Clough Global Allocation Fund, et al.; Notice of Application, 44890-44894 [E9-20868]
Download as PDF
<![CDATA[
cprice-sewell on DSK2BSOYB1PROD with NOTICES
44890
Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Notices
Underwriting occurred, the first two
years in an easily accessible place, a
written record of each purchase of
securities in Affiliated Underwritings
once an investment by an Investing
Fund in Fund Shares exceeds the limit
of section 12(d)(1)(A)(i) of the Act,
setting forth from whom the securities
were acquired, the identity of the
underwriting syndicate’s members, the
terms of the purchase, and the
information or material upon which the
Board’s determinations were made.
15. Before investing in a Fund in
excess of the limits in section
12(d)(1)(A), the Investing Fund and the
Fund will execute a Participation
Agreement stating, without limitation,
that their boards of directors or trustees
and their investment advisers, and the
Trustee and Sponsor, as applicable,
understand the terms and conditions of
the order, and agree to fulfill their
responsibilities under the order. At the
time of its investment in Fund Shares in
excess of the limit in section
12(d)(1)(A)(i), an Investing Fund will
notify the Fund of the investment. At
such time, the Investing Fund will also
transmit to the Fund a list of the names
of each Investing Fund Affiliate and
Underwriting Affiliate. The Investing
Fund will notify the Fund of any
changes to the list of names as soon as
reasonably practicable after a change
occurs. The Fund and the Investing
Fund will maintain and preserve a copy
of the order, the Participation
Agreement, and the list with any
updated information for the duration of
the investment and for a period of not
less than six years thereafter, the first
two years in an easily accessible place.
16. Before approving any advisory
contract under section 15 of the Act, the
board of directors or trustees of each
Investing Management Company,
including a majority of the disinterested
directors or trustees, will find that the
advisory fees charged under such
advisory contract are based on services
provided that will be in addition to,
rather than duplicative of, the services
provided under the advisory contract(s)
of any Fund in which the Investing
Management Company may invest.
These findings and their basis will be
recorded fully in the minute books of
the appropriate Investing Management
Company.
17. Any sales charges and/or service
fees charged with respect to shares of an
Investing Fund will not exceed the
limits applicable to a fund of funds as
set forth in Conduct Rule 2830 of the
NASD.
18. No Fund will acquire securities of
any investment company or company
relying on sections 3(c)(1) or 3(c)(7) of
VerDate Nov<24>2008
14:57 Aug 28, 2009
Jkt 217001
the Act in excess of the limits contained
in section 12(d)(1)(A) of the Act, except
as permitted pursuant to rule 12d1–1
under the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–20870 Filed 8–28–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28850; File No. 812–13105]
Clough Global Allocation Fund, et al.;
Notice of Application
August 24, 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.
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 Clough Capital Partners,
L.P., One Post Office Square, 40th Floor,
Boston, MA 02109, Attention: James E.
Canty.
FOR FURTHER INFORMATION CONTACT:
Keith A. Gregory, Senior Counsel, at
(202) 551–6815, or Mary Kay Frech,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm, or by
calling (202) 551–8090.
Applicants’ Representations
1. Each Fund is a closed-end
management investment company
registered under the Act.1 Each Fund
Summary of Application: Applicants
has a primary investment objective of
request an order to permit certain
seeking a high level of total return. The
registered closed-end investment
common shares issued by each Fund are
companies to make periodic
listed on the NYSE Amex. Although the
distributions of long-term capital gains
Funds have not issued preferred shares,
with respect to their outstanding
each Fund is authorized to do so.
common stock as often as monthly in
Applicants believe that the shareholders
any one taxable year, and as frequently
of each Fund are generally conservative,
as distributions are specified by or in
dividend-sensitive investors who desire
accordance with the terms of any
current income periodically and may
outstanding preferred stock that such
favor a fixed distribution policy.
investment companies may issue.
2. The Adviser is a Delaware limited
Applicants: Clough Global Allocation
partnership registered under the
Fund, Clough Global Equity Fund,
Investment Advisers Act of 1940
Clough Global Opportunities Fund
(‘‘Advisers Act’’). The Adviser serves as
(collectively, the ‘‘Funds’’) and Clough
investment adviser to each Fund and
Capital Partners, L.P. (the ‘‘Adviser’’).
may in the future serve as investment
Filing Dates: The application was
adviser to one or more additional
filed on July 9, 2004 and amended on
Funds. Each Fund will be advised by
February 12, 2007, October 14, 2008,
investment advisers that are registered
July 29, 2009 and August 24, 2009.
Hearing or Notification of Hearing: An under the Advisers Act.
3. Applicants state that on December
order granting the application will be
13, 2006, the boards of trustees (the
issued unless the Commission orders a
hearing. Interested persons may request ‘‘Board’’) of each Fund, including a
a hearing by writing to the
1 All existing closed-end investment companies
Commission’s Secretary and serving
that currently intend to rely on the requested order
applicants with a copy of the request,
are named as applicants. Applicants request that
personally or by mail. Hearing requests
any order granting the requested relief also apply
to any registered closed-end investment company
should be received by the Commission
that in the future: (a) Is advised by the Adviser
by 5:30 p.m. on September 18, 2009,
(including any successor in interest) or by any
and should be accompanied by proof of
entity controlling, controlled by, or under common
service on applicants, in the form of an
control (within the meaning of section 2(a)(9) of the
Act) with the Adviser; and (b) complies with the
affidavit or, for lawyers, a certificate of
terms and conditions of the application (included
service. Hearing requests should state
in ‘‘Funds’’). A successor in interest is limited to
the nature of the writer’s interest, the
entities that result from a reorganization into
reason for the request, and the issues
another jurisdiction or a change in the type of
business organization.
contested. Persons who wish to be
PO 00000
Frm 00077
Fmt 4703
Sfmt 4703
E:\FR\FM\31AUN1.SGM
31AUN1
cprice-sewell on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Notices
majority of the members of each Board
who are not ‘‘interested persons’’ of the
Fund as defined in section 2(a)(19) of
the Act (the ‘‘Independent Trustees’’),
reviewed information regarding the
purpose and terms of a proposed
distribution policy, the likely effects of
such policy on the respective Fund’s
long-term total return (in relation to
market price and net asset value
(‘‘NAV’’) per common share) and the
relationship between the Fund’s
distribution rate on its common shares
under the policy and the Fund’s total
return (in relation to NAV per share).
Applicants state that the Independent
Trustees 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.
Applicants further state that after
considering such information, the
Board, including the Independent
Trustees, of each Fund approved a
distribution policy with respect to the
Fund’s common shares (the ‘‘Plan’’) and
determined that such Plan is consistent
with such Fund’s investment objectives
and in the best interests of such Fund’s
common shareholders. Prior to
implementing the Plan, the Board of
each Fund, including the Independent
Trustees, will review the factors
considered in connection with its
approval of the Plan, as well as any
changes in such factors since the date of
its approval, and will confirm that the
Plan is consistent with the Fund’s
investment objectives and policies and
in the best interests of such Fund’s
common shareholders.
4. Applicants state that the purpose of
each Fund’s Plan is to provide to its
respective common shareholders a
regular, quarterly distribution that is not
dependent on the timing or amount of
investment income earned or capital
gains realized by such Fund. Applicants
represent that, under the Plans, each
Fund will distribute all available
investment income to shareholders,
consistent with such Fund’s primary
investment objective of providing a high
level of total returns. Applicants state
that, if and when sufficient investment
income is not available on a quarterly
basis, each Fund will distribute longterm capital gains and/or return of
capital to its shareholders to maintain
the level distribution rate that has been
approved by the Board. Applicants state
that the minimum annual distribution
rate of each Fund will be independent
of such Fund’s performance during any
particular period but is expected to
correlate with such Fund’s performance
over time. Applicants note that the
VerDate Nov<24>2008
14:57 Aug 28, 2009
Jkt 217001
amount and frequency of distributions
may be amended at any time by the
Board of each Fund without prior notice
to such Fund’s shareholders. Applicants
explain that if a Fund’s net investment
income and net realized capital gains for
any year exceed the amount required to
be distributed under its Plan, such Fund
will at a minimum make distributions
necessary to comply with the
distribution requirements of subchapter
M of the Internal Revenue Code of 1986
(the ‘‘Code’’). Applicants state that each
Plan provides that it can be amended,
suspended or terminated at any time by
the Board without prior notice to such
Fund’s shareholders.
5. Applicants state that at the
December 13, 2006 meeting, each Board
adopted policies and procedures under
rule 38a-1 under the Act that are
reasonably designed to ensure that all
notices sent to the Fund’s shareholders
pursuant to section 19(a) of the Act,
rules 19a-1 under the Act, and condition
IV below (‘‘19(a) Notices’’) comply with
condition II below, and that all other
written communications by a Fund or
its agents regarding distributions under
the Plan include the disclosure required
by condition III below. Applicants state
that the Board of each Fund also
adopted policies and procedures at that
meeting that require each Fund to keep
records that demonstrate its compliance
with all of the conditions of the
requested order and that are necessary
for such Fund to form the basis for, or
demonstrate the calculation of, the
amounts disclosed in its 19(a) 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
every twelve months. 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
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
44891
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 each
Fund’s annual report to shareholders
and on its IRS Form 1099–DIV, which
is sent to each common and preferred
shareholder who received distributions
during the year (including shareholders
who have sold shares during the year).
4. Applicants further state that each of
the Funds 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 19(a)
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.
Applicants also state that compliance
with each Fund’s compliance
procedures and condition III set forth
below will ensure that prospective
shareholders and third parties are
provided with the same information.
Accordingly, applicants assert that
continuing to subject the 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
E:\FR\FM\31AUN1.SGM
31AUN1
cprice-sewell on DSK2BSOYB1PROD with NOTICES
44892
Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Notices
result in an immediate corresponding
reduction in NAV and would be in
effect a taxable return of the investor’s
capital. Applicants assert that the
‘‘selling the dividend’’ concern should
not apply to closed-end investment
companies, such as the Funds, 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 periodic distribution plan
actually helps minimize the concern by
avoiding, through periodic
distributions, any buildup of large endof-the-year distributions.
6. Applicants also note that common
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 adoption of a periodic
distribution 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 periodic
distribution 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. Applicants also assert that rule
19b–1 may cause fixed regular periodic
distributions under a periodic
distribution plan to be funded with
VerDate Nov<24>2008
14:57 Aug 28, 2009
Jkt 217001
returns of capital 2 (to the extent net
investment income and realized shortterm 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 periodic
distribution plan, or to retain and pay
taxes on the excess amount. Applicants
thus assert that the requested order
would minimize these effects of rule
19b–1 by enabling the Funds to realize
long-term capital gains as often as
investment considerations dictate
without fear of violating rule 19b–1.
9. Applicants state that Revenue
Ruling 89–81 under the Code requires
that a fund that has both common stock
and preferred stock outstanding
designate the types of income, e.g.,
investment income and capital gains, in
the same proportion as the total
distributions distributed to each class
for the tax year. To satisfy the
proportionate designation requirements
of Revenue Ruling 89–81, whenever a
fund has realized a long-term capital
gain with respect to a given tax year, the
fund must designate the required
proportionate share of such capital gain
to be included in common and preferred
stock dividends. Applicants state that
although rule 19b–1 allows a fund some
flexibility with respect to the frequency
of capital gains distributions, a fund
might use all of the exceptions available
under the rule for a tax year and still
need to distribute additional capital
gains allocated to the preferred stock to
comply with Revenue Ruling 89–81.
10. Applicants assert that the
potential abuses addressed by section
19(b) and rule 19b–1 do not arise with
respect to preferred stock issued by a
closed-end fund. Applicants assert that
such distributions are fixed or
determined in periodic auctions by
reference to short-term interest rates
rather than by reference to performance
of the issuer and Revenue Ruling 89–81
determines the proportion of such
distributions that are comprised of the
long-term capital gains.
11. Applicants also submit that the
‘‘selling the dividend’’ concern is not
applicable to preferred stock, which
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
2 Returns of capital as used in the application
means return of capital for financial accounting
purposes and not for tax accounting purposes.
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
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 to make
periodic capital gain distributions (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, if any.3
Applicants’ Conditions
Applicants agree that any order of the
Commission granting the requested
relief will be subject to the following
conditions:
I. Compliance Review and Reporting.
Each Fund’s chief compliance officer
will: (a) Report to the Fund’s Board, no
less frequently than once every three
months or at the next regularly
scheduled quarterly Board meeting,
whether (i) the Fund and its Adviser
have complied with the conditions of
the order, and (ii) a material compliance
matter, as defined in rule 38a–1(e)(2)
under the Act, has occurred with
respect to such conditions; and (b)
review the adequacy of the policies and
procedures adopted by the Board no less
frequently than annually.
II. Disclosures to Fund Shareholders:
A. Each 19(a) Notice to the holders of
the Fund’s common shares, in addition
to the information required by section
19(a) and rule 19a–1:
1. Will provide, in a tabular or
graphical format:
(a) The amount of the distribution, on
a per share basis, together with the
amounts of such distribution amount,
on a per share basis and as a percentage
of such distribution amount, from
estimated: (A) Net investment income;
(B) net realized short-term capital gains;
(C) net realized long-term capital gains;
and (D) return of capital or other capital
source;
(b) The fiscal year-to-date cumulative
amount of distributions, on a per share
basis, together with the amounts of such
cumulative amount, on a per share basis
and as a percentage of such cumulative
amount of distributions, from estimated:
(A) Net investment income; (B) net
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 trustees or directors of such future
Fund and will be made at a future time.
E:\FR\FM\31AUN1.SGM
31AUN1
cprice-sewell on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Notices
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 record 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 record 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 record 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 record 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 19(a)
Notice are only estimates and are not
being provided for tax reporting
purposes. The actual amounts and
sources of the amounts for 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
4 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.
VerDate Nov<24>2008
14:57 Aug 28, 2009
Jkt 217001
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 19(a) 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. Each Fund will include the
information contained in the relevant
19(a) 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. Each Fund will issue,
contemporaneously with the issuance of
any 19(a) Notice, a press release
containing the information in the 19(a)
Notice and will file with the
Commission the information contained
in such 19(a) Notice, including the
disclosure required by condition II.A.2
above, as an exhibit to its next filed
Form N–CSR; and
C. Each Fund will post prominently a
statement on its (or the Adviser’s) Web
site containing the information in each
19(a) 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,
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
44893
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 19(a) 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 19(a) 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 19(a) 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 19(a) Notice, will pay the
financial intermediary, or its agent, the
reasonable expenses of sending the 19(a)
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 Trustees:
(a) Will request and evaluate, and the
Adviser will furnish, such information
as may be reasonably necessary to make
an informed determination of whether
the Plan should be continued or
continued after amendment;
(b) Will determine whether
continuation, or continuation after
amendment, of the Plan is consistent
with the Fund’s investment objective(s)
and policies and in the best interests of
the Fund and its shareholders, after
considering the information in
condition V.B.1.a above; including,
without limitation:
E:\FR\FM\31AUN1.SGM
31AUN1
cprice-sewell on DSK2BSOYB1PROD with NOTICES
44894
Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Notices
(1) Whether the Plan is accomplishing
its purpose(s);
(2) The reasonably foreseeable effects
of the Plan on the Fund’s long-term total
return in relation to the market price
and NAV of the Fund’s common 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, including
its consideration of the factors listed in
condition V.B.1.(b) above, 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 shares;
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 annualized distribution
rate for the six months ending on the
last day of the month ended
immediately prior to the most recent
distribution record 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
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.
VerDate Nov<24>2008
14:57 Aug 28, 2009
Jkt 217001
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 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,
Deputy Secretary.
[FR Doc. E9–20868 Filed 8–28–09; 8:45 am]
be determined, is in the national
interest. Public Notice of these
Determinations is ordered to be
published in the Federal Register.
FOR FURTHER INFORMATION CONTACT: For
further information, including a list of
the exhibit objects, contact Julie
Simpson, Attorney-Adviser, Office of
the Legal Adviser, U.S. Department of
State (telephone: 202–632–6467). The
address is U.S. Department of State,
L/PD, SA–5, 2200 C Street, NW., Suite
5H03, Washington, DC 20522–0505.
Dated: August 25, 2009.
Maura M. Pally,
Deputy Assistant Secretary for Professional
and Cultural Exchanges, Bureau of
Educational and Cultural Affairs, Department
of State.
[FR Doc. E9–20938 Filed 8–28–09; 8:45 am]
BILLING CODE 4710–05–P
BILLING CODE 8010–01–P
DEPARTMENT OF STATE
DEPARTMENT OF STATE
[Public Notice 6745]
[Public Notice 6746]
Culturally Significant Objects Imported
for Exhibition Determinations:
‘‘Heroes: Mortals and Myths in Ancient
Greece’’
Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
2459), Executive Order 12047 of March
27, 1978, the Foreign Affairs Reform and
Restructuring Act of 1998 (112 Stat.
2681, et seq.; 22 U.S.C. 6501 note, et
seq.), Delegation of Authority No. 234 of
October 1, 1999, Delegation of Authority
No. 236 of October 19, 1999, as
amended, and Delegation of Authority
No. 257 of April 15, 2003 [68 FR 19875],
I hereby determine that the objects in
the exhibition: ‘‘Heroes: Mortals and
Myths in Ancient Greece,’’ imported
from abroad for temporary exhibition
within the United States, are of cultural
significance. The objects are imported
pursuant to loan agreements with the
foreign owners or custodians. I also
determine that the exhibition or display
of the exhibit objects at The Walters Art
Museum, Baltimore, MD, from on or
about October 11, 2009, until on or
about January 3, 2010; Frist Center for
the Visual Arts, Nashville, TN, from on
or about January 29, 2010, until on or
about April 25, 2010; San Diego
Museum of Art, San Diego, CA, from on
or about May 22, 2010, until on or about
September 5, 2010; Onassis Cultural
Center, New York, NY, from on or about
October 5, 2010, until on or about
January 3, 2011, and at possible
additional exhibitions or venues yet to
SUMMARY:
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
Culturally Significant Object Imported
for Exhibition Determinations:
‘‘American Stories: Paintings of
Everyday Life, 1765–1915’’
SUMMARY: Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
2459), Executive Order 12047 of March
27, 1978, the Foreign Affairs Reform and
Restructuring Act of 1998 (112 Stat.
2681, et seq.; 22 U.S.C. 6501 note, et
seq.), Delegation of Authority No. 234 of
October 1, 1999, Delegation of Authority
No. 236 of October 19, 1999, as
amended, and Delegation of Authority
No. 257 of April 15, 2003 [68 FR 19875],
I hereby determine that the object in the
exhibition: ‘‘American Stories: Paintings
of Everyday Life, 1765–1915,’’ imported
from abroad for temporary exhibition
within the United States, is of cultural
significance. The object is imported
pursuant to a loan agreement with the
foreign owner or custodian. I also
determine that the exhibition or display
of the exhibit object at the Metropolitan
Museum of Art, New York, NY, from on
or about October 5, 2009, until on or
about January 24, 2010, and at possible
additional exhibitions or venues yet to
be determined, is in the national
interest. Public Notice of these
Determinations is ordered to be
published in the Federal Register.
FOR FURTHER INFORMATION CONTACT: For
further information, including a list of
the exhibit object, contact Julie
Simpson, Attorney-Adviser, Office of
the Legal Adviser, U.S. Department of
State (telephone: 202–632–6467). The
E:\FR\FM\31AUN1.SGM
31AUN1
]]>Agencies
[Federal Register Volume 74, Number 167 (Monday, August 31, 2009)]
[Notices]
[Pages 44890-44894]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-20868]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28850; File No. 812-13105]
Clough Global Allocation Fund, et al.; Notice of Application
August 24, 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 registered closed-end investment companies to make periodic
distributions of long-term capital gains with respect to their
outstanding common stock as often as monthly in any one taxable 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: Clough Global Allocation Fund, Clough Global Equity
Fund, Clough Global Opportunities Fund (collectively, the ``Funds'')
and Clough Capital Partners, L.P. (the ``Adviser'').
Filing Dates: The application was filed on July 9, 2004 and amended
on February 12, 2007, October 14, 2008, July 29, 2009 and August 24,
2009.
Hearing or Notification of Hearing: An order granting the
application will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on September 18, 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 Clough Capital Partners,
L.P., One Post Office Square, 40th Floor, Boston, MA 02109, Attention:
James E. Canty.
FOR FURTHER INFORMATION CONTACT: Keith A. Gregory, Senior Counsel, at
(202) 551-6815, or Mary Kay Frech, Branch Chief, at (202) 551-6821
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm, or by calling (202) 551-8090.
Applicants' Representations
1. Each Fund is a closed-end management investment company
registered under the Act.\1\ Each Fund has a primary investment
objective of seeking a high level of total return. The common shares
issued by each Fund are listed on the NYSE Amex. Although the Funds
have not issued preferred shares, each Fund is authorized to do so.
Applicants believe that the shareholders of each Fund are generally
conservative, dividend-sensitive investors who desire current income
periodically and may favor a fixed distribution policy.
---------------------------------------------------------------------------
\1\ All existing closed-end investment companies that currently
intend to rely on the requested order are named as applicants.
Applicants request that any order granting the requested relief also
apply to any registered closed-end investment company that in the
future: (a) Is advised by the Adviser (including any successor in
interest) or by any entity controlling, controlled by, or under
common control (within the meaning of section 2(a)(9) of the Act)
with the Adviser; and (b) complies with the terms and conditions of
the application (included in ``Funds''). 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 limited partnership registered under
the Investment Advisers Act of 1940 (``Advisers Act''). The Adviser
serves as investment adviser to each Fund and may in the future serve
as investment adviser to one or more additional Funds. Each Fund will
be advised by investment advisers that are registered under the
Advisers Act.
3. Applicants state that on December 13, 2006, the boards of
trustees (the ``Board'') of each Fund, including a
[[Page 44891]]
majority of the members of each Board who are not ``interested
persons'' of the Fund as defined in section 2(a)(19) of the Act (the
``Independent Trustees''), reviewed information regarding the purpose
and terms of a proposed distribution policy, the likely effects of such
policy on the respective Fund's long-term total return (in relation to
market price and net asset value (``NAV'') per common share) and the
relationship between the Fund's distribution rate on its common shares
under the policy and the Fund's total return (in relation to NAV per
share). Applicants state that the Independent Trustees 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. Applicants further state that after
considering such information, the Board, including the Independent
Trustees, of each Fund approved a distribution policy with respect to
the Fund's common shares (the ``Plan'') and determined that such Plan
is consistent with such Fund's investment objectives and in the best
interests of such Fund's common shareholders. Prior to implementing the
Plan, the Board of each Fund, including the Independent Trustees, will
review the factors considered in connection with its approval of the
Plan, as well as any changes in such factors since the date of its
approval, and will confirm that the Plan is consistent with the Fund's
investment objectives and policies and in the best interests of such
Fund's common shareholders.
4. Applicants state that the purpose of each Fund's Plan is to
provide to its respective common shareholders a regular, quarterly
distribution that is not dependent on the timing or amount of
investment income earned or capital gains realized by such Fund.
Applicants represent that, under the Plans, each Fund will distribute
all available investment income to shareholders, consistent with such
Fund's primary investment objective of providing a high level of total
returns. Applicants state that, if and when sufficient investment
income is not available on a quarterly basis, each Fund will distribute
long-term capital gains and/or return of capital to its shareholders to
maintain the level distribution rate that has been approved by the
Board. Applicants state that the minimum annual distribution rate of
each Fund will be independent of such Fund's performance during any
particular period but is expected to correlate with such Fund's
performance over time. Applicants note that the amount and frequency of
distributions may be amended at any time by the Board of each Fund
without prior notice to such Fund's shareholders. Applicants explain
that if a Fund's net investment income and net realized capital gains
for any year exceed the amount required to be distributed under its
Plan, such Fund will at a minimum make distributions necessary to
comply with the distribution requirements of subchapter M of the
Internal Revenue Code of 1986 (the ``Code''). Applicants state that
each Plan provides that it can be amended, suspended or terminated at
any time by the Board without prior notice to such Fund's shareholders.
5. Applicants state that at the December 13, 2006 meeting, each
Board adopted policies and procedures under rule 38a-1 under the Act
that are reasonably designed to ensure that all notices sent to the
Fund's shareholders pursuant to section 19(a) of the Act, rules 19a-1
under the Act, and condition IV below (``19(a) Notices'') comply with
condition II below, and that all other written communications by a Fund
or its agents regarding distributions under the Plan include the
disclosure required by condition III below. Applicants state that the
Board of each Fund also adopted policies and procedures at that meeting
that require each Fund to keep records that demonstrate its compliance
with all of the conditions of the requested order and that are
necessary for such Fund to form the basis for, or demonstrate the
calculation of, the amounts disclosed in its 19(a) 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 every twelve months. 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 each Fund's annual report to
shareholders and on its IRS Form 1099-DIV, which is sent to each common
and preferred shareholder who received distributions during the year
(including shareholders who have sold shares during the year).
4. Applicants further state that each of the Funds 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 19(a) 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. Applicants also state that
compliance with each Fund's compliance procedures and condition III set
forth below will ensure that prospective shareholders and third parties
are provided with the same information. Accordingly, applicants assert
that continuing to subject the 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
[[Page 44892]]
result in an immediate corresponding reduction in NAV and would be in
effect a taxable return of the investor's capital. Applicants assert
that the ``selling the dividend'' concern should not apply to closed-
end investment companies, such as the Funds, 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 periodic distribution 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 adoption of a periodic distribution 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
periodic distribution 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. Applicants also assert that rule 19b-1 may cause fixed regular
periodic distributions under a periodic distribution 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 periodic distribution 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 to make periodic capital gain distributions (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, if any.\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 trustees or directors of such future Fund
and will be made at a future time.
---------------------------------------------------------------------------
Applicants' Conditions
Applicants agree that any order of the Commission granting the
requested relief will be subject to the following conditions:
I. Compliance Review and Reporting. Each Fund's chief compliance
officer will: (a) Report to the Fund's Board, no less frequently than
once every three months or at the next regularly scheduled quarterly
Board meeting, whether (i) the Fund and its Adviser have complied with
the conditions of the order, and (ii) a material compliance matter, as
defined in rule 38a-1(e)(2) under the Act, has occurred with respect to
such conditions; and (b) review the adequacy of the policies and
procedures adopted by the Board no less frequently than annually.
II. Disclosures to Fund Shareholders:
A. Each 19(a) Notice to the holders of the Fund's common shares, in
addition to the information required by section 19(a) and rule 19a-1:
1. Will provide, in a tabular or graphical format:
(a) The amount of the distribution, on a per share basis, together
with the amounts of such distribution amount, on a per share basis and
as a percentage of such distribution amount, from estimated: (A) Net
investment income; (B) net realized short-term capital gains; (C) net
realized long-term capital gains; and (D) return of capital or other
capital source;
(b) The fiscal year-to-date cumulative amount of distributions, on
a per share basis, together with the amounts of such cumulative amount,
on a per share basis and as a percentage of such cumulative amount of
distributions, from estimated: (A) Net investment income; (B) net
[[Page 44893]]
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 record 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 record 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 record 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 record 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\ 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
19(a) Notice are only estimates and are not being provided for tax
reporting purposes. The actual amounts and sources of the amounts for
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 19(a) 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. Each Fund will include the information contained in the relevant
19(a) 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. Each Fund will issue, contemporaneously with the issuance of any
19(a) Notice, a press release containing the information in the 19(a)
Notice and will file with the Commission the information contained in
such 19(a) Notice, including the disclosure required by condition
II.A.2 above, as an exhibit to its next filed Form N-CSR; and
C. Each Fund will post prominently a statement on its (or the
Adviser's) Web site containing the information in each 19(a) 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 19(a) 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 19(a) 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
19(a) 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 19(a) Notice, will pay the financial
intermediary, or its agent, the reasonable expenses of sending the
19(a) 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 Trustees:
(a) Will request and evaluate, and the Adviser will furnish, such
information as may be reasonably necessary to make an informed
determination of whether the Plan should be continued or continued
after amendment;
(b) Will determine whether continuation, or continuation after
amendment, of the Plan is consistent with the Fund's investment
objective(s) and policies and in the best interests of the Fund and its
shareholders, after considering the information in condition V.B.1.a
above; including, without limitation:
[[Page 44894]]
(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,
including its consideration of the factors listed in condition
V.B.1.(b) above, 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
shares;
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 annualized distribution rate for the six months
ending on the last day of the month ended immediately prior to the most
recent distribution record 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
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 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,
Deputy Secretary.
[FR Doc. E9-20868 Filed 8-28-09; 8:45 am]
BILLING CODE 8010-01-P
