SunAmerica Focused Alpha Growth Fund, Inc., et al.; Notice of Application, 1730-1734 [E9-416]
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Federal Register / Vol. 74, No. 8 / Tuesday, January 13, 2009 / Notices
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
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 total return over the 2year 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.
consolidation, acquisition, spin-off or
reorganization of the fund; or
C. An offering other than an offering
described in conditions VI.A and VI.B
above, unless, with respect to such other
offering:
1. The fund’s average annual
distribution rate for the six months
ending on the last day of the month
ended immediately prior to the most
recent distribution declaration date,5
expressed as a percentage of NAV per
share as of such date, is no more than
1 percentage point greater than the
fund’s average annual total return for
the 5-year period ending on such date;6
and
2. The transmittal letter
accompanying any registration
statement filed with the Commission in
connection with such offering discloses
that the fund has received an order
under section 19(b) to permit it to make
periodic distributions of long-term
capital gains with respect to its common
stock as frequently as twelve times each
year, and as frequently as distributions
are specified 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 net asset
value to holders of the fund’s common
stock;
B. An offering in connection with a
dividend reinvestment plan, merger,
AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
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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,
Deputy Secretary.
[FR Doc. E9–440 Filed 1–12–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28578; 812–13239]
SunAmerica Focused Alpha Growth
Fund, Inc., et al.; Notice of Application
January 6, 2009.
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.
SunAmerica Focused
Alpha Growth Fund, Inc. (‘‘FGF’’),
SunAmerica Focused Alpha Large-Cap
Fund, Inc. (‘‘FGI’’) and AIG SunAmerica
Asset Management Corp. (the
‘‘Adviser’’).
APPLICANTS:
October 17, 2005 and
September 2, 2008.
FILING DATES:
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 February 2, 2009, 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 AIG SunAmerica Asset
Management Corp., Harborside
Financial Center, 3200 Plaza 5, Jersey
City, NJ 07311–4992, Attention: Gregory
N. Bressler.
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).
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).
SUPPLEMENTARY INFORMATION:
5 If
the fund has been in operation fewer than six
months, the measured period will begin
immediately following the fund’s first public
offering.
6 If the fund has been in operation fewer than five
years, the measured period will begin immediately
following the fund’s first public offering.
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Federal Register / Vol. 74, No. 8 / Tuesday, January 13, 2009 / Notices
Applicants’ Representations
1. FGF and FGI are registered closedend management investment companies
organized as Maryland corporations,
and each has capital growth as its
investment objective.1 The common
stock of FGF and FGI are listed on the
New York Stock Exchange. FGF and FGI
have not issued preferred stock.
Applicants believe that the stockholders
of FGF and FGI are generally
conservative, dividend-sensitive
investors who desire current income
periodically and may favor a fixed
distribution policy.
2. The Adviser is a Delaware
corporation and is registered as an
investment adviser under the
Investment Advisers Act of 1940. The
Adviser is the investment adviser for
FGF and FGI and provides investment
advice and management services to
other mutual funds and accounts. The
Adviser is a wholly-owned subsidiary of
American International Group, Inc.
3. Applicants represent that prior to
May 30, 2007, the Board of Directors
(the ‘‘Boards’’) of FGF and FGI,
including a majority of the members of
each of the Boards who are not
‘‘interested persons’’ of each fund (the
‘‘Independent Directors’’) as defined in
section 2(a)(19) of the Act, requested
information, and the Adviser provided,
such information as was reasonably
necessary for the Boards to determine
whether FGF or FGI should adopt a
proposed distribution policy.
4. Applicants represent that at a
meeting on May 30, 2007, the Directors
reviewed the information regarding the
purpose and terms of a proposed
distribution policy, the likely effects of
such policy on each fund’s long-term
total return (in relation to market price
and net asset value (‘‘NAV’’) per
common share) and the relationship
between such fund’s distribution rate on
its common stock under the policy and
the fund’s total return on NAV per
share. Applicants state that the
Independent Directors of each fund also
considered 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.
1 Applicants request that any order issued
granting the relief requested in the application also
apply to any closed-end investment company
(‘‘fund’’) 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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5. Applicants state that at another
meeting on August 27, 2007, the Boards
of FGF and FGI, including the
Independent directors, approved a
revised distribution policy with respect
to its fund’s common stock (‘‘Plan’’) and
determined that such Plan is consistent
with such fund’s investment objectives
and in the best interest of such fund’s
common stockholders.
4. Applicants state that the purpose of
each of the proposed Plans would be to
permit each fund to distribute over the
course of each year periodic and level
distributions that would be independent
of the fund’s performance during any
particular period but that would be
expected to correlate with the fund’s
performance over time. Applicants
explain that each distribution would be
at the stated rate then in effect, except
for extraordinary distributions and
potential increases or decreases in the
final dividend 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 state that the Boards of the
funds will periodically review the
amount of potential distributions in
light of the investment experience of
each fund, and may modify or terminate
the fund’s Plan at any time.
5. Applicants state that at the August
27, 2007 meeting, the Boards of FGF and
FGI each also adopted policies and
procedures under rule 38a–1 under the
Act that are reasonably designed to
ensure that all notices sent to FGF and
FGI shareholders with distributions
under the Plan (‘‘Notices’’) comply with
condition II below, and that all other
written communications by FGF and
FGI or its agents regarding distributions
under the Plan include the disclosure
required by condition III below.
Applicants state that the Boards of FGF
and FGI each also adopted policies and
procedures at that meeting that require
FGF and FGI to keep records that
demonstrate each 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
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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 shareholders might be
unable to differentiate between regular
distributions of capital gains and
distributions of investment income.
Applicants state, however, that rule
19a–1 effectively addresses this concern
by requiring that a separate statement
showing the sources of a distribution
(e.g., estimated net income, net shortterm capital gains, net long-term capital
gains and/or return of capital)
accompany any distributions (or the
confirmation of the reinvestment of
distributions) estimated to be sourced in
part from capital gains or capital.
Applicants state that the same
information also is included in FGF’s
and FGI’s annual reports to shareholders
and on their IRS Forms 1099–DIV,
which are sent to each common and
preferred shareholder who received
distributions during the year.
4. Applicants further state that each of
FGF and FGI will make the additional
disclosures required by the conditions
set forth below, and each of them has
adopted compliance policies and
procedures in accordance with rule
38a–1 to ensure that all required Notices
and disclosures are sent to shareholders.
Applicants argue that by providing the
information required by section 19(a)
and rule 19a–1, and by complying with
the procedures adopted under each Plan
and the conditions listed below, the
funds would ensure that each fund’s
shareholders 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. Accordingly, applicants assert
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that continuing to subject the funds to
section 19(b) and rule 19b–1 would
afford shareholders no extra protection.
5. Applicants note that section 19(b)
and rule 19b–1 also were intended to
prevent certain improper sales practices,
including, in particular, the practice of
urging an investor to purchase shares of
a fund on the basis of an upcoming
capital gains dividend (‘‘selling the
dividend’’), where the dividend would
result in an immediate corresponding
reduction in NAV and would be in
effect a taxable return of the investor’s
capital. Applicants assert that the
‘‘selling the dividend’’ concern should
not apply to closed-end investment
companies, such as FGF and FGI, which
do not continuously distribute shares.
According to Applicants, if the
underlying concern extends to
secondary market purchases of shares of
closed-end funds that are subject to a
large upcoming capital gains dividend,
adoption of 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
shares of closed-end funds that invest
primarily in equity securities often trade
in the marketplace at a discount to their
NAV. Applicants believe that this
discount may be reduced for closed-end
funds that pay relatively frequent
dividends on their common shares at a
consistent rate, whether or not those
dividends contain an element of longterm 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 gain
distributions that a fund may make with
respect to any one year imposed by rule
19b–1, may prevent the efficient
operation of a Plan whenever that fund’s
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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.
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.
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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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 shares and as
often as specified by or determined in
accordance with the terms thereof in
respect of its preferred shares.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 Shareholders
A. Each Notice to the holders of the
fund’s common shares, in addition to
the information required by section
19(a) and rule 19a–1:
1. Will provide, in a tabular or
graphical format:
(a) The amount of the distribution, on
a per 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
3 Applicants state that a future fund that relies on
the requested order will satisfy each of the
representations in the application except that such
representations will be made in respect of actions
by the board of directors of such future fund and
will be made at a future time.
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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
should not be confused with ‘yield’ or
‘income’’’; 4 and
(c) ‘‘The amounts and sources of
distributions reported in this Notice are
only estimates and are not being
4 This disclosure 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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provided for tax reporting purposes. The
actual amounts and sources of the
amounts for [accounting and] tax
reporting purposes will depend upon
the fund’s investment experience during
the remainder of its fiscal year and may
be subject to changes based on tax
regulations. The fund will send you a
Form 1099–DIV for the calendar year
that will tell you how to report these
distributions for federal income tax
purposes.’’
Such disclosure shall be made in a
type size at least as large as and as
prominent as any other information in
the Notice and placed on the same page
in close proximity to the amount and
the sources of the distribution.
B. On the inside front cover of each
report to shareholders under rule 30e–
1 under the Act, the fund will:
1. Describe the terms of the Plan
(including the fixed amount or fixed
percentage of the distributions and the
frequency of the distributions);
2. include the disclosure required by
condition II.A.2.a above;
3. state, if applicable, that the Plan
provides that the Board may amend or
terminate the Plan at any time without
prior notice to fund shareholders; and
4. describe any reasonably foreseeable
circumstances that might cause the fund
to terminate the Plan and any
reasonably foreseeable consequences of
such termination.
C. Each report provided to
shareholders under rule 30e–1 and in
each prospectus filed with the
Commission on Form N–2 under the
Act, will provide the fund’s total return
in relation to changes in NAV in the
financial highlights table and in any
discussion about the fund’s total return.
III. Disclosure to Shareholders,
Prospective Shareholders and Third
Parties
A. The fund will include the
information contained in the relevant
Notice, including the disclosure
required by condition II.A.2 above, in
any written communication (other than
a Form 1099) about the Plan or
distributions under the Plan by the
fund, or agents that the fund has
authorized to make such
communication on the fund’s behalf, to
any fund common shareholder,
prospective common shareholder or
third-party information provider;
B. The fund will issue,
contemporaneously with the issuance of
any Notice, a press release containing
the information in the Notice and will
file with the Commission the
information contained in such Notice,
including the disclosure required by
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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 Adviser’s) Web
site containing the information in each
Notice, including the disclosure
required by condition II.A.2 above, and
will maintain such information on such
Web site for at least 24 months.
IV. Delivery of 19(a) Notices to
Beneficial Owners
If a broker, dealer, bank or other
person (‘‘financial intermediary’’) holds
common stock issued by the fund in
nominee name, or otherwise, on behalf
of a beneficial owner, the fund: (a) Will
request that the financial intermediary,
or its agent, forward the Notice to all
beneficial owners of the fund’s shares
held through such financial
intermediary; (b) will provide, in a
timely manner, to the financial
intermediary, or its agent, enough
copies of the Notice assembled in the
form and at the place that the financial
intermediary, or its agent, reasonably
requests to facilitate the financial
intermediary’s sending of the Notice to
each beneficial owner of the fund’s
shares; and (c) upon the request of any
financial intermediary, or its agent, that
receives copies of the Notice, will pay
the financial intermediary, or its agent,
the reasonable expenses of sending the
Notice to such beneficial owners.
V. Additional Board Determinations for
Funds Whose Shares Trade at a
Premium
If:
A. The fund’s common shares have
traded on the exchange that they
primarily trade on at the time in
question at an average premium to NAV
equal to or greater than 10%, as
determined on the basis of the average
of the discount or premium to NAV of
the fund’s common shares as of the
close of each trading day over a 12-week
rolling period (each such 12-week
rolling period ending on the last trading
day of each week); and
B. The fund’s annualized distribution
rate for such 12-week rolling period,
expressed as a percentage of NAV as of
the ending date of such 12-week rolling
period, is greater than the fund’s average
annual total return in relation to the
change in NAV over the 2-year period
ending on the last day of such 12-week
rolling period; then:
1. At the earlier of the next regularly
scheduled meeting or within four
months of the last day of such 12-week
rolling period, the Board including a
majority of the Independent Directors:
(a) Will request and evaluate, and the
Adviser will furnish, such information
E:\FR\FM\13JAN1.SGM
13JAN1
1734
Federal Register / Vol. 74, No. 8 / Tuesday, January 13, 2009 / Notices
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 to with the fund’s
average annual total return over the 2year 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 shares
other than:
A. a rights offering below NAV to
holders of the fund’s common stock;
B. an offering in connection with a
dividend reinvestment plan, merger,
consolidation, acquisition, spin-off or
reorganization of the fund; or
C. an offering other than an offering
described in conditions VI.A and VI.B
above, unless, with respect to such other
offering:
1. the fund’s average annual
distribution rate for the six months
ending on the last day of the month
ended immediately prior to the most
recent distribution declaration date,5
expressed as a percentage of NAV per
share as of such date, is no more than
1 percentage point greater than the
5 If the fund has been in operation fewer than six
months, the measured period will begin
immediately following the fund’s first public
offering.
VerDate Nov<24>2008
19:10 Jan 12, 2009
Jkt 217001
fund’s average annual total return for
the 5-year period ending on such date; 6
and
2. the transmittal letter accompanying
any registration statement filed with the
Commission in connection with such
offering discloses that the fund has
received an order under section 19(b) to
permit it to make periodic distributions
of long-term capital gains with respect
to its common stock as frequently as
twelve times each year, and as
frequently as distributions are specified
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,
Deputy Secretary.
[FR Doc. E9–416 Filed 1–12–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Pub. L. 94–409, that the
Securities and Exchange Commission
will hold a Closed Meeting on
Thursday, January 15, 2009 at 2 p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters also may be present.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (5), (7), 9(ii)
and (10), permit consideration of the
scheduled matters at the Closed
Meeting.
Commissioner Casey, as duty officer,
voted to consider the items listed for the
Closed Meeting in closed session.
6 If the fund has been in operation fewer than five
years, the measured period will begin immediately
following the fund’s first public offering.
PO 00000
Frm 00073
Fmt 4703
Sfmt 4703
The subject matter of the Closed
Meeting scheduled for Thursday,
January 15, 2009 will be:
formal orders of investigation;
institution and settlement of injunctive
actions;
institution and settlement of
administrative proceedings of an
enforcement nature; and
other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact: The Office of the Secretary at
(202) 551–5400.
Dated: January 8, 2009.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9–462 Filed 1–12–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59211; File No. SR–BSE–
2008–56]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Notice of Filing
of Proposed Rule Change Relating to
BOX Rules Governing Doing Business
With the Public
January 7, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
9, 2008, the Boston Stock Exchange, Inc.
(‘‘BSE’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
substantially prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Chapter XI of the Boston Options
Exchange (‘‘BOX’’) Rules by replacing
the term ‘‘Registered Options and
Security Futures Principal’’ (‘‘ROSFP’’)
with ‘‘Registered Options Principal’’
(‘‘ROP’’), to modify the confirmation
disclosure requirements to remain
1 15
2 17
E:\FR\FM\13JAN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
13JAN1
]]>Agencies
[Federal Register Volume 74, Number 8 (Tuesday, January 13, 2009)]
[Notices]
[Pages 1730-1734]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-416]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28578; 812-13239]
SunAmerica Focused Alpha Growth Fund, Inc., et al.; Notice of
Application
January 6, 2009.
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: SunAmerica Focused Alpha Growth Fund, Inc. (``FGF''),
SunAmerica Focused Alpha Large-Cap Fund, Inc. (``FGI'') and AIG
SunAmerica Asset Management Corp. (the ``Adviser'').
Filing Dates: October 17, 2005 and September 2, 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 February 2, 2009, 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 AIG SunAmerica Asset
Management Corp., Harborside Financial Center, 3200 Plaza 5, Jersey
City, NJ 07311-4992, Attention: Gregory N. Bressler.
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).
[[Page 1731]]
Applicants' Representations
1. FGF and FGI are registered closed-end management investment
companies organized as Maryland corporations, and each has capital
growth as its investment objective.\1\ The common stock of FGF and FGI
are listed on the New York Stock Exchange. FGF and FGI have not issued
preferred stock. Applicants believe that the stockholders of FGF and
FGI are generally conservative, dividend-sensitive investors who desire
current income periodically and may favor a fixed distribution policy.
---------------------------------------------------------------------------
\1\ Applicants request that any order issued granting the relief
requested in the application also apply to any closed-end investment
company (``fund'') 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 a Delaware corporation and is registered as an
investment adviser under the Investment Advisers Act of 1940. The
Adviser is the investment adviser for FGF and FGI and provides
investment advice and management services to other mutual funds and
accounts. The Adviser is a wholly-owned subsidiary of American
International Group, Inc.
3. Applicants represent that prior to May 30, 2007, the Board of
Directors (the ``Boards'') of FGF and FGI, including a majority of the
members of each of the Boards who are not ``interested persons'' of
each fund (the ``Independent Directors'') as defined in section
2(a)(19) of the Act, requested information, and the Adviser provided,
such information as was reasonably necessary for the Boards to
determine whether FGF or FGI should adopt a proposed distribution
policy.
4. Applicants represent that at a meeting on May 30, 2007, the
Directors reviewed the information regarding the purpose and terms of a
proposed distribution policy, the likely effects of such policy on each
fund's long-term total return (in relation to market price and net
asset value (``NAV'') per common share) and the relationship between
such fund's distribution rate on its common stock under the policy and
the fund's total return on NAV per share. Applicants state that the
Independent Directors of each fund also considered 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.
5. Applicants state that at another meeting on August 27, 2007, the
Boards of FGF and FGI, including the Independent directors, approved a
revised distribution policy with respect to its fund's common stock
(``Plan'') and determined that such Plan is consistent with such fund's
investment objectives and in the best interest of such fund's common
stockholders.
4. Applicants state that the purpose of each of the proposed Plans
would be to permit each fund to distribute over the course of each year
periodic and level distributions that would be independent of the
fund's performance during any particular period but that would be
expected to correlate with the fund's performance over time. Applicants
explain that each distribution would be at the stated rate then in
effect, except for extraordinary distributions and potential increases
or decreases in the final dividend 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 state that the Boards of the funds will periodically review
the amount of potential distributions in light of the investment
experience of each fund, and may modify or terminate the fund's Plan at
any time.
5. Applicants state that at the August 27, 2007 meeting, the Boards
of FGF and FGI each also adopted policies and procedures under rule
38a-1 under the Act that are reasonably designed to ensure that all
notices sent to FGF and FGI shareholders with distributions under the
Plan (``Notices'') comply with condition II below, and that all other
written communications by FGF and FGI or its agents regarding
distributions under the Plan include the disclosure required by
condition III below. Applicants state that the Boards of FGF and FGI
each also adopted policies and procedures at that meeting that require
FGF and FGI to keep records that demonstrate each 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 shareholders might be unable to
differentiate between regular distributions of capital gains and
distributions of investment income. Applicants state, however, that
rule 19a-1 effectively addresses this concern by requiring that a
separate statement showing the sources of a distribution (e.g.,
estimated net income, net short-term capital gains, net long-term
capital gains and/or return of capital) accompany any distributions (or
the confirmation of the reinvestment of distributions) estimated to be
sourced in part from capital gains or capital. Applicants state that
the same information also is included in FGF's and FGI's annual reports
to shareholders and on their IRS Forms 1099-DIV, which are sent to each
common and preferred shareholder who received distributions during the
year.
4. Applicants further state that each of FGF and FGI will make the
additional disclosures required by the conditions set forth below, and
each of them has adopted compliance policies and procedures in
accordance with rule 38a-1 to ensure that all required Notices and
disclosures are sent to shareholders. Applicants argue that by
providing the information required by section 19(a) and rule 19a-1, and
by complying with the procedures adopted under each Plan and the
conditions listed below, the funds would ensure that each fund's
shareholders 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. Accordingly, applicants assert
[[Page 1732]]
that continuing to subject the funds to section 19(b) and rule 19b-1
would afford shareholders no extra protection.
5. Applicants note that section 19(b) and rule 19b-1 also were
intended to prevent certain improper sales practices, including, in
particular, the practice of urging an investor to purchase shares of a
fund on the basis of an upcoming capital gains dividend (``selling the
dividend''), where the dividend would result in an immediate
corresponding reduction in NAV and would be in effect a taxable return
of the investor's capital. Applicants assert that the ``selling the
dividend'' concern should not apply to closed-end investment companies,
such as FGF and FGI, which do not continuously distribute shares.
According to Applicants, if the underlying concern extends to secondary
market purchases of shares of closed-end funds that are subject to a
large upcoming capital gains dividend, adoption of 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 shares of closed-end funds that
invest primarily in equity securities often trade in the marketplace at
a discount to their NAV. Applicants believe that this discount may be
reduced for closed-end funds that pay relatively frequent dividends on
their common shares 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 gain distributions
that a fund may make with respect to any one year imposed by rule 19b-
1, may prevent the efficient operation of a Plan whenever that fund's
realized net long-term capital gains in any year exceed the total of
the periodic distributions that may include such capital gains under
the rule.
8. In addition, Applicants assert that rule 19b-1 may cause fixed
regular periodic distributions under a Plan to be funded with returns
of capital \2\ (to the extent net investment income and realized short-
term capital gains are insufficient to fund the distribution), even
though realized net long-term capital gains otherwise could be
available. To distribute all of a fund's long-term capital gains within
the limits in rule 19b-1, a fund may be required to make total
distributions in excess of the annual amount called for by its Plan, or
to retain and pay taxes on the excess amount. Applicants thus assert
that the requested order would minimize these effects of rule 19b-1 by
enabling 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 shares and as often as
specified by or determined in accordance with the terms thereof in
respect of its preferred shares.\3\
---------------------------------------------------------------------------
\3\ Applicants state that a future fund that relies on the
requested order will satisfy each of the representations in the
application except that such representations will be made in respect
of actions by the board of directors of such future fund and will be
made at a future time.
---------------------------------------------------------------------------
Applicants' Conditions
Applicants agree that, with respect to 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 Shareholders
A. Each Notice to the holders of the fund's common shares, in
addition to the information required by section 19(a) and rule 19a-1:
1. Will provide, in a tabular or graphical format:
(a) The amount of the distribution, on a per 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
[[Page 1733]]
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 should not be
confused with `yield' or `income'''; \4\ and
---------------------------------------------------------------------------
\4\ This disclosure 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 shareholders under
rule 30e-1 under the Act, the fund will:
1. Describe the terms of the Plan (including the fixed amount or
fixed percentage of the distributions and the frequency of the
distributions);
2. include the disclosure required by condition II.A.2.a above;
3. state, if applicable, that the Plan provides that the Board may
amend or terminate the Plan at any time without prior notice to fund
shareholders; and
4. describe any reasonably foreseeable circumstances that might
cause the fund to terminate the Plan and any reasonably foreseeable
consequences of such termination.
C. Each report provided to shareholders under rule 30e-1 and in
each prospectus filed with the Commission on Form N-2 under the Act,
will provide the fund's total return in relation to changes in NAV in
the financial highlights table and in any discussion about the fund's
total return.
III. Disclosure to Shareholders, Prospective Shareholders and Third
Parties
A. The fund will include the information contained in the relevant
Notice, including the disclosure required by condition II.A.2 above, in
any written communication (other than a Form 1099) about the Plan or
distributions under the Plan by the fund, or agents that the fund has
authorized to make such communication on the fund's behalf, to any fund
common shareholder, prospective common shareholder or third-party
information provider;
B. The fund will issue, contemporaneously with the issuance of any
Notice, a press release containing the information in the Notice and
will file with the Commission the information contained in such Notice,
including the disclosure required by condition II.A.2 above, as an
exhibit to its next filed Form N-CSR; and
C. The fund will post prominently a statement on its (or the
Adviser's) Web site containing the information in each Notice,
including the disclosure required by condition II.A.2 above, and will
maintain such information on such Web site for at least 24 months.
IV. Delivery of 19(a) Notices to Beneficial Owners
If a broker, dealer, bank or other person (``financial
intermediary'') holds common stock issued by the fund in nominee name,
or otherwise, on behalf of a beneficial owner, the fund: (a) Will
request that the financial intermediary, or its agent, forward the
Notice to all beneficial owners of the fund's shares held through such
financial intermediary; (b) will provide, in a timely manner, to the
financial intermediary, or its agent, enough copies of the Notice
assembled in the form and at the place that the financial intermediary,
or its agent, reasonably requests to facilitate the financial
intermediary's sending of the Notice to each beneficial owner of the
fund's shares; and (c) upon the request of any financial intermediary,
or its agent, that receives copies of the Notice, will pay the
financial intermediary, or its agent, the reasonable expenses of
sending the Notice to such beneficial owners.
V. Additional Board Determinations for Funds Whose Shares Trade at a
Premium
If:
A. The fund's common shares have traded on the exchange that they
primarily trade on at the time in question at an average premium to NAV
equal to or greater than 10%, as determined on the basis of the average
of the discount or premium to NAV of the fund's common shares as of the
close of each trading day over a 12-week rolling period (each such 12-
week rolling period ending on the last trading day of each week); and
B. The fund's annualized distribution rate for such 12-week rolling
period, expressed as a percentage of NAV as of the ending date of such
12-week rolling period, is greater than the fund's average annual total
return in relation to the change in NAV over the 2-year period ending
on the last day of such 12-week rolling period; then:
1. At the earlier of the next regularly scheduled meeting or within
four months of the last day of such 12-week rolling period, the Board
including a majority of the Independent Directors:
(a) Will request and evaluate, and the Adviser will furnish, such
information
[[Page 1734]]
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 to with 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
shares other than:
A. a rights offering below NAV to holders of the fund's common
stock;
B. an offering in connection with a dividend reinvestment plan,
merger, consolidation, acquisition, spin-off or reorganization of the
fund; or
C. an offering other than an offering described in conditions VI.A
and VI.B above, unless, with respect to such other offering:
1. the fund's average annual distribution rate for the six months
ending on the last day of the month ended immediately prior to the most
recent distribution declaration date,\5\ expressed as a percentage of
NAV per share as of such date, is no more than 1 percentage point
greater than the fund's average annual total return for the 5-year
period ending on such date; \6\ and
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\5\ If the fund has been in operation fewer than six months, the
measured period will begin immediately following the fund's first
public offering.
\6\ If the fund has been in operation fewer than five years, the
measured period will begin immediately following the fund's first
public offering.
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2. the transmittal letter accompanying any registration statement
filed with the Commission in connection with such offering discloses
that the fund has received an order under section 19(b) to permit it to
make periodic distributions of long-term capital gains with respect to
its common stock as frequently as twelve times each year, and as
frequently as distributions are specified 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,
Deputy Secretary.
[FR Doc. E9-416 Filed 1-12-09; 8:45 am]
BILLING CODE 8011-01-P
