

[Federal Register: March 29, 2006 (Volume 71, Number 60)]
[Notices]               
[Page 15772-15775]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29mr06-138]                         

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 27265; 812-13199]

 
OppenheimerFunds, Inc., et al.; Notice of Application

March 22, 2006.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application 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, under sections 6(c) and 17(b) 
of the Act for an exemption from section 17(a) of the Act, and under 
section 17(d) of the Act and rule 17d-1 under the Act to permit certain 
joint transactions.

-----------------------------------------------------------------------

    Summary of Application: Applicants request an order to permit 
certain registered open-end management investment companies to invest 
uninvested cash and cash collateral in affiliated money market funds in 
excess of the limits in sections 12(d)(1)(A) and (B) of the Act.
    Applicants: OppenheimerFunds, Inc. (``OFI''), Centennial Asset 
Management Corp. (``CAMC,'' and OFI , together, the ``Adviser''), Bond 
Fund Series, Oppenheimer AMT-Free Municipals, Oppenheimer Fund AMT-Free 
New York Municipals, Oppenheimer Balanced Fund, Oppenheimer California 
Municipal Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer 
Capital Income Fund, Oppenheimer Cash Reserves, Oppenheimer Champion 
Income Fund, Oppenheimer Developing Markets Fund, Oppenheimer Discovery 
Fund, Oppenheimer Dividend Growth Fund, Oppenheimer Equity Fund, Inc., 
Oppenheimer Emerging Growth Fund, Oppenheimer Emerging Technologies 
Fund, Oppenheimer Enterprise Fund, Oppenheimer Global Fund, Oppenheimer 
Global Opportunities Fund, Oppenheimer Gold & Special Minerals Fund, 
Oppenheimer Growth Fund, Oppenheimer High Yield Fund, Oppenheimer 
Integrity Funds, Oppenheimer International Bond Fund,

[[Page 15773]]

Oppenheimer International Diversified Fund, Oppenheimer International 
Growth Fund, Oppenheimer International Large-Cap Core Trust, 
Oppenheimer International Growth Fund, Oppenheimer International Small 
Company Fund, Oppenheimer International Value Trust, Oppenheimer 
Limited Term California Municipal Fund, Oppenheimer Limited-Term 
Government Fund, Oppenheimer Main Street Funds, Inc., Oppenheimer Main 
Street Opportunity Fund, Oppenheimer Main Street Small Cap Fund, 
Oppenheimer Midcap Fund, Oppenheimer Money Market Fund, Inc., 
Oppenheimer Multi-State Municipal Trust, Oppenheimer Municipal Fund, 
Oppenheimer Portfolio Series, Oppenheimer Principal Protected Trust, 
Oppenheimer Principal Protected Trust II, Oppenheimer Principal 
Protected Trust III, Oppenheimer Quest Capital Value Fund, Inc., 
Oppenheimer Quest International Value Fund, Inc., Oppenheimer Quest For 
Value Funds, Oppenheimer Quest Value Fund, Inc., Oppenheimer Real Asset 
Fund, Oppenheimer Real Estate Fund, Oppenheimer Select Value Fund, 
Oppenheimer Series Fund, Inc., Oppenheimer Strategic Income Fund, 
Oppenheimer Total Return Bond Fund, Oppenheimer U.S. Government Trust, 
Oppenheimer Variable Account Funds, Rochester Fund Municipals, 
Rochester Portfolio Series, and Panorama Series Fund, Inc. 
(collectively, the ``Oppenheimer Funds,''), Centennial California Tax 
Exempt Trust, Centennial Government Trust, Centennial Money Market 
Trust, Centennial New York Exempt Trust and Centennial Tax Exempt Trust 
(collectively, the ``Centennial Funds,'' together with the Oppenheimer 
Funds, the ``Funds''), and any other registered open-end management 
investment companies or series thereof that are currently, or in the 
future may be advised or, provided the Adviser manages the Cash 
Balances (as defined herein), subadvised by the Adviser (included in 
the term ``Funds'').
    Filing Dates: The application was filed on June 9, 2005. Applicants 
have agreed to file a final 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 April 17, 2006, 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 may request notification of a hearing by writing to 
the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090. Applicants, R. William Hawkins, 
Esq., OppenheimerFunds, Inc., Two World Financial Center, 225 Liberty 
Street, 11th Floor, New York, NY 10281.

FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Sr., Senior Counsel, 
at (202) 551-6868, or Nadya B. Roytblat, Assistant Director, 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 for a fee at the 
Commission's Public Reference Desk, 100 F Street, NE., Washington, DC 
20549-0102 (tel. 202-551-5850).

Applicants' Representations

    1. Each Fund, organized as a Massachusetts business trust or 
Maryland corporation, is registered under the Act as an open-end 
management investment company.\1\ Certain Funds operate as money market 
funds that comply with rule 2a-7 under the Act (``Cash Management 
Funds''). OFI, a Colorado corporation, is registered as an investment 
adviser under the Investment Advisers Act of 1940 (the ``Advisers 
Act'') and serves as investment adviser to each of the Oppenheimer 
Funds. CAMC, an investment adviser registered under the Advisers Act, 
is a wholly-owned subsidiary of OFI and serves as investment adviser to 
each of the Centennial Funds.
---------------------------------------------------------------------------

    \1\ All Funds that currently intend to rely on the requested 
relief have been named as applicants and any existing or future Fund 
that relies on the requested relief in the future will do so only in 
accordance with the terms and conditions of the application.
---------------------------------------------------------------------------

    2. Each Fund has, and may be expected to have, uninvested cash in 
an account at its custodian (``Uninvested Cash''). Uninvested Cash may 
result from a variety of sources, such as dividends or interest 
received on portfolio securities, unsettled securities transactions, 
reserves held for investment purposes, scheduled maturity of 
investments, proceeds from liquidation of investment securities, 
dividend payments, or money received from investors. Certain Funds may 
participate in a securities lending program under which a Fund will 
lend its portfolio securities to registered broker-dealers or other 
institutional investors (the ``Securities Lending Program''). The loans 
will be continuously secured by collateral, which may include cash 
(``Cash Collateral,'' and together with Uninvested Cash, ``Cash 
Balances''). The Securities Lending Program, including the investment 
of any Cash Collateral, will comply with all present and future 
Commission or staff positions regarding securities lending 
arrangements.
    3. Applicants request relief to permit: (a) Certain Funds 
(``Investing Funds'') to use Cash Balances to purchase shares of one or 
more of the Cash Management Funds, (b) the Cash Management Funds to 
sell their shares to, and redeem their shares from, each of the 
Investing Funds and (c) the Adviser to effect the above transactions. 
Investment of Cash Balances in shares of the Cash Management Funds will 
be made only to the extent consistent with an Investing Fund's 
investment restrictions and policies as set forth in its prospectus and 
statement of additional information. Applicants believe that the 
proposed transactions will result in higher yields, increased 
investment opportunities, reduced transaction costs, increased returns, 
reduced administrative burdens, enhanced liquidity, and increased 
diversification.

Applicants' Legal Analysis

A. Section 12(d)(1)

    1. Section 12(d)(1)(A) of the Act provides that no registered 
investment company may acquire securities of another investment company 
if such securities represent more than 3% of the acquired company's 
outstanding voting stock, more than 5% of the acquiring company's total 
assets, or if such securities, together with the securities of other 
acquired investment companies, represent more than 10% of the acquiring 
company's total assets. Section 12(d)(1)(B) of the Act provides that no 
registered open-end investment company may sell its securities 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.
    2. Section 12(d)(1)(J) of the Act authorizes the Commission to 
exempt any person, security or transaction (or classes thereof) from 
any provision of section 12(d)(1) if, and to the extent

[[Page 15774]]

that, the exemption is consistent with the public interest and the 
protection of investors. Applicants request relief under section 
12(d)(1)(J) to permit the Investing Funds to use their Cash Balances to 
acquire shares of the Cash Management Funds in excess of the percentage 
limitations in section 12(d)(1)(A), provided however, that in all cases 
an Investing Fund's aggregate investment of Uninvested Cash in shares 
of the Cash Management Funds will not exceed 25% of the Investing 
Fund's total assets. Applicants also request relief to permit the Cash 
Management Funds to sell their shares to the Investing Funds in excess 
of the percentage limitations in section 12(d)(1)(B).
    3. Applicants state that the proposed arrangement will not result 
in the abuses that sections 12(d)(1)(A) and (B) were intended to 
prevent. Applicants state that because each Cash Management Fund will 
maintain a highly liquid portfolio, a Cash Management Fund would not 
need to maintain a special reserve or balances to meet redemptions by 
an Investing Fund. Applicants state that the proposed arrangement will 
not result in an inappropriate layering of fees because shares of the 
Cash Management Funds sold to the Investing Funds will not be subject 
to a sales load, redemption fee, distribution fee under a plan adopted 
in accordance with rule 12b-1 under the Act, or service fee (as defined 
in rule 2830(b)(9) of the Conduct Rules of the National Association of 
Securities Dealers, Inc. (``NASD Conduct Rules'') or, if such shares 
are subject to any such fees, the Adviser will waive its advisory fee 
for each Investing Fund in an amount that offsets the amount of such 
fees incurred by the Investing Fund. Applicants state that if a Cash 
Management Fund offers more than one class of securities, each 
Investing Fund will invest only in the class with the lowest expense 
ratio (taking into account the expected impact of the Investing Fund's 
investment) at the time of the investment. Before the next meeting of 
the board of trustees/directors (``Board'') of an Investing Fund is 
held for the purpose of voting on an advisory contract under section 15 
of the Act, the Adviser to the Investing Fund will provide the Board 
with specific information regarding the approximate cost to the Adviser 
of, or portion of the advisory fee attributable to managing the 
Uninvested Cash of the Investing Fund, that can be expected to be 
invested in the Cash Management Funds. In connection with approving any 
advisory contract for an Investing Fund, the Board, including a 
majority of the trustees/directors who are not ``interested persons,'' 
as defined in section 2(a)(19) of the Act (``Independent Trustees/
Directors''), will consider to what extent, if any, the advisory fee 
charged to each Investing Fund by the Adviser should be reduced to 
account for reduced services provided by the Adviser as a result of 
Uninvested Cash being invested in a Cash Management Fund. Applicants 
represent that no Cash Management Fund whose shares are held by an 
Investing 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 limitations contained in section 12(d)(1)(A) of the Act.

B. Section 17(a) of the Act

    1. Section 17(a) of the Act makes it unlawful for any affiliated 
person of a registered investment company, acting as principal, to sell 
or purchase any security to or from the investment company. Section 
2(a)(3) of the Act defines an ``affiliated person'' of an investment 
company to include the investment adviser, any person that owns 5% or 
more of the outstanding voting securities of that company, and any 
person directly or indirectly controlling, controlled by, or under 
common control with the investment company. Control is defined in 
section 2(a)(9) of the Act as ``the power to exercise a controlling 
influence over the management or policies of a company, unless such 
power is solely the result of an official position with such company.'' 
Applicants state that the Investing Funds and the Cash Management Funds 
may be deemed to be under common control, and therefore affiliated 
persons of each other, because they have a common Board, a common 
investment adviser or their investment advisers may be under common 
control. In addition, applicants submit that because an Investing Fund 
could acquire 5% or more of the outstanding voting shares of a Cash 
Management Fund, such Investing Fund might be deemed an affiliated 
person of the Cash Management Fund. Accordingly, applicants state that 
the sale of shares of the Cash Management Fund to the Investing Funds, 
and the redemption of such shares by the Investing Funds, may be 
prohibited under section 17(a).
    2. Section 17(b) of the Act authorizes the Commission to exempt a 
proposed transaction from section 17(a) of the Act if the terms of the 
proposed transaction, including the consideration to be paid or 
received, are fair and reasonable and do not involve overreaching on 
the part of any person concerned, and the proposed transaction is 
consistent with the policies of each registered investment company 
involved and with the general purposes of the Act. Section 6(c) of the 
Act provides, in part, that the Commission may exempt any person, 
security or transaction, or any class or classes of persons, securities 
or transactions, from any provision of the Act, if and to the extent 
that such exemption is necessary or appropriate in the public interest 
and is consistent with the protection of investors and the purposes 
fairly intended by the policy and provisions of the Act.
    3. Applicants submit that their request for relief to permit the 
purchase and redemption of Cash Management Fund shares by the Investing 
Funds satisfies the standards of sections 17(b) and 6(c) of the Act. 
Applicants state that the Investing Funds will purchase and redeem 
shares of the Cash Management Funds at net asset value, which is the 
same consideration paid and received for such shares by other 
shareholders. In addition, the Investing Funds will retain their 
ability to invest their Cash Balances directly into money market 
instruments or short-term instruments as authorized by their respective 
investment objectives and policies, if they believe they can obtain a 
higher rate of return, or for any other reason. Applicants also state 
that each of the Cash Management Funds reserves the right to 
discontinue selling shares to any of the Investing Funds if the 
management or Board of the Cash Management Fund determines that such 
sales would adversely affect its portfolio management and operations.

C. Section 17(d) of the Act and Rule 17d-1 Under the Act

    1. Section 17(d) of the Act and rule 17d-1 thereunder prohibit an 
affiliated person of a registered investment company, acting as 
principal, from participating in or effecting any transaction in 
connection with any joint enterprise or joint arrangement in which the 
investment company participates, unless the Commission has issued an 
order authorizing the arrangement. Applicants state that each Investing 
Fund (by purchasing shares of the Cash Management Funds), each Adviser 
of an Investing Fund (by managing the assets of the Investing Funds 
invested in the Cash Management Funds), and each Cash Management Fund 
(by selling shares to and redeeming them from the Investing Funds) 
could be deemed to be participants in a joint enterprise or other joint 
arrangement within the meaning of section 17(d) of the Act and rule 
17d-1 thereunder.

[[Page 15775]]

    2. In determining whether to approve a joint transaction under rule 
17d-1 under the Act, the Commission will consider whether the 
participation by the investment company in the joint transaction or 
arrangement is consistent with the provisions, policies, and purposes 
of the Act, and the extent to which the participation is on a basis 
different from or less advantageous than that of other participants. 
Applicants submit that the investment by the Investing Funds in shares 
of the Cash Management Funds will be on the same basis and will be 
indistinguishable from any other shareholder account maintained by the 
same class of the Cash Management Funds, and the proposed transactions 
satisfy the standards of rule 17d-1 under the Act.

Applicants' Conditions

    Applicants agree that the order granting the requested relief shall 
be subject to the following conditions:
    1. Shares of the Cash Management Funds sold to and redeemed by the 
Investing Funds will not be subject to a sales load, redemption fee, 
distribution fee under a plan adopted in accordance with rule 12b-1 
under the Act, or service fee (as defined in rule 2830(b)(9) of the 
NASD Conduct Rules), or if such shares are subject to any such fee, the 
Adviser will waive its advisory fee for each Investing Fund in an 
amount that offsets the amount of such fees incurred by the Investing 
Fund.
    2. Before the next meeting of the Board of an Investing Funds held 
for purposes of voting on an advisory contract under Section 15 the 
Act, the Adviser to the Investing Fund will provide the Board with 
specific information regarding the approximate cost to the Adviser of, 
or portion of the advisory fee under the existing advisory contract 
attributable to, managing the Uninvested Cash of the Investing Fund 
that can be expected to be invested in the Cash Management Funds. 
Before approving any advisory contract for an Investing Fund, the Board 
of the Investing Fund, including a majority of the Independent 
Trustees/Directors, shall consider to what extent, if any, the advisory 
fees charged to the Investing Fund by the Adviser should be reduced to 
account for reduced or duplicative services provided to the Investing 
Fund by the Adviser as a result of Uninvested Cash being invested in 
the Cash Management Funds. The minutes of the meeting of the Investing 
Fund will record fully the Board's considerations in approving the 
advisory contract, including the considerations relating to fees 
referred to above.
    3. Each of the Investing Funds will invest Uninvested Cash in, and 
hold shares of, the Cash Management Funds only to the extent that the 
Investing Fund's aggregate investment of Uninvested Cash in the Cash 
Management Funds does not exceed 25% of the Investing Fund's total 
assets.
    4. Investment of Cash Balances in shares of the Cash Management 
Funds will be in accordance with each Investing Fund's respective 
investment restrictions, if any, and will be consistent with each 
Investing Fund's policies as set forth in its prospectus and statement 
of additional information.
    5. No Cash Management Fund shall 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.
    6. Each Investing Fund and Cash Management Fund that may rely on 
the requested order shall be advised by the Adviser.
    7. Before an Investing Fund may participate in a Securities Lending 
Program, a majority of the Fund's Board, including a majority of the 
Independent Trustees/Directors, will approve the Fund's participation 
in the Securities Lending Program. The Board will evaluate the 
Securities Lending Program and its results no less frequently than 
annually and determine that any investment of Cash Collateral in the 
Cash Management Funds is in the best interests of the shareholders of 
the Investing Fund.
    8. The Board of any Investing Fund will satisfy the fund governance 
standards as defined in rule 0-1(a)(7) under the Act by the compliance 
date for the rule.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Nancy M. Morris,
Secretary,
 [FR Doc. E6-4518 Filed 3-28-06; 8:45 am]

BILLING CODE 8010-01-P
