The Zweig Total Return Fund, Inc., et al.; Notice of Application, 63523-63527 [E8-25361]
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Federal Register / Vol. 73, No. 207 / Friday, October 24, 2008 / Notices
jlentini on PROD1PC65 with NOTICES
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
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.
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 five-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 by or determined in
accordance with the terms of any
outstanding preferred stock that such
fund may issue.
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
October 20, 2008.
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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. E8–25402 Filed 10–23–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28441, 812–13497]
The Zweig Total Return Fund, Inc., et
al.; Notice of Application
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
AGENCY:
4 If the fund has been in operation fewer than two
years, the measured period will begin immediately
following the fund’s first public offering.
5 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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63523
from section 19(b) of the Act and rule
19b–1 under the Act.
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 company may issue.
APPLICANTS: The Zweig Total Return
Fund, Inc. (‘‘ZTR’’), The Zweig Fund,
Inc. (‘‘ZF’’) and Phoenix/Zweig Advisers
LLC (the ‘‘Adviser’’).
FILING DATES: February 14, 2008 and
July 30, 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 November 14, 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, c/o George R. Aylward,
President, Phoenix/Zweig Advisors
LLC, 900 Third Avenue, New York, NY
10022.
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).
SUMMARY OF APPLICATION:
Applicants’ Representations
1. Each of ZTR and ZF is a diversified
closed-end management investment
company registered under the Act and
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organized as a Maryland corporation.1
The common stock issued by ZTR and
ZF are listed on the New York Stock
Exchange. The investment objective of
ZTR is total return consisting of capital
appreciation and current income. The
investment objective of ZF is capital
appreciation primarily through
investment in equity securities.
2. The Adviser is a Delaware
corporation and is registered as an
investment adviser under the
Investment Advisers Act of 1940. The
Adviser currently has no investment
advisory clients other than ZTR and ZF.
3. Applicants represent that ZTR and
ZF have each adopted fixed distribution
plans to make periodic, level
distributions equal to 10% per annum of
their common stock’s net asset value
(‘‘NAV’’). ZTR currently makes
quarterly distributions and ZF currently
makes monthly distributions on their
respective common stock. Applicants
represent that currently the capital gains
distributions are funded by capital loss
carryovers available to each of ZTR and
ZF but state that such carryovers may
not be available in the future.
4. Applicants represent that on
December 12, 2007, the Boards of
Directors of ZTR and ZF (each, a
‘‘Board’’), including a majority of the
directors who are not ‘‘interested
persons,’’ as defined in section 2(a)(19)
of the Act (the ‘‘Independent
Directors’’), of ZTR and ZF each
approved and adopted their respective
distribution policy and plan (‘‘Plan’’).
Applicants represent that the purpose of
each Plan is to continue to make regular
distributions that are not dependent on
the timing or amount of investment
income earned or capital gains realized
by ZTR or ZF. Applicants further
represent that the Board of ZTR and ZF
each:
(a) Determined that it is in the best
interests of the respective fund and its
stockholders to adopt the Plan;
(b) Requested and evaluated, and the
Adviser furnished, such information as
may be reasonably necessary to make an
informed determination of whether each
Plan should be adopted and
implemented;
(c) Determined that adoption and
implementation of the Plan are
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 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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consistent with the respective fund’s
investment objective(s) and policies and
in the best interests of the respective
fund and its stockholders, after
considering information provided
pursuant to representation 4(b) above,
including, without limitation, with
respect to each Plan: (i) The purpose(s)
of the Plan as stated in this application;
(ii) any potential or actual conflict of
interest that the Adviser, any affiliated
person of the Adviser, or any other
affiliated person of the respective fund
may have relating to the adoption or
implementation of the Plan; (iii)
whether the rate of distribution under
the Plan will exceed the respective
fund’s expected total return (in relation
to the NAV); and (iv) any reasonably
foreseeable material effect of the Plan on
the respective fund’s long-term total
return (in relation to market price and
the NAV of its common stock); and
(d) Approved the respective fund’s
adoption of compliance policies and
procedures in accordance with rule
38a–1 under the Act to be effective upon
the issuance of the requested Order
(‘‘Compliance Policies and Procedures’’)
that:
(i) Are reasonably designed to ensure
that all notices required to be sent to the
respective fund’s common stockholders
pursuant to section 19(a) of the Act, rule
19a–1 thereunder and condition IV
below (each, a ‘‘Notice’’) include the
disclosure required by rule 19a–1 and
by condition II.A below, and that all
other communications by the fund or its
agents, described in condition III.A
below, about the distributions under its
Plan include the disclosure required by
condition III.A below; and
(ii) Require the respective fund to
keep records that demonstrate its
compliance with all of the conditions of
the Order and that are necessary for the
fund to form the basis for, or
demonstrate the calculation of, the
amounts disclosed in its Notices.
5. Applicants represent that at the
December 12, 2007 meeting, the Boards
of each of ZTR and ZF, including a
majority of its Independent Directors,
also adopted policies and procedures
under rule 38a–1 under the Act that are
reasonably designed to ensure that all
Notices comply with Condition II
below, and that all other written
communications by the funds or their
agents regarding distributions under the
Plans include the disclosure required by
Condition III below. Applicants state
that the Boards of ZTR and ZF also
adopted policies and procedures at that
meeting that require the respective fund
to keep records that demonstrate each
respective fund’s compliance with all of
the conditions of the requested Order
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and that are necessary for each
respective fund to form the basis for, or
demonstrate the calculation of, the
amounts disclosed in its Notices.
6. Applicants represent that the
Boards of ZTR and ZF have recorded the
basis for their approval of the Plans,
including their consideration of the
factors listed in representation 4(c)
above, in its meeting minutes, which
will 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, or such
longer period as may otherwise be
required by law.
Applicants’ Legal Analysis
1. Section 19(b) provides that
registered investment companies may
not, in contravention of such rules,
regulations, or orders as the
Commission may prescribe, distribute
long-term capital gains more often than
once every twelve months. Rule 19b–1
permits a registered investment
company with respect to any one
taxable year, to make one capital gain
dividend, as defined in section
852(b)(3)(C) of the Internal Revenue
Code of 1986 (the ‘‘Code’’), plus a
supplemental distribution made
pursuant to section 855 of the Code not
exceeding 10% of the total amount
distributed for the year, plus one
additional long-term capital gains
distribution 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 assert that section 19(b)
and rule 19b–1 may prevent the
operation of a Plan and effectively force
fixed regular periodic distributions to be
funded with returns of capital (to the
extent net investment income and
realized short-term capital gains are
insufficient), even though net realized
long-term capital gains otherwise would
be available. Applicants state that the
long-term capital gains in excess of the
fixed regular periodic distributions
permitted by the rule then must either
be (1) added as an ‘‘extra’’ on one of the
permitted capital gains distributions,
thus exceeding the total annual amount
called for by the Plan, or (2) retained by
the affected fund, with such fund
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paying taxes on the amount retained.
Applicants believe that their
stockholders should benefit from the
continued investment of assets that
might otherwise be distributed as a
return of capital in order to fund the
regular periodic distributions under the
Plan.
4. Applicants believe that the
stockholders in each of the funds
include income-sensitive investors who
desire steady distributions. Applicants
believe that funds with Plans may
attract new investors and support the
market price of the fund’s common
stock. In addition, Applicants believe
that, without a Plan, there may be an
increase in the amount of any discount
from NAV at which a fund’s common
stock may trade.
5. Applicants state that one of the
concerns leading to the enactment of
section 19(b) and adoption of rule 19b–
1 was that stockholders might be unable
to distinguish between frequent
distributions of capital gain and
dividends from investment income.
Applicants state that, pursuant to its
respective Plan, each fund will provide
stockholders with adequate disclosure
to clearly inform stockholders of the
nature of each distribution they receive.
6. Applicants assert that one of the
goals of rule 19b–1 was to reduce the
possible inappropriate pressure on
portfolio managers to realize capital
gains on a frequent basis and/or at times
when investment objective
considerations would militate against
doing so. However, when applied to
Plans like those of the ZTR and ZF,
applicants assert that rule 19b–1
actually may create an inappropriate
influence on portfolio management
decisions by imposing pressure to limit
the realization of long-term capital gains
to an annual total that is a fraction of a
fund’s net investment income.
Applicants assert that rule 19b–1 also
may create pressure to ensure that
realized capital gains are short-term
rather than long-term because the
distribution of short-term capital gains
is not subject to the limitations of the
rule. Applicants seek an Order to
minimize these anomalous effects by
enabling the funds to realize long-term
capital gains as investment
considerations warrant and without fear
of violating rule 19b–1.
7. Applicants assert that another
concern that led to the enactment of
section 19(b) of the Act and the
adoption of rule 19b–1 was that frequent
capital gain distributions could facilitate
improper fund sales practices,
including, in particular, the practice of
urging an investor to purchase shares of
a fund on the basis of an upcoming
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capital gains dividend (‘‘selling the
dividend’’), where the dividend results
in an immediate corresponding
reduction in net asset value and is in
effect a taxable return of the investor’s
capital. Applicants submit that this
concern does not apply to closed-end
investment companies, such as ZTR and
ZF, which do not continuously
distribute shares.
Applicants state that, in order to
counteract any potential ‘‘selling of the
dividend’’ issue in connection with a
public offering of the funds’ common
stock, any such public offering will be
made in accordance with Condition VI
below. Applicants state that, in the case
of a rights offering, the offering will be
made in accordance with Condition
VI.A below. Applicants argue that,
under those circumstances, the abuse of
selling the dividend would not occur.
8. Applicants argue that there is no
public policy reason why investors,
with full disclosure of the nature of
distributions, including disclosure that
such distributions may be, or include,
returns of capital, should not have the
opportunity to invest in a closed-end
fund with a Plan independent of the
fund’s net investment income and net
capital gain, with the fund returning
capital only to the extent that net
investment income and net capital gain
for the year plus previously
undistributed related earnings and
profit from prior years are insufficient to
meet the annual fixed distribution
requirement.
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 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 Stockholders
A. Each Notice to the holders of the
fund’s common stock, in addition to the
information required by section 19(a)
and rule 19a–1:
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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;
(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
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prospective common stockholder, 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 the fund 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.
III. Disclosure to Stockholders,
Prospective Stockholders and Third
Parties
jlentini on PROD1PC65 with NOTICES
should not be confused with ‘yield’ or
‘income’;’’ 2 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.
If:
A. The fund’s common stock has
traded on the exchange that it 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
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
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 common stockholder,
2 The disclosure in this Condition II.A.2(b) will be
included only if the current distribution or the
fiscal year-to-date cumulative distributions are
estimated to include a return of capital.
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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 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
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 Common Stock Trades at
a Premium
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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
material 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.
(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
E:\FR\FM\24OCN1.SGM
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Federal Register / Vol. 73, No. 207 / Friday, October 24, 2008 / Notices
ending on the last day of the month
ended immediately prior to the most
recent distribution declaration date,3
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; 4
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 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 shares 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. E8–25361 Filed 10–23–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release Nos. 33–8980; 34–58813; File No.
4–573]
Roundtable on Mark-to-Market
Accounting
Securities and Exchange
Commission.
ACTION: Notice of roundtable discussion;
request for comment.
AGENCY:
jlentini on PROD1PC65 with NOTICES
SUMMARY: On October 29, 2008 from 9
a.m. to 1 p.m., the Securities and
Exchange Commission will hold a
roundtable to discuss mark-to-market
accounting and the recent period of
market turmoil. The roundtable will be
organized as two panels. The panels
will include investors, issuers, auditors,
3 If the fund has been in operation fewer than two
years, the measured period will begin immediately
following the fund’s first public offering.
4 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
16:48 Oct 23, 2008
Jkt 217001
63527
and other parties with experience in
mark-to-market accounting.
Additionally, representatives from the
Financial Accounting Standards Board,
the International Accounting Standards
Board and the Public Company
Accounting Oversight Board will be
present as observers.
The roundtable will be held in the
auditorium of SEC headquarters at 100
F Street, NE., Washington, DC. The
roundtable will be open to the public
with seating on a first-come, first-served
basis. The roundtable discussions also
will be available via Webcast on the
SEC’s Web site at https://www.sec.gov.
The roundtable agenda and other
materials related to the roundtable,
including a list of participants and
moderators, will be accessible at https://
www.sec.gov/spotlight/fairvalue.htm.
The Commission welcomes feedback
regarding any of the topics to be
addressed at the roundtable.
DATES: Comments should be received on
or before October 28, 2008.
ADDRESSES: Comments may be
submitted by any of the following
methods:
(202) 551–5300, Office of the Chief
Accountant, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–6561.
SUPPLEMENTARY INFORMATION: The
Commission welcomes feedback
regarding any of the topics to be
addressed at the roundtable. The panel
discussions will focus on:
• The effects of mark-to-market
accounting on financial reporting by
financial institutions.
• Potential market behavior effects
from mark-to-market accounting.
• The usefulness of mark-to-market
accounting to investors and regulators.
• Aspects of the current accounting
standards that can be improved.
Electronic Comments
• Use the Commission’s Internet
submission form (https://www.sec.gov/
rules/other.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number 4–573 on the subject line.
[Release No. 34–58814; File No. SR–Amex–
2008–53]
Paper Comments
• Send paper comments in triplicate
to Florence Harmon, Acting Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File No.
4–573. This file number should be
included on the subject line if e-mail is
used. To help us process and review
your comments more efficiently, please
use only one method. The Commission
will post all comments on the
Commission’s Internet Web site (https://
www.sec.gov/rules/other.shtml).
Comments also will be available for
public inspection and copying in the
Commission’s Public Reference Room,
100 F Street, NE., Washington, DC
20549, on official business days
between the hours of 10 a.m. and 3 p.m.
All comments received will be posted
without change; we do not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
FOR FURTHER INFORMATION CONTACT: Bert
Fox or Liza McAndrew Moberg,
Professional Accounting Fellows, at
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
By the Commission.
Dated: October 20, 2008.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E8–25387 Filed 10–23–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations;
American Stock Exchange LLC; Order
Granting Approval of Proposed Rule
Change Related to Amendments to
Rule 925 (Confirmations) and Rule 921
(Opening of Accounts)
October 20, 2008.
On June 26, 2008, the American Stock
Exchange LLC (the ‘‘Amex’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) a proposed rule change
pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder.2 Notice of the proposal was
published for comment in the Federal
Register on September 12, 2008.3 The
Commission received no comments on
the proposed rule change. This order
approves the proposed rule change.
I. Description of the Proposed Rule
Change
The Exchange proposed to amend
Amex Rule 925 to clarify that written
confirmations relating to options
transactions are not required to specify
the options exchange or exchanges on
which such options contracts were
executed. The Exchange further
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 58466
(Sept. 5, 2008) 73 FR 53057 (Sept. 12, 2008).
2 17
E:\FR\FM\24OCN1.SGM
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]]>Agencies
[Federal Register Volume 73, Number 207 (Friday, October 24, 2008)]
[Notices]
[Pages 63523-63527]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-25361]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28441, 812-13497]
The Zweig Total Return Fund, Inc., et al.; Notice of Application
October 20, 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 company may issue.
Applicants: The Zweig Total Return Fund, Inc. (``ZTR''), The Zweig
Fund, Inc. (``ZF'') and Phoenix/Zweig Advisers LLC (the ``Adviser'').
Filing Dates: February 14, 2008 and July 30, 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 November 14, 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, c/o George R. Aylward,
President, Phoenix/Zweig Advisors LLC, 900 Third Avenue, New York, NY
10022.
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 of ZTR and ZF is a diversified closed-end management
investment company registered under the Act and
[[Page 63524]]
organized as a Maryland corporation.\1\ The common stock issued by ZTR
and ZF are listed on the New York Stock Exchange. The investment
objective of ZTR is total return consisting of capital appreciation and
current income. The investment objective of ZF is capital appreciation
primarily through investment in equity securities.
---------------------------------------------------------------------------
\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 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 a Delaware corporation and is registered as an
investment adviser under the Investment Advisers Act of 1940. The
Adviser currently has no investment advisory clients other than ZTR and
ZF.
3. Applicants represent that ZTR and ZF have each adopted fixed
distribution plans to make periodic, level distributions equal to 10%
per annum of their common stock's net asset value (``NAV''). ZTR
currently makes quarterly distributions and ZF currently makes monthly
distributions on their respective common stock. Applicants represent
that currently the capital gains distributions are funded by capital
loss carryovers available to each of ZTR and ZF but state that such
carryovers may not be available in the future.
4. Applicants represent that on December 12, 2007, the Boards of
Directors of ZTR and ZF (each, a ``Board''), including a majority of
the directors who are not ``interested persons,'' as defined in section
2(a)(19) of the Act (the ``Independent Directors''), of ZTR and ZF each
approved and adopted their respective distribution policy and plan
(``Plan''). Applicants represent that the purpose of each Plan is to
continue to make regular distributions that are not dependent on the
timing or amount of investment income earned or capital gains realized
by ZTR or ZF. Applicants further represent that the Board of ZTR and ZF
each:
(a) Determined that it is in the best interests of the respective
fund and its stockholders to adopt the Plan;
(b) Requested and evaluated, and the Adviser furnished, such
information as may be reasonably necessary to make an informed
determination of whether each Plan should be adopted and implemented;
(c) Determined that adoption and implementation of the Plan are
consistent with the respective fund's investment objective(s) and
policies and in the best interests of the respective fund and its
stockholders, after considering information provided pursuant to
representation 4(b) above, including, without limitation, with respect
to each Plan: (i) The purpose(s) of the Plan as stated in this
application; (ii) any potential or actual conflict of interest that the
Adviser, any affiliated person of the Adviser, or any other affiliated
person of the respective fund may have relating to the adoption or
implementation of the Plan; (iii) whether the rate of distribution
under the Plan will exceed the respective fund's expected total return
(in relation to the NAV); and (iv) any reasonably foreseeable material
effect of the Plan on the respective fund's long-term total return (in
relation to market price and the NAV of its common stock); and
(d) Approved the respective fund's adoption of compliance policies
and procedures in accordance with rule 38a-1 under the Act to be
effective upon the issuance of the requested Order (``Compliance
Policies and Procedures'') that:
(i) Are reasonably designed to ensure that all notices required to
be sent to the respective fund's common stockholders pursuant to
section 19(a) of the Act, rule 19a-1 thereunder and condition IV below
(each, a ``Notice'') include the disclosure required by rule 19a-1 and
by condition II.A below, and that all other communications by the fund
or its agents, described in condition III.A below, about the
distributions under its Plan include the disclosure required by
condition III.A below; and
(ii) Require the respective fund to keep records that demonstrate
its compliance with all of the conditions of the Order and that are
necessary for the fund to form the basis for, or demonstrate the
calculation of, the amounts disclosed in its Notices.
5. Applicants represent that at the December 12, 2007 meeting, the
Boards of each of ZTR and ZF, including a majority of its Independent
Directors, also adopted policies and procedures under rule 38a-1 under
the Act that are reasonably designed to ensure that all Notices comply
with Condition II below, and that all other written communications by
the funds or their agents regarding distributions under the Plans
include the disclosure required by Condition III below. Applicants
state that the Boards of ZTR and ZF also adopted policies and
procedures at that meeting that require the respective fund to keep
records that demonstrate each respective fund's compliance with all of
the conditions of the requested Order and that are necessary for each
respective fund to form the basis for, or demonstrate the calculation
of, the amounts disclosed in its Notices.
6. Applicants represent that the Boards of ZTR and ZF have recorded
the basis for their approval of the Plans, including their
consideration of the factors listed in representation 4(c) above, in
its meeting minutes, which will 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, or such longer period as may
otherwise be required by law.
Applicants' Legal Analysis
1. Section 19(b) provides that registered investment companies may
not, in contravention of such rules, regulations, or orders as the
Commission may prescribe, distribute long-term capital gains more often
than once every twelve months. Rule 19b-1 permits a registered
investment company with respect to any one taxable year, to make one
capital gain dividend, as defined in section 852(b)(3)(C) of the
Internal Revenue Code of 1986 (the ``Code''), plus a supplemental
distribution made pursuant to section 855 of the Code not exceeding 10%
of the total amount distributed for the year, plus one additional long-
term capital gains distribution 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 assert that section 19(b) and rule 19b-1 may prevent
the operation of a Plan and effectively force fixed regular periodic
distributions to be funded with returns of capital (to the extent net
investment income and realized short-term capital gains are
insufficient), even though net realized long-term capital gains
otherwise would be available. Applicants state that the long-term
capital gains in excess of the fixed regular periodic distributions
permitted by the rule then must either be (1) added as an ``extra'' on
one of the permitted capital gains distributions, thus exceeding the
total annual amount called for by the Plan, or (2) retained by the
affected fund, with such fund
[[Page 63525]]
paying taxes on the amount retained. Applicants believe that their
stockholders should benefit from the continued investment of assets
that might otherwise be distributed as a return of capital in order to
fund the regular periodic distributions under the Plan.
4. Applicants believe that the stockholders in each of the funds
include income-sensitive investors who desire steady distributions.
Applicants believe that funds with Plans may attract new investors and
support the market price of the fund's common stock. In addition,
Applicants believe that, without a Plan, there may be an increase in
the amount of any discount from NAV at which a fund's common stock may
trade.
5. Applicants state that one of the concerns leading to the
enactment of section 19(b) and adoption of rule 19b-1 was that
stockholders might be unable to distinguish between frequent
distributions of capital gain and dividends from investment income.
Applicants state that, pursuant to its respective Plan, each fund will
provide stockholders with adequate disclosure to clearly inform
stockholders of the nature of each distribution they receive.
6. Applicants assert that one of the goals of rule 19b-1 was to
reduce the possible inappropriate pressure on portfolio managers to
realize capital gains on a frequent basis and/or at times when
investment objective considerations would militate against doing so.
However, when applied to Plans like those of the ZTR and ZF, applicants
assert that rule 19b-1 actually may create an inappropriate influence
on portfolio management decisions by imposing pressure to limit the
realization of long-term capital gains to an annual total that is a
fraction of a fund's net investment income. Applicants assert that rule
19b-1 also may create pressure to ensure that realized capital gains
are short-term rather than long-term because the distribution of short-
term capital gains is not subject to the limitations of the rule.
Applicants seek an Order to minimize these anomalous effects by
enabling the funds to realize long-term capital gains as investment
considerations warrant and without fear of violating rule 19b-1.
7. Applicants assert that another concern that led to the enactment
of section 19(b) of the Act and the adoption of rule 19b-1 was that
frequent capital gain distributions could facilitate improper fund
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
results in an immediate corresponding reduction in net asset value and
is in effect a taxable return of the investor's capital. Applicants
submit that this concern does not apply to closed-end investment
companies, such as ZTR and ZF, which do not continuously distribute
shares.
Applicants state that, in order to counteract any potential
``selling of the dividend'' issue in connection with a public offering
of the funds' common stock, any such public offering will be made in
accordance with Condition VI below. Applicants state that, in the case
of a rights offering, the offering will be made in accordance with
Condition VI.A below. Applicants argue that, under those circumstances,
the abuse of selling the dividend would not occur.
8. Applicants argue that there is no public policy reason why
investors, with full disclosure of the nature of distributions,
including disclosure that such distributions may be, or include,
returns of capital, should not have the opportunity to invest in a
closed-end fund with a Plan independent of the fund's net investment
income and net capital gain, with the fund returning capital only to
the extent that net investment income and net capital gain for the year
plus previously undistributed related earnings and profit from prior
years are insufficient to meet the annual fixed distribution
requirement.
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 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 Stockholders
A. Each Notice to the holders of the 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;
(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
[[Page 63526]]
should not be confused with `yield' or `income';'' \2\ and
---------------------------------------------------------------------------
\2\ The disclosure in this Condition II.A.2(b) will be included
only if the current distribution or the fiscal year-to-date
cumulative distributions are estimated to include a return of
capital.
---------------------------------------------------------------------------
(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. 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
common stockholder, prospective common stockholder, 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 the fund
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 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 Common Stock Trades
at a Premium
If:
A. The fund's common stock has traded on the exchange that it
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 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 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 material 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.
(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
[[Page 63527]]
ending on the last day of the month ended immediately prior to the most
recent distribution declaration date,\3\ 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; \4\ and
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\3\ If the fund has been in operation fewer than two years, the
measured period will begin immediately following the fund's first
public offering.
\4\ 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 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 shares 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. E8-25361 Filed 10-23-08; 8:45 am]
BILLING CODE 8011-01-P
