John Hancock Income Securities Trust, et al.; Notice of Application, 51863-51867 [E8-20614]
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Federal Register / Vol. 73, No. 173 / Friday, September 5, 2008 / Notices
Education and Advocacy,
Washington, DC 20549–0213.
Revision and Extension:
Rule 203A–2, SEC File No. 270–501, OMB
Control No. 3235–0559.
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Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (‘‘PRA’’) the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Rule 203A–2(f),1 which is entitled
‘‘Internet Investment Advisers,’’
exempts from the prohibition on
Commission registration an Internet
investment adviser who provides
investment advice to all of its clients
exclusively through computer softwarebased models or applications termed
under the rule as ‘‘interactive Web
sites.’’ These advisers generally would
not meet the statutory thresholds set out
in section 203A of the Advisers Act 2—
they do not manage $25 million or more
in assets and do not advise registered
investment companies. Eligibility under
rule 203A–2(f) is conditioned on an
adviser maintaining in an easily
accessible place, for a period of not less
than five years from the filing of Form
ADV relying on the rule,3 a record
demonstrating that the adviser’s
advisory business has been conducted
through an interactive Web site in
accordance with the rule.4
This record maintenance requirement
is a ‘‘collection of information’’ for PRA
purposes. The Commission believes that
approximately 39 advisers are registered
with the Commission under rule 203A–
2(f), which involves a recordkeeping
requirement manifesting in
approximately four burden hours per
year per adviser and results in an
estimated 156 total burden hours (4 ×
39) for all advisers.
This collection of information is
mandatory, as it is used by Commission
staff in its examination and oversight
program in order to determine
1 17 CFR 275.203A–2(f). Included in rule 203A–
2(f) is a limited exception to the interactive Web
site requirement which allows these advisers to
provide investment advice to no more than 14
clients through other means on an annual basis. 17
CFR 275.203A–2(f)(1)(i). The rule also precludes
advisers in a control relationship with the SECregistered Internet adviser from registering with the
Commission under the common control exemption
provided by rule 203A–2(c) (17 CFR 275.203A–
2(c)). 17 CFR 275.203A–2(f)(1)(iii).
2 15 U.S.C. 80b–3a(a).
3 The five-year record retention period is the same
recordkeeping retention period for all advisers
imposed under rule 204–2 of the Adviser Act. See
rule 204–2 (17 CFR 275.204–2).
4 17 CFR 275.203A–2(f)(1)(ii).
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continued Commission registration
eligibility of advisers registered under
this rule. Responses generally are kept
confidential pursuant to section 210(b)
of the Advisers Act.5 An agency may not
conduct or sponsor, and a person is not
required to respond to a collection of
information unless it displays a
currently valid control number.
Please direct general comments
regarding the above information to the
following persons: (i) Desk Officer for
the Securities and Exchange
Commission, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503
or e-mail to:
Alexander_T._Hunt@omb.eop.gov; and
(ii) Lewis W. Walker, Acting Director/
Chief Information Officer, Securities
and Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way,
Alexandria, VA 22312; or send an email to: PRA_Mailbox@sec.gov.
Comments must be submitted to OMB
within 30 days of this notice.
Dated: August 27, 2008.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–20618 Filed 9–4–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28372; 812–13357–01]
John Hancock Income Securities
Trust, et al.; Notice of Application
August 29, 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 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, and as
frequently as distributions are specified
by or in accordance with the terms of
any outstanding preferred stock that
such investment companies may issue.
APPLICANTS: John Hancock Income
Securities Trust, John Hancock Investors
Trust, John Hancock Patriot Premium
Dividend Fund II, John Hancock
Preferred Income Fund, John Hancock
SUMMARY OF APPLICATION:
5 15
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U.S.C. 80b–10(b).
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Preferred Income Fund II, John Hancock
Preferred Income Fund III, John
Hancock Tax-Advantaged Dividend
Income Fund, John Hancock TaxAdvantaged Global Shareholder Yield
Fund (the ‘‘Funds’’) and John Hancock
Advisers, LLC (the ‘‘Adviser’’).
Filing Dates: January 18, 2007, March
5, 2007, June 1, 2007, October 30, 2007
and July 18, 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 September 23, 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, 601 Congress Street, Boston,
MA 02210–2805.
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. Each Fund is a registered closedend management investment company
organized as a Massachusetts business
trust.1 The Funds are authorized to
issue common stock and preferred
stock. Applicants believe that the
investors in the common stock of 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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Funds may prefer an investment vehicle
that provides a steady cash flow by
making regular or monthly
distributions. In May or June 2008, each
Fund that had issued preferred stock
redeemed all outstanding preferred
stock. In the future, however, the Funds
may issue preferred stock again.
2. The Adviser is registered under the
Investment Advisers Act of 1940 and is
responsible for the overall management
of the Funds. The Adviser is a whollyowned subsidiary of John Hancock
Financial Services, Inc., a subsidiary of
Manulife Financial Corporation.
3. Applicants represent that prior to
relying on the requested order, the
Board of Trustees (the ‘‘Board’’) of each
Fund, including a majority of the
members of each of the Boards who are
not ‘‘interested persons’’ of each Fund
as defined in section 2(a)(19) of the Act
(the ‘‘Independent Trustees’’), shall
have requested and considered, and the
Adviser shall have provided,
information regarding the purpose and
terms of a proposed distribution policy,
the likely effects of such policy on the
respective 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 Independent Trustees of
each Fund shall also consider what
conflicts of interest the Adviser and the
affiliated persons of the Adviser and
each Fund might have with respect to
the adoption or implementation of such
policy. Applicants further state that
after considering such information the
Board, including the Independent
Trustees, of each Fund shall approve a
distribution policy and related plan
with respect to each Fund’s common
shares (a ‘‘Plan’’) and shall determine
that such policy and Plan are consistent
with the relevant Fund’s investment
objectives and in the best interests of
such Fund’s common stockholders.
4. Applicants state that the purpose of
each proposed Plan would be to permit
the relevant Fund to distribute to its
respective common stockholders, over
the course of each year, through
periodic distributions as nearly equal as
practicable and any required special
distributions, an amount closely
approximating the total taxable income
of the Fund during such year and, if so
determined by its Board, all or a portion
of the returns of capital paid by
portfolio companies to the Fund during
such year. Applicants represent that
each Fund would distribute to its
respective common stockholders a fixed
monthly percentage or amount under its
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proposed Plan, which percentage or
amount may be adjusted from time to
time. Applicants state that the minimum
annual distribution rate with respect to
a Fund’s common shares under each
Plan would be independent of the
Fund’s performance during any
particular period but would be expected
to correlate with the Fund’s
performance over time. Applicants
explain that each distribution on the
common stock would be at the stated
rate then in effect, except for
extraordinary distributions and
potential increases or decreases in the
final distribution periods in light of the
Fund’s performance for the entire
calendar year and to enable the Fund to
comply with the distribution
requirements of subchapter M of the
Internal Revenue Code of 1986 (the
‘‘Code’’) for the calendar year.
Applicants expect that over time the
NAV distribution rate with respect to a
Fund’s common shares will
approximately equal that Fund’s total
return on NAV.
5. Applicants represent that, prior to
the implementation of a Plan, the Board
of each Fund shall adopt policies and
procedures under rule 38a–1 under the
Act that are reasonably designed to
ensure that all notices sent to
stockholders with distributions under
the Plan (‘‘Notices’’) comply with
condition II below, and that all other
written communications by a Fund or
its agents regarding distributions under
the Plan include the disclosure required
by condition III below. Applicants state
that the Board of each Fund also will
adopt policies and procedures 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 each 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.
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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 the one of the
concerns underlying section 19(b) and
rule 19b–1 is that stockholders 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 annual
reports to stockholders and on its IRS
Form 1099–DIV, which is sent to each
common and preferred stockholder who
received distributions during the year.
4. Applicants further state that each
Fund will make the additional
disclosures required by the conditions
set forth below, and each of them will
adopt compliance policies and
procedures in accordance with rule
38a–1 to ensure that all required Notices
and disclosures are sent to stockholders.
Applicants argue that by providing the
information required by section 19(a)
and rule 19a–1, and by complying with
the procedures that will be adopted
under each Plan and the conditions
listed below, each Fund will ensure that
each 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 each Fund’s
compliance procedures and condition
III set forth below will ensure that
prospective stockholders and third
parties are provided with the same
information. Accordingly, applicants
assert that continuing to subject the
Funds to section 19(b) and rule 19b–1
would afford stockholders no extra
protection.
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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 stock 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, which do not continuously
distribute shares. According to
applicants, if the underlying concern
extends to secondary market purchases
of stock of closed-end funds that are
subject to a large upcoming capital gains
distribution, adoption of a Plan actually
helps minimize the concern by
avoiding, through periodic
distributions, any buildup of large endof-the-year distributions.
6. Applicants also note that common
stock of closed-end funds that invest
primarily in equity securities often
trades in the marketplace at a discount
to the fund’s NAV. Applicants believe
that this discount may be reduced for
closed-end funds that pay relatively
frequent dividends on their common
stock at a consistent rate, whether or not
those dividends contain an element of
long-term capital gain.
7. Applicants assert that the
application of rule 19b–1 to a Plan
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
gains 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
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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 the
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. 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.
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 fixed or
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
2 Returns of capital as used in the application
means return of capital for financial accounting
purposes and not for tax accounting purposes.
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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, 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 each Fund’s common
stock 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 stock and as often
as specified by or determined in
accordance with the terms thereof in
respect of its preferred stock.3
Applicants’ Conditions
Applicants agree that, with respect to
each 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 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 Stockholders
A. Each Notice to the holders of a
Fund’s common stock, 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 common share basis, together with
the amounts of such distribution
amount, on a per common 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;
3 Applicants state that a future fund that relies on
the requested order will satisfy each of the
representations in the appilcation 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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(b) the fiscal year-to-date cumulative
amount of distributions, on a per
common share basis, together with the
amounts of such cumulative amount, on
a per common 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
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
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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 stockholders 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 stockholders; 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
stockholders 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 Stockholders,
Prospective Stockholders and Third
Parties:
A. Each 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 common stockholder,
prospective common stockholder or
third-party information provider;
B. Each 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. Each 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.
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IV. Delivery of 19(a) Notices to
Beneficial Owners: If a broker, dealer,
bank or other person (‘‘financial
intermediary’’) holds common stock
issued by a 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 common stock; 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 Stock Trades at a
Premium: If:
A. a Fund’s common stock has traded
on the exchange that it primarily trades
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 stock as
of the close of each trading day over a
12-week rolling period (each such 12week 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 Trustees:
(a) Will request and evaluate, and the
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 stockholders, after
considering the information in
condition V.B.1.a above; including,
without limitation:
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Federal Register / Vol. 73, No. 173 / Friday, September 5, 2008 / Notices
(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 stock;
and
(3) the Fund’s current distribution
rate, as described in condition V.B
above, compared to the Fund’s average
annual 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
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 stock other than:
A. A rights offering below net asset
value 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,4
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; 5
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
4 If the fund has been in operation fewer than two
years, the measured period will be immediately
following the fund’s first public offering.
5 If the fund has been in operation fewer than five
years, the measured period will be immediately
following the fund’s first public offering.
VerDate Aug<31>2005
18:40 Sep 04, 2008
Jkt 214001
in accordance with the terms of any
outstanding preferred stock that such
Fund may issue.
VII. Amendments to Rule 19b–1: The
requested relief will expire on the
effective date of any amendment to rule
19b–1 that provides 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. E8–20614 Filed 9–4–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28370; 812–13381]
PIMCO Municipal Income Fund, et al.;
Notice of Application
August 29, 2008.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 6(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from section
19(b) of the Act and rule 19b–1 under
the Act.
AGENCY:
SUMMARY OF THE APPLICATION:
Applicants request an order to permit
certain registered closed-end
management investment companies to
make a greater number of capital gains
distributions to holders of shares of
their auction market preferred stock
than is permitted by section 19(b) of the
Act and rule 19b–1 under the Act to the
extent necessary to comply with
Internal Revenue Ruling 89–81, 1989–1
C.B. 226 (‘‘Revenue Ruling 89–81’’)
under the Internal Revenue Code of
1986 (the ‘‘Code’’).
APPLICANTS: PIMCO Municipal Income
Fund, PIMCO Municipal Income Fund
II, PIMCO Municipal Income Fund III,
PIMCO California Municipal Income
Fund, PIMCO California Municipal
Income Fund II, PIMCO California
Municipal Income Fund III, PIMCO
New York Municipal Income Fund,
PIMCO New York Municipal Income
Fund II, PIMCO New York Municipal
Income Fund III, PIMCO Municipal
Advantage Fund Inc., PIMCO Corporate
Income Fund, PIMCO Corporate
Opportunity Fund, PIMCO High Income
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
51867
Fund, Nicholas-Applegate Convertible &
Income Fund, Nicholas-Applegate
Convertible & Income Fund II, PIMCO
Floating Rate Income Fund, PIMCO
Floating Rate Strategy Fund
(collectively, the ‘‘Current Funds’’), and
Allianz Global Investors Fund
Management LLC (‘‘AGIFM’’).
FILING DATES: The application was filed
on May 2, 2007 and amended on
January 10, 2008 and August 29, 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 the
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 September 26, 2008 and
should be accompanied by proof of
service on the applicants in the form of
an affidavit or, for lawyers, a certificate
of service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090; Applicants, c/o AGIFM, 49th
Floor, 1345 Avenue of the Americas,
New York, NY 10105.
FOR FURTHER INFORMATION CONTACT:
Laura J. Riegel, Senior Counsel, at (202)
551–6873 (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
Commission’s Public Reference Room,
100 F Street, NE., Washington, DC
20549–1520 (telephone (202) 551–5850).
Applicants’ Representations
1. Each of the Current Funds is
organized as a Massachusetts business
trust or Maryland corporation. Each of
the Current Funds is registered under
the Act as a closed-end management
investment company. AGIFM, an
investment adviser registered under the
Investment Advisers Act of 1940, serves
as the investment adviser to each
Current Fund. Each Current Fund has
outstanding one class of common stock
that trades on the New York Stock
Exchange. Each Current Fund also has
outstanding one or more series of
preferred stock that pays out
distributions at a rate generally set at
periodic auctions (‘‘Auction Market
E:\FR\FM\05SEN1.SGM
05SEN1
]]>Agencies
[Federal Register Volume 73, Number 173 (Friday, September 5, 2008)]
[Notices]
[Pages 51863-51867]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-20614]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28372; 812-13357-01]
John Hancock Income Securities Trust, et al.; Notice of
Application
August 29, 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 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, and as frequently as
distributions are specified by or in accordance with the terms of any
outstanding preferred stock that such investment companies may issue.
APPLICANTS: John Hancock Income Securities Trust, John Hancock
Investors Trust, John Hancock Patriot Premium Dividend Fund II, John
Hancock Preferred Income Fund, John Hancock Preferred Income Fund II,
John Hancock Preferred Income Fund III, John Hancock Tax-Advantaged
Dividend Income Fund, John Hancock Tax-Advantaged Global Shareholder
Yield Fund (the ``Funds'') and John Hancock Advisers, LLC (the
``Adviser'').
Filing Dates: January 18, 2007, March 5, 2007, June 1, 2007,
October 30, 2007 and July 18, 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 September 23, 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, 601 Congress Street,
Boston, MA 02210-2805.
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. Each Fund is a registered closed-end management investment
company organized as a Massachusetts business trust.\1\ The Funds are
authorized to issue common stock and preferred stock. Applicants
believe that the investors in the common stock of the
[[Page 51864]]
Funds may prefer an investment vehicle that provides a steady cash flow
by making regular or monthly distributions. In May or June 2008, each
Fund that had issued preferred stock redeemed all outstanding preferred
stock. In the future, however, the Funds may issue preferred stock
again.
---------------------------------------------------------------------------
\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 Funds. The
Adviser is a wholly-owned subsidiary of John Hancock Financial
Services, Inc., a subsidiary of Manulife Financial Corporation.
3. Applicants represent that prior to relying on the requested
order, the Board of Trustees (the ``Board'') of each Fund, including a
majority of the members of each of the Boards who are not ``interested
persons'' of each Fund as defined in section 2(a)(19) of the Act (the
``Independent Trustees''), shall have requested and considered, and the
Adviser shall have provided, information regarding the purpose and
terms of a proposed distribution policy, the likely effects of such
policy on the respective 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 Independent Trustees of each Fund shall also
consider what conflicts of interest the Adviser and the affiliated
persons of the Adviser and each Fund might have with respect to the
adoption or implementation of such policy. Applicants further state
that after considering such information the Board, including the
Independent Trustees, of each Fund shall approve a distribution policy
and related plan with respect to each Fund's common shares (a ``Plan'')
and shall determine that such policy and Plan are consistent with the
relevant Fund's investment objectives and in the best interests of such
Fund's common stockholders.
4. Applicants state that the purpose of each proposed Plan would be
to permit the relevant Fund to distribute to its respective common
stockholders, over the course of each year, through periodic
distributions as nearly equal as practicable and any required special
distributions, an amount closely approximating the total taxable income
of the Fund during such year and, if so determined by its Board, all or
a portion of the returns of capital paid by portfolio companies to the
Fund during such year. Applicants represent that each Fund would
distribute to its respective common stockholders a fixed monthly
percentage or amount under its proposed Plan, which percentage or
amount may be adjusted from time to time. Applicants state that the
minimum annual distribution rate with respect to a Fund's common shares
under each Plan would be independent of the Fund's performance during
any particular period but would be expected to correlate with the
Fund's performance over time. Applicants explain that each distribution
on the common stock would be at the stated rate then in effect, except
for extraordinary distributions and potential increases or decreases in
the final distribution periods in light of the Fund's performance for
the entire calendar year and to enable the Fund to comply with the
distribution requirements of subchapter M of the Internal Revenue Code
of 1986 (the ``Code'') for the calendar year. Applicants expect that
over time the NAV distribution rate with respect to a Fund's common
shares will approximately equal that Fund's total return on NAV.
5. Applicants represent that, prior to the implementation of a
Plan, the Board of each Fund shall adopt policies and procedures under
rule 38a-1 under the Act that are reasonably designed to ensure that
all notices sent to stockholders with distributions under the Plan
(``Notices'') comply with condition II below, and that all other
written communications by a Fund or its agents regarding distributions
under the Plan include the disclosure required by condition III below.
Applicants state that the Board of each Fund also will adopt policies
and procedures 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 each 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 the one of the concerns underlying section
19(b) and rule 19b-1 is that stockholders 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 annual reports to stockholders
and on its IRS Form 1099-DIV, which is sent to each common and
preferred stockholder who received distributions during the year.
4. Applicants further state that each Fund will make the additional
disclosures required by the conditions set forth below, and each of
them will adopt compliance policies and procedures in accordance with
rule 38a-1 to ensure that all required Notices and disclosures are sent
to stockholders. Applicants argue that by providing the information
required by section 19(a) and rule 19a-1, and by complying with the
procedures that will be adopted under each Plan and the conditions
listed below, each Fund will ensure that each 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 each
Fund's compliance procedures and condition III set forth below will
ensure that prospective stockholders and third parties are provided
with the same information. Accordingly, applicants assert that
continuing to subject the Funds to section 19(b) and rule 19b-1 would
afford stockholders no extra protection.
[[Page 51865]]
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 stock 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,
which do not continuously distribute shares. According to applicants,
if the underlying concern extends to secondary market purchases of
stock of closed-end funds that are subject to a large upcoming capital
gains distribution, adoption of a 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 trades in the marketplace
at a discount to the fund's NAV. Applicants believe that this discount
may be reduced for closed-end funds that pay relatively frequent
dividends on their common stock at a consistent rate, whether or not
those dividends contain an element of long-term capital gain.
7. Applicants assert that the application of rule 19b-1 to a Plan
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 gains 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 the 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. 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.
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 fixed or 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, 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
each Fund's common stock 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 stock and as often as
specified by or determined in accordance with the terms thereof in
respect of its preferred stock.\3\
---------------------------------------------------------------------------
\3\ Applicants state that a future fund that relies on the
requested order will satisfy each of the representations in the
appilcation 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 each 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 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 Stockholders
A. Each Notice to the holders of a Fund's common stock, 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 common share basis,
together with the amounts of such distribution amount, on a per common
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;
[[Page 51866]]
(b) the fiscal year-to-date cumulative amount of distributions, on
a per common share basis, together with the amounts of such cumulative
amount, on a per common 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 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 stockholders 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
stockholders; 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 stockholders 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 Stockholders, Prospective Stockholders and Third
Parties:
A. Each 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
common stockholder, prospective common stockholder or third-party
information provider;
B. Each 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. Each 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 a 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 common stock; 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 Stock Trades at
a Premium: If:
A. a Fund's common stock has traded on the exchange that it
primarily trades 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 stock 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 Trustees:
(a) Will request and evaluate, and the 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
stockholders, after considering the information in condition V.B.1.a
above; including, without limitation:
[[Page 51867]]
(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 stock; and
(3) the Fund's current distribution rate, as described in condition
V.B above, compared to the Fund's average annual 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 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 stock other than:
A. A rights offering below net asset value 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,\4\ 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; \5\ and
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\4\ If the fund has been in operation fewer than two years, the
measured period will be immediately following the fund's first
public offering.
\5\ If the fund has been in operation fewer than five years, the
measured period will be 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 in accordance with the terms
of any outstanding preferred stock that such Fund may issue.
VII. Amendments to Rule 19b-1: The requested relief will expire on
the effective date of any amendment to rule 19b-1 that provides 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. E8-20614 Filed 9-4-08; 8:45 am]
BILLING CODE 8010-01-P
