[Federal Register Volume 60, Number 27 (Thursday, February 9, 1995)]
[Notices]
[Pages 7810-7812]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3283]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-20879; 812-9238]
Van Kampen Merritt Equity Opportunity Trust, Series 7, et al.;
Notice of Application
February 3, 1995.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (``Act'').
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APPLICANTS: Van Kampen Merritt Equity Opportunity Trust, Series 7 and
Van Kampen Merritt, Inc. (the ``Sponsor'').
RELEVANT ACT SECTIONS: Order requested under sections 11(a) and 11(c).
SUMMARY OF APPLICATION: Van Kampen Merritt Equity Opportunity Trust,
Series 7 and certain Subsequent Series (the ``Rollover Trust'') and the
Sponsor seek an order permitting certain offers to exchange units of
terminating series of the Rollover Trust for units of subsequently
offered series of the Rollover Trust.
FILING DATES: The application was filed on September 22, 1994, and an
amendment thereto was filed on January 25, 1995.
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 February 28,
1995, 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
reasons for the request, and the issues contested. Persons who wish to
be notified of a hearing may request such notification by writing to
the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Applicants: One Parkview Plaza, Oakrook Terrace, Illinois 60181.
FOR FURTHER INFORMATION CONTACT:
H.R. Hallock, Jr., Special Counsel, at (202) 942-0564 or Barry D.
Miller, [[Page 7811]] Senior Special Counsel, 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 Rollover Trust will consist of a registered unit investment
trust having multiple series, each of which will be similar but
separate and designated by a different name and/or series number.\1\
Each series for which exemptive relief is being sought will have the
characteristics described below (the ``Trust Series''). Each Trust
Series will pursue an investment objective that is consistent with a
specified investment philosophy. The Sponsor will serve as the sponsor
and depositor for each such Trust Series.
\1\Van Kampen Merritt Equity Opportunity Trust has been included
in the Registration of Investors Corporate Income Trust, a taxable
trust, on Form N-8B-2, File No. 811-2754.
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2. The first Trust Series of the Rollover Trust will contain the
Strategic Ten Trust--United States Portfolio, United Kingdom Portfolio
and Hong Kong Portfolio. Its objective will be to provide an above-
average total return derived from dividend income and capital
appreciation by investing in common stocks (the ``Equity Securities'')
of ten companies in the Dow Jones Industrial Average, the Financial
Times Industrial Ordinary Share Index and the Hang Seng Index,
respectively, having the highest dividend yield as of the day prior to
the initial date of deposit for such Trust Series. Future series of the
Rollover Trust may be similar to the first Trust Series or may consist
of Trust Series with a different investment philosophy, a different
number of common stocks or a different duration.
3. The Sponsor will be permitted to deposit additional Equity
Securities in a Trust Series subsequent to the initial date of deposit.
Any such deposit will result in a corresponding increase in the number
of units of such Trust Series outstanding. Such units will be
continuously offered for sale to the public by means of the prospectus.
The Sponsor anticipates that any additional Equity Securities deposited
in the Trust Series in connection with the sale of additional units
will maintain, as nearly as is practicable, the original proportionate
relationship among the Equity Securities in the Trust Series as of the
original date of deposit of such Trust Series. Although not obligated
to do so, the Sponsor intends to maintain a secondary market for the
units of each Trust Series.
4. Each Trust Series will terminate on a date (the ``Mandatory
Termination Date'') which is a specified term (e.g., one, three or five
years) after the initial date of deposit for such Trust Series.
Commencing on the Mandatory Termination Date, Equity Securities will be
sold in connection with termination of the Trust Series. The Sponsor
will determine the manner, timing and execution of the sale of the
Equity Securities. A specified number of days prior to the Mandatory
Termination Date of the Trust, the trustee will provide notice thereof
to all unitholders.
5. Absent another election, unitholders will receive a cash
distribution evidencing their pro rata share of the proceeds from the
liquidation of the Equity Securities in the Trust Series. Unitholders
who own at least a specified number of units of a Trust Series (e.g.,
2,500 units) may elect to receive a distribution of Equity Securities
in connection with the termination of the Trust Series.
6. Alternatively, unitholders may elect to have all of their units
redeemed in kind on a predetermined date which is prior to the
Mandatory Termination Date, and to have the distributed Equity
Securities sold by the trustee. The proceeds of such sale will be
reinvested in the units of a new Trust Series (the ``Reinvestment Trust
Series''), if one is then being offered, at a reduced sales charge.
(The option of unitholders to make such election is referred to as the
``Rollover Option,'' and unitholders making such election are referred
to as ``Rollover Unitholders''.) The portfolio of the Reinvestment
Trust Series will contain a specified number of common stocks selected
by the Sponsor pursuant to the same investment philosophy which was
followed in selecting the common stocks in the terminating Trust
Series. The number of common stocks in the Reinvestment Trust Series
and the approximate duration of the Reinvestment Trust Series will be
the same as those of the terminating Trust Series.
7. The applicable sales charge upon the initial investment in the
Rollover Trust will not exceed 3.5% of the public offering price. The
reduced sales charge applicable to Rollover Unitholders will be no more
than 2.0% of the public offering price.
Applicants' Legal Analysis
1. Section 11(a) requires SEC approval of an offer to exchange
securities between open-end investment companies if the exchange occurs
on any basis other than the relative net asset values of the securities
to be exchanged. Section 11(c) makes section 11(a) applicable to any
type of exchange offer of securities of registered unit investment
trusts for the securities of any other investment company, irrespective
of the basis of exchange. Applicants seek an order pursuant to sections
11(a) and 11(c) of the Act permitting them to offer the Rollover Option
in connection with the Trust Series described above to the extent such
option is deemed to be an offer of exchange under section 11 of the
Act.
2. Applicants state that, in the absence of the Rollover Option, a
unitholder of a terminating Trust Series would have to pay the full
sales charge in connection with the investment in the Reinvestment
Trust Series or in some other investment vehicle. Pursuant to the
Rollover Option, however, the Sponsor will offer unitholders of a Trust
Series which is currently terminating the opportunity to invest in a
Reinvestment Trust Series at a reduced sales charge. Through the
exercise of the Rollover Option, investors will be able to decrease
their proportionate sales charge burden while remaining invested in a
portfolio of common stocks selected pursuant to a particular investment
philosophy, determined on a relatively current basis.
3. Applicants state that unitholders of Rollover Trusts will not be
induced or encouraged to participate in the Rollover Option through an
active advertising or sales campaign. The Sponsor recognizes its
responsibility to its customers against generating excessive
commissions through churning and claims that the sales charge collected
will not be a significant economic incentive to salesmen to promote
inappropriately the Rollover Option.
4. On the basis of the foregoing, and subject to the conditions set
forth below, Applicants submit that the Rollover Option is 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.
Applicants' Conditions
If the requested exemption from section 11 is granted, Applicants
agree to the following conditions:
1. Whenever the Rollover Option is to be terminated or its terms
are to be amended materially, any holder of a security subject to that
privilege will be given prominent notice of the impending termination
or amendment at least 60 days prior to the date of
[[Page 7812]] termination or the effective date of the amendment,
provided that:
(a) No such notice need to be given if the only material effect of
an amendment is to reduce or eliminate the sales charge payable at the
time of a rollover; and
(b) No notice need to be given if, under extraordinary
circumstances, either--
(i) There is a suspension of the redemption of units of the
Rollover Trust under section 22(e) of the Act and the rules and
regulations thereunder, or
(ii) A Reinvestment Trust Series temporarily delays or ceases the
sale of its units because it is unable to invest amounts effectively in
accordance with applicable investment objectives, policies and
restrictions.
2. The sales charge collected at the time of any rollover shall not
exceed 2.0% of the public offering price of the unit being acquired on
each rollover.
3. The prospectus of each Reinvestment Trust Series and any sales
literature or advertising that mentions the existence of the Rollover
Option will disclose that the Rollover Option is subject to
modification, termination or suspension.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-3283 Filed 2-8-95; 8:45 am]
BILLING CODE 8010-01-M
