[Federal Register Volume 61, Number 41 (Thursday, February 29, 1996)]
[Notices]
[Pages 7834-7836]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4579]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21771; 812-9874]
Qualified Unit Investment Liquid Trust Series Equity Opportunity
Trust, et al.; Notice of Application
February 22, 1996.
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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APPLICANTS: Qualified Unit Investment Liquid Trust Series Equity
Opportunity Trust (the ``Trust''), Oppenheimer Quest for Value Funds
(the ``Value Funds''), OppenheimerFunds, Inc. (``OppenheimerFunds''),
OpCap Advisors (``OpCap''), OCC Distributors (the ``Sponsor''), and
Oppenheimer Fund Distributors, Inc. (``OFDI'').
RELEVANT ACT SECTIONS: Order requested under section 6(c) of the Act to
grant an exemption from sections 14(a) and 19(b) of the Act and rule
19b-1 thereunder and under section 17(d) and rule 17d-1 to permit
certain affiliated transactions.
SUMMARY OF APPLICATION: Applicants request an order (a) permitting the
Trust to invest in shares of the Value Funds and U.S. Treasury zero
coupon obligations; (b) exempting the Sponsor from having to take for
its own account or place with others $100,000 worth of units in the
Trust; (c) permitting the Trust to distribute capital gains resulting
from redemptions of the Value Fund shares within a reasonable time
after receipt; and (d) permitting certain affiliated transactions
involving the Trust.
Applicants request that relief also be extended to any other open-
end investment company (including any series thereof), other than money
market or no-load funds, that may be advised by OppenheimerFunds or
OpCap or be distributed by OFDE, or be advised and/or distributed by
any entity controlling, controlled by, or under common control with
OppenheimerFunds, OpCap, or OFDI (collectively with the Value Funds,
the ``Funds'').
FILING DATES: The application was filed on December 6, 1995, and
amended on February 12, 1996.
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
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on March 18, 1996,
and should be accompanied by proof of service on the 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 SEC's
Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street NW., Washington, D.C.
20549. Applicants: Oppenheimer Quest for Value Funds, the Trust,
OppenheimerFunds, and OFDI, Two World Trade Center, New York, New York
10048-0203; the Sponsor, Two World Financial Center, 225 Liberty
Street, New York, New York 10080-6116; and OpCap, One World Financial
Center, New York, New York 10281.
FOR FURTHER INFORMATION CONTACT: Elaine M. Boggs, Staff Attorney, at
(202) 942-0572, 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.
Applicants' Representations
1. The Value Funds are open-end management investment companies
registered under the Act. The Value Funds have adopted a multiple class
plan and shares of the Value Funds are offered with front-end sales
loads and, in certain instances, with contingent deferred sales
charges. Each of the Value Funds has adopted a rule 12b-1 plan.
2. Each Value Fund has entered into an investment advisory or
management agreement with OppenheimerFunds or one of its affiliates
and, in some cases, a sub-advisory agreement with OpCap.
OppenheimerFunds, formerly Oppenheimer Management Corporation, is owned
by Oppenheimer Acquisition Corp, a holding company controlled by
Massachusetts Mutual Life Insurance Company. OpCap is a majority-owned
subsidiary of Oppenheimer Capital. OFDI acts as the distributor for the
Value Funds. OFDI is a wholly-owned subsidiary of OppenheimerFunds. The
Sponsor acts as sponsor for the Trust and is a majority owned
subsidiary of Oppenheimer Capital.
3. The Trust will offer units in series (``Trust Series''). Each
Trust Series will contain shares of one Fund and U.S. Government zero
coupon obligations. The Trust's objective is to provide protection of
capital while providing for capital appreciation through investments in
zero coupon obligations and shares of the Funds. Each Trust Series will
be organized pursuant to a reference trust agreement that will
incorporate a trust indenture and agreement relating to the entire
Trust (collectively, the ``Trust Agreement'') and that will name a
qualified bank as trustee (``Trustee'').
4. Each Trust Series will be sponsored by the Sponsor, which will
perform the functions typical of unit investment trust sponsors. The
Sponsor expects to deposit in the Trust substantially more than
$100,000 aggregate value of zero coupon obligations and shares of the
Funds.
5. Trust units will be offered for sale to the public through the
final
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prospectus by the Sponsor. Trust series are intended to be offered to
the public initially at prices based on the net asset value of the
shares of the Funds selected for deposit in that Trust Series, plus the
offering side value of the zero coupon obligations contained therein,
plus a sales charge. The Trust will redeem units at prices based on the
then currently aggregate bid side evaluation of the zero-coupon
obligations and the then current net asset value of the Fund shares.
6. The Trust will be structured so that each Trust Series will
contain a sufficient amount of zero coupon obligations to assure that,
at the specified maturity date for such Trust Series, the purchaser of
a unit would receive back the approximate total amount of the original
investment in the Trust, including the sales charge. Such investor
would receive more than the original investment to the extent that the
underlying Fund made any distributions during the life of the Trust
and/or had any value at the maturity of the Trust Series.
7. The Sponsor intends to maintain a secondary market for Trust
units, but is not obligated to do so. The existence of such a secondary
market will reduce the number of units tendered to the Trustee for
redemption and thus alleviate the necessity of selling portfolio
securities to raise the cash necessary to meet such redemptions.
8. The Trust has taken certain steps to reduce the impact of the
termination of a Trust Series on the Fund deposited therein. First, the
Trust will, with respect to all unitholders still holding units at
scheduled termination and to the extent desired by such unitholders,
transfer the registration of their proportionate number of shares of
the Funds from the Trust to a registration in the investor's name in
lieu of redeeming such shares. Second, the Funds will offer all such
unitholders the option of investing the proceeds from the zero coupon
obligations in shares of the Funds at net asset value (i.e., without
the imposition of the normal sales load). The Funds also will offer
unitholders the option of investing all distributions from the Trust
during the life of the Trust Series in shares of the Funds at net asset
value. Thus, it is anticipated that many of the unitholders will become
and remain direct shareholders of the Funds and that many will elect to
invest their proceeds of the Trust Series in an account of the Fund.
Applicants' Legal Analysis
1. Applicants seek relief under section 6(c) of the Act from
sections 14(a) and 19(b) of the Act and rule 19b-1 thereunder and
pursuant to section 17(d) of the Act and rule 17d-1 thereunder.
2. Section 14(a) of the Act requires that investment companies have
$100,000 of net worth prior to making a public offering. The Trust will
have an initial net worth in excess of $100,000 invested in zero coupon
obligations and shares of the Funds. Applicants recognize, however,
that because of the Sponsor's intention to sell all the units of the
Trust, the Sponsor may be deemed to be reducing the Trust's net worth
below the requirements of section 14(a). Applicants will comply in all
respects with the requirements of rule 14a-3, which provides an
exemption from section 14(a), except that the Trust would not restrict
its portfolio to ``eligible trust securities.''
3. Section 19(b) of the Act and rule 19b-1 thereunder provide that,
except under limited circumstances, no registered investment company
may distribute long-term capital gains more than once every twelve
months. Applicants request an exemption from section 19(b) and rule
19b-1 to the extent necessary to permit capital gains earned in
connection with the redemption of shares of the Funds to be distributed
to unitholders along with the Trust's regular distributions. Applicants
believe that the requested exemption is consistent with the purposes of
section 19(b) and rule 19b-1 because the dangers of manipulation of
capital gains and confusion between capital gains and regular income
distributions does not exist in the Trust. Applicants state that the
Sponsor has no incentive to redeem or permit the redemption of units in
order to generate capital gains. Moreover, because principal
distributions are clearly indicated in accompanying reports to
unitholders as a return of principal, applicants believe that the
danger of confusion is not present in the operations of the Trust.
4. Section 6(c) of the Act provides, in relevant part, that the SEC
may by order, exempt any person or class of persons from any provision
of the Act or from any rule thereunder, if such exemption is necessary
or appropriate in the public interests, consistent with the protection
of investors, and consistent with the purposes fairly intended by the
policy and provisions of the Act. Applicants believe that the requested
relief meets that standards of section 6(c).
5. Section 17(d) of the Act and rule 17d-1 thereunder make it
unlawful for any affiliated person of, or principal underwriter for, a
registered investment company, or any affiliated person of either of
them, acting as a principal, to engage in a joint transaction with the
investment company unless the joint transaction has been approved by
the SEC. Applicants' proposed arrangements may be a joint transaction
under these provisions. Applicants believe that the proposed
arrangements are consistent with the provisions, policies, and purposes
of the Act, and that participation by each registered investment
company is not on a basis less advantageous than that of other
participants.
6. Applicants do not request relief under section 12(d)(1) of the
Act.\1\ Section 12(d)(1)(E) provides that section 12(d)(1) shall not
apply to securities purchased by a registered unit investment trust if
the securities are the only ``investment securities'' held by the
trust. Applicants believe that the U.S. Treasury zero coupon
obligations are not ``investment securities'' for purposes of section
12(d)(1)(E) \2\ and that the shares of the Funds are the only
``investment securities'' which the Trust will hold. Accordingly, they
do not believe relief from section 12(d)(1) is necessary.
\1\ Section 12(d)(1) limits purchases by registered investment
companies of securities issued by other investment companies.
\2\ Equity Securities Trust (pub. avail. Jan. 19, 1994).
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Applicants' Conditions
Applicants agree to the following as conditions to the granting of
the requested order:
1. The Trustee will not redeem Fund shares except to the extent
necessary to meet redemptions of units by unitholders, or to pay Trust
expenses should distributions received on fund shares and rebated rule
12b-1 fees prove insufficient to cover such expenses.
2. Any rule 12b-1 fees received by the Sponsor in connection with
the distribution of Fund shares to the Trust will be immediately
rebated by the Sponsor to the Trustee.
3. All Trust Series will be structured so that their maturity dates
will be at least thirty days apart from one another.
4. The Trust and the Sponsor will comply in all respects with the
requirements of rule 14a-3, except that the Trust will not restrict its
portfolio investments to ``eligible trust securities.''
5. Shares of a Fund which are held by a Series of the Trust will be
voted by the Trustee of the Trust, and the Trustee will vote all shares
of a Fund held in a Trust Series in the same proportion as all other
shares of that Fund not held by the Trust are voted.
6. Any shares of the Funds deposited in any Trust Series or any
shares
[[Page 7836]]
acquired by unitholders through reinvestment of dividends or
distributions or through reinvestment at termination will be made
without imposition of any otherwise applicable sales load and at net
asset value.
7. The prospectus of each Trust Series and any sales literature or
advertising that mentions the existence of a reinvestment option will
disclose that shareholders who elect to invest in Fund shares will
incur a rule 12b-1 fee.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-4579 Filed 2-28-96; 8:45 am]
BILLING CODE 8010-01-M