total assets of the acquiring company. Section 12(d)(1)(B) of the Act
prohibits a registered open-end investment company, its principal
underwriter, and any broker or dealer from selling the investment
company's shares 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 if the sale will cause more than 10% of the acquired
company's voting stock to be owned by investment companies generally.
2. Section 12(d)(1)(J) of the Act provides that the Commission may
exempt any person, security, or transaction, or any class or classes of
persons, securities or transactions, from any provision of section
12(d)(1) if the exemption is consistent with the public interest and
the protection of investors. Applicants seek an exemption under section
12(d)(1)(J) of the Act to permit the DWS Fund of Funds to acquire
shares of the Underlying Funds in excess of the limits in section
12(d)(1)(A), and the Underlying Funds, their principal underwriters and
any Broker to sell shares of the Underlying Funds to the DWS Fund of
Funds in excess of the limits in section 12(d)(1)(B) of the Act.
3. Applicants state that the proposed arrangement will not give
rise to the policy concerns underlying sections 12(d)(1)(A) and (B),
which include concerns about undue influence by a fund of funds over
underlying funds, excessive layering of fees, and overly complex fund
structures. Accordingly, applicants believe that the requested
exemption is consistent with the public interest and the protection of
investors.
4. Applicants believe that neither a DWS Fund of Funds nor its
affiliate would be able to exert undue influence over the Unaffiliated
Underlying Funds. The concern about undue influence does not arise in
connection with a DWS Fund of Funds investing in Affiliated Underlying
Funds since they are part of the same group of investment companies. To
limit the control that a DWS Fund of Funds or its affiliate may have
over an Unaffiliated Underlying Fund, applicants propose a condition
prohibiting the Adviser, any person controlling, controlled by, or
under common control with the Adviser, any investment company and any
issuer that would be an investment company but for section 3(c)(1) or
3(c)(7) of the Act that is advised or sponsored by the Adviser or any
person controlling, controlled by, or under common control with the
Adviser (the ``Group'') from controlling (individually or in the
aggregate) an Unaffiliated Underlying Fund within the meaning of
section 2(a)(9) of the Act. The same prohibition would apply to any
other investment adviser within the meaning of section 2(a)(20)(B) of
the Act to a DWS Fund of Funds (``Subadviser''), any person
controlling, controlled by or under common control with the Subadviser,
any investment company and any issuer that would be an investment
company but for section 3(c)(1) or 3(c)(7) of the Act (or portion of
such investment company or issuer) advised or sponsored by the
Subadviser or any person controlling, controlled by or under common
control with the Subadviser (the ``Subadviser Group''). Applicants
propose other conditions to limit the potential for undue influence
over the Unaffiliated Underlying Funds, including that no DWS Fund of
Funds or DWS Fund of Funds Affiliate \3\ (except to the extent it is
acting in its capacity as an investment adviser to an Unaffiliated Fund
or sponsor to an Unaffiliated Trust) will cause an Unaffiliated
Underlying Fund to purchase a security in an offering of securities
during the existence of an underwriting or selling syndicate of which a
principal underwriter is an Underwriting Affiliate (``Affiliated
Underwriting''). An ``Underwriting Affiliate'' is a principal
underwriter in any underwriting or selling syndicate that is an
officer, director, advisory board member, Adviser, Subadviser, or
employee of a DWS Fund of Funds, or a person of which any such officer,
director, Adviser, Subadviser, member of an advisory board, or employee
is an affiliated person. An Underwriting Affiliate does not include any
person whose relationship to an Unaffiliated Underlying Fund is covered
by section 10(f) of the Act.
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\3\ A ``DWS Fund of Funds Affiliate'' is a DWS Fund of Funds
Adviser, DWS Fund of Funds Subadviser, promoter and principal
underwriter of a DWS Fund of Funds and any person controlling,
controlled by, or under common control with any of those entities.
An ``Unaffiliated Underlying Fund Affiliate'' is an investment
adviser(s), sponsor, promoter and principal underwriter of an
Unaffiliated Underlying Fund and any person controlling, controlled
by, or under common control with any of those entities.
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5. To further ensure that an Unaffiliated Fund understands the
implications of a DWS Fund of Funds' investment under the requested
relief, prior to an investment in the shares of the Unaffiliated Fund
in excess of the limit in section 12(d)(1)(A)(i), a DWS Fund of Funds
and the Unaffiliated Fund will execute an agreement stating, without
limitation, that their boards of directors or trustees and their
investment advisers understand the terms and conditions of the order
and agree to fulfill their responsibilities under the order
(``Participation Agreement''). Applicants note that an Unaffiliated
Underlying Fund (other than an ETF whose shares are purchased by a DWS
Fund of Funds in the secondary market) will retain the right to reject
any investment by a DWS Fund of Funds.\4\
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\4\ An Unaffiliated Fund, including an ETF, would retain its
right to reject an initial investment by a DWS Fund of Funds in
excess of the limit in section 12(d)(1)(A)(i) of the Act by
declining to execute the Participation Agreement with the DWS Fund
of Funds.
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6. Applicants do not believe that the proposed arrangement will
involve excessive layering of fees. The board of directors or trustees
(``Board'') of each DWS Fund of Funds, including a majority of the
directors or trustees who are not ``interested persons'' (within the
meaning of section 2(a)(19) of the Act) (``Disinterested Trustees''),
will find that the advisory fees charged under the advisory contract
are based on services provided that will be in addition to, rather than
duplicative of, the services provided under the advisory contracts of
any Underlying Funds in which a DWS Fund of Funds may invest. In
addition, the Adviser will waive fees otherwise payable to it by the
DWS Fund of Funds in an amount at least equal to any compensation
(including fees received pursuant to a plan adopted by an Unaffiliated
Fund under rule 12b-1 under the Act) received from an Unaffiliated
Underlying Fund by the Adviser or an affiliated person of the Adviser,
other than any advisory fees paid to the Adviser or an affiliated
person of the Adviser by an Unaffiliated Fund, in connection with the
investment by the DWS Fund of Funds in the Unaffiliated Underlying
Fund.
7. Applicants state that with respect to Registered Separate
Accounts that invest in a DWS Fund of Funds, no sales load will be
charged at the DWS Fund of Funds level or at the Underlying Fund level.
Other sales charges and service fees, as defined in Rule 2830 of the
Conduct Rules of the NASD (``NASD Conduct Rule 2830''), will only be
charged at the DWS Fund of Funds level or at the Underlying Fund level,
not both. With respect to other investments in a DWS Fund of Funds, any
sales charges and/or service fees charged with respect to shares of the
DWS Fund of Funds will not exceed the limits
[[Page 33859]]
applicable to a fund of funds as set forth in NASD Conduct Rule
2830.\5\
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\5\ Any references to NASD Conduct Rule 2830 include any
successor or replacement rule to NASD Conduct Rule 2830 that may be
adopted by the Financial Industry Regulatory Authority, Inc.
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8. Applicants represent that each DWS Fund of Funds will represent
in the Participation Agreement that no Insurance Company sponsoring a
Registered Separate Account funding variable insurance contracts will
be permitted to invest in the DWS Fund of Funds unless the Insurance
Company has certified to the DWS Fund of Funds that the aggregate of
all fees and charges associated with each contract that invests in the
DWS Fund of Funds, including fees and charges at the Separate Account,
DWS Fund of Funds, and Underlying Fund levels, are reasonable in
relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by the Insurance Company.
9. Applicants submit that the proposed arrangement will not create
an overly complex fund structure. Applicants note that no Underlying
Fund will acquire securities of any investment company or company
relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the
limits contained in section 12(d)(1)(A) of the Act, except in certain
circumstances identified in condition 11 below.
B. Section 17(a)
1. Section 17(a) of the Act generally prohibits sales or purchases
of securities between a registered investment company and its
affiliated persons or affiliated persons of such persons. Section
2(a)(3) of the Act defines an ``affiliated person'' of another person
to include (a) any person directly or indirectly owning, controlling,
or holding with power to vote, 5% or more of the outstanding voting
securities of the other person; (b) any person 5% or more of whose
outstanding voting securities are directly or indirectly owned,
controlled, or held with power to vote by the other person; and (c) any
person directly or indirectly controlling, controlled by, or under
common control with the other person.
2. Applicants state that the DWS Funds of Funds and the Affiliated
Underlying Funds may be deemed to be under common control and therefore
affiliated persons of one another. Applicants also state that the DWS
Funds of Funds and an Underlying Fund may be deemed to be affiliated
persons of one another if a DWS Fund of Funds acquires 5% or more of an
Underlying Fund's outstanding voting securities. In light of these and
other possible affiliations, section 17(a) could prevent an Underlying
Fund from selling shares to and redeeming shares from a DWS Fund of
Funds.\6\
---------------------------------------------------------------------------
\6\ Applicants acknowledge that receipt of compensation by (a)
an affiliated person of a DWS Fund of Funds, or an affiliated person
of such person, for the purchase by the DWS Fund of Funds of shares
of an Underlying Fund or (b) an affiliated person of an Underlying
Fund, or an affiliated person of such person, for the sale by the
Underlying Fund of its shares to a DWS Fund of Funds may be
prohibited by section 17(e)(1) of the Act. The Participation
Agreement also will include this acknowledgment.
---------------------------------------------------------------------------
3. Section 17(b) of the Act authorizes the Commission to grant an
order permitting a transaction otherwise prohibited by section 17(a) if
it finds that (i) the terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned; (ii) the proposed transaction is consistent with the
policies of each registered investment company involved; and (iii) the
proposed transaction is consistent with the general purposes of the
Act. Section 6(c) of the Act permits the Commission to exempt any
person or transactions from any provision of the Act if 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.
4. Applicants submit that the proposed transactions satisfy the
standards for relief under sections 17(b) and 6(c) of the Act.
Applicants state that the terms upon which an Underlying Fund will sell
its shares to or purchase its shares from a DWS Fund of Funds will be
based on the net asset value of each Underlying Fund.\7\ Applicants
state that the proposed investment will be consistent with the policies
of each DWS Fund of Funds and Underlying Fund, and with the general
purposes of the Act.
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\7\ Applicants note that a DWS Fund of Funds generally would
purchase and sell shares of an Unaffiliated Underlying Fund that
operates as an ETF through secondary market transactions at market
prices rather than through principal transactions with the
Unaffiliated Underlying Fund at net asset value. Applicants would
not rely on the requested relief from section 17(a) for such
secondary market transactions. To the extent that a DWS Fund of
Funds purchases or redeems shares from an Unaffiliated Underlying
Fund that is an ETF and an affiliated person of the DWS Fund of
Funds in exchange for a basket of specified securities as described
in the application for the exemptive order upon which the ETF
relies, applicants also request relief from section 17(a) for those
transactions.
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Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. The members of the Group will not control (individually or in
the aggregate) an Unaffiliated Underlying Fund within the meaning of
section 2(a)(9) of the Act. The members of a Subadviser Group will not
control (individually or in the aggregate) an Unaffiliated Underlying
Fund within the meaning of section 2(a)(9) of the Act. If, as a result
of a decrease in the outstanding voting securities of an Unaffiliated
Underlying Fund, the Group or the Subadviser Group, each in the
aggregate, becomes a holder of more than 25 percent of the outstanding
voting securities of the Unaffiliated Underlying Fund, then the Group
or the Subadviser Group (except for any member of the Group or
Subadviser Group that is a Separate Account) will vote its shares of
the Unaffiliated Underlying Fund in the same proportion as the vote of
all other holders of the Unaffiliated Underlying Fund's shares. This
condition will not apply to the Subadviser Group with respect to an
Unaffiliated Underlying Fund for which the Subadviser or a person
controlling, controlled by, or under common control with the Subadviser
acts as the investment adviser within the meaning of section
2(a)(20)(A) of the Act (in the case of an Unaffiliated Fund) or the
sponsor (in the case of an Unaffiliated Trust). A Registered Separate
Account will seek voting instructions from its Variable Contract
holders and will vote its shares of an Unaffiliated Underlying Fund in
accordance with the instructions received and will vote those shares
for which no instructions were received in the same proportion as the
shares for which instructions were received. An Unregistered Separate
Account will either (a) vote its shares of the Unaffiliated Underlying
Fund in the same proportion as the vote of all other holders of the
Unaffiliated Underlying Fund's shares, or (b) seek voting instructions
from its Variable Contract holders and vote its shares in accordance
with the instructions received and vote those shares for which no
instructions were received in the same proportion as the shares for
which instructions were received.
2. No DWS Fund of Funds or DWS Fund of Funds Affiliate will cause
any existing or potential investment by the DWS Fund of Funds in shares
of an Unaffiliated Underlying Fund to influence the terms of any
services or transactions between the DWS Fund of Funds or a DWS Fund of
Funds Affiliate
[[Page 33860]]
and the Unaffiliated Underlying Fund or an Unaffiliated Underlying Fund
Affiliate.
3. Each DWS Fund of Funds Board, including a majority of the
Disinterested Trustees, will adopt procedures reasonably designed to
ensure that the Adviser and any Subadviser are conducting the
investment program of the DWS Fund of Funds without taking into account
any consideration received by the DWS Fund of Funds or a DWS Fund of
Funds Affiliate from an Unaffiliated Underlying Fund or an Unaffiliated
Underlying Fund Affiliate in connection with any services or
transactions.
4. Once an investment by a DWS Fund of Funds in the securities of
an Unaffiliated Fund exceeds the limit contained in section
12(d)(1)(A)(i) of the Act, the Board of the Unaffiliated Fund,
including a majority of the Disinterested Trustees, will determine that
any consideration paid by the Unaffiliated Fund to a DWS Fund of Funds
or a DWS Fund of Funds Affiliate in connection with any services or
transactions: (a) Is fair and reasonable in relation to the nature and
quality of the services and benefits received by the Unaffiliated Fund;
(b) is within the range of consideration that the Unaffiliated Fund
would be required to pay to another unaffiliated entity in connection
with the same services or transactions; and (c) does not involve
overreaching on the part of any person concerned. This condition does
not apply with respect to any services or transactions between an
Unaffiliated Fund and its investment adviser(s) or any person
controlling, controlled by, or under common control with such
investment adviser(s).
5. No DWS Fund of Funds or DWS Fund of Funds Affiliate (except to
the extent it is acting in its capacity as an investment adviser to an
Unaffiliated Fund or sponsor to an Unaffiliated Trust) will cause an
Unaffiliated Underlying Fund to purchase a security in an Affiliated
Underwriting.
6. The Board of an Unaffiliated Fund, including a majority of the
Disinterested Trustees, will adopt procedures reasonably designed to
monitor any purchases of securities by the Unaffiliated Fund in an
Affiliated Underwriting once an investment by a DWS Fund of Funds in
the securities of the Unaffiliated Fund exceeds the limit contained in
section 12(d)(1)(A)(i) of the Act, including any purchases made
directly from an Underwriting Affiliate. The Board of the Unaffiliated
Fund will review these purchases periodically, but no less frequently
than annually, to determine whether the purchases were influenced by
the investment by the DWS Fund of Funds in shares of the Unaffiliated
Fund. The Board of the Unaffiliated Fund will consider, among other
things, (a) whether the purchases were consistent with the investment
objectives and policies of the Unaffiliated Fund; (b) how the
performance of securities purchased in an Affiliated Underwriting
compared to the performance of comparable securities purchased during a
comparable period of time in underwritings other than Affiliated
Underwritings or to a benchmark such as a comparable market index; and
(c) whether the amount of securities purchased by the Unaffiliated Fund
in Affiliated Underwritings and the amount purchased directly from an
Underwriting Affiliate have changed significantly from prior years. The
Board of the Unaffiliated Fund will take any appropriate actions based
on its review, including, if appropriate, the institution of procedures
designed to assure that purchases of securities in Affiliated
Underwritings are in the best interests of shareholders.
7. Each Unaffiliated Fund will maintain and preserve permanently in
an easily accessible place a written copy of the procedures described
in the preceding condition, and any modifications to such procedures,
and it will maintain and preserve for a period of not less than six
years from the end of the fiscal year in which any purchase in an
Affiliated Underwriting occurred, the first two years in an easily
accessible place, a written record of each purchase of securities in an
Affiliated Underwriting once an investment by a DWS Fund of Funds in
the securities of an Unaffiliated Fund exceeds the limit contained in
section 12(d)(1)(A)(i) of the Act, setting forth from whom the
securities were acquired, the identities of the underwriting
syndicate's members, the terms of the purchase, and the information or
materials upon which the determinations of the Board of the
Unaffiliated Fund were made.
8. Before making an investment in shares of an Unaffiliated Fund in
an amount in excess of the limit contained in section 12(d)(1)(A)(i) of
the Act, the DWS Fund of Funds and the Unaffiliated Fund will execute a
Participation Agreement stating, without limitation, that their boards
of directors or trustees and their investment advisers understand the
terms and conditions of the order and agree to fulfill their
responsibilities under the order. At the time of making its investment
in shares of an Unaffiliated Fund in an amount in excess of the limit
contained in section 12(d)(1)(A)(i), the DWS Fund of Funds will notify
the Unaffiliated Fund of the investment. At such time, the DWS Fund of
Funds will also transmit to the Unaffiliated Fund a list of the names
of each DWS Fund of Funds Affiliate and Underwriting Affiliate. The DWS
Fund of Funds will notify the Unaffiliated Fund of any changes to the
list as soon as reasonably practicable after a change occurs. The
Unaffiliated Fund and the DWS Fund of Funds will maintain and preserve
a copy of the order, the Participation Agreement, and the list with any
updated information for the duration of the investment and for a period
of not less than six years thereafter, the first two years in an easily
accessible place.
9. Prior to approving any advisory contract under section 15 of the
Act, each DWS Fund of Funds Board, including a majority of the
Disinterested Trustees, will be required to find that the advisory fees
charged under the advisory contract are based on services provided that
are in addition to, rather than duplicative of, the services provided
under the advisory contract(s) of any Underlying Funds in which the DWS
Fund of Funds may invest. This finding, and the basis upon which the
finding was made, will be recorded fully in the minute books of the
appropriate DWS Fund of Funds.
10. The Adviser will waive fees otherwise payable to it by the DWS
Fund of Funds in an amount at least equal to any compensation
(including fees received pursuant to a plan adopted by an Unaffiliated
Fund under rule 12b-1 under the Act) received from an Unaffiliated
Underlying Fund by the Adviser, or an affiliated person of the Adviser,
other than any advisory fees paid to the Adviser or an affiliated
person of the Adviser by an Unaffiliated Fund, in connection with the
investment by the DWS Fund of Funds in the Unaffiliated Underlying
Fund. Any Subadviser will waive fees otherwise payable to the
Subadviser, directly or indirectly, by the DWS Fund of Funds in an
amount at least equal to any compensation received from an Unaffiliated
Underlying Fund by the Subadviser, or any affiliated person of the
Subadviser, other than any advisory fees paid to the Subadviser or an
affiliated person of the Subadviser by an Unaffiliated Fund, in
connection with the investment by the DWS Fund of Funds in the
Unaffiliated Underlying Fund made at the direction of the Subadviser.
In the event that the Subadviser waives such fees, the benefit of the
waiver will be passed through to the DWS Fund of Funds.
11. No Underlying Fund will acquire securities of any other
investment
[[Page 33861]]
company or company relying on section 3(c)(1) or 3(c)(7) of the Act in
an amount in excess of the limits contained in section 12(d)(1)(A) of
the Act, except to the extent that such Underlying Fund: (a) Receives
securities of another investment company as a dividend or as a result
of a plan of reorganization of a company (other than a plan devised for
the purpose of evading section 12(d)(1) of the Act); or (b) acquires
(or is deemed to have acquired) securities of another investment
company pursuant to exemptive relief from the Commission permitting
such Underlying Fund to (i) acquire securities of one or more
investment companies for short-term cash management purposes, or (ii)
engage in interfund borrowing and lending transactions.
12. With respect to Registered Separate Accounts that invest in a
DWS Fund of Funds, no sales load will be charged at the DWS Fund of
Funds level or at the Underlying Fund level. Other sales charges and
service fees, as defined in NASD Conduct Rule 2830, if any, will be
charged at the DWS Fund of Funds level or at the Underlying Fund level,
not both. With respect to other investments in a DWS Fund of Funds, any
sales charges and/or service fees charged with respect to shares of a
DWS Fund of Funds will not exceed the limits applicable to a fund of
funds set forth in NASD Conduct Rule 2830.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-14356 Filed 6-14-10; 8:45 am]
BILLING CODE 8010-01-P
