Mail Stop 4561
August 25,
2005
Kevin Rich
c/o DB Commodity Services LLC
60 Wall Street
New York, New York 10005
Re: DB Commodity Index Tracking Fund
DB Commodity Index Tracking Master Fund
Amendment No. 2 to Registration Statement on Form S-1
Filed August 5, 2005
File No. 333-125325
Dear Mr. Rich:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. We consider the sale of shares by the Fund to Authorized
Participants and the resale of these shares by Authorized
Participants to investors as one offering by the Fund through the
Authorized Participants, which are acting as underwriters. Please
confirm to us that the Authorized Participants will distribute
this
prospectus in connection with their sales to other investors.
Also,
please revise your document, including the prospectus cover page,
the
description of subscription procedures and the Plan of
Distribution,
to clearly describe the terms of the offering to persons who
purchase
your shares from the Authorized Participants. Please ensure that
the
material terms of those offerings, including the offering price,
is
clearly disclosed.
2. We are still considering your response to comment 1. In
addition
to sales at NAV, we note that Deutsche Bank Securities intends to
offer 2 million shares to the public at a per share offering price
that will vary depending on, among other things, the trading price
of
shares on the Amex. Considering our view that sales to the
Authorized Participants and subsequent sales to other investors
are
all part of the same offering, please provide further analysis of
why
you are not conducting an at-the-market-offering.
3. We note your response to comment 2. However, it is not clear
why
a determination that the offering is not an "at the market
offering"
would preclude it from being a "delayed offering" subject to the
requirements of Item 415(a)(1)(x). Please provide additional
analysis as to the applicability of Item 415(a)(1)(x) to this
offering. Your analysis should address both the offering to
Authorized Participants and the offering to persons who purchase
shares from the Authorized Participants. Your analysis should
also
address whether Authorized Participants may purchase shares from
the
fund and then hold such shares for a period of time prior to
offering
them to other investors.
4. We note your response to prior comment 3; however, we are
unable
to agree with your analysis. Although the redemption right is a
term
of the security, it provides a right comparable to those offered
by a
share redemption program. Holders must make an investment
decision
regarding whether to redeem their shares at any given point in
time.
Please provide further analysis of why the redemption right should
not be viewed as an issuer tender offer.
5. We note that Deutsche Bank Securities, Inc. has submitted an
order
to purchase units. Please advise us how this transaction complies
with or is exempt from Section 5 of the Securities Act.
Prospectus Cover Page
6. We note your response to prior comment 10; however, we continue
to
believe that you should revise the pricing table. Item 501(b)(3)
expressly requires you to show pricing information based on the
total
minimum and the total maximum amount of the offering. As noted in
your response, the instruction to this Item permits you to
disclose
the method by which the price will be determined if it is
impracticable to state the price to the public. With respect to
the
continuous offering period, please provide the required
information
in the table itself instead of a footnote to the table.
Summary
Risk Factors, page 1
7. We note your response to comment 12. Please clarify the risk
relating to a commodity broker`s conflict between its execution of
trades for the fund and its other customers.
Fees and Expenses, page 9
8. Refer to the description of brokerage commissions and fees and
the
description of routine operational, administrative, and other
ordinary expenses. In each case you state that these expenses are
not expected to exceed a certain amount. Please revise to clarify
whether there is any actual limit on the amount of expenses that
the
Fund may be required to pay.
The Risks You Face, page 15
9. We note your response to comment 38. Please disclose that a
purchasing Authorized Participant will not know the purchase price
of
the basket at the time of the investment decision.
Historical Closing Levels, page 28
10. We note your response to prior comments 33 and 34. Please
describe in more detail the information that is presented in the
table. Disclose the relative weighting applied to each underlying
futures contract used to calculate the hypothetical Index levels
and
briefly describe how you used the historical closing levels to
calculate the hypothetical Index levels for each year.
Creation and Redemption of Shares, page 31
11. Please clarify whether the $500 transaction fee is paid to the
distributor or the administrator. We note your disclosure on page
38
and page 40.
Conflicts of Interest
Net Asset Value, page 48
12. We understand that if a commodity futures contract could not
be
liquidated on a particular day due to the operation of daily
limits
or other rules of the exchange, for purposes of determining market
value the managing owner will use the settlement price on the most
recent day it could be liquidated. In such a situation, it
appears
that the calculation of market value on such day will not
accurately
reflect the realizable market value of such commodity.
Furthermore,
since such daily limits are generally triggered in the event of a
significant change in market price for such commodity, it seems
that
the calculation of market value could be significantly under or
overstated. Please include a risk factor discussing this
valuation
issue, or advise us why you believe it is not material.
Material Contracts, page 52
13. Please identify each party to these agreements, i.e., the
Commodity Broker, the Administrator, the Custodian, the Transfer
Agent, and the Distributor.
Material U.S. Federal Income Tax Considerations, page 58
14. Please tell us why Sidley Austin Brown & Wood is not opining
that
you are a grantor trust for Federal income tax purposes. We note
that Sidley Austin has opined that you will not be classified as
an
association taxable as a corporation.
Plan of Distribution, page 70
15. We note your response to comment 44. However, as noted above,
we
continue to believe that the Authorized Participants are acting as
underwriters in this offering and should be identified as such.
Also, revise the disclosure on page 72 to more clearly state the
role
of the Authorized Participants in this offering.
16. We note from your response to comment 45 that there are no
arrangements or understandings between the fund and an Authorized
Participant. However, please briefly disclose that the Authorized
Participant may sell units from time to time and at any time such
Authorized Participant holds units, the price at which such sales
may
be made or the means of calculating the price and that such sales
may
be made through the facilities of the AMEX or otherwise.
* * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Josh Forgione at (202) 551-3431 or Steven
Jacobs, Accounting Branch Chief, at (202) 551-3403 if you have
questions regarding comments on the financial statements and
related
matters. Please contact Michael McTiernan, Special Counsel, at
(202)
551-3852, or me at (202) 551-3780 with any other questions.
Sincerely,
Karen J. Garnett
Assistant Director
cc: Michael J. Schmidtberger
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Kevin Rich
DB Commodity Index Tracking Fund
August 25, 2005
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