[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 

[[Page 7835]]
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