DNP Select Income Fund Inc., et al.; Notice of Application, 46058-46062 [E8-18150]
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Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices
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Proclamation 8213, as modified by
Proclamation 8272, the President
modified the HTS to implement the
Amendment with respect to the
CAFTA–DR parties. These
modifications are set forth in sections A,
B, and C of the Annex to Proclamation
8213, as modified by paragraph 2 of
Annex VI to Proclamation 8272.
Proclamations 8213 and 8272 provide
for these modifications to enter into
effect on the date, as announced by the
USTR in the Federal Register, that the
Amendment enters into force, and to be
effective with respect to goods entered,
or withdrawn from warehouse for
consumption, on or after that date. I
anticipate that the Amendment will
enter into force on August 15, 2008.
Accordingly, I announce that these
modifications to the HTS shall enter
into effect on August 15, 2008.
2. Rule of Origin for Woven Apparel
Section 203(o) of the CAFTA–DR
Implementation Act (19 U.S.C. 4033(o))
authorizes the President to proclaim, as
part of the HTS, the provisions set out
in Annex 4.1 of the CAFTA–DR. Among
these provisions is a rule of origin set
out in Appendix 4.1–B of the CAFTA–
DR that provides, subject to certain
conditions, for Mexican and Canadian
inputs to be treated as though they
originated in a CAFTA–DR country for
purposes of determining whether
certain woven apparel imported into the
United States qualifies for duty-free
treatment under the agreement. In
Proclamation 8213, as modified by
Proclamation 8272, the President
modified the HTS to implement this
rule of origin. These modifications are
set forth in section D of the Annex to
Proclamation 8213, as modified by
paragraph 1 of Annex VI to
Proclamation 8272.
Proclamations 8213 and 8272 provide
for these modifications to the HTS to
enter into effect on the date, as
announced by the USTR in the Federal
Register, that the Amendment enters
into force and the conditions set forth in
paragraph (a), paragraph (b), or both, of
footnote 1 to Appendix 4.1–B of the
CAFTA–DR have been fulfilled, and to
be effective with respect to goods
entered, or withdrawn from warehouse
for consumption, on or after that date.
I anticipate that the Amendment will
enter into force on August 15, 2008. In
addition, all of the conditions set forth
in paragraph (a) of footnote 1 to
Appendix 4.1–B of the CAFTA–DR have
been fulfilled and therefore the rule of
origin may enter into force with respect
to woven apparel containing materials
produced in Mexico. Accordingly, I
announce that these modifications to
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the HTS shall enter into effect on
August 15, 2008, with respect to
materials produced in Mexico.
Susan C. Schwab,
U.S. Trade Representative.
[FR Doc. E8–18216 Filed 8–6–08; 8:45 am]
BILLING CODE 3190–W8–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28348; 812–13377]
DNP Select Income Fund Inc., et al.;
Notice of Application
July 31, 2008.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from section 19(b) of the Act and rule
19b–1 under the Act.
AGENCY:
Applicants
request an order to permit a closed-end
investment company to make periodic
distributions of long-term capital gains
with respect to its outstanding common
stock as frequently as twelve times each
year, and as frequently as distributions
are specified by or in accordance with
the terms of any outstanding preferred
stock that such investment company
may issue.
APPLICANTS: DNP Select Income Fund
Inc. (the ‘‘Fund’’) and Duff & Phelps
Investment Management Co. (the
‘‘Adviser’’).
FILING DATES: April 11, 2007 and July
24, 2008.
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 August 25, 2008, 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 who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–1090;
Applicants, 55 East Monroe Street, Suite
SUMMARY OF APPLICATION:
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3600, Chicago, IL 60603, Attention:
Nathan I. Partain.
FOR FURTHER INFORMATION CONTACT:
Wendy Friedlander, Senior Counsel, at
(202) 551–6837, or James M. Curtis,
Branch Chief, at (202) 551–6825
(Division of Investment Management,
Office of Chief Counsel).
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 Room,
100 F Street, NE., Washington, DC
20549–1520 (telephone (202) 551–5850).
Applicants’ Representations
1. The Fund is a registered closed-end
management investment company
organized as a Maryland corporation.
The Fund’s primary investment
objectives are current income and longterm growth of income, with a
secondary objective of capital
appreciation.1 The Fund’s common
stock is listed on the New York Stock
Exchange, and the Fund’s preferred
stock is not listed on any exchange.
Applicants believe that the Fund’s
shareholders are generally conservative,
income-sensitive investors who desire
steady distributions of income and who
will favor a distribution policy with
respect to its common stock.
2. The Adviser is registered under the
Investment Advisers Act of 1940 and is
responsible for the overall management
of the Fund and other registered
investment companies and institutional
accounts.
3. Applicants represent that on
February 21, 2007, the Board of
Directors (the ‘‘Board’’) of the Fund,
including a majority of the directors
who are not ‘‘interested persons’’ of the
Fund as defined in section 2(a)(19) of
the Act (the ‘‘Independent Directors’’),
reviewed information regarding the
purpose and terms of a proposed
distribution policy, the likely effects of
such policy on the Fund’s long-term
total return (in relation to market price
and net asset value (‘‘NAV’’) per
common share) and the relationship
between the Fund’s distribution rate on
its common shares under the policy and
the Fund’s total return on NAV per
share. Applicants state that the
1 Applicants request that any order issued
granting the relief requested in the application also
apply to any closed-end investment company that
in the future: (a) is advised by the Adviser
(including any successor in interest) or by any
entity controlling, controlled by, or under common
control (within the meaning of section 2(a)(9) of the
Act) with the Adviser; and (b) complies with the
terms and conditions of the requested order. A
successor in interest is limited to entities that result
from a reorganization into another jurisdiction or a
change in the type of business organization.
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Independent Directors also considered
what conflicts of interest the Adviser
and the affiliated persons of the Adviser
and the Fund might have with respect
to the adoption or implementation of
the policy. Applicants further state that
after considering such information the
Board, including the Independent
Directors, of the Fund approved a
managed distribution policy and related
plan with respect to the Fund’s common
shares (the ‘‘Plan’’) and determined that
such policy and Plan are consistent with
the Fund’s investment objectives and in
the best interests of the Fund’s common
stockholders.
4. Applicants state that the purpose of
the Plan is to provide to the Fund’s
common stockholders a regular,
monthly distribution that is not
dependent on the timing or amount of
investment income earned or capital
gains realized by the Fund. Applicants
represent that, under the Plan, the Fund
will distribute all available investment
income to common stockholders,
consistent with the Fund’s primary
investment objective of current income
and long-term growth of income.
Applicants state that, if and when
sufficient investment income is not
available on a monthly basis, the Fund
will distribute long-term capital gains
and/or return of capital to its
stockholders to maintain the level
distribution rate that has been approved
by the Board. Applicants state that the
minimum annual distribution rate will
be independent of the Fund’s
performance during any particular
period but is expected to correlate with
the Fund’s performance over time.
Applicants note that the amount and
frequency of distributions may be
amended at any time by the Board
without prior notice to the Fund’s
shareholders. Applicants explain that if
the Fund’s net investment income and
net realized capital gains for any year
exceed the amount required to be
distributed under the Plan, the Fund
will, at a minimum, make distributions
necessary to comply with the
distribution requirements of subchapter
M of the Internal Revenue Code of 1986
(the ‘‘Code’’). Applicants state that the
Plan provides that it can be amended,
suspended or terminated at any time by
the Board without prior notice to the
Fund’s shareholders.
5. Applicants state that at the
February 21, 2007 meeting, the Board
also adopted policies and procedures
under rule 38a–1 under the Act that are
reasonably designed to ensure that all
notices sent to the Fund’s stockholders
with distributions under the Plan
(‘‘Notices’’) comply with condition II
below, and that all other written
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communications by the Fund or its
agents regarding distributions under the
Plan include the disclosure required by
condition III below. Applicants state
that the Board also adopted policies and
procedures at that meeting that require
the Fund to keep records that
demonstrate the Fund’s compliance
with all of the conditions of the
requested order and that are necessary
for the Fund to form the basis for, or
demonstrate the calculation of, the
amounts disclosed in its Notices.
Applicants’ Legal Analysis
1. Section 19(b) generally makes it
unlawful for any registered investment
company to make long-term capital
gains distributions more than once each
year. Rule 19b–1 limits the number of
capital gains dividends, as defined in
section 852(b)(3)(C) of the Code
(‘‘distributions’’), that a fund may make
with respect to any one taxable year to
one, plus a supplemental ‘‘clean up’’
distribution made pursuant to section
855 of the Code not exceeding 10% of
the total amount distributed for the year,
plus one additional capital gain
dividend made in whole or in part to
avoid the excise tax under section 4982
of the Code.
2. Section 6(c) provides that the
Commission may, by order upon
application, conditionally or
unconditionally 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 the
exemption is necessary or 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.
3. Applicants state that one of the
concerns underlying section 19(b) and
rule 19b–1 is that shareholders might be
unable to differentiate between regular
distributions of capital gains and
distributions of investment income.
Applicants state, however, that rule
19a–1 effectively addresses this concern
by requiring that a separate statement
showing the sources of a distribution
(e.g., estimated net income, net shortterm capital gains, net long-term capital
gains and/or return of capital)
accompany any distributions (or the
confirmation of the reinvestment of
distributions) estimated to be sourced in
part from capital gains or capital.
Applicants state that the same
information also is included in the
Fund’s annual reports to shareholders
and on its IRS Form 1099 DIV, which is
sent to each common and preferred
shareholder who received distributions
during the year.
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4. Applicants further state that the
Fund will make the additional
disclosures required by the conditions
set forth below, and has adopted
compliance policies and procedures in
accordance with rule 38a–1 to ensure
that all required Notices and disclosures
are sent to shareholders. Applicants
argue that by providing the information
required by section 19(a) and rule 19a–
1, and by complying with the
procedures adopted under the Plan and
the conditions listed below, the Fund
would ensure that the Fund’s
stockholders are provided sufficient
information to understand that their
periodic distributions are not tied to the
Fund’s net investment income (which
for this purpose is the Fund’s taxable
income other than from capital gains)
and realized capital gains to date, and
may not represent yield or investment
return. Applicants also state that
compliance with the Fund’s compliance
procedures and condition III set forth
below will ensure that prospective
shareholders and third parties are
provided with the same information.
Accordingly, Applicants assert that
continuing to subject the Fund to
section 19(b) and rule 19b–1 would
afford stockholders no extra protection.
5. Applicants note that section 19(b)
and rule 19b–1 also were intended to
prevent certain improper sales practices,
including, in particular, the practice of
urging an investor to purchase shares of
a fund on the basis of an upcoming
capital gains dividend (‘‘selling the
dividend’’), where the dividend would
result in an immediate corresponding
reduction in NAV and would be in
effect a taxable return of the investor’s
capital. Applicants assert that the
‘‘selling the dividend’’ concern should
not apply to closed-end investment
companies, such as the Fund, which do
not continuously distribute shares.
According to Applicants, if the
underlying concern extends to
secondary market purchases of shares of
closed-end funds that are subject to a
large upcoming capital gains dividend,
adoption of the Plan actually helps
minimize the concern by avoiding,
through periodic distributions, any
buildup of large end-of-the-year
distributions.
6. Applicants also note that common
stock of closed-end funds that invest
primarily in equity securities often trade
in the marketplace at a discount to their
NAV. Applicants believe that the Fund’s
history of making regular, monthly
distributions has had a significant
positive effect on the market price of the
Fund’s common stock.
7. Applicants assert that the
application of rule 19b–1 to a Plan
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actually could have an undesirable
influence on portfolio management
decisions. Applicants state that, in the
absence of an exemption from rule 19b–
1, the implementation of a Plan imposes
pressure on management (i) not to
realize any net long-term capital gains
until the point in the year that the fund
can pay all of its remaining distributions
in accordance with rule 19b–1, and (ii)
not to realize any long-term capital
gains during any particular year in
excess of the amount of the aggregate
pay-out for the year (since as a practical
matter excess gains must be distributed
and accordingly would not be available
to satisfy pay-out requirements in
following years), notwithstanding that
purely investment considerations might
favor realization of long term gains at
different times or in different amounts.
Applicants thus assert that the
limitation on the number of capital gain
distributions that a fund may make with
respect to any one year imposed by rule
19b–1, may prevent the efficient
operation of a Plan whenever that fund’s
realized net long-term capital gains in
any year exceed the total of the periodic
distributions that may include such
capital gains under the rule.
8. In addition, Applicants assert that
rule 19b–1 may cause fixed regular
periodic distributions under a Plan to be
funded with returns of capital2 (to the
extent net investment income and
realized short-term capital gains are
insufficient to fund the distribution),
even though realized net long-term
capital gains otherwise could be
available. To distribute all of a fund’s
long-term capital gains within the limits
in rule 19b–1, a fund may be required
to make total distributions in excess of
the annual amount called for by its Plan,
or to retain and pay taxes on the excess
amount. Applicants thus assert that the
requested order would minimize these
effects of rule 19b–1 by enabling funds
to realize long term-capital gains as
often as investment considerations
dictate without fear of violating rule
19b–1.
9. Applicants state that Revenue
Ruling 89–81 under the Code requires
that a fund that has both common stock
and preferred stock outstanding
designate the types of income, e.g.,
investment income and capital gains, in
the same proportion as the total
distributions distributed to each class
for the tax year.3 To satisfy the
2 Returns of capital as used in the application
means return of capital for financial accounting
purposes and not for tax accounting purposes.
3 The Internal Revenue Service has agreed, in
Private Letter Rulings 8842048, 8850018,
200332005 and 200604008, that the Fund’s
remarketed preferred shares (but not its auction
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proportionate designation requirements
of Revenue Ruling 89–81, whenever a
fund has realized a long-term capital
gain with respect to a given tax year, the
fund must designate the required
proportionate share of such capital gain
to be included in common and preferred
stock dividends. Applicants state that
although rule 19b–1 allows a fund some
flexibility with respect to the frequency
of capital gains distributions, a fund
might use all of the exceptions available
under the rule for a tax year and still
need to distribute additional capital
gains allocated to the preferred stock to
comply with Revenue Ruling 89–81.
10. Applicants assert that the
potential abuses addressed by section
19(b) and rule 19b–1 do not arise with
respect to preferred stock issued by a
closed-end fund. Applicants assert that
such distributions are either fixed or are
determined in periodic auctions by
reference to short-term interest rates
rather than by reference to performance
of the issuer, and Revenue Ruling 89–81
determines the proportion of such
distributions that are comprised of the
long-term capital gains.
11. Applicants also submit that the
‘‘selling the dividend’’ concern is not
applicable to preferred stock, which
entitles a holder to no more than a
periodic dividend at a fixed rate or the
rate determined by the market, and, like
a debt security, is priced based upon its
liquidation value, dividend rate, credit
quality, and frequency of payment.
Applicants state that investors buy
preferred shares for the purpose of
receiving payments at the frequency
bargained for, and do not expect the
liquidation value of their shares to
change.
12. Applicants request an order under
section 6(c) granting an exemption from
the provisions of section 19(b) and rule
19b–1 to permit the Fund (and any
future funds advised by the Adviser that
have a similar distribution plan and
make similar representations to those
set forth in the application) to distribute
periodic capital gains dividends (as
defined in section 852(b)(3)(C) of the
Code) as often as monthly in any one
taxable year in respect of its common
shares and as often as specified by or
determined in accordance with the
preferred shares) are entitled to the benefit of the
‘‘grandfather clause’’ of Revenue Ruling 89–81, in
that the Fund is permitted to make a preferential
allocation to the remarketed preferred shares of
dividends eligible for the dividends received
deduction in accordance with the registration
statements for the remarketed preferred shares filed
in July and August of 1988. In all other respects,
Revenue Ruling 89–81 is applicable to the Fund’s
common and preferred shares.
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terms thereof in respect of its preferred
shares.4
Applicants’ Conditions
Applicants agree that, with respect to
the Fund and each future fund seeking
to rely on the order, the order will be
subject to the following conditions:
I. Compliance Review and Reporting.
The fund’s chief compliance officer
will: (a) report to the fund Board, no less
frequently than once every three months
or at the next regularly scheduled
quarterly board meeting, whether (i) the
fund and the fund adviser have
complied with the conditions to the
requested order, and (ii) a Material
Compliance Matter, as defined in rule
38a–1(e)(2), has occurred with respect to
compliance with such conditions; and
(b) review the adequacy of the policies
and procedures adopted by the fund no
less frequently than annually.
II. Disclosures to Fund Shareholders:
A. Each Notice to the holders of the
fund’s common shares, in addition to
the information required by section
19(a) and rule 19a–1:
1. Will provide, in a tabular or
graphical format:
(a) The amount of the distribution, on
a per share basis, together with the
amounts of such distribution amount,
on a per share basis and as a percentage
of such distribution amount, from
estimated: (A) Net investment income;
(B) net realized short-term capital gains;
(C) net realized long-term capital gains;
and (D) return of capital or other capital
source;
(b) The fiscal year-to-date cumulative
amount of distributions, on a per share
basis, together with the amounts of such
cumulative amount, on a per share basis
and as a percentage of such cumulative
amount of distributions, from estimated:
(A) Net investment income; (B) net
realized short-term capital gains; (C) net
realized long-term capital gains; and (D)
return of capital or other capital source;
(c) The average annual total return in
relation to the change in NAV for the 5year period (or, if the fund’s history of
operations is less than five years, the
time period commencing immediately
following the fund’s first public
offering) ending on the last day of the
month prior to the most recent
distribution declaration date compared
to the current fiscal period’s annualized
distribution rate expressed as a
percentage of NAV as of the last day of
4 Applicants state that a future fund that relies on
the requested order will satisfy each of the
representations in the application except that such
representations will be made in respect of actions
by the board of directors of such future fund and
will be made at a future time.
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the month prior to the most recent
distribution declaration date; and
(d) The cumulative total return in
relation to the change in NAV from the
last completed fiscal year to the last day
of the month prior to the most recent
distribution declaration date compared
to the fiscal year-to-date cumulative
distribution rate expressed as a
percentage of NAV as of the last day of
the month prior to the most recent
distribution declaration date.
Such disclosure shall be made in a
type size at least as large and as
prominent as the estimate of the sources
of the current distribution; and
2. Will include the following
disclosure:
(a) ‘‘You should not draw any
conclusions about the fund’s investment
performance from the amount of this
distribution or from the terms of the
fund’s Plan’’;
(b) ‘‘The fund estimates that it has
distributed more than its income and
net realized capital gains; therefore, a
portion of your distribution may be a
return of capital. A return of capital may
occur for example, when some or all of
the money that you invested in the fund
is paid back to you. A return of capital
distribution does not necessarily reflect
the fund’s investment performance and
should not be confused with ‘yield’ or
‘income’ ’’; and
(c) ‘‘The amounts and sources of
distributions reported in this Notice are
only estimates and are not being
provided for tax reporting purposes. The
actual amounts and sources of the
amounts for [accounting and] tax
reporting purposes will depend upon
the fund’s investment experience during
the remainder of its fiscal year and may
be subject to changes based on tax
regulations. The fund will send you a
Form 1099 DIV for the calendar year
that will tell you how to report these
distributions for federal income tax
purposes.’’
Such disclosure shall be made in a
type size at least as large as and as
prominent as any other information in
the Notice and placed on the same page
in close proximity to the amount and
the sources of the distribution.
B. On the inside front cover of each
report to shareholders under rule 30e–
1 under the Act, the fund will:
1. Describe the terms of the Plan
(including the fixed amount or fixed
percentage of the distributions and the
frequency of the distributions);
2. Include the disclosure required by
condition II.A.2(a) above;
3. State, if applicable, that the Plan
provides that the Board may amend or
terminate the Plan at any time without
prior notice to fund shareholders; and
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4. Describe any reasonably foreseeable
circumstances that might cause the fund
to terminate the Plan and any
reasonably foreseeable consequences of
such termination.
C. Each report provided to
shareholders under rule 30e–1 and each
prospectus filed with the Commission
on Form N–2 under the Act, will
provide the fund’s total return in
relation to changes in NAV in the
financial highlights table and in any
discussion about the fund’s total return.
III. Disclosure to Shareholders,
Prospective Shareholders and Third
Parties:
A. The fund will include the
information contained in the relevant
Notice, including the disclosure
required by condition II.A.2 above, in
any written communication (other than
a Form 1099) about the Plan or
distributions under the Plan by the
fund, or agents that the fund has
authorized to make such
communication on the fund’s behalf, to
any fund shareholder, prospective
shareholder or third-party information
provider;
B. The fund will issue,
contemporaneously with the issuance of
any Notice, a press release containing
the information in the Notice and will
file with the Commission the
information contained in such Notice,
including the disclosure required by
condition II.A.2 above, as an exhibit to
its next filed Form N–CSR; and
C. The fund will post prominently a
statement on its (or its adviser’s) Web
site containing the information in each
Notice, including the disclosure
required by condition II.A.2 above, and
will maintain such information on such
web site for at least 24 months.
IV. Delivery of 19(a) Notices to
Beneficial Owners: If a broker, dealer,
bank or other person (‘‘financial
intermediary’’) holds common stock
issued by the fund in nominee name, or
otherwise, on behalf of a beneficial
owner, the fund: (a) Will request that
the financial intermediary, or its agent,
forward the Notice to all beneficial
owners of the fund’s shares held
through such financial intermediary; (b)
will provide, in a timely manner, to the
financial intermediary, or its agent,
enough copies of the Notice assembled
in the form and at the place that the
financial intermediary, or its agent,
reasonably requests to facilitate the
financial intermediary’s sending of the
Notice to each beneficial owner of the
fund’s shares; and (c) upon the request
of any financial intermediary, or its
agent, that receives copies of the Notice,
will pay the financial intermediary, or
its agent, the reasonable expenses of
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sending the Notice to such beneficial
owners.
V. Additional Board Determinations
for Funds Whose Shares Trade at a
Premium: If:
A. The fund’s common shares have
traded on the exchange that they
primarily trade on at the time in
question at an average premium to NAV
equal to or greater than 10%, as
determined on the basis of the average
of the discount or premium to NAV of
the fund’s common shares as of the
close of each trading day over a 12-week
rolling period (each such 12-week
rolling period ending on the last trading
day of each week); and
B. The fund’s annualized distribution
rate for such 12-week rolling period,
expressed as a percentage of NAV as of
the ending date of such 12-week rolling
period is greater than the fund’s average
annual total return in relation to the
change in NAV over the 2-year period
ending on the last day of such 12-week
rolling period; then:
1. At the earlier of the next regularly
scheduled meeting or within four
months of the last day of such 12-week
rolling period, the Board including a
majority of the Independent Directors:
(a) Will request and evaluate, and the
fund’s adviser will furnish, such
information as may be reasonably
necessary to make an informed
determination of whether the Plan
should be continued or continued after
amendment;
(b) Will determine whether
continuation, or continuation after
amendment, of the Plan is consistent
with the fund’s investment objective(s)
and policies and in the best interests of
the fund and its shareholders, after
considering the information in
condition V.B.1.a above; including,
without limitation:
(1) Whether the Plan is accomplishing
its purpose(s);
(2) The reasonably foreseeable effects
of the Plan on the fund’s long-term total
return in relation to the market price
and NAV of the fund’s common shares;
and
(3) The fund’s current distribution
rate, as described in condition V.B
above, compared with the fund’s
average annual taxable income or total
return over the 2-year period, as
described in condition V.B, or such
longer period as the Board deems
appropriate; and
(c) Based upon that determination,
will approve or disapprove the
continuation, or continuation after
amendment, of the Plan; and
2. The Board will record the
information considered by it and the
basis for its approval or disapproval of
E:\FR\FM\07AUN1.SGM
07AUN1
46062
Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices
the continuation, or continuation after
amendment, of the Plan in its meeting
minutes, which must be made and
preserved for a period of not less than
six years from the date of such meeting,
the first two years in an easily accessible
place.
VI. Public Offerings: The fund will not
make a public offering of the fund’s
common shares other than:
A. A rights offering below NAV to
holders of the fund’s common stock;
B. An offering in connection with a
dividend reinvestment plan, merger,
consolidation, acquisition, spin off or
reorganization of the fund; or
C. An offering other than an offering
described in conditions VI.A and VI.B
above, unless, with respect to such other
offering:
1. The fund’s average annual
distribution rate for the six months
ending on the last day of the month
ended immediately prior to the most
recent distribution declaration date,5
expressed as a percentage of NAV per
share as of such date, is no more than
1 percentage point greater than the
fund’s average annual total return for
the 5-year period ending on such date; 6
and
2. The transmittal letter
accompanying any registration
statement filed with the Commission in
connection with such offering discloses
that the fund has received an order
under section 19(b) to permit it to make
periodic distributions of long-term
capital gains with respect to its common
stock as frequently as twelve times each
year, and as frequently as distributions
are specified by or determined in
accordance with the terms of any
outstanding preferred stock that such
fund may issue.
VII. Amendments to Rule 19b–1: The
requested order will expire on the
effective date of any amendments to rule
19b–1 that provide relief permitting
certain closed-end investment
companies to make periodic
distributions of long-term capital gains
with respect to their outstanding
common stock as frequently as twelve
times each year.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–18150 Filed 8–6–08; 8:45 am]
sroberts on PROD1PC70 with NOTICES
BILLING CODE 8010–01–P
5 If the fund has been in operation fewer than two
years, the measured period will begin immediately
following the fund’s first public offering.
6 If the fund has been in operation fewer than five
years, the measured period will begin immediately
following the fund’s first public offering.
VerDate Aug<31>2005
16:49 Aug 06, 2008
Jkt 214001
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28347; 812–13456]
Goldman Sachs Trust, et al.; Notice of
Application
July 31, 2008.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order under section 12(d)(1)(J) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
12(d)(1)(A) and (B) of the Act, and
under sections 6(c) and 17(b) of the Act
for an exemption from section 17(a) of
the Act.
AGENCY:
SUMMARY OF THE APPLICATION:
Applicants request an order that would
permit certain registered open-end
management investment companies to
acquire shares of other registered openend management investment companies
and unit investment trusts that are
within and outside the same group of
investment companies.
APPLICANTS: Goldman Sachs Trust
(‘‘GST’’), Goldman Sachs Variable
Insurance Trust (‘‘VIT,’’ and together
with GST, the ‘‘Trusts’’), Goldman
Sachs Asset Management, L.P.
(‘‘GSAM’’) and Goldman Sachs Asset
Management International (‘‘GSAMI,’’
and together with GSAM, the
‘‘Advisers’’).
FILING DATES: The application was filed
on November 27, 2007 and amended on
May 29, 2008. Applicants have agreed to
file an 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 August 25, 2008, 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 who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090; Applicants, c/o Jack W. Murphy,
PO 00000
Frm 00126
Fmt 4703
Sfmt 4703
Esq., Dechert LLP, 1775 I Street, NW.,
Washington, DC 20006–2401.
FOR FURTHER INFORMATION CONTACT:
Barbara T. Heussler, Senior Counsel, at
(202) 551–6990, or Marilyn Mann,
Branch Chief, at (202) 551–6821 (Office
of Investment Company Regulation,
Division of Investment Management).
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
20549–1520 (telephone (202) 551–5850).
Applicants’ Representations
1. The Trusts, organized as Delaware
statutory trusts, are registered under the
Act as open-end management
investment companies and offer
multiple series, each of which has its
own distinct investment objectives and
policies (‘‘Funds’’). GST currently offers
86 Funds and VIT offers 11 Funds.
Shares of the Trusts are registered under
the Securities Act of 1933, as amended
(the ‘‘1933 Act’’). Shares of GST are
offered directly to the public. Shares of
VIT are not offered directly to the public
but only to insurance company separate
accounts (‘‘Separate Accounts’’) that
fund variable annuity and variable life
insurance contracts (‘‘Variable
Contracts’’) issued by participating
insurance companies. The Separate
Accounts may be registered under the
Act (‘‘Registered Separate Accounts’’),
or unregistered thereunder
(‘‘Unregistered Separate Accounts’’).
2. GSAM is a Delaware limited
partnership and a wholly-owned
subsidiary of The Goldman Sachs
Group, Inc. GSAM is a registered
investment adviser under the
Investment Advisers Act of 1940, as
amended (the ‘‘Advisers Act’’) and
serves as investment adviser for eightysix of the Funds. GSAMI is a company
organized under the laws of England
and Wales and is a registered
investment adviser under the Advisers
Act. GSAMI is indirectly wholly-owned
by The Goldman Sachs Group, Inc.
3. Applicants request relief to permit:
(a) A Fund (each a ‘‘Fund of Funds’’) to
acquire shares of registered open-end
management investment companies (the
‘‘Unaffiliated Investment Companies’’)
and unit investment trusts (‘‘UITs’’) that
are not part of the same ‘‘group of
investment companies’’ as defined in
section 12(d)(1)(G)(ii) of the Act
(‘‘Unaffiliated Trusts,’’ and together
with Unaffiliated Investment
Companies, the ‘‘Unaffiliated Funds’’);
(b) the Unaffiliated Investment
Companies, their principal underwriters
E:\FR\FM\07AUN1.SGM
07AUN1
]]>Agencies
[Federal Register Volume 73, Number 153 (Thursday, August 7, 2008)]
[Notices]
[Pages 46058-46062]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-18150]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28348; 812-13377]
DNP Select Income Fund Inc., et al.; Notice of Application
July 31, 2008.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 19(b) of
the Act and rule 19b-1 under the Act.
-----------------------------------------------------------------------
Summary of Application: Applicants request an order to permit a
closed-end investment company to make periodic distributions of long-
term capital gains with respect to its outstanding common stock as
frequently as twelve times each year, and as frequently as
distributions are specified by or in accordance with the terms of any
outstanding preferred stock that such investment company may issue.
Applicants: DNP Select Income Fund Inc. (the ``Fund'') and Duff &
Phelps Investment Management Co. (the ``Adviser'').
Filing Dates: April 11, 2007 and July 24, 2008.
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 August 25, 2008, 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 who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090; Applicants, 55 East Monroe Street,
Suite 3600, Chicago, IL 60603, Attention: Nathan I. Partain.
FOR FURTHER INFORMATION CONTACT: Wendy Friedlander, Senior Counsel, at
(202) 551-6837, or James M. Curtis, Branch Chief, at (202) 551-6825
(Division of Investment Management, Office of Chief Counsel).
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 Room, 100 F Street, NE., Washington, DC
20549-1520 (telephone (202) 551-5850).
Applicants' Representations
1. The Fund is a registered closed-end management investment
company organized as a Maryland corporation. The Fund's primary
investment objectives are current income and long-term growth of
income, with a secondary objective of capital appreciation.\1\ The
Fund's common stock is listed on the New York Stock Exchange, and the
Fund's preferred stock is not listed on any exchange. Applicants
believe that the Fund's shareholders are generally conservative,
income-sensitive investors who desire steady distributions of income
and who will favor a distribution policy with respect to its common
stock.
---------------------------------------------------------------------------
\1\ Applicants request that any order issued granting the relief
requested in the application also apply to any closed-end investment
company that in the future: (a) is advised by the Adviser (including
any successor in interest) or by any entity controlling, controlled
by, or under common control (within the meaning of section 2(a)(9)
of the Act) with the Adviser; and (b) complies with the terms and
conditions of the requested order. A successor in interest is
limited to entities that result from a reorganization into another
jurisdiction or a change in the type of business organization.
---------------------------------------------------------------------------
2. The Adviser is registered under the Investment Advisers Act of
1940 and is responsible for the overall management of the Fund and
other registered investment companies and institutional accounts.
3. Applicants represent that on February 21, 2007, the Board of
Directors (the ``Board'') of the Fund, including a majority of the
directors who are not ``interested persons'' of the Fund as defined in
section 2(a)(19) of the Act (the ``Independent Directors''), reviewed
information regarding the purpose and terms of a proposed distribution
policy, the likely effects of such policy on the Fund's long-term total
return (in relation to market price and net asset value (``NAV'') per
common share) and the relationship between the Fund's distribution rate
on its common shares under the policy and the Fund's total return on
NAV per share. Applicants state that the
[[Page 46059]]
Independent Directors also considered what conflicts of interest the
Adviser and the affiliated persons of the Adviser and the Fund might
have with respect to the adoption or implementation of the policy.
Applicants further state that after considering such information the
Board, including the Independent Directors, of the Fund approved a
managed distribution policy and related plan with respect to the Fund's
common shares (the ``Plan'') and determined that such policy and Plan
are consistent with the Fund's investment objectives and in the best
interests of the Fund's common stockholders.
4. Applicants state that the purpose of the Plan is to provide to
the Fund's common stockholders a regular, monthly distribution that is
not dependent on the timing or amount of investment income earned or
capital gains realized by the Fund. Applicants represent that, under
the Plan, the Fund will distribute all available investment income to
common stockholders, consistent with the Fund's primary investment
objective of current income and long-term growth of income. Applicants
state that, if and when sufficient investment income is not available
on a monthly basis, the Fund will distribute long-term capital gains
and/or return of capital to its stockholders to maintain the level
distribution rate that has been approved by the Board. Applicants state
that the minimum annual distribution rate will be independent of the
Fund's performance during any particular period but is expected to
correlate with the Fund's performance over time. Applicants note that
the amount and frequency of distributions may be amended at any time by
the Board without prior notice to the Fund's shareholders. Applicants
explain that if the Fund's net investment income and net realized
capital gains for any year exceed the amount required to be distributed
under the Plan, the Fund will, at a minimum, make distributions
necessary to comply with the distribution requirements of subchapter M
of the Internal Revenue Code of 1986 (the ``Code''). Applicants state
that the Plan provides that it can be amended, suspended or terminated
at any time by the Board without prior notice to the Fund's
shareholders.
5. Applicants state that at the February 21, 2007 meeting, the
Board also adopted policies and procedures under rule 38a-1 under the
Act that are reasonably designed to ensure that all notices sent to the
Fund's stockholders with distributions under the Plan (``Notices'')
comply with condition II below, and that all other written
communications by the Fund or its agents regarding distributions under
the Plan include the disclosure required by condition III below.
Applicants state that the Board also adopted policies and procedures at
that meeting that require the Fund to keep records that demonstrate the
Fund's compliance with all of the conditions of the requested order and
that are necessary for the Fund to form the basis for, or demonstrate
the calculation of, the amounts disclosed in its Notices.
Applicants' Legal Analysis
1. Section 19(b) generally makes it unlawful for any registered
investment company to make long-term capital gains distributions more
than once each year. Rule 19b-1 limits the number of capital gains
dividends, as defined in section 852(b)(3)(C) of the Code
(``distributions''), that a fund may make with respect to any one
taxable year to one, plus a supplemental ``clean up'' distribution made
pursuant to section 855 of the Code not exceeding 10% of the total
amount distributed for the year, plus one additional capital gain
dividend made in whole or in part to avoid the excise tax under section
4982 of the Code.
2. Section 6(c) provides that the Commission may, by order upon
application, conditionally or unconditionally 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 the exemption is necessary or 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.
3. Applicants state that one of the concerns underlying section
19(b) and rule 19b-1 is that shareholders might be unable to
differentiate between regular distributions of capital gains and
distributions of investment income. Applicants state, however, that
rule 19a-1 effectively addresses this concern by requiring that a
separate statement showing the sources of a distribution (e.g.,
estimated net income, net short-term capital gains, net long-term
capital gains and/or return of capital) accompany any distributions (or
the confirmation of the reinvestment of distributions) estimated to be
sourced in part from capital gains or capital. Applicants state that
the same information also is included in the Fund's annual reports to
shareholders and on its IRS Form 1099 DIV, which is sent to each common
and preferred shareholder who received distributions during the year.
4. Applicants further state that the Fund will make the additional
disclosures required by the conditions set forth below, and has adopted
compliance policies and procedures in accordance with rule 38a-1 to
ensure that all required Notices and disclosures are sent to
shareholders. Applicants argue that by providing the information
required by section 19(a) and rule 19a-1, and by complying with the
procedures adopted under the Plan and the conditions listed below, the
Fund would ensure that the Fund's stockholders are provided sufficient
information to understand that their periodic distributions are not
tied to the Fund's net investment income (which for this purpose is the
Fund's taxable income other than from capital gains) and realized
capital gains to date, and may not represent yield or investment
return. Applicants also state that compliance with the Fund's
compliance procedures and condition III set forth below will ensure
that prospective shareholders and third parties are provided with the
same information. Accordingly, Applicants assert that continuing to
subject the Fund to section 19(b) and rule 19b-1 would afford
stockholders no extra protection.
5. Applicants note that section 19(b) and rule 19b-1 also were
intended to prevent certain improper sales practices, including, in
particular, the practice of urging an investor to purchase shares of a
fund on the basis of an upcoming capital gains dividend (``selling the
dividend''), where the dividend would result in an immediate
corresponding reduction in NAV and would be in effect a taxable return
of the investor's capital. Applicants assert that the ``selling the
dividend'' concern should not apply to closed-end investment companies,
such as the Fund, which do not continuously distribute shares.
According to Applicants, if the underlying concern extends to secondary
market purchases of shares of closed-end funds that are subject to a
large upcoming capital gains dividend, adoption of the Plan actually
helps minimize the concern by avoiding, through periodic distributions,
any buildup of large end-of-the-year distributions.
6. Applicants also note that common stock of closed-end funds that
invest primarily in equity securities often trade in the marketplace at
a discount to their NAV. Applicants believe that the Fund's history of
making regular, monthly distributions has had a significant positive
effect on the market price of the Fund's common stock.
7. Applicants assert that the application of rule 19b-1 to a Plan
[[Page 46060]]
actually could have an undesirable influence on portfolio management
decisions. Applicants state that, in the absence of an exemption from
rule 19b-1, the implementation of a Plan imposes pressure on management
(i) not to realize any net long-term capital gains until the point in
the year that the fund can pay all of its remaining distributions in
accordance with rule 19b-1, and (ii) not to realize any long-term
capital gains during any particular year in excess of the amount of the
aggregate pay-out for the year (since as a practical matter excess
gains must be distributed and accordingly would not be available to
satisfy pay-out requirements in following years), notwithstanding that
purely investment considerations might favor realization of long term
gains at different times or in different amounts. Applicants thus
assert that the limitation on the number of capital gain distributions
that a fund may make with respect to any one year imposed by rule 19b-
1, may prevent the efficient operation of a Plan whenever that fund's
realized net long-term capital gains in any year exceed the total of
the periodic distributions that may include such capital gains under
the rule.
8. In addition, Applicants assert that rule 19b-1 may cause fixed
regular periodic distributions under a Plan to be funded with returns
of capital\2\ (to the extent net investment income and realized short-
term capital gains are insufficient to fund the distribution), even
though realized net long-term capital gains otherwise could be
available. To distribute all of a fund's long-term capital gains within
the limits in rule 19b-1, a fund may be required to make total
distributions in excess of the annual amount called for by its Plan, or
to retain and pay taxes on the excess amount. Applicants thus assert
that the requested order would minimize these effects of rule 19b-1 by
enabling funds to realize long term-capital gains as often as
investment considerations dictate without fear of violating rule 19b-1.
---------------------------------------------------------------------------
\2\ Returns of capital as used in the application means return
of capital for financial accounting purposes and not for tax
accounting purposes.
---------------------------------------------------------------------------
9. Applicants state that Revenue Ruling 89-81 under the Code
requires that a fund that has both common stock and preferred stock
outstanding designate the types of income, e.g., investment income and
capital gains, in the same proportion as the total distributions
distributed to each class for the tax year.\3\ To satisfy the
proportionate designation requirements of Revenue Ruling 89-81,
whenever a fund has realized a long-term capital gain with respect to a
given tax year, the fund must designate the required proportionate
share of such capital gain to be included in common and preferred stock
dividends. Applicants state that although rule 19b-1 allows a fund some
flexibility with respect to the frequency of capital gains
distributions, a fund might use all of the exceptions available under
the rule for a tax year and still need to distribute additional capital
gains allocated to the preferred stock to comply with Revenue Ruling
89-81.
---------------------------------------------------------------------------
\3\ The Internal Revenue Service has agreed, in Private Letter
Rulings 8842048, 8850018, 200332005 and 200604008, that the Fund's
remarketed preferred shares (but not its auction preferred shares)
are entitled to the benefit of the ``grandfather clause'' of Revenue
Ruling 89-81, in that the Fund is permitted to make a preferential
allocation to the remarketed preferred shares of dividends eligible
for the dividends received deduction in accordance with the
registration statements for the remarketed preferred shares filed in
July and August of 1988. In all other respects, Revenue Ruling 89-81
is applicable to the Fund's common and preferred shares.
---------------------------------------------------------------------------
10. Applicants assert that the potential abuses addressed by
section 19(b) and rule 19b-1 do not arise with respect to preferred
stock issued by a closed-end fund. Applicants assert that such
distributions are either fixed or are determined in periodic auctions
by reference to short-term interest rates rather than by reference to
performance of the issuer, and Revenue Ruling 89-81 determines the
proportion of such distributions that are comprised of the long-term
capital gains.
11. Applicants also submit that the ``selling the dividend''
concern is not applicable to preferred stock, which entitles a holder
to no more than a periodic dividend at a fixed rate or the rate
determined by the market, and, like a debt security, is priced based
upon its liquidation value, dividend rate, credit quality, and
frequency of payment. Applicants state that investors buy preferred
shares for the purpose of receiving payments at the frequency bargained
for, and do not expect the liquidation value of their shares to change.
12. Applicants request an order under section 6(c) granting an
exemption from the provisions of section 19(b) and rule 19b-1 to permit
the Fund (and any future funds advised by the Adviser that have a
similar distribution plan and make similar representations to those set
forth in the application) to distribute periodic capital gains
dividends (as defined in section 852(b)(3)(C) of the Code) as often as
monthly in any one taxable year in respect of its common shares and as
often as specified by or determined in accordance with the terms
thereof in respect of its preferred shares.\4\
---------------------------------------------------------------------------
\4\ Applicants state that a future fund that relies on the
requested order will satisfy each of the representations in the
application except that such representations will be made in respect
of actions by the board of directors of such future fund and will be
made at a future time.
---------------------------------------------------------------------------
Applicants' Conditions
Applicants agree that, with respect to the Fund and each future
fund seeking to rely on the order, the order will be subject to the
following conditions:
I. Compliance Review and Reporting. The fund's chief compliance
officer will: (a) report to the fund Board, no less frequently than
once every three months or at the next regularly scheduled quarterly
board meeting, whether (i) the fund and the fund adviser have complied
with the conditions to the requested order, and (ii) a Material
Compliance Matter, as defined in rule 38a-1(e)(2), has occurred with
respect to compliance with such conditions; and (b) review the adequacy
of the policies and procedures adopted by the fund no less frequently
than annually.
II. Disclosures to Fund Shareholders:
A. Each Notice to the holders of the fund's common shares, in
addition to the information required by section 19(a) and rule 19a-1:
1. Will provide, in a tabular or graphical format:
(a) The amount of the distribution, on a per share basis, together
with the amounts of such distribution amount, on a per share basis and
as a percentage of such distribution amount, from estimated: (A) Net
investment income; (B) net realized short-term capital gains; (C) net
realized long-term capital gains; and (D) return of capital or other
capital source;
(b) The fiscal year-to-date cumulative amount of distributions, on
a per share basis, together with the amounts of such cumulative amount,
on a per share basis and as a percentage of such cumulative amount of
distributions, from estimated: (A) Net investment income; (B) net
realized short-term capital gains; (C) net realized long-term capital
gains; and (D) return of capital or other capital source;
(c) The average annual total return in relation to the change in
NAV for the 5-year period (or, if the fund's history of operations is
less than five years, the time period commencing immediately following
the fund's first public offering) ending on the last day of the month
prior to the most recent distribution declaration date compared to the
current fiscal period's annualized distribution rate expressed as a
percentage of NAV as of the last day of
[[Page 46061]]
the month prior to the most recent distribution declaration date; and
(d) The cumulative total return in relation to the change in NAV
from the last completed fiscal year to the last day of the month prior
to the most recent distribution declaration date compared to the fiscal
year-to-date cumulative distribution rate expressed as a percentage of
NAV as of the last day of the month prior to the most recent
distribution declaration date.
Such disclosure shall be made in a type size at least as large and
as prominent as the estimate of the sources of the current
distribution; and
2. Will include the following disclosure:
(a) ``You should not draw any conclusions about the fund's
investment performance from the amount of this distribution or from the
terms of the fund's Plan'';
(b) ``The fund estimates that it has distributed more than its
income and net realized capital gains; therefore, a portion of your
distribution may be a return of capital. A return of capital may occur
for example, when some or all of the money that you invested in the
fund is paid back to you. A return of capital distribution does not
necessarily reflect the fund's investment performance and should not be
confused with `yield' or `income' ''; and
(c) ``The amounts and sources of distributions reported in this
Notice are only estimates and are not being provided for tax reporting
purposes. The actual amounts and sources of the amounts for [accounting
and] tax reporting purposes will depend upon the fund's investment
experience during the remainder of its fiscal year and may be subject
to changes based on tax regulations. The fund will send you a Form 1099
DIV for the calendar year that will tell you how to report these
distributions for federal income tax purposes.''
Such disclosure shall be made in a type size at least as large as
and as prominent as any other information in the Notice and placed on
the same page in close proximity to the amount and the sources of the
distribution.
B. On the inside front cover of each report to shareholders under
rule 30e-1 under the Act, the fund will:
1. Describe the terms of the Plan (including the fixed amount or
fixed percentage of the distributions and the frequency of the
distributions);
2. Include the disclosure required by condition II.A.2(a) above;
3. State, if applicable, that the Plan provides that the Board may
amend or terminate the Plan at any time without prior notice to fund
shareholders; and
4. Describe any reasonably foreseeable circumstances that might
cause the fund to terminate the Plan and any reasonably foreseeable
consequences of such termination.
C. Each report provided to shareholders under rule 30e-1 and each
prospectus filed with the Commission on Form N-2 under the Act, will
provide the fund's total return in relation to changes in NAV in the
financial highlights table and in any discussion about the fund's total
return.
III. Disclosure to Shareholders, Prospective Shareholders and Third
Parties:
A. The fund will include the information contained in the relevant
Notice, including the disclosure required by condition II.A.2 above, in
any written communication (other than a Form 1099) about the Plan or
distributions under the Plan by the fund, or agents that the fund has
authorized to make such communication on the fund's behalf, to any fund
shareholder, prospective shareholder or third-party information
provider;
B. The fund will issue, contemporaneously with the issuance of any
Notice, a press release containing the information in the Notice and
will file with the Commission the information contained in such Notice,
including the disclosure required by condition II.A.2 above, as an
exhibit to its next filed Form N-CSR; and
C. The fund will post prominently a statement on its (or its
adviser's) Web site containing the information in each Notice,
including the disclosure required by condition II.A.2 above, and will
maintain such information on such web site for at least 24 months.
IV. Delivery of 19(a) Notices to Beneficial Owners: If a broker,
dealer, bank or other person (``financial intermediary'') holds common
stock issued by the fund in nominee name, or otherwise, on behalf of a
beneficial owner, the fund: (a) Will request that the financial
intermediary, or its agent, forward the Notice to all beneficial owners
of the fund's shares held through such financial intermediary; (b) will
provide, in a timely manner, to the financial intermediary, or its
agent, enough copies of the Notice assembled in the form and at the
place that the financial intermediary, or its agent, reasonably
requests to facilitate the financial intermediary's sending of the
Notice to each beneficial owner of the fund's shares; and (c) upon the
request of any financial intermediary, or its agent, that receives
copies of the Notice, will pay the financial intermediary, or its
agent, the reasonable expenses of sending the Notice to such beneficial
owners.
V. Additional Board Determinations for Funds Whose Shares Trade at
a Premium: If:
A. The fund's common shares have traded on the exchange that they
primarily trade on at the time in question at an average premium to NAV
equal to or greater than 10%, as determined on the basis of the average
of the discount or premium to NAV of the fund's common shares as of the
close of each trading day over a 12-week rolling period (each such 12-
week rolling period ending on the last trading day of each week); and
B. The fund's annualized distribution rate for such 12-week rolling
period, expressed as a percentage of NAV as of the ending date of such
12-week rolling period is greater than the fund's average annual total
return in relation to the change in NAV over the 2-year period ending
on the last day of such 12-week rolling period; then:
1. At the earlier of the next regularly scheduled meeting or within
four months of the last day of such 12-week rolling period, the Board
including a majority of the Independent Directors:
(a) Will request and evaluate, and the fund's adviser will furnish,
such information as may be reasonably necessary to make an informed
determination of whether the Plan should be continued or continued
after amendment;
(b) Will determine whether continuation, or continuation after
amendment, of the Plan is consistent with the fund's investment
objective(s) and policies and in the best interests of the fund and its
shareholders, after considering the information in condition V.B.1.a
above; including, without limitation:
(1) Whether the Plan is accomplishing its purpose(s);
(2) The reasonably foreseeable effects of the Plan on the fund's
long-term total return in relation to the market price and NAV of the
fund's common shares; and
(3) The fund's current distribution rate, as described in condition
V.B above, compared with the fund's average annual taxable income or
total return over the 2-year period, as described in condition V.B, or
such longer period as the Board deems appropriate; and
(c) Based upon that determination, will approve or disapprove the
continuation, or continuation after amendment, of the Plan; and
2. The Board will record the information considered by it and the
basis for its approval or disapproval of
[[Page 46062]]
the continuation, or continuation after amendment, of the Plan in its
meeting minutes, which must be made and preserved for a period of not
less than six years from the date of such meeting, the first two years
in an easily accessible place.
VI. Public Offerings: The fund will not make a public offering of
the fund's common shares other than:
A. A rights offering below NAV to holders of the fund's common
stock;
B. An offering in connection with a dividend reinvestment plan,
merger, consolidation, acquisition, spin off or reorganization of the
fund; or
C. An offering other than an offering described in conditions VI.A
and VI.B above, unless, with respect to such other offering:
1. The fund's average annual distribution rate for the six months
ending on the last day of the month ended immediately prior to the most
recent distribution declaration date,\5\ expressed as a percentage of
NAV per share as of such date, is no more than 1 percentage point
greater than the fund's average annual total return for the 5-year
period ending on such date; \6\ and
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\5\ If the fund has been in operation fewer than two years, the
measured period will begin immediately following the fund's first
public offering.
\6\ If the fund has been in operation fewer than five years, the
measured period will begin immediately following the fund's first
public offering.
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2. The transmittal letter accompanying any registration statement
filed with the Commission in connection with such offering discloses
that the fund has received an order under section 19(b) to permit it to
make periodic distributions of long-term capital gains with respect to
its common stock as frequently as twelve times each year, and as
frequently as distributions are specified by or determined in
accordance with the terms of any outstanding preferred stock that such
fund may issue.
VII. Amendments to Rule 19b-1: The requested order will expire on
the effective date of any amendments to rule 19b-1 that provide relief
permitting certain closed-end investment companies to make periodic
distributions of long-term capital gains with respect to their
outstanding common stock as frequently as twelve times each year.
For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-18150 Filed 8-6-08; 8:45 am]
BILLING CODE 8010-01-P
