Neuberger Berman Management LLC, et al.; Notice of Application, 53786-53790 [E9-25137]
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53786
Federal Register / Vol. 74, No. 201 / Tuesday, October 20, 2009 / Notices
OFFICE OF PERSONNEL
MANAGEMENT
Proposed Collection; Request for
Comments on a Revised Information
Collection: (OMB Control No. 3206–
0170; Standard Forms SF 3106 and SF
3106A)
AGENCY: Office of Personnel
Management.
ACTION: Notice.
In accordance with the
Paperwork Reduction Act of 1995 (Pub.
L. 104–13, May 22, 1995), this notice
announces that the Office of Personnel
Management (OPM) intends to submit to
the Office of Management and Budget
(OMB) a request for review of a revised
information collection. This information
collection, ‘‘Application for Refund of
Retirement Deductions Federal
Employees Retirement System (FERS),’’
(OMB Control No. 3206–0170; Standard
Form 3106), is used by former Federal
employees under FERS, to apply for a
refund of retirement deductions
withheld during Federal employment,
plus any interest provided by law.
‘‘Current/Former Spouse(s) Notification
of Application for Refund of Retirement
Deductions Under FERS’’ (OMB Control
No. 3206–0170; Standard Form 3106A),
is used by refund applicants to notify
their current/former spouse(s) that they
are applying for a refund of retirement
deductions, which is required by law.
Comments are particularly invited on:
whether this collection of information is
necessary for the proper performance of
functions of the Office of Personnel
Management, and whether it will have
practical utility; whether our estimate of
the public burden of this collection of
information is accurate, and based on
valid assumptions and methodology;
and ways in which we can minimize the
burden of the collection of information
on those who are to respond, through
the use of appropriate technological
collection techniques or other forms of
information technology.
Approximately 17,000 SF 3106 forms
will be processed annually. The SF 3106
takes approximately 30 minutes to
complete for a total of 8,500 hours
annually. Approximately 13,600 SF
3106A forms will be processed
annually. The SF 3106A takes
approximately 5 minutes to complete
for a total of 1,133 hours. The total
annual estimated burden is 9,633 hours.
For copies of this proposal, contact
Cyrus S. Benson on (202) 606–0623,
FAX (202) 606- 0910 or via e-mail to
Cyrus.Benson@opm.gov. Please include
a mailing address with your request.
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SUMMARY:
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DATES: Comments on this proposal
should be received within 60 calendar
days from the date of this publication.
ADDRESSES: Send or deliver comments
to—James K. Freiert, Deputy Assistant
Director, Retirement Services Program,
Center for Retirement and Insurance
Services, U.S. Office of Personnel
Management, 1900 E Street, NW., Room
3305, Washington, DC 20415–3500.
FOR FURTHER INFORMATION CONTACT: For
information regarding administrative
coordination contact: Cyrus S. Benson,
Team Leader, Publications Team, RIS
Support Services/Support Group, U.S.
Office of Personnel Management, 1900 E
Street, NW., Room 4H28, Washington,
DC 20415, (202) 606–0623.
U.S. Office of Personnel Management
John Berry,
Director.
[FR Doc. E9–25126 Filed 10–19–09; 8:45 am]
BILLING CODE 6325–38–P
United States Postal Service Board of
Governors; Sunshine Act Meeting
Board Votes To Close October 12–14,
2009, Meeting
At its closed session meeting on
September 22, 2009, the Board of
Governors of the United States Postal
Service voted unanimously to close to
public observation its meeting to be
held October 12–14, 2009, at the Bolger
Center for Leadership Development in
Potomac, Maryland. The Board
determined that no earlier public notice
was possible.
GENERAL COUNSEL CERTIFICATION: The
General Counsel of the United States
Postal Service has certified that the
meeting is properly closed under the
Government in the Sunshine Act.
TIMES AND DATES:
5 p.m., Monday, October 12, 2009;
8 a.m., Tuesday, October 13, 2009;
and
8 a.m., Wednesday, October 14, 2009.
MATTERS TO BE CONSIDERED:
Monday, October 12 at 5 p.m. (Closed)
1. Strategic Issues.
2. Financial Matters.
3. Pricing.
4. Personnel Matters and
Compensation Issues.
5. Governors’ Executive Session—
Discussion of prior agenda items and
Board Governance.
Tuesday, October 13 at 8 a.m. (Closed)
Continuation of Monday’s agenda.
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Continuation of Monday’s agenda.
CONTACT PERSON FOR MORE INFORMATION:
Julie S. Moore, Secretary of the Board,
U.S. Postal Service, 475 L’Enfant Plaza,
SW., Washington, DC 20260–1000.
Telephone (202) 268–4800.
Julie S. Moore,
Secretary.
[FR Doc. E9–25364 Filed 10–16–09; 4:15 pm]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28945; File No. 812–13086–05]
Neuberger Berman Management LLC,
et al.; Notice of Application
October 14, 2009.
POSTAL SERVICE
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Wednesday, October 14 at 8 a.m.
(Closed)—(if needed)
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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 management
investment companies to make periodic
distributions of long-term capital gains
with respect to their outstanding
common stock as frequently as monthly
in any 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: Neuberger Berman
Management LLC (‘‘NB Management’’),
and Neuberger Berman Dividend
Advantage Fund Inc., Neuberger
Berman Income Opportunity Fund Inc.,
and Neuberger Berman Real Estate
Securities Income Fund Inc.
(collectively, the ‘‘Current Funds’’).
FILING DATES: The application was filed
on May 18, 2004 and amended on June
5, 2007, October 28, 2008, January 22,
2009, January 26, 2009, May 15, 2009
and October 13, 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 November 9, 2009, and
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should be accompanied by proof of
service on the applicants in the form of
an affidavit or, for lawyers, a certificate
of service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090; Applicants, c/o Andrew B. Allard,
Neuberger Berman, LLC, 605 Third
Avenue, 21st Floor, New York, New
York 10158–3698.
FOR FURTHER INFORMATION CONTACT:
Barbara T. Heussler, Senior Counsel, at
(202) 551–6990, or Jennifer L. Sawin,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
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 an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
SUPPLEMENTARY INFORMATION:
Applicants’ Representations
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1. Each Current Fund is a registered
closed-end management investment
company organized as a Maryland
corporation.1 The common stock
(‘‘common shares’’) of the Current
Funds are listed and traded on the
American Stock Exchange. The Current
Funds have also issued either private
preferred shares or auction market
preferred shares (collectively, ‘‘preferred
shares’’). Applicants believe that the
shareholders of each Current Fund are
generally dividend-sensitive investors
who desire current income periodically
1 Applicants request that any order issued
granting the relief requested in the application also
apply to any registered closed-end investment
company currently advised or to be advised in the
future by NB Management (including any successor
in interest) or by an entity controlling, controlled
by or under common control (within the meaning
of section 2(a)(9) of the Act) with NB Management
(such entities, together with NB Management, the
‘‘Investment Advisers’’) that decides in the future
to rely on the requested relief. Any fund that relies
on the requested order will comply with the terms
and conditions of the application (such investment
companies together with the Current Funds, the
‘‘Funds,’’ and with the Investment Advisers, the
‘‘Applicants’’). 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. All existing Funds currently
intending to rely on the requested order have been
named as Applicants.
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and may favor a fixed distribution
policy.
2. NB Management serves as each
Current Fund’s investment manager and
administrator. Neuberger Berman LLC
(‘‘Neuberger Berman’’) serves as a subadviser to each Current Fund. Neuberger
Berman Fixed Income LLC (‘‘NBFI’’)
also serves as a sub-adviser to NBIO. NB
Management, Neuberger Berman and
NBFI are registered as investment
advisers under the Investment Advisers
Act of 1940, as amended (‘‘Advisers
Act’’). Each future Investment Adviser
will be registered under the Advisers
Act.
3. Applicants represent that the board
of directors (each, a ‘‘Board’’ and
collectively, ‘‘Boards’’) of each Current
Fund, including a majority of the
directors who are not ‘‘interested
persons,’’ as defined in section 2(a)(19)
of the Act (‘‘Independent Directors’’), of
the respective Current Fund requested
and evaluated, and NB Management
furnished, such information as was
reasonably necessary to make an
informed determination on whether the
Board should adopt and implement a
proposed distribution policy
(‘‘Distribution Policy’’) for that Current
Fund. The Board considered, among
other things: (i) The purpose and terms
of the Distribution Policy; (ii) any
potential or actual conflicts of interest
that NB Management, any affiliated
person of NB Management, or any other
affiliated person of the respective
Current Fund may have relating to the
adoption or implementation of the
Distribution Policy; (iii) whether the
rate of distribution under the
Distribution Policy will exceed the
Current Fund’s expected total return
based on net asset value per common
share (‘‘NAV’’); and (iv) any reasonably
foreseeable material effects of the
Distribution Policy on the Fund’s longterm total return based on market price
and NAV. Applicants state that, after
considering such information, the
Board, including the Independent
Directors, determined that adoption and
implementation of the Distribution
Policy would be consistent with the
Current Fund’s investment objective(s)
and policies and in the best interests of
the Current Fund and its shareholders.
4. Applicants state that the purpose of
a Fund’s Distribution Policy is to permit
that Fund to provide shareholders with
periodic fixed cash dividends that
approximate the character of income
that the Fund receives throughout the
year. Each Fund’s Distribution Policy
provides for periodic level distributions
with respect to outstanding common
shares based upon a fixed amount per
share, a fixed percentage of market price
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or a fixed percentage of NAV. The
Distribution Policy will allow
distributions to be made without
significant restrictions due to the timing
of realization of capital gains.
Applicants state that the Distribution
Policy will allow the Fund to pay
realized long-term capital gains as part
of its periodic distributions rather than
forcing the distributions to be funded
with returns of capital (when net
investment income and realized net
short-term capital gains are insufficient
to cover the fixed distribution amount).
The Distribution Policy will provide
investors with the potential for a more
tax-efficient return on their investment
in the Fund. Applicants state that if a
Fund’s net investment income and net
realized capital gains for any year
exceed the amount required to be
distributed under the Distribution
Policy, the Fund will at a minimum
make distributions necessary to comply
with the distribution requirements of
Subchapter M of the Internal Revenue
Code of 1986 (‘‘Code’’).
5. Prior to relying on the order and
implementing the Distribution Policy in
the future, the Board of each Fund will
approve and adopt policies and
procedures under rule 38a–1 under the
Act that: (i) Are reasonably designed to
ensure that all notices required to be
sent to the Fund’s shareholders
pursuant to section 19(a) of the Act, rule
19a–1 thereunder and condition 4 below
(each a ‘‘19(a) Notice’’) include the
disclosure required by rule 19a–1 under
the Act and by condition 2(a) below,
and that all other written
communications by the Fund or its
agents, described in condition 3(a)
below, about the distributions under the
Distribution Policy include the
disclosure required by condition 3(a)
below; and (ii) require the Fund to keep
records that demonstrate its compliance
with all of the conditions of the 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) of the Act 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
under the Act 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,
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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) of the Act provides that
the Commission may, by order upon
application, conditionally or
unconditionally exempt any person,
security, or transaction, or any class or
classes of persons, securities or
transactions, from any provision of the
Act, if and to the extent that the
exemption is necessary or appropriate
in the public interest and consistent
with the protection of investors and the
purposes fairly intended by the policy
and provisions of the Act.
3. Applicants state that one of the
concerns leading to the enactment of
section 19(b) and adoption of rule 19b–
1 was that shareholders might be unable
to distinguish between frequent
distributions of capital gains and
dividends from investment income.
Applicants state, however, that rule
19a–1 effectively addresses this concern
by requiring that distributions (or the
confirmation of the reinvestment
thereof) estimated to be sourced in part
from capital gains or capital be
accompanied by a separate statement
showing the sources of the distribution
(e.g., estimated net income, net shortterm capital gains, net long-term capital
gains and/or return of capital).
Applicants state that the same
information is included in the annual
reports of each Current Fund sent to its
shareholders and on the IRS Form
1099–DIV, which is sent to each
common and preferred shareholder who
received distributions during a
particular 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 will
adopt compliance policies and
procedures in accordance with rule
38a–1 under the Act to ensure that all
required notices and disclosures are
sent to shareholders. Applicants argue
that rule 19a–1, the Distribution Policy
and the compliance policies ensure that
each Fund’s shareholders would be
provided sufficient information to
understand that their periodic
distributions are not tied to the Fund’s
net investment income and realized
capital gains to date, and may not
represent yield or investment return.
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 assert that section 19(b)
and rule 19b–1 also were intended to
prevent certain improper sales practices,
including, in particular, the practice of
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urging an investor to purchase shares of
a fund on the basis of an upcoming
capital gains dividend (‘‘selling the
dividend’’), where the dividend would
result in an immediate corresponding
reduction in NAV and would be in
effect a taxable return of the investor’s
capital. Applicants assert that the
‘‘selling the dividend’’ concern should
not apply to closed-end investment
companies, such as the Funds, which do
not continuously distribute shares.
According to the 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 note that common
shares of closed-end funds that invest
primarily in equity securities often trade
in the marketplace at a discount to their
NAVs. Applicants believe that this
discount may be reduced if the Funds
are permitted to 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
Distribution Policy 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 assert that by limiting the
number of capital gain distributions that
a fund may make with respect to any
one year, rule 19b–1 may prevent the
normal and 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.
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8. In addition, Applicants assert that
rule 19b–1 may cause fixed regular
periodic distributions to be funded with
returns of capital2 (to the extent net
investment income and realized
short term capital gains are insufficient
to fund the distribution), even though
undistributed realized net long-term
capital gains otherwise would 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 shares
and preferred shares 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 that 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
share 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 shares to
comply with Revenue Ruling 89–81.
10. Applicants assert the potential
abuses addressed by section 19(b) and
rule 19b–1do not arise with respect to
preferred shares issued by a closed-end
fund. Applicants assert that such
distributions are either fixed,
determined in periodic auctions, or
determined 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 long-term capital gains.
11. Applicants also submit that the
‘‘selling the dividend’’ concern is not
applicable to preferred shares, which
entitles a holder to no more than a
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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periodic dividend at a fixed rate or a
rate determined by the market, and, like
a debt security, is priced based upon its
liquidation preference, dividend rate,
credit quality, and frequency of
payment. Applicants assert that
investors buy preferred shares for the
express 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
pursuant to section 6(c) of the Act
granting an exemption from the
provisions of section 19(b) of the Act
and rule 19b–1 thereunder to permit
each Fund to make periodic capital gain
dividends (as defined in section
852(b)(3)(C) of the Code) that include
long-term capital gains 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 the Fund’s preferred shares.
Applicants’ Conditions
Applicants agree that any order of the
Commission granting the requested
relief will be subject to the following
conditions.
1. Compliance Review and Reporting:
The 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 Investment
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.
2. Disclosures to Fund Shareholders:
(a) Each 19(a) Notice disseminated to
the holders of the Fund’s common
shares, in addition to the information
required by section 19(a) and rule 19a–
1:
(i) Will provide, in a tabular or
graphical format:
(1) The amount of the distribution, on
a per common share basis, together with
the amounts of such distribution
amount, on a per common share basis
and as a percentage of such distribution
amount, from estimated: (A) Net
investment income; (B) net realized
short-term capital gains; (C) net realized
long-term capital gains; and (D) return
of capital or other capital source;
(2) The fiscal year-to-date cumulative
amount of distributions, on a per
common share basis, together with the
amounts of such cumulative amount, on
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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;
(3) 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
(4) 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
(ii) will include the following
disclosure:
(1) ‘‘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 Distribution
Policy’’;
(2) ‘‘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’ ’’; 3
and
(3) ‘‘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
3 The disclosure in this condition 2(a)(ii)(2) 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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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:
(i) Describe the terms of the
Distribution Policy (including the fixed
amount or fixed percentage of the
distributions and the frequency of the
distributions);
(ii) Include the disclosure required by
condition 2(a)(ii)(1) above;
(iii) State, if applicable, that the
Distribution Policy provides that the
Board may amend or terminate the
Distribution Policy at any time without
prior notice to Fund shareholders; and
(iv) Describe any reasonably
foreseeable circumstances that might
cause the Fund to terminate the
Distribution Policy and any reasonably
foreseeable consequences of such
termination; and
(c) Each report provided to
shareholders under rule 30e–1 under
the Act and each prospectus filed with
the Commission on Form N–2 under the
Act, will provide the Fund’s total return
in relation to changes in NAV in the
financial highlights table and in any
discussion about the Fund’s total return.
3. Disclosure to Shareholders,
Prospective Shareholders and Third
Parties:
(a) The Fund will include the
information contained in the relevant
19(a) Notice, including the disclosure
required by condition 2(a)(ii) above, in
any written communication (other than
a communication on Form 1099) about
the Distribution Policy or distributions
under the Distribution Policy 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 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 2(a)(ii)
above, as an exhibit to its next filed
Form N–CSR; and
E:\FR\FM\20OCN1.SGM
20OCN1
cprice-sewell on DSKGBLS3C1PROD with NOTICES
53790
Federal Register / Vol. 74, No. 201 / Tuesday, October 20, 2009 / Notices
(c) The Fund will post prominently a
statement on its (or its Investment
Adviser’s) Web site containing the
information in each 19(a) Notice,
including the disclosure required by
condition 2(a)(ii) above, and maintain
such information on such Web site for
at least 24 months.
4. Delivery of 19(a) Notices to
Beneficial Owners:
If a broker, dealer, bank or other
person (‘‘financial intermediary’’) holds
common shares 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.
5. Special Board Review for Funds
Whose Common Stock Trades at a
Premium. If:
(a) The Fund’s common shares have
traded on the stock 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 as
of the close of each trading day over a
12-week rolling period (each such 12week rolling period ending on the last
trading day of each week); and
(b) The Fund’s annualized
distribution rate for such 12-week
rolling period, expressed as a percentage
of NAV as of the ending date of such 12week 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:
(i) 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:
(1) Will request and evaluate, and the
Investment Adviser will furnish, such
information as may be reasonably
necessary to make an informed
determination of whether the
VerDate Nov<24>2008
14:46 Oct 19, 2009
Jkt 220001
Distribution Policy should be continued
or continued after amendment;
(2) Will determine whether
continuation, or continuation after
amendment, of the Distribution Policy 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 5(b)(i)(1)
above, including, without limitation:
(A) Whether the Distribution Policy is
accomplishing its purpose(s);
(B) The reasonably foreseeable
material effects of the Distribution
Policy on the Fund’s long-term total
return in relation to the market price
and NAV; and
(C) The Fund’s current distribution
rate, as described in condition 5(b)
above, compared with the Fund’s
average annual taxable income or total
return over the 2-year period, as
described in condition 5(b), or such
longer period as the Board deems
appropriate; and
(3) Based upon that determination,
will approve or disapprove the
continuation, or continuation after
amendment, of the Distribution Policy;
and
(ii) The Board will record the
information considered by it, including
its consideration of the factors listed in
condition 5(b)(i)(2) above, and the basis
for its approval or disapproval of the
continuation, or continuation after
amendment, of the Distribution Policy
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.
6. 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 6(a) and 6(b)
above, provided that, with respect to
such other offering:
(i) 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,4 expressed as a
percentage of NAV as of such date, is no
more than 1 percentage point greater
than the Fund’s average annual total
4 If the Fund has been in operation fewer than six
months, the measured period will begin
immediately following the Fund’s first public
offering.
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
return for the 5-year period ending on
such date; 5 and
(ii) 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
shares as frequently as twelve times
each year, and as frequently as
distributions are specified by or
determined in accordance with the
terms of any outstanding preferred
shares as such Fund may issue.
7. Amendments to Rule 19b–1: The
requested order will expire on the
effective date of any amendment to rule
19b–1 that provides relief permitting
certain closed-end investment
companies to make periodic
distributions of long-term capital gains
with respect to their outstanding
common shares as frequently as twelve
times each year.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–25137 Filed 10–19–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1]
Altiva Financial Corp., Atlantic Gulf
Communities Corp., CFI Mortgage,
Inc., Commodore Holdings Ltd.,
Conversion Technologies
International, Inc., Cyntech
Technologies, Inc., Diversified Senior
Services, Inc., Dyersburg Corp., Flour
City International, Inc., Gerald Stevens,
Inc., Leisure Time Casinos & Resorts,
Inc., and Platinum Entertainment, Inc.
(n/k/a Vidalia Gichner Holdings, Inc.),;
Order of Suspension of Trading
October 16, 2009.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Altiva
Financial Corp. because it has not filed
any periodic reports since the period
ended February 29, 2000.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Atlantic
Gulf Communities Corp. because it has
5 If the Fund has been in operation fewer than five
years, the measured period will begin immediately
following the Fund’s first public offering.
E:\FR\FM\20OCN1.SGM
20OCN1
Agencies
[Federal Register Volume 74, Number 201 (Tuesday, October 20, 2009)]
[Notices]
[Pages 53786-53790]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-25137]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28945; File No. 812-13086-05]
Neuberger Berman Management LLC, et al.; Notice of Application
October 14, 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 management investment companies to make periodic
distributions of long-term capital gains with respect to their
outstanding common stock as frequently as monthly in any 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: Neuberger Berman Management LLC (``NB Management''), and
Neuberger Berman Dividend Advantage Fund Inc., Neuberger Berman Income
Opportunity Fund Inc., and Neuberger Berman Real Estate Securities
Income Fund Inc. (collectively, the ``Current Funds'').
Filing Dates: The application was filed on May 18, 2004 and amended on
June 5, 2007, October 28, 2008, January 22, 2009, January 26, 2009, May
15, 2009 and October 13, 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 November 9, 2009, and
[[Page 53787]]
should be accompanied by proof of service on the applicants in the form
of an affidavit or, for lawyers, a certificate of service. Hearing
requests should state the nature of the writer's interest, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the
Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090; Applicants, c/o Andrew B.
Allard, Neuberger Berman, LLC, 605 Third Avenue, 21st Floor, New York,
New York 10158-3698.
FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel,
at (202) 551-6990, or Jennifer L. Sawin, 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 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 Current Fund is a registered closed-end management
investment company organized as a Maryland corporation.\1\ The common
stock (``common shares'') of the Current Funds are listed and traded on
the American Stock Exchange. The Current Funds have also issued either
private preferred shares or auction market preferred shares
(collectively, ``preferred shares''). Applicants believe that the
shareholders of each Current Fund are generally 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 registered closed-end
investment company currently advised or to be advised in the future
by NB Management (including any successor in interest) or by an
entity controlling, controlled by or under common control (within
the meaning of section 2(a)(9) of the Act) with NB Management (such
entities, together with NB Management, the ``Investment Advisers'')
that decides in the future to rely on the requested relief. Any fund
that relies on the requested order will comply with the terms and
conditions of the application (such investment companies together
with the Current Funds, the ``Funds,'' and with the Investment
Advisers, the ``Applicants''). 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. All existing Funds
currently intending to rely on the requested order have been named
as Applicants.
---------------------------------------------------------------------------
2. NB Management serves as each Current Fund's investment manager
and administrator. Neuberger Berman LLC (``Neuberger Berman'') serves
as a sub-adviser to each Current Fund. Neuberger Berman Fixed Income
LLC (``NBFI'') also serves as a sub-adviser to NBIO. NB Management,
Neuberger Berman and NBFI are registered as investment advisers under
the Investment Advisers Act of 1940, as amended (``Advisers Act'').
Each future Investment Adviser will be registered under the Advisers
Act.
3. Applicants represent that the board of directors (each, a
``Board'' and collectively, ``Boards'') of each Current Fund, including
a majority of the directors who are not ``interested persons,'' as
defined in section 2(a)(19) of the Act (``Independent Directors''), of
the respective Current Fund requested and evaluated, and NB Management
furnished, such information as was reasonably necessary to make an
informed determination on whether the Board should adopt and implement
a proposed distribution policy (``Distribution Policy'') for that
Current Fund. The Board considered, among other things: (i) The purpose
and terms of the Distribution Policy; (ii) any potential or actual
conflicts of interest that NB Management, any affiliated person of NB
Management, or any other affiliated person of the respective Current
Fund may have relating to the adoption or implementation of the
Distribution Policy; (iii) whether the rate of distribution under the
Distribution Policy will exceed the Current Fund's expected total
return based on net asset value per common share (``NAV''); and (iv)
any reasonably foreseeable material effects of the Distribution Policy
on the Fund's long-term total return based on market price and NAV.
Applicants state that, after considering such information, the Board,
including the Independent Directors, determined that adoption and
implementation of the Distribution Policy would be consistent with the
Current Fund's investment objective(s) and policies and in the best
interests of the Current Fund and its shareholders.
4. Applicants state that the purpose of a Fund's Distribution
Policy is to permit that Fund to provide shareholders with periodic
fixed cash dividends that approximate the character of income that the
Fund receives throughout the year. Each Fund's Distribution Policy
provides for periodic level distributions with respect to outstanding
common shares based upon a fixed amount per share, a fixed percentage
of market price or a fixed percentage of NAV. The Distribution Policy
will allow distributions to be made without significant restrictions
due to the timing of realization of capital gains. Applicants state
that the Distribution Policy will allow the Fund to pay realized long-
term capital gains as part of its periodic distributions rather than
forcing the distributions to be funded with returns of capital (when
net investment income and realized net short-term capital gains are
insufficient to cover the fixed distribution amount). The Distribution
Policy will provide investors with the potential for a more tax-
efficient return on their investment in the Fund. Applicants state that
if a Fund's net investment income and net realized capital gains for
any year exceed the amount required to be distributed under the
Distribution Policy, the Fund will at a minimum make distributions
necessary to comply with the distribution requirements of Subchapter M
of the Internal Revenue Code of 1986 (``Code'').
5. Prior to relying on the order and implementing the Distribution
Policy in the future, the Board of each Fund will approve and adopt
policies and procedures under rule 38a-1 under the Act that: (i) Are
reasonably designed to ensure that all notices required to be sent to
the Fund's shareholders pursuant to section 19(a) of the Act, rule 19a-
1 thereunder and condition 4 below (each a ``19(a) Notice'') include
the disclosure required by rule 19a-1 under the Act and by condition
2(a) below, and that all other written communications by the Fund or
its agents, described in condition 3(a) below, about the distributions
under the Distribution Policy include the disclosure required by
condition 3(a) below; and (ii) require the Fund to keep records that
demonstrate its compliance with all of the conditions of the 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) of the Act 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 under the
Act 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,
[[Page 53788]]
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) of the Act provides that the Commission may, by
order upon application, conditionally or unconditionally exempt any
person, security, or transaction, or any class or classes of persons,
securities or transactions, from any provision of the Act, if and to
the extent that the exemption is necessary or appropriate in the public
interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
3. Applicants state that one of the concerns leading to the
enactment of section 19(b) and adoption of rule 19b-1 was that
shareholders might be unable to distinguish between frequent
distributions of capital gains and dividends from investment income.
Applicants state, however, that rule 19a-1 effectively addresses this
concern by requiring that distributions (or the confirmation of the
reinvestment thereof) estimated to be sourced in part from capital
gains or capital be accompanied by a separate statement showing the
sources of the distribution (e.g., estimated net income, net short-term
capital gains, net long-term capital gains and/or return of capital).
Applicants state that the same information is included in the annual
reports of each Current Fund sent to its shareholders and on the IRS
Form 1099-DIV, which is sent to each common and preferred shareholder
who received distributions during a particular 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 will adopt compliance policies and procedures in
accordance with rule 38a-1 under the Act to ensure that all required
notices and disclosures are sent to shareholders. Applicants argue that
rule 19a-1, the Distribution Policy and the compliance policies ensure
that each Fund's shareholders would be provided sufficient information
to understand that their periodic distributions are not tied to the
Fund's net investment income and realized capital gains to date, and
may not represent yield or investment return. 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 assert that section 19(b) and rule 19b-1 also were
intended to prevent certain improper sales practices, including, in
particular, the practice of urging an investor to purchase shares of a
fund on the basis of an upcoming capital gains dividend (``selling the
dividend''), where the dividend would result in an immediate
corresponding reduction in NAV and would be in effect a taxable return
of the investor's capital. Applicants assert that the ``selling the
dividend'' concern should not apply to closed-end investment companies,
such as the Funds, which do not continuously distribute shares.
According to the 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 note that common shares of closed-end funds that
invest primarily in equity securities often trade in the marketplace at
a discount to their NAVs. Applicants believe that this discount may be
reduced if the Funds are permitted to 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
Distribution Policy 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 assert that by limiting the
number of capital gain distributions that a fund may make with respect
to any one year, rule 19b-1 may prevent the normal and 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. In addition, Applicants assert that rule 19b-1 may cause fixed
regular periodic distributions 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
undistributed realized net long-term capital gains otherwise would 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 shares and preferred shares
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 that 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 share
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 shares to comply with Revenue Ruling
89-81.
10. Applicants assert the potential abuses addressed by section
19(b) and rule 19b-1do not arise with respect to preferred shares
issued by a closed-end fund. Applicants assert that such distributions
are either fixed, determined in periodic auctions, or determined 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 long-term
capital gains.
11. Applicants also submit that the ``selling the dividend''
concern is not applicable to preferred shares, which entitles a holder
to no more than a
[[Page 53789]]
periodic dividend at a fixed rate or a rate determined by the market,
and, like a debt security, is priced based upon its liquidation
preference, dividend rate, credit quality, and frequency of payment.
Applicants assert that investors buy preferred shares for the express
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 pursuant to section 6(c) of the Act
granting an exemption from the provisions of section 19(b) of the Act
and rule 19b-1 thereunder to permit each Fund to make periodic capital
gain dividends (as defined in section 852(b)(3)(C) of the Code) that
include long-term capital gains 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 the
Fund's preferred shares.
Applicants' Conditions
Applicants agree that any order of the Commission granting the
requested relief will be subject to the following conditions.
1. Compliance Review and Reporting:
The 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 Investment 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.
2. Disclosures to Fund Shareholders:
(a) Each 19(a) Notice disseminated to the holders of the Fund's
common shares, in addition to the information required by section 19(a)
and rule 19a-1:
(i) Will provide, in a tabular or graphical format:
(1) The amount of the distribution, on a per common share basis,
together with the amounts of such distribution amount, on a per common
share basis and as a percentage of such distribution amount, from
estimated: (A) Net investment income; (B) net realized short-term
capital gains; (C) net realized long-term capital gains; and (D) return
of capital or other capital source;
(2) 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;
(3) 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
(4) 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
(ii) will include the following disclosure:
(1) ``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 Distribution Policy'';
(2) ``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' ''; \3\ and
---------------------------------------------------------------------------
\3\ The disclosure in this condition 2(a)(ii)(2) will be
included only if the current distribution or the fiscal year-to-date
cumulative distributions are estimated to include a return of
capital.
---------------------------------------------------------------------------
(3) ``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:
(i) Describe the terms of the Distribution Policy (including the
fixed amount or fixed percentage of the distributions and the frequency
of the distributions);
(ii) Include the disclosure required by condition 2(a)(ii)(1)
above;
(iii) State, if applicable, that the Distribution Policy provides
that the Board may amend or terminate the Distribution Policy at any
time without prior notice to Fund shareholders; and
(iv) Describe any reasonably foreseeable circumstances that might
cause the Fund to terminate the Distribution Policy and any reasonably
foreseeable consequences of such termination; and
(c) Each report provided to shareholders under rule 30e-1 under the
Act and each prospectus filed with the Commission on Form N-2 under the
Act, will provide the Fund's total return in relation to changes in NAV
in the financial highlights table and in any discussion about the
Fund's total return.
3. Disclosure to Shareholders, Prospective Shareholders and Third
Parties:
(a) The Fund will include the information contained in the relevant
19(a) Notice, including the disclosure required by condition 2(a)(ii)
above, in any written communication (other than a communication on Form
1099) about the Distribution Policy or distributions under the
Distribution Policy 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
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
2(a)(ii) above, as an exhibit to its next filed Form N-CSR; and
[[Page 53790]]
(c) The Fund will post prominently a statement on its (or its
Investment Adviser's) Web site containing the information in each 19(a)
Notice, including the disclosure required by condition 2(a)(ii) above,
and maintain such information on such Web site for at least 24 months.
4. Delivery of 19(a) Notices to Beneficial Owners:
If a broker, dealer, bank or other person (``financial
intermediary'') holds common shares 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.
5. Special Board Review for Funds Whose Common Stock Trades at a
Premium. If:
(a) The Fund's common shares have traded on the stock 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 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:
(i) 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:
(1) Will request and evaluate, and the Investment Adviser will
furnish, such information as may be reasonably necessary to make an
informed determination of whether the Distribution Policy should be
continued or continued after amendment;
(2) Will determine whether continuation, or continuation after
amendment, of the Distribution Policy 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 5(b)(i)(1) above, including, without limitation:
(A) Whether the Distribution Policy is accomplishing its
purpose(s);
(B) The reasonably foreseeable material effects of the Distribution
Policy on the Fund's long-term total return in relation to the market
price and NAV; and
(C) The Fund's current distribution rate, as described in condition
5(b) above, compared with the Fund's average annual taxable income or
total return over the 2-year period, as described in condition 5(b), or
such longer period as the Board deems appropriate; and
(3) Based upon that determination, will approve or disapprove the
continuation, or continuation after amendment, of the Distribution
Policy; and
(ii) The Board will record the information considered by it,
including its consideration of the factors listed in condition
5(b)(i)(2) above, and the basis for its approval or disapproval of the
continuation, or continuation after amendment, of the Distribution
Policy 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.
6. 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 6(a)
and 6(b) above, provided that, with respect to such other offering:
(i) 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,\4\ expressed as a percentage of NAV as
of such date, is no more than 1 percentage point greater than the
Fund's average annual total return for the 5-year period ending on such
date; \5\ and
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\4\ If the Fund has been in operation fewer than six months, the
measured period will begin immediately following the Fund's first
public offering.
\5\ If the Fund has been in operation fewer than five years, the
measured period will begin immediately following the Fund's first
public offering.
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(ii) 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 shares as frequently as twelve times each year, and as
frequently as distributions are specified by or determined in
accordance with the terms of any outstanding preferred shares as such
Fund may issue.
7. Amendments to Rule 19b-1: The requested order will expire on the
effective date of any amendment to rule 19b-1 that provides relief
permitting certain closed-end investment companies to make periodic
distributions of long-term capital gains with respect to their
outstanding common shares as frequently as twelve times each year.
For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-25137 Filed 10-19-09; 8:45 am]
BILLING CODE 8011-01-P